Category Archive: 2008

It’s not just the economy stupid!

In March of 2008, the research director for Canada’s National Farmers Union announced that, “The decline in food supplies we’re seeing now is steeper than any time since the Second World War,” he says, “maybe in the past century.”  Some blame a “biofuel boondoggle” that has seen 20% of the U.S. corn crop go into creating ethanol last year, in order to provide only 1% of that country’s fuel needs. Rather than driving down the cost of gasoline, it has succeeded in driving up the price of everything else.  By reducing the supply of corn that is available for feeding livestock, the price of meat, milk and eggs has gone up 10 to 20 per cent.  Meanwhile, water is becoming the greatest worry of all. World use increased six-fold between 1990 and 2005, the majority of that going to agriculture. Water tables in important farm belts of the U.S., China and South Asia are plummeting — in India by as much as three metres a year. Factor in Asia’s sudden enthusiasm for red meat and the sense of crisis only deepens: producing one kilogram of grain-fed beef requires five times the water a kilogram of cereal grain does, which helps explain why the outgoing CEO of Nestlé SA, the world’s biggest food-maker, recently raised water scarcity as one of the great challenges facing the world.  Bottom Line: Given that our (pirate) captains of finance and industry are apparently stupid enough to get the global economies into their current state, I can understand how they might also be overlooking these unsettling details especially given that their collective culinary palettes are currently attuned to a feeding frenzy at a wholly different kind of (billion dollar) hog trough.

In a related story:  Wait a minute I may have been mistaken.  At least one “expert” seemed to be in tune with the real deal.  Lost in the billions of other frauds and scandals of 2008 (which included the arrest of Bernard Madoff, the former chairman of the Nasdaq Stock Market on charges of running a $50 billion “Ponzi scheme”) is a little “Made in Canada” hedge fund called Sextant Capital Management.  Sextant’s sophisticated investors gave $22 million to Otto Spork, a former dentist who used it to buy investments in two private companies with ownership stakes in northern glaciers. Spork, has recently moved to Iceland, and apparently envisions these glaciers as the source of fresh water that can be sold around the world. These companies have no revenues, certainly no profits, and no prospect for operations in the foreseeable future; however, according to Sextant, their value has surged by 984 per cent in the couple of years since the Sextant fund was launched.  The Ontario Securities Commission has barred Sextant from selling its fund to any more clients pending regulatory hearings in the weeks and months ahead.