...The average American, who spends roughly 8 to 12 percent of her weekly paycheck on food, did not immediately feel the crunch of rising costs.
But for the roughly 2-billion people across the world who spend more than 50 percent of their income on food, the effects have been staggering:
250 million people joined the ranks of the hungry in 2008, bringing the total of the world's "food insecure" to a peak of 1 billion -- a number never seen before.
What's the solution?
The last time I visited the Minneapolis Grain Exchange, I asked a handful of wheat brokers what would happen if the U.S. government simply outlawed long-only trading in food commodities for investment banks.
Their reaction: laughter.
One phone call to a bona-fide hedger like Cargill or Archer Daniels Midland and one secret swap of assets, and a bank's stake in the futures market is indistinguishable from that of an international wheat buyer.
What if the government outlawed all long-only derivative products, I asked? Once again, laughter.
Problem solved with another phone call, this time to a trading office in London or Hong Kong; the new food derivative markets have reached supranational proportions, beyond the reach of sovereign law...
more...How Goldman Sachs Created the Food Crisis - By Frederick Kaufman | Foreign Policy