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Thursday, April 28, 2011

What is fueling the stock markets is damping down the general economy

Corn went from $3.50 to over $7.50 a bushel in one year
While the Dow Jones Industrial Average has chugged right along in the economic "recovery" and is pushing toward 13,000 points, unemployment lingers in the 9 percent range, fuel prices have skyrocketed, and food prices are taking an upward surge.  At the same time, many states are following the direction of Wisconsin in reducing the wages and benefits of public workers, which sets the trend for all workers.  

What it all means is that working people are paying more and more for everything in an economy in which they earn less and less.

While fuel costs are the more obvious strains on family budgets, food costs, which are affected by fuel costs, are taking some jumps upward, a fact that people in the U.S. are noticing and which are a major factor in uprisings elsewhere.  Bloomberg News notes:

Riots prompted partly by rising costs have toppled governments in Egypt and Tunisia and contributed to unrest in other parts of northern Africa and the Middle East. China is now battling increasing pest infestation in its wheat-growing regions, while U.S. winter-crop conditions are rated at their worst since 2002.

In the U.S., the price of ethanol, which is largely touted as a means of reducing the dependence and costs of foreign oil, is getting more costly to make because its major ingredient, corn, has doubled in price during the past year, from $3.50 a bushel to more than $7.50 a bushel.   The diversion of corn from feeding livestock and being exported for food purposes into the making of fuel is blamed by some economists for adding to a growing shortage of food in the world. 

The USDA expects a 5 or more percent rise in food costs during 2011.  Prices for meat poultry and fish will jump 5 percent to 6 percent, led by beef, which may climb 8 percent, and pork, which could gain 7.5 percent.   Fresh fruits and vegetables have gone up 6.5 percent so far this year, according to the Bureau of Labor Statistics.  Field grown tomatoes alone have jumped up one third in price since the beginning of the year and are now $2.086 a pound.

 The economic signals for corporations are looking bright.  For working families, they are for lower wages and higher prices.  And the consequence of that can be seen in north Africa and the Middle East. 

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Aberdeen, South Dakota, United States