NewsWhore
01-27-2011, 04:30 PM
In an address to the UNCTAD in Geneva yesterday, President Leonel Fernandez spoke of the negative effects of speculation on commodity prices worldwide. President Fernandez is on a two-week tour abroad, with stops in Switzerland and India.
Fernandez focused on the volatility of commodity prices in his speech. He said that behind the increase in food prices is an increasing demand, fueled by the growth in the global middle class, namely the rise of the middle class in countries like China, India, Brazil and South Africa. This has occurred at a time when produce is being affected by climate-related disasters like drought, hurricanes and tsunamis around the world that have reduced food stocks. But he says that speculation, including hedging and leveraging, has had a major impact on international markets in terms of commodity prices and more attention needs to be given to this. "It seems that there has been one element people have neglected and sidelined that explains the rise in commodity prices that is still playing a crucial role in these prices in the future," he said. He called for corrective measures to be taken to check speculation.
He criticized the way that with the massive participation of investors in the futures market, food commodities are now unfortunately sold as financial assets. He stressed that when food becomes a financial asset it can become subject to speculation. If no controls are imposed, if institutional investors are not limited, or limits placed on the volume of investments, this will be a key factor to returning to a degree of reason in commodity prices that are good for countries.
He commended the efforts in the US Congress in passing a bill to this effect and called for more attention to legislation in Europe.
"Democratic stability and social progress of our peoples, commitments we have made for poverty reduction, all this undertaken when prices rise, social disturbances, a decline in public order and security and often affect the institutional democratic order. Of utmost important economically, social and politically for stability and peace and all at a time when uncertainty reigns as to how we will recover from financial crisis," he said at the United Nations Palais des Nations in Geneva.
Moreover, he said that the disparity between the ways in which Europe and the US have tackled the financial crisis fuels uncertainty. He said that Europe acted with austerity, while in the US the policy was the contrary, with a push to increase spending to propagate growth. "When we have opposite poles, obviously some policies will lead to an increase in inflation, or deflationary impacts at a time when we need unified and clear policies to get the world out of stagnation and uncertainty".
www.unctad.org/sections/meetings/audio/2011-01-26/am/1006-E.MP3 (http://www.unctad.org/sections/meetings/audio/2011-01-26/am/1006-E.MP3)
More... (http://www.dr1.com/index.html#1)
Fernandez focused on the volatility of commodity prices in his speech. He said that behind the increase in food prices is an increasing demand, fueled by the growth in the global middle class, namely the rise of the middle class in countries like China, India, Brazil and South Africa. This has occurred at a time when produce is being affected by climate-related disasters like drought, hurricanes and tsunamis around the world that have reduced food stocks. But he says that speculation, including hedging and leveraging, has had a major impact on international markets in terms of commodity prices and more attention needs to be given to this. "It seems that there has been one element people have neglected and sidelined that explains the rise in commodity prices that is still playing a crucial role in these prices in the future," he said. He called for corrective measures to be taken to check speculation.
He criticized the way that with the massive participation of investors in the futures market, food commodities are now unfortunately sold as financial assets. He stressed that when food becomes a financial asset it can become subject to speculation. If no controls are imposed, if institutional investors are not limited, or limits placed on the volume of investments, this will be a key factor to returning to a degree of reason in commodity prices that are good for countries.
He commended the efforts in the US Congress in passing a bill to this effect and called for more attention to legislation in Europe.
"Democratic stability and social progress of our peoples, commitments we have made for poverty reduction, all this undertaken when prices rise, social disturbances, a decline in public order and security and often affect the institutional democratic order. Of utmost important economically, social and politically for stability and peace and all at a time when uncertainty reigns as to how we will recover from financial crisis," he said at the United Nations Palais des Nations in Geneva.
Moreover, he said that the disparity between the ways in which Europe and the US have tackled the financial crisis fuels uncertainty. He said that Europe acted with austerity, while in the US the policy was the contrary, with a push to increase spending to propagate growth. "When we have opposite poles, obviously some policies will lead to an increase in inflation, or deflationary impacts at a time when we need unified and clear policies to get the world out of stagnation and uncertainty".
www.unctad.org/sections/meetings/audio/2011-01-26/am/1006-E.MP3 (http://www.unctad.org/sections/meetings/audio/2011-01-26/am/1006-E.MP3)
More... (http://www.dr1.com/index.html#1)