Sending this message out yesterday may well have led to a near 6% fall
in the share price of Citigroup, the world's biggest bank! Oppenheimer
& Co analyst Meredith Whitney, who predicted more losses in the credit
crunch and precipitated that fall, may well have read the message...



On the 25th of February, the World Food Programme (WFP), the United
Nations agency responsible for distributing aid from donations by
governments around the world, announced a $500 million budget
shortfall due to soaring fuel and particularly food prices. The prices
of the staple food items distributed by the WFP had risen by an
average of 40% since June last year.

Since making that announcement, the WFP reported that food prices had
risen by another 20% in three weeks. The WFP had changed to buying
food locally to cut costs, so this massive further acceleration of
food inflation is particularly severe in the “third world” and
probably reflects panic buying and the hoarding of food by those
worried about rising prices and/or shortages in the shops. The only
thing preventing food prices rising even more rapidly than they are
already is poor people around the world consuming less because they
cannot afford the higher prices or because of shortages.

The WFP only distributes aid to around 70 million people and obviously
a huge number of people now require aid who previously didn’t, to
avoid starving to death. Meanwhile, the WFP is warning that if it does
not receive more government funding by the 1st of May, it might cut
“the rations for those who rely on the world to stand by them during
times of abject need”.

Food prices have risen sharply in the West too, albeit to a lesser
extent due to the huge profit margins in the supply chain (by 17% in
the last year for “a basket of staple food items” according to an
article by Emma Lunn in the Business & Money section of the 23rd of
March Scotland on Sunday newspaper). A Tory report has estimated that
butter has risen 37%, a dozen eggs 34% and bread 28% in the nine
months since Gordon Brown became prime minister.

The demand for food is massively outstripping supply, mainly due to a
lot of land being used for biofuels (to supposedly reduce global
warming) and people in some countries (such as China) consuming more
meat and dairy products, both of which require much more farmland (by
a factor of eight for meat) than that required for vegan diets.
Additionally, there is a problem with a fungus destroying wheat, and
floods and droughts are affecting harvests.

There have already been demonstrations and riots in many countries as
a result of the food crisis. The challenge for political activists
such as myself is to channel the anger of ordinary people in a
positive direction, and to provide practical solutions. Abandoning
biofuels may help a lot, but many will have to switch to wholly or
mainly vegetarian/vegan diets, either voluntarily (which would
probably only happen in a socialist society) or through compulsion by
a form of rationing.

I called for a worldwide general strike in the run-up to the 2005 G8
summit in Gleneagles , Scotland , when the Make Poverty History
campaign and Live 8 concerts made “third world” poverty a big issue.
There is massive scope for coordinated strike action in many countries
of the world this year, because food and fuel price increases are
hitting ordinary (particularly working class) people in the West too.

Additionally, income tax has doubled for some low-paid people in the
UK (with the abolition of the 10% rate in Alistair Darling’s first
Budget, hardly mentioned in the media), and mortgage interest rates
(for homes declining in value) are rising.

The New Labour government is attempting to get public sector workers
to accept three-year pay deals at no more than 2.5% per year, not just
because inflation is already much higher than officially recognised
but because inflation is massively rising in these turbulent economic
times.

We cannot wait until the time of the next G8 summit (in Toyako ,
Japan , from the 7th to the 9th of July); the crisis is getting
exponentially worse and is unsolvable without overthrowing capitalism.
I have written two very important songs mentioning the food crisis;
recordings of both will soon be recorded by my new band Red Day:
“Radio Africa” (which may become a charity single) and “Global Warming
Bluff”. In the meantime, you can read the lyrics at www.red-day.net.

The food crisis impacts the other major crisis of capitalism – the
credit crunch. The problem to date has largely been of “subprime”
mortgages (particularly but not just those in the USA), with flexible
interest rates that massively increase after starting low, sold to
people with poor credit records. However, some commentators have
recognised that the collapse of the big US bank Bear Stearns shows
that there is a crisis with other mortgages (called “prime”) as well!

A BBC TV programme on the credit crunch pointed out that people got
caught out with subprime mortgages largely because mortgages are
usually a fixed rate for their entire term, unlike in the UK where all
mortgages have flexible interest rates that can be changed by banks
and building societies. With (real) inflation going through the roof,
many more financial institutions are bound to go to the wall.

Rather than just a slowdown, recession or slump, we are heading
towards a massive possibly terminal crisis of unethical capitalism
like in 1914. On that occasion, stock markets around the world were
closed for several months to avoid a complete meltdown.

There will need to be a complete reorganisation of the world economic
system to resolve the situation. Maybe there could be a more ethical
form of capitalism, in which I would argue that rich people must pay
their fair share of tax and there must be a fair electoral system as
well as there being ethical approaches to farming, the environment,
animals and poor people via fair trade. Maybe banks and building
societies would return to concentrating on savings and loans.

I would argue however that there should be genuine democratic
socialist societies, in particular countries if not throughout the
world. What happens will largely depend on what ordinary people
striving to change society do, as well as the effects of politicians,
stock market investors and big businesspeople. Economists can’t model
the free will of individuals, so their relatively optimistic economic
forecasts are largely speculative and will be proven false by events.


--
Steve Wallis (Glasgow, Scotland)
For important/urgent communications, please email:


Blogs: http://groups.yahoo.com/group/steve-...socialist-blog,
http://blog.myspace.com/galaxiasteve

My socialist website: http://www.socialiststeve.me.uk
My socialist musical poetry: http://www.socialiststeve.me.uk/poetry.htm
(and at my MySpace and Multiply pages)
My pages at MySpace: http://www.myspace.com/galaxiasteve, Facebook:
http://www.facebook.com/profile.php?id=731729407 and Multiply:
http://socialiststeve.multiply.com

Founder, Good Intentions Network: http//www.goodintentionsnetwork.org

Funder, Ethical Capitalism Network: http://www.ethicalcapitalism.org
Founder, Foundation for PR-based Socialism: http://www.PRsocialism.org
Founder, Revolutionary Platform Network: http://www.revolutionaryplatform.net

My socialist band, Red Day: http://www.red-day.net
Author, "Revolution Destroyed? Have I ensured that a world socialist
revolution will never happen?": http://www.revolutiondestroyed.net

For discussion of the credit crunch, go to
http://www.revolutionaryplatform.net....php?board=156