NightBlogger

Baton-wielding Zimbabwean riot police broke up a demonstration by doctors and nurses protesting against the collapse of the country’s health system on Wednesday, while scores of trade unionists were arrested ahead of marches over the cash crisis. The country’s economy has been collapsing for several years, but now appears to have reached a stage where hardly a day passes without some new example of the consequences. Three journalists, two from the Zimababwean weekly, The Independent, and one from the South African Broadcasting Corporation, were arrested as the demonstrations began. More

In recent weeks, a series of riots across central and southern China have flowered as disgruntled employees aired their grievances at the downturn. Today, around 500 protesters rioted at the Kai Da toy factory in Dongguan in the Pearl River delta, flipping over a police car and trashing computers in a dispute over payoffs to 80 fired workers. Tens of thousands of factories across the region have already shut their gates. Yin Weimin, China’s Social Security minister, has revealed that employment is the Communist Party’s number one concern in the downturn and said the “situation is critical”. Unemployment is expected to rise from 4pc to 4.5pc by the end of the year and anecdotal reports have suggested that 3m people have already been fired in the industrial province of Zhejiang alone. Two major provinces, Shandong and Hubei, have already responded by banning companies from firing staff without permission from the government. More

Food prices will rise next year, prompting a revival of protectionism from food-growing nations and risking a renewed bout of rioting, according to Jochen Hitzfeld, an analyst at UniCredit SpA in Munich. “Agricultural commodities will outperform the broad commodity indices in 2009,” Hitzfeld wrote in a research note this week. “If key crop-producing countries then impose export bans again and speculators drive up prices via physical stockpiling and futures contracts, new food unrest is even conceivable in the second half of 2009.” The CHART OF THE DAY shows food prices for the past 10 years as measured by an index compiled by UBS AG and Bloomberg that tracks at least 13 foodstuffs, including wheat, soybeans, sugar, cocoa and coffee. The index has declined 35 percent since peaking in July. More

The Washington Post says,
After decades of solid economic growth, China is battling an unknown as falling demand for its products triggers factory closures, sparks protests and raises fears of popular unrest. Rioting involving thousands of people exploded on Monday in Wudu, in Gansu province’s poverty-stricken region of Longnan, where 1.8 million people were made homeless by the May 12 Sichuan earthquake. After decades of solid economic growth, China is battling an unknown as falling demand for its products triggers factory closures, sparks protests and raises fears of popular unrest. The Longnan rioting follows a number of strikes by taxi drivers and labor protests in the country’s major export regions, where thousands of factories have closed in recent months, prompting fears the global financial crisis could stir wider popular unrest. More

The protest comes on the heels of a strike in the same city by 9,000 taxi drivers earlier this month over rental fees and fuel shortages. Disgruntled drivers smashed more than 100 cabs and three police vehicles. The protest also prompted several hundred drivers in other parts of the country to take similar action over unlicensed competition and high fees. The unrest highlights the increasing anxiety felt by many workers over their incomes and job security as the Chinese economy slows. News about the global financial crisis and plunging markets is also adding to concerns. More

The government said the protest was triggered on Monday by about 30 people whose houses had been demolished to make way for a new government building, in an apparent typical “land grab” case that often leads to protests in China.

The government said…I don’t believe in what governments say. You can bet China is coming apart at the seams with massive civil unrest from factory closing and layoffs.

BEIJING (AFP) — Security forces in northwest China used tear gas to quell two days of violent protests by thousands of people who used axes, chains and iron bars to attack police, witnesses and officials said on Wednesday. At least 60 people, including police and officials, were injured during the riots, according to a statement on the government website of Longnan city in Gansu province, where the violence occurred. “Protesters used iron rods, chains, axes, hoes… to attack officials and policemen at close proximity,” the statement said. They also threw stones, bricks and flowers pots at the officials and police in front of the local government building, and attempted to hijack a fire truck that came to put out a blaze they started, according to the statement. More

London Banker
Systemic Risk, Contagion and Trade Finance…
Letters of credit have financed trade for over 400 years. They are considered one of the more stable and secure means of finance as the cargo is secures the credit extended to import it. The letter of credit irrevocably advises an exporter and his bank that payment will be made by the importer’s issuing bank if the proper documentation confirming a shipment is presented. This was seen as low risk as the issuing bank could seize and sell the cargo if its client defaulted after payment was made. Like so much else in this topsy turvy financial crisis, however, the verities of the ages have been discarded in favour of new and unpleasant realities.

The combination of the global interbank lending freeze with the collapse of the speculative, leveraged commodity price bubble have undermined both the confidence of banks in the ability of a far-flung peer bank to pay an obligation when due and confidence in the value of the dry cargo as security for the credit if liquidated on default. The result is that those with goods to export and those with goods to import, no matter how worthy and well capitalised, are left standing quayside without bank finance for trade. Adding to the difficulties, letters of credit are so short term that they become an easy target for scaling back credit as liquidity tightens around bank operations globally. Longer term “assets” – like mortgage-back securities, CDOs and CDSs – can’t be easily renegotiated, and banks are loathe to default to one another on them because of cross-default provisions. Short term credit like trade finance can be cut with the flick of an executive wrist.

Further adding to the difficulties, many bulk cargoes are financed in dollars. Non-US banks have been progressively starved of dollar credit because US banks hoarded it as the funding crisis intensified. Recent currency swaps between central banks should be seen in this light, noting the allocation of Federal Reserve dollar liquidity to key trading partners Brazil, Mexico, South Korea and Singapore in particular. Fixing this problem shouldn’t be left to the Fed. They aren’t going to make it a priority. Indeed, their determination to accelerate the payment of interest on reserves and then to raise that rate to match the Fed Funds target rate indicates that the Fed are more likely to constrain trade finance liquidity rather than improve it. Furthermore, the Fed may be highly selective in its allocation of dollar liquidity abroad, prejudicing the economic prospects of a large part of the world that is either indifferent or hostile to the continuation of American dollar hegemony.

If cargo trade stops, a whole lot of supply chain disruption starts. If the ore doesn’t go to the refinery, there is no plate steel. If the plate steel doesn’t get shipped, there is nothing to fabricate into components. If there are no components, there is nothing to assemble in the factory. If the factory closes the assembly line, there are no finished goods. If there are no finished goods, there is nothing to restock the shelves of the shops. If there is nothing in the shops, the consumers don’t buy. If the consumers don’t buy, there is no Christmas. Everyone along the supply chain should worry about their jobs. Many will lose their jobs sooner rather than later.

If cargo trade stops, the wheat doesn’t get exported. If the wheat doesn’t get exported, the mill has nothing to grind into flour. If there is no flour, the bakeries and food processors can’t produce bread and pasta and other foods. If there are no foods shipped from the bakeries and factories, there are no foods in the shops. If there are no foods in the shops, people go hungry. If people go hungry their children go hungry. When children go hungry, people riot and governments fall. More

mainichi.jp
Egyptians are living through the worst food crisis in a generation, caught in a storm of stagnant wages, rising global food prices, rampant corruption, and a quickly advancing inflation rate that hit 16.4 percent in May. The price of basic commodities like bread, wheat, rice, and cooking oil has doubled since this time last year – prompting bread riots.

The riots are why Egyptian President Hosni Mubarak was a featured speaker among 40 government leaders at the three-day UN food summit that concluded Thursday in Rome. Mr. Mubarak called for an end to subsidies for biofuels because they are creating a “hazardous distortion to the present system of agricultural trade.” More

Photo babasteve
Jeffrey N. Wasserstrom
Two thousand and eight was to have been an auspicious year for China. But the year has been anything but. In January, a wave of polite demonstrations over planned urban development washed over Shanghai. Then freak snowstorms left 200,000 citizens stranded and angry over the government’s failure to deal with the emergency. Next, demonstrations and riots broke out in Lhasa, Tibet’s main city, and beyond. The flame of the Olympic torch relay was nearly doused by international protests and threats of a boycott. And now the catastrophic Sichuan earthquake has claimed as many as 80,000 lives, rendering millions homeless and raising fears of significant damage to the country’s infrastructure.

And it’s only May. No matter what happens next, 2008 is shaping up to be one of the most eventful and tragic years in recent Chinese history. And the way the Chinese people and the Communist Party leadership have risen to meet these unforeseen events challenges us in the West to rethink our often distorted view of China. Here are five lessons that are emerging: More

Photo nukeit

“I don’t want to alarm anybody, but maybe it’s time for Americans to start stockpiling food.
No this is not a drill.” –Brett Arends

CounterPunch
There is a time for food, and a time for ethical appraisals. This was the case even before Bertolt Brecht gave life to that expression in Die Driegroschen Oper. The time for a reasoned, coherent understanding for the growing food crisis is not just overdue, but seemingly past. Robert Zoellick of the World Bank, an organization often dedicated to flouting, rather than achieving its claimed goal of poverty reduction, stated the problem in Davos in January this year. ‘Hunger and malnutrition are the forgotten Millennium Development Goal.’

Global food prices have gone through the roof, terrifying the 3 billion or so people who live off less than $2 a day. This should terrify everybody else. In November, the UN Food and Agricultural Organization reported that food prices had suffered a 18 percent inflation in China, 13 percent in Indonesia and Pakistan, and 10 percent or more in Latin America, Russia and India. The devil in the detail is even more distressing: a doubling in the price of wheat, a twenty percent increase in the price of rice, an increase by half in maize prices. Read more

Photo Belltown

Conservative talk show host Rush Limbaugh has again sparked controversy by saying he was “dreaming of riots in Denver” during the Democratic National Convention. “Riots in Denver, the Democrat Convention would see to it that we don’t elect Democrats,” Limbaugh said during his radio show on Wednesday. He prodded his listeners to help make that a reality. In response to a caller on Thursday’s program, Limbaugh said, “Who wishes for riots?” Limbaugh said that on Wednesday’s program he was responding to comments made by the Rev. Al Sharpton who warned of “trouble” at the convention if Democratic superdelegates decided to nominate Sen. Hillary Clinton over Sen. Barack Obama.
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Photo courtesy of StormyDog

As farmers confront mounting costs and riots erupt from Haiti to Egypt over food, farmers pay the price for Wall Street’s speculation in grain markets. “It’s the best of times for somebody speculating on grain prices, but it’s not the best of times for farmers. The demand for futures exceeds the demand for cash grains.” Commodity investors control more U.S. crops than ever before, competing with governments and consumers for dwindling food supplies. Demand is rising with population and income gains in Asia, while record energy costs boost biofuels consumption, sending grain inventories to the lowest levels in two decades.
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