World Growth Can No Longer Explain Soaring Commodity Prices.
Jeffrey Frankel
Note: This post is from Jeffrey Frankel not Brad Setser.
It is hard to remember now, but mineral and agricultural commodities were considered passé less than ten years ago. Anyone who talked about sectors where the product was as clunky and mundane as copper, corn, and crude petroleum, was considered behind the times.In Alan Greenspan’s phrase, GDP had gotten “lighter.”Agriculture and mining no longer constituted a large share of the New Economy, and did not matter much in an age dominated by ethereal digital communication, evanescent dotcoms, and externally outsourced services.The Economist magazine in a 1999 cover story forecast that oil might be headed for $5-a-barrel oil.
Since then, of course, we have seen tremendous increases in the prices of most mineral and agricultural commodities, many of them hitting records in nominal and even real terms. Oil is now well above $100 a barrel, and gold has just crossed the $1000 an ounce line.
The question is why.
There could well be merit to many of the explanations that have been offered for the rise in the price of oil; one is the “peak oil hypothesis,” and another is geopolitical uncertainty in Russia, Nigeria, Venezuela and - above all - the Gulf. Corn prices have been impacted by American subsidies for biofuel. And other special microeconomic factors are relevant in other specific sectors. But it cannot be a coincidence that mineral and agricultural prices have risen virtually across the board. Some macroeconomic explanation is called for.
The popular explanation since 2004 has been rapid growth in the world economy. The strongest growth has of course been coming from China and other recently minted manufacturing powerhouses in Asia, but the expansion has been unusually broad-based - including up to last year the United States and even a reinvigorated Europe. So growth has pushed up demand for farm products, energy and other industrial inputs, right?
This reigning explanation now looks suspect. Since last summer the US economy has slowed down noticeably, and is probably entering a recession. Despite talk of decoupling, it is clear that other countries are also slowing down at least to some extent. In its most recent forecast, the IMF World Economic Outlook revised downward the growth rate for virtually every region, including China. The overall global growth rate for 2008 has been marked down by 1.1% (from 5.2 % in July 2007, just before the sub-prime mortgage crisis hit, to 4.1 % as of January 29, 2008). And prospects continue to deteriorate. Yet commodity prices have found their second wind over precisely this period! (Up some 25% or more since August 2007, by a number of indices. So much for the growth explanation.
How to explain commodity prices up while the economy turns down? I will offer my answer in my next posting here.
This post also appeared on Jeff Frankel’s Blog here.
“Foreign investors veto Fed bailout rescue”
Telegraph UK
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/17/ccview117.xml
“1:13pm GMT 17/03/2008 As feared, foreign bond holders have begun to exercise a collective vote of no confidence in the devaluation policies of the US government. The Federal Reserve faces a potential veto of its rescue measures.
Asian, Mid East and European investors stood aside at last week’s auction of 10-year US Treasury notes. “It was a disaster,” said Ray Attrill from 4castweb. “We may be close to the point where the uglier consequences of benign neglect towards the currency are revealed.”
The share of foreign buyers (”indirect bidders”) plummeted to 5.8pc, from an average 25pc over the last eight weeks. On the Richter Scale of unfolding dramas, this matches the death of Bear Stearns.
Rightly or wrongly, a view has taken hold that Washington is cynically debasing the coinage, hoping to export its day of reckoning through beggar-thy-neighbour policies.
The imminent risk is that global flight from US Treasury and agency debt drives up long-term rates, the key funding instrument for mortgages and corporations. The effect could outweigh Fed easing.”
Commodities may be the next bubble: They might be right.
But exploding commodity prices will not help. They’re not going to make housing more affordable because less of people’s paychecks will be available for mortgage payments.
This problem is going to run its course. There’s no bubble to bail out the housing bubble.
http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/FedsLatestGiveawayWontWork.aspx
Dr. Frankel — Many thanks for stepping in this week. I agree that a commodity rally while the largest single global source of demand (tho not necessarily the largest source of demand growth for some commodities) is slowing sharply is a major puzzle. The contrast with 97/98 is particularly interesting — that financial crisis was marked by record low not record high commodity prices.
Brad–recession in US can cause a drop of 2% in consumption but that’s just 15% of incremental demand. 85% of incremental is still there. That’s why oil price rise
bsetser-
Your analysis about commodity prices compared to U.S. demand growth makes some sense, but it neglects some crucial factors.
First, in most commodities, oil being almost the only exception,China is a dominant consumer. The is true not just regarding incremental demand change, but in absolute terms. It is also not only true in absolute terms, but very true in absolute terms; for many minerals, China consumes as much as the US, EU and Japan combined. Over the past decade, the US has been completely usurped as dominant consumer in the global commodities market. Particularly as China is responsible for the overwhelming share of incremental demand, and will be for the forseeable future, what happens to the US economy is not particularly relevant to most commodity prices.
Second, the commodity markets are likely not only factoring in change in actual demand, but changes in the real value of the USD. Inflation is accellerating globally, meaning that any real change in commodities’ terms of trade withtin the economy requires an even faster increase in price. Even more importantly, the depreciation of the dollar is increasingly seen not only to be a temporary shift in some exchange rates due to short term concerns, but a process of long term adjustment in the RER that will remove the dollar and ultimately the American economy from its long dominance.
While there probably is a great deal of speculative padding in commodity prices from money that has been fleeing other types of markets, the age of cheap commodities may be ending in light of the fact that commodities will for the first time since the industrial revolution be needed to support developed societies not only in the West but across the Earth.
If gold collapses there will surely be a liquidity crisis. The commodity cycle is being touted as a viable alternative to channel investment funds into. There is a tremendous amount of liquidity that doesn’t know what to do. Therefore move away from equities and real estate and jump into gold, coffee and sugar while it lasts.
the only thing the fed/dollar/treasury has is credibility; it’s been passé to say that currency denomination matters (that reserves matter more) but from a credibility standpoint they are largely interchangeable, if not one and the same — stocks follow flows (and valuation ‘adjustments’)…
for any system to work there must be (an agreed upon) accountability — or at least a framework for such — without accountability (if anything goes) the system falls apart; our postmodern system of finance is presently demonstrating a shocking lack of accountability and if the mythmaker of last resort is no longer to be believed — not enforcing an internally consistent myth for all participants (or at least the ones that matter) — then eventually it will be replaced by a system that does inspire credibility, one that enforces accountability…
in the end, of course, for the myth to be believed, it must also happen to be true, that is, empirically verifiable, and able to survive large heaping doses of reality…
Brad I couldn’t agree more. This is not demand driven.
I think blind ETF investing in Commodities and lack of regulation for electronic markets are key items contributing to this incredible run-up.
For agricultural commodities I wonder how much fallow land will be put into production at the current high prices this year globally.
Demand will be going down globally based on prices and the economy; this is certain.
Copper has been designed out of most applications (e.g., plumbing) because of the current prices and replaced with oil based plastics largely. Copper is the one that doesn’t seem to make sense to me.
Anyway, thanks again for your timely analysis and broad macro views.
The recent wheat debacle at MF Global tells you what you need to know about this commodity market- despite the real fundamental bullish drivers for commodity prices, in many cases speculative cupidity/stupidity has completely divorced many of these prices from whatever intrinsic value they possess.
As a couple of posters have observed above, this bubble will ultimately end like previous bubbles, including previous commodity bubbles, have ended- with a loud POP. As ever, the trick will be in the timing…as a financial market participant, I can only hope that this bubble pops when policy conditions are being tightened; if it pops even as policy is being eased, that does not bode well at all for the world’s financial system.
“…Commodity derivatives rose fivefold over this period to $7 trillion, reflecting the increased interest in commodities as an alternative investment…” http://www.ifsl.org.uk/uploads/CBS_Derivatives_2007.pdf
When currencies are not currencies anymore (read shadowstats on REAL interest rates offered), commodities can be.
Of course for a short period of time. Paper money is not to be trusted as currency when under bankers’ supervision.
Except fo gold and a few others, commodities are of course not better currencies.
But when currencies are deliberately run into a mess, they can be used as a temporary store of value until the havoc is cleared.
Beware that this is may well be the final stage for the currency at stake…
commentators — please note, this post was from Jeff Frankel of Harvard, not me!
Yes. Hunger alone, does not drive up the price of food. There’s got to be some economy linked to the hunger for that to happen.
So, the speculative nature of investors, the ever-attractive illusion that supply & demand actually determines the true value of things, is what ultimately causes bubbles. The commodity price bonanza is surely no exception. At some point even the price of oil is bound to come craching down.
“…since September 2003, the total number of open crude oil futures and options contracts rose by 364%. Meanwhile the global demand for petroleum rose by just 8.2%… higher oil prices contribute to higher inflation, which in turn lowers the value of the dollar, which boosts oil prices, and so forth. In other words, the oil market is coming to resemble the gold market… Evans notes that most gold traders don’t even ask the question of how much gold was mined last year or how much spare gold mining capacity there is…” http://reason.com/news/show/125414.html
How about a hedge to the falling dollar explaining the last surge (which I agree cannot be explained by fundamentals alone)?
“…oil prices may be peaking as growth slows. The median forecast of 34 analysts surveyed by Bloomberg is for the dollar to gain about 10% against the euro this year and 8% versus the yen… in the second half of 2008. “If [when] the U.S. dollar turns higher or if [and] the crude oil market reverses then we have a spiral working the other way,”…” http://www.bloomberg.com/apps/news?pid=20601109&sid=afkthYhzZ5a8&refer=home
An informed rumor has it that the US has lost its political influence over Japan. Treasury Secretary Paulson’s visit a few months ago didn’t seem to lead to any help for Citigroup, and they haven’t been especially visible in the patching of holes in the the last few weeks. Japan is refusing to contribute a dime to the recapitalization of the US banking system. The Japanese MOF must have concluded that the US Banking mess is beyond Japan’s financial capacity. Maybe the Japanese have it figured that China will be the dominant military and financial power in the Western Pacific as the world existed 200 years ago.
Japan are not particularly fond of the current U. S. administration for a variety of reasons.
japan doesn’t seem to have much love for china - and confirmed reports indicate china may be loosing control of itself, but apart from the fact the riots seem to have been sparked, in part, by food prices, what do your comments have to do with the topic?
Anonymous,
I have to disagree with the Western public on Tibet. It’s not the commies fault this time. The minorities that the Chinese put in the reservations (Uighars) are similar to the redskins the Americans place in their reservations. Every attempt to boost their economic status and education level has been stymied by “cultural differences” - read: inbred stupidity and laziness. They just plain refuse to be uplifted. This is also the case with the Tibetians. They’re so “enlightened” they’re constantly in squalor, preferring religion to entrepreneurship. But then they get upset at the people who came in and opened the shops making money. Never mind the shops supplied them with modern needs. Never mind that they didn’t want to open the shops themselves in the first place. And now they’re crying about migrants stealing their scarce jobs. But then they don’t have the skills for these jobs - modern education went against their religion.
“the age of cheap commodities may be ending in light of the fact that commodities will for the first time since the industrial revolution be needed to support developed societies not only in the West but across the Earth. ”
“hunger alone does not drive up the price of food.” (comment above) there is wisdom in that. check it out - what was the price of potatoes in the irish potato famine ?
so will oil be cheap or dear in the future ? one possibility is that it will be cheap - but you will not be able to afford it . . .
rumour has it that mr secretary paulson invited the japanese to another get together in the plaza hotel, new york.
his hosts bowed deeply and informed him that regretfully this was off-topic.
.
Dr. Frankel,
This seems a little too obvious: Measure global M2 relative to global GDP. M2 has grown in the 15-18% range in China in recent years, faster in Russia, Japan’s been cranking it out liberally for years, & the US has tended to grow M2 about twice as fast as GDP over the past decade.
Commodity prices tend to be a prelude to consumer prices.
Not sure why you question performance in the rear view mirror with forecasting through the windshield.
Plus the kids in the back seat are only just getting tired playing with their ETFs.
Algernon,
Please check your facts…
The 40 quarter i.e 10-year moving average of US M2 growth is a relatively pedestrian 5.4%. This compares to average nominal GDP growth of 5.7% over the last decade. For the record, real monetary base growth (for now at least) is currently falling in the US. Apart from in the aftermath of Y2K, it hasn’t done this since the early 1960s.
I also find it interesting that you compare US M2 growth to GDP but do not bother to do so in China. Given nominal potential Chinese GDP growth is probably in the region of around 15%, Chinese money supply growth has hardly been excessive.
Broad money growth in Japan over the last decade has also been moribund…..
The Eurozone is actually the economy with the fastest broad money growth
“…China consumes as much as the US, EU and Japan combined. Over the past decade, the US has been completely usurped as dominant consumer in the global commodities market.”
True fact but misleading. What you are missing is that China acts as a pass-through country, where they import commodities for manufacturing for export to the US, Japan, and EU. A fairly small percentage of this is actually “consumed” in China. This is a big part of the reason why China and SE Asian economies won’t de-couple from the US and EU when our economies sink.
If we aren’t consuming, they aren’t manufacturing and using as many commodities… What do you suppose that will do for prices?
Commodity prices going up is a good thing for the global economy. When they start crashing, that is a major problem. In the US, 1 million plus jobs will be wipped out and further financial turmoil will commence. I am seeing signs a crash may be near.
I can tell you from direct experience, The ag boom is a twin of the housing boom. You know what that means and our sector doesn’t crash at snails pace either, it will be fast and furious.
The statistics that Milton Keynes supplies are correct and raise an important point: While financial conditions seem loose by many indicators (real interest rates, credit growth), monetary aggregates show a very moderate behaviour.
Are narrow money aggregates (M1, M2) useful? Do they really reflect monetary conditions? They are useful and important indicators, but should not be relied upon exclusively. The reason why the Volcker Fed ended up abandoning them as a guide for policy is the same reason for which they do not really give a complete picture of real monetary conditions: With financial innovation, much of what serves as money is actually outside M2 (or even M3).
I suggest looking at credit growth as a better proxy, although also incomplete. The data are excellently presented at the St Louis Fed:
http://research.stlouisfed.org/fred2/fredgraph?chart_type=line&s1id=LOANINV&s1transformation=ch1
Credit growth has been growing and is, even in today’s difficult times, growing at around 10%. Not hyperinflationary, but enough to make the dollar lose significant purchasing power, especially in asset markets.
I eagerly await Mr. Frankel’s next post.
I believe a major factor in the commodities markets bonanza is speculative investment using tangible commodities as temporary (but risky) inflation hedges or just ‘jumping the bandwagon’ in a migration of liquidity from other markets.
I doubt very much that commodity prices will crash. Everything is tied to oil and energy: from cabbages to cars, from getting minerals out of the ground to transporting them around the world. Actual production is rather flat; infrastructure is aging. Getting it out of the ground is increasingly expensive.
gillies, I think, has a point. Increasing population with increasing expectations…
At the same time, I do not sense that anyone is talking with anyone else about the magnitude of the problems we are facing. China wants 10% growth at all costs…Saudi’s are stingy with their oil….investment goes willy nilly everywhere with little oversight and less common sense….no agreement on currency exchanges…developing countries with huge reserves fed the U.S. appetite for inflows in exchange for buying their goods and keeping their currency cheap. Trade is becoming a one-way street.
With a global economy, the parts have to work smoothly; right now it seems like the last frontier, both in the U.S. and elsewhere.
“…As commodity prices rose, China, India, Argentina, Russia, Iran and others rushed to cap retail energy prices to protect their economies. This “twin peg” of forex and domestic fuel prices has been the main source of oil demand growth and price appreciation in the past four years… World commodity prices - mainly oil - have been the main mechanism of adjustment in the face of pegged currency and domestic commodity price regimes. This system of artificially capping both exchange rates and commodity prices cannot go on forever, and emerging markets inflation is rising rapidly…” http://www.ft.com/cms/s/0/ce7415d8-bf1d-11dc-8c61-0000779fd2ac.html
“A new breed of commodities indices is making the sector look a lot more like hedge funds. Departing from their traditional long-only approaches, [these indexes]… have added a short-selling component. “The move is trying to capture some of the asset flows currently going to multi-strategy commodity hedge funds while starting to realize that some commodities are approaching overbought conditions,” Olivier Jakob of Petromatrix, an oil consultant, explained… It also appears to be a strategic decision as institutional investors that have been exposed to commodities for years have expressed a desire to hedge against inflation and to find new ways to diversify as a counterbalance to their stock-heavy portfolios… analyst Michael Jansen of JPMorgan said… “…when the market gets some form of cyclicality, volatility and maturity, long/short indexes will give exposure on the way down.”…” http://www.emii.com/Article.aspx?ArticleID=1891574&LS=EMS168410
Commodity prices are rising for a number of fundamental reasons, many mentioned above.
But they’re also rising because of the large amount of investable funds out there looking for a home.
What paper asset do you trust to hold value over the short-medium term? US bonds prices are sky high, stocks seem wild overvalued given earnings going forward into a recession with a tapped out consumer and a falling dollar. Global coupling makes much of the same assets in international markets scary. Real estate? Ha!
So where else to put investable dollars?
Milton & Mick
Eyeballing the St. Louis Fed’s charts, it appeared to me that M2 growth over the last decade was about 7%. I was thinking real GDP growth was about half that over the last 10 years. But I was speaking from the cuff & defer to your certainty.
Does MZM growing currently at 16.5% give anyone pause? I don’t know what the optimal measure is. But I deduce from the severely negative real interest rates at all maturities (exacerbated further by taxes), that huge amounts of money are being lent that have never been saved but rather created out of thin air.
No conundrum here: The Chinese economy has expanded by 11.4% over the past year, and Chinese economic growth is much more energy-intensive (and resource-intensive in general) than that of OECD countries. China’s crude oil imports rose 12.3 percent in 2007. India goes second place, though at a distance.
This issue was covered in the presentation at ASPO USA 2007 by Dr Vincent Matthews, Director of the Colorado Geological Survey:
http://www.aspousa.org/proceedings/houston/presentations/Vince%20Matthews%20China%20India1.pdf
And also by IEA chief economist Fatih Birol in his Nov 26 presentation of the World Energy Outlook 2007 to the CFR
http://www.cfr.org/publication/14888/world_energy_outlook_2007_rush_transcript_federal_news_service.html
“on the demand side, we see that the — China and India are transforming our energy markets by their sheer size. I’m going to give you some numbers about our projections for the future, but if you don’t believe our projections, which is completely legitimate — (scattered laughter) — you will see that in the last two years about 70 percent of the growth in global oil demand came from China plus India. About 80 percent on the global coal demand (growth, see below) came from these two countries”
“If you ask me, what is the most critical number assumption, I would tell you it is the pace and the nature of the Chinese economic growth. So it’s not only for our book, but for the oil markets, for climate change. It is very important how much China will grow and what kind of growth prospect they are going to follow.”
“China, according to our projections, will overtake the United States around 2010 as the largest energy consumer of the world. And just to put things in context, only in 2005 — two years ago — the U.S. was using 25 percent more energy than China. In around 2010, China will be overtaking the United States. And about 45 percent of the growth in the global energy demand will come from China, plus India. More than 80 percent of the growth from coal will come from these two countries.”
About energy and China, there is also an Oct 2007 report by Malcolm Shealy and James P. Dorian of CSIS, titled “Growing Chinese energy demand: is the world in denial?”
http://www.csis.org/component/option,com_csis_pubs/task,view/id,4150/
About the food situation, this recent article from Ban Ki-moon is eloquent
http://www.washingtonpost.com/wp-dyn/content/article/2008/03/11/AR2008031102462.html?hpid=opinionsbox1
while this FAO page give insight on specifics
http://www.fao.org/docrep/010/ah881e/ah881e04.htm
Finally, here’s my own contribution connecting energy, food, and the US current account balance: turning an ever greater share of US corn to ethanol (and then soybeans to biodiesel) can easily cause in a few years the halving of US agricultural exports in volume and their doubling at least in dollars (i.e. at least quadrupling agricultural prices). That will substantially reduce the US current account deficit and give the US a significant strategic advantage.
The US has certainly the right to follow that path. But they also have the duty to tell the world openly that they will do it. Like: “Along the coming years and decades our food exports will become progressively lower in volume, and the same will probably happen to total world food production. It is likely that they could be half their current volume in 10 years. People, and particularly poor people, should have it in mind when making procreation decisions.”
Dropping a nuke on a city is not genocide if its dwellers are given a week’s notice.
Milton Keynes; any stats for money growth in the UK?
The telegraph article quoted by one of the commentators should have also noted the curbing of Bernanke’s ability to print ($) his way out of the mess, but it doesn’t quite explain the irrational highs of the euro and pound. Could we see a roundrobin on the part of both currencies in the near future?
That commodity prices, in the long run, are on an upward trend is a no brainner , but what could manifest itself as a blip in this graph could be the unrealistic runup in recent weeks which will probably cause profit taking and intervention to reduce the impact of speculation. As some commentators have noted, some funds seem to have no where else to run but commodities but unless they’re willing to hold gold or cash whatever the downside may be, there could be little protection when the spiral becomes unstoppable in credit and equity markets.
I want to reiterate that a major retreat in the price of gold could be a major headache within this environment.
Especially a retreat of up to 50% from these levels.
Gold is rapidly becoming a speculative bubble.
Reallocation towards commodity paper began so early as 2002 but not until moreless later 2005 did the long-onlys begin piling in, or, as Alan Heap put it in early 2006:
“A flood of investment funds is driving..prices much higher than can be supported by fundamental analysis of supply and demand. It’s a bubble which could grow a lot bigger before bursting.” And so it has, ‘grown a lot bigger’.
I’m always amazed that so many have bought the global growth story and/or neo-malthusian ‘running out of…’ story, but then there’s reciprocal justification between these and the assorted ‘green investment’ stories, which only require such support to the extent they can’t stand without subsidies and spec flows. The whole process became, like any mania, self-fullfilling and self-justifying. Likely sooner than later a number of folks will discover just how rapidly these markets can correct.
Anonymous,
Beyond oil is the pollution now befouling the planet. Small bio-crashes are happening with regularity: fisheries in the Chesapeake, salmon runs in the Northwest; ocean going fish factories, scouring the bottom, deeper and wider than before. Even blue fin tuna are endangered. Stresses appear everywhere in the food chain. Each time one occurs, we accommodate…look elsewhere. Some scientists rush in with rescue suggestions; but most of the damage has already been irreparably done. We move on to something else, rarely learning anything. Like locusts, we thoughtlessly devour. Only recently has the idea of sustainable development received any real notice. Only recently, have we begun to consider the real cost of each resource. How renewable is it? If it is renewable, how can we keep it so? If it is not renewable, how do we allocate it—or chose wiser alternatives when we can.
I watched the watermen of the Chesapeake fight any and all regulations. As the blue crabs dwindled, they increased the number of their pots…or the length of their trotlines. Meanwhile, sewers and farm run-offs created larger and larger dead zones. Now, for all intents and purposes, the Chesapeake is no longer a rich, productive estuary: Over harvested and despoiled. The watermen I knew have left. That estuary is just one small part of the planet, but its experience is being repeated across the world.
Beyond all this is population growth. According to the U.N., in 2000, we were adding about 78 million people per year to the planet. Between 2000 and 2008, we must have added at least the equivalent of one United States. By 2025, we will have 8 billion people. The stress on the environment and on resources will be enormous.
Yes, fertility rates are falling in developed countries, but they are not negative. Our percentage of the world’s population will fall, but the actual population of the world is increasing.
The stress of our sheer numbers is already being felt.
Hallo
ft.com has some numbers
1. value of equity maket: 10x value of commod. derivatives
2. speculative trading in commod.: >1/2 of all tradings
3. globale slowdown + CN tigthening(inflat.)= globale demand goes down
4. US/Westeuropa = 47% of world GDP -> to equalize slowdown in Westworld consumption, needs 3%-4% growth in in Restworld
5. 1/2 of CN comm. import is passage (net export brings >2/3 to CH GDP growth
6. globale slow down + 8% CN econ. growth (down from 11%) -> significant surpluse in commod.
7. ==>oil goes down 30%, industry metals goe down 20%-30%
ft.com: Commodities: The big fall is coming…
http://ftalphaville.ft.com/blog/2008/03/18/11652/commodities-the-big-fall-is-coming/
globumedes
modern technology and ingenuity continue to conquer constraints and facilitate increases in productivity and opportunities for income diversification:
“…valued at $4bn in 2001. It is now worth one-third more, according to most estimates, which means it accounts for more than 5% of the province’s GDP… “… in the Slocan valley, I reckon between half and 70% of the households will be involved… Inside the two sea containers, hundreds upon hundreds of freshly planted cannabis saplings are starting to crane towards the equally numerous halogen lamps. This facility also has a system of CO2 injections… you can double the yield and beyond.”…” http://books.guardian.co.uk/extracts/story/0,,2265967,00.html
Stormy,
Nothing I said deny’s the realities of species’ die-offs which have been taking place, studied and overstudied for years now (there may be a bubble in grants?). What is called into question is the actual potential for this to be overcome, at least mitigated, by the same system which generated the problems in the first place and, as part of this, an ideological project which helps support speculative flows into commodities.
Any demographic argument which fails to consider the uneven quality of development on a world scale fails as an argument. Put very simply, poverty produces people. Decade by decade world GDP growth rates, 1970-1999, have been more indicative of undevelopment than the contrary. To fall back into Malthusian-type ‘explanations’ is no more than a generally unconscious attempt to excuse long-run systemic problems.