Money for nothin’ (but chickens aint’ free)
Patrick Ferguson, The [Mexico City] News:
MEXICO CITY – Mexico’s international reserves increased by $1.41 billion in the week ending on Aug. 24, reaching a record-setting $161.2 billion, reported the country’s central bank (Banxico) on Tuesday.
Mexico’s reserves have increased 13 percent, or $18.73 billion, this year. In the past, the reserves have helped Mexico control inflation. In June, the peso weakened to more than 14 pesos to the dollar. Although Mexico’s annualized inflation rate is currently at 4.45 percent, over Banxico’s target rate of 3 to 4 percent, Banxico is not expected to act. Banxico Governor Augstin Carstens has said that the recent increase in inflation is only temporary, and will die down after the bird flu dissipates.
One assumes it’s a good thing that there are healthy foreign reserves… and I’ll take Sr. Carstens’ word for it that the inflationary pressure is only temporary… and he’s paid very well (and does a very good job) of thinking in the long-range.
As Hank Williams (or was it John Maynard Keynes?) said, “In the long run we’ll all be dead” anyway, and without some relief in food prices a lot of us could be dead. Or, the “stability of the markets” might not mean a hell of a lot when there is instability in the streets.
I can see where egg and poultry prices would jump because of avian flu, but avian flu has only been a very recent factor, and food prices have been jumping since 2006. With the salario minimo kept artificially low (ideally, it would have the same purchasing power it did back in 2006) it’s no longer a matter of substituting one product for another, but of buying anything to eat at all.
And without some relief… even it it meant cutting into reserves and massively intervening in the food sector, this can’t go on much longer. While I’m hearing more and more stories of people only having beans and tortillas to eat, even those of us with relatively middle-class incomes are feeling a squeeze.
I’m talking about people who shop in supermarkets, but are buying less and less… and maybe eating less and less, too. What happens to the national productivity if middle-class people like myself put more of our working days into raising a few hens in the backyard? Egg prices are nuts: up to 60 pesos for three dozen here in Sinaloa — more than a salario minimo — which is what a family of four might go through in a week, especially if they can’t afford much else in the way of animal protein right now. And, seriously… what happens to the supermarkets and the suppliers and the banks and everyone else when are spending only on essentials?
Perhaps, as Trotsky pointed out, the comfortable seldom rebel… but these food prices are making people damned uncomfortable.