From Volume 5, Issue Number 6 of EIR Online, Published Feb. 7, 2006

World Economic News

Hyperinflation Shockwave Continue To Hit Commodities

More wild inflation is reported across the board in industrial commodities, and would explode with the aid of another war. In every case, the details of these sharp increases involve hedge funds pouring into commodity sale and trading companies, and also hedge funds getting "caught short" in speculations, further driving the prices up as they unwind those short positions.

Aluminum is at an all-time record, nearing $2,600/ton, a 55% increase from the $1,700/ton price one year ago, at the beginning of 2005. This is another case, like copper, where it is as clear as day that if free-trade supply-and-demand were real, this price would be going down, not shooting up. "Nick Moore, base metals strategist at ABN Amro, said the rise in the aluminium price did not fully reflect the fundamentals," the London Times drolly noted Feb. 1. "He pointed out that stockpiles of the metal had been rising, with LME aluminium inventories at a 13-month high of 710,000 tonnes following three months of strong rises. Global aluminium output was a record 31.5 million tonnes in 2005, up 6.8 per cent. World demand has been flat."

Other examples: Copper: the three-month London Metals Exchange price touched a record $4,881.50 a ton, up another 25% in two months. Zinc: hit a new record of $2,353 a ton. Tin: up 20% in January alone at a record $7,875 a ton. Coal: up from $35/ton in early 2004 to $65/ton now. Iron: global price rose 71% in 2005. Steel prices have been rising steadily since late 2004.

Not to mention gold.

France, Luxembourg Move To Block Mittal Hostile Takeover

On Jan. 27, Mittal Steel, the company owned by asset-stripper Lakshmi Mittal, launched a $22.8 billion (18.6 billion euro) hostile takeover bid for the Luxembourg-based Arcelor, the world's second-largest steel producer (formed formed years ago by the merger of three steel companies: Luxembourg's Arbed, Spain's Aceralia, and France's Usinor). On Jan. 29, Arcelor's board of directors rejected Mittal's hostile offer.

On Jan. 31, Jean-Claude Juncker, Luxembourg's Prime Minister, told his country's Parliament, "I am determined—as is the government—to do everything to preserve everything that we have worked for and that we believe in ... by using all necessary means to fend off the hostile takeover." Arcelor is Luxembourg's largest private employer, employing 6,000 workers in four different locations. Mittal is notorious for firing workers and looting, and this takeover would be a leading feature of an effort to rationalize world steel production.

Arcelor CEO Guy Dolle asserted, "We are solid; we are in it for the long haul, and we've been preparing for this attack since last spring." He added that Mittal's French steel plants suffer ten times the number of accidents as Arcelor's.

French Finance Minister Guy Bretton informed the French Parliament Jan. 31, "I have seen many operations like these in my life. I would like to tell you that it is the first time I have seen one that appears to be so badly prepared."

UN Development Program Offers New Plan for Third World Looting

Presented at the World Economic Summit in Davos, Switzerland at the end of January by UN Development Program chief Kemal Davis, a book titled New Public Finance offers new ideas for enslaving and looting developing nations as a means of extracting the proverbial blood from a stone—all posed as a means to "break the cycle of underfunded and inadequate responses to global problems." Example: sell hedging instruments to developing nations against speculators; set up "pollution permits" which can be traded, so poor countries can sell their pollution allotment to the rich countries; securitize remittances from the growing armies of overseas workers (which are now being wasted by the workers' starving families buying food and the like) to guarantee new national debt, and securing new debts "against the income from stable parts of their economies."

Former World Bank chief economist Joseph Stiglitz, who presents himself as the defender of poor nations against globalization, said that the "landmark text provides the important beginnings of a field that will be tilled for years to come." Gordon Brown, British Chancellor of the Exchequer, praised the scheme as an extension of his International Financing Facility.

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