Global Economic News

Food Hyperinflation Is Murdering East Africans

July 24 (EIRNS)—Genocide by starvation continues to unfold across Africa. British-directed Malthusian policies have put over 15 million East Africans at risk of "severe hunger and destitution" within months, an Oxfam press release states today. Cost of food has risen "500% in some places," causing "utter destitution," said Oxfam's Rob McNeil, who just returned from Somalia. Drought, spiralling food costs, and fuel shortages have added to the fragile existence of Africans who have been denied the technology and infrastructure to make their nations food self-sufficient.

This preventable disaster underscores the need for all concerned to support Helga Zepp-LaRouche's call to double world food production, issued in May 2008. "Humanity is in mortal danger!" she warned.

McNeil found that the cost of imported rice to Somalia soared 350% between January 2007 and May 2008. All the Horn of Africa countries—Kenya, Ethiopia, Somalia, Eritrea, and Djibouti—are desperate. Incredibly, however, McNeil called it a "catastrophe in the making," which if acted on could be prevented from becoming "a reality." But, the catastrophe is already here: He belies his own statement describing a road "littered with dead livestock" and people grinding "food pellets intended for their animals" to make "porridge to feed their families," SkyNews.com reports.

A few examples suffice to show the extent of the genocide:

Ethiopia: More than 10 million people, 12% of its population, need food aid—a doubling since January. Of these, 4.6 million people require emergency food aid, while 5.7 million who are in safety-net programs need additional food to survive until the November harvest. Among the 10 million are 75,000 children with acute malnutrition. The country has already used up its emergency cereal reserves to feed its urban poor. The price of wheat doubled here in six months.

Extreme drought has made survival worse: "Ethiopians are waiting for rain—or death," a BBC correspondent said.

Somalia: 2.6-3.5 million people, 35% of its population, require food aid. The price of rice has tripled in one year, since May 2007. Acute malnutrition of children has risen between 18% and 24% in some areas, well above the 15% deemed an emergency. Desperation has led to five food aid workers being killed, as militias maraud for food supplies in recent months.

"Disaster similar to the 1992-1993 famine when hundreds of thousands of people perished," could engulf areas of the country in months, Peter Goossens of the World Food Program (WFP) told a news conference on July 23.

Kenya: Between 2 and 6 million Kenyans are at risk of hunger and will require emergency food aid by September, the World Food Program's July 15 "Hunger's global hotspots" report states. Food prices have soared by 30-50% this year, as inflation is at 26.6%. Fertilizers costs doubled since 2007, preventing their use. The result: "Right now we [expect] four bags of maize per acre instead of the usual 20, as we could not afford to use any fertilizer," a Kenyan farmer told IRIN news, a UN news service.

China Begins World's Largest Pipeline Project

July 23 (EIRNS)—Construction was started July 22 on the first gas compressor station in Khorgos, in China's northwestern Xinjiang Uygur Autonomous Region. This marks the start of the second West-to-East gas pipeline project in China.

With a designed gas transmission capacity of 30 billion cubic meters annually, and a total length of 9,100 kilometers, the pipeline begins in Xinjiang, and traverses 14 provinces before reaching East China's Shanghai, South China's Guangdong Province, and Hong Kong.

At the end of 2009, it will carry natural gas from Turkmenistan.

IMF Conditionalities Kill People

July 22 (EIRNS)—In a just-completed study, British and U.S. researchers have charged that the imposition in recent years of the International Monetary Fund's loan conditionalities on 21 nations of Eastern Europe, played a major role in resurgence of tuberculosis in those countries, particularly of the drug-resistant strains.

According to analysts at Cambridge and Yale universities, efforts in these nations to meet the IMF's strict economic targets resulted in an 8% decline in government spending, a 7% drop in the number of doctors per capita, and a decline in the method of TB treatment known as "directly observed therapy," which the World Health Organization recommends.

The researchers argued that there was a direct relationship between the start of an IMF program and the rise in TB incidence, which they said resulted in a 16.6% increase in deaths in all 21 countries—a total of 100,000 dead. Without the IMF program, rates would have fallen by up to 10%.

As Cambridge University analyst David Stuckler commented, "the IMF has its priorities backwards."

Did the British Banking System Nearly Disintegrate?

July 20 (EIRNS)—On July 11, as the meltdown of U.S. mortgage giants Fannie Mae and Freddie Mac impelled U.S. Treasury Secretary Henry Paulson to announce desperate, foolish measures to try to bail them out, the entire British banking system was undergoing a near-death experience of its own.

Spain's Banco Santander—which is a controlled asset of the British monarchy's Royal Bank of Scotland—swooped down on Friday afternoon July 18, with a buy-out offer for the failing British mortgage bank Alliance and Leicester (A&L). According to the Britain's Daily Mail, Santander's move "had already gained the backing of the Financial Services Authority [FSA] and even of the Bank of England," before Santander even spoke with A&L. The FSA armtwisted A&L to accept Santander's offer of a mere 300 pence per share (in December, Santander had offered twice that amount), fearing "a run on the bank like the one that forced Northern Rock into nationalization" in late 2007, in the words of the Guardian. A&L was told: "Think of the consequences of refusing."

The FSA and the Bank of England are clearly panicked. "Frantic efforts by the FSA underline the fragile nature of the banking and building society sectors where fears of another collapse along the lines of Northern Rock could have unthinkable consequences," wrote the Daily Mail. The paper quotes a seasoned banking veteran saying: "We have never seen anything like this before.... This is the worst financial crisis that most of us have ever seen."

The July 11 Santander bailout of A&L on British orders—Santander head Emilio Botin "is a close friend of Royal Bank of Scotland boss Sir Fred Goodwin," according to the Guardian—was pulled off with capital that Santander came up with by selling off its holdings in the Spanish mortgage giant Martinsa-Fadesa, which led to Martinsa's explosive bankruptcy three days later, on July 14.

Through its 2004 purchase of Britain's Abbey Bank, and now A&L, Santander is today the proud owner of 13% of all the mortgage debt garbage in Great Britain.

The Santander buyout of A&L solved nothing: the British financial system continues to disintegrate. Barclay's Bank (#3 in the country) and HBOS (the #1 mortgage lender) both attempted to hustle up urgently needed capital with a so-called "rights call" on July 18—selling additional stock to their existing stockholders. Both flopped miserably, with offers made for only 20-30% of the total offered. As the Financial Times put it: "The poor response is ignominious."