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Sarkozy Calls for the End of the US Dollar

 
 
 
 
 
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French president Nicolas Sarkozy Calls for the end of the US Dollar while US president Barack Obama calls France “biggest ally”.

There’s little doubt that the world’s superpowers are now fighting a new war. It’s not a cold one, or a hot one. No tanks, bombs or poison gas. At least not yet.

But open hostility between Europe, Brazil, China, India and the United States blanket the headlines nearly every day.

It’s a long-awaited answer to the question, “Do deficits matter?”

And the answer is a resounding, “Yes of course they do, don’t be silly – why in the world wouldn’t they matter?”

To recap, the United States is hellbent for leather to devalue its currency in an effort to ignite growth in the economy. Devalued dollars make American goods cheaper abroad and supposedly encourage spending and speculative investment rather than saving and safe investment.

These policies necessarily punish the types of productive savers that should be the backbone of a strong economy. Reckless spenders are rewarded – you know, the types of people who pay credit card bills with a credit card. It’s actually a pretty apt metaphor for the Federal Government. They’re currently funding past spending with debt, and they’re funding that debt with more debt.

And finally, world leaders are calling a spade a spade. French Finance Minister Christine Lagarde said, “We need reserves that are surer and more stable” than the dollar.

“This is a currency war that’s turning into a trade war,” said Brazilian Finance Minister Guido Mantega.

A story in The Wall Street Journal this morning quoted Senator Charles Schumer, who plans to “punish China for its ‘currency manipulation’.”

So world leaders are throwing lots of mud. And it seems like most of it is hitting the United States.

That’s just the super-text. The real important fallout from these currency and trade wars, and all the nasty mud-slinging is that the prices of “real stuff” like corn, wheat, oil, coal, copper, sugar and rice – you know, the stuff we need to live – are all on the rise.

President Sarkozy might hurt our feelings with his tough talk on the dollar, but higher food prices are actually causing real harm in very, very dangerous ways.

Hundreds of people were injured thanks to food riots in Algeria, and they’re not far off in places like India and Pakistan, which are now squaring off over onions, of all things.

Truly, a keystroke on Ben Bernanke’s magical-money computer is having typhoon like consequences in places where a 10% spike in food prices can be a matter of life and death.

I think we can expect the words “food riot” to enter the American lexicon sometime in the next 18 months, and I don’t say that flippantly.

Now is the time to make sure your portfolio has adequate exposure to agriculture stocks.

I’ve talked before about owning farming giant Monsanto (NYSE: MON) as well as Archer Daniels Midland (NYSE: AMD) and South American farming concern Cresud (Nasdaq: CRESY).

I do still like these companies, but they’ve all run past what I would call a “cheap” valuation. I’d look for any major correction of 5% or more as a good time to build a position in these companies, but for now, I’m more interested in buying another company that’s selling at a discount to its peers.

I’m talking about Bunge Limited (NYSE: BG). This company operates in a similar sector as Archer Daniels Midland and Monsanto, but is currently selling at a much lower valuation. They also have production and sales in 30 countries, and they sell fertilizer in North and South America. They process seed and grain for both food and bio-fuels. They’re what I called diversified in their sector.

I think you can safely buy shares of Bunge under $70.

As the dollar continues to wane and world leaders bicker over devalued currencies, food prices will rise. Invest accordingly.

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  • Bryannjamie

    :( Cant find enough info, do they GM seeds as well? I think primarily people should be storing foods and supporting locals, not investing money in GM companies that are causing food production to be less nutritive and strapping farmers. I think if you support Monsanto, I am questioning any other company you support.
    The stocks and money will be useless when SHTF

    • sc

      …and I read that in some areas in the US some farmers are being forced to purchase GM seeds instead of using their own organic seeds… Why is this happening? to support big Pharma?

      • Rudy

        YEah, the same reason that the Highly profitable and Environmentally friendly Marijuana. Marijuana cures almost any ailment. And high quality paper and textile, and wood products can be made from it. It takes just 4 months for M.J. plants to mature for harvest, but it takes 20 years for trees to mature and be harvested.

      • L

        More to support their depopulation plans.

  • brian

    I’ve been telling people to plant crops to have something to barter with since last summer. I’m now being proven correct in my assumptions. We are going to have to be self sufficient, with our without the dollar. It has to crash and burn before it can be rebuilt. Plant plant plant guys, if you have any property, use it for your crops now or it’s going to be too late and you will starve and/or have nothing to barter with.

  • Child O’ the Corm!

    I guess he won’t be around much longer,good.

  • ngs

    If China stops supporting it, it’s gone already.

  • RufStei

    Joy of joys! Death to the Nazi USA! I’m a US citizen who would certainly stave, but I don’t care, my death is a worthy price of justice against those like Obama.

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