World's financial chiefs sweat over inflation

Posted Jun 15th 2008 4:40PM by Douglas McIntyre
Filed under: Forecasts, Economic Data, Commodities, Oil, Agriculture

The agendas of the G-8 meetings, gatherings of the finance ministers of the most powerful countries in the world, are still concerned about the credit crisis that has brought many financial firms to their knees and has caused chaos in the housing markets. Even so, they are now much more concerned about inflation.

According to Bloomberg, "Finance ministers from the Group of Eight nations said surging food and fuel prices have replaced the credit squeeze as the biggest threat to the world economy."

It happened fairly fast. At the beginning of the year, the world's credit problems began to accelerate. Mortgage-backed paper write-offs were so bad that many financial company stocks hit multi-year lows in March. Most had to go begging for new capital.

It was only as the first quarter ended that oil prices began huge run-ups and news turned to sharp increases in the price of corn and other agricultural commodities.

The "advantage" with inflation is that central banks can put money into commercial banks and brokerages, propping them up until the storm clouds pass. Getting oil and corn prices down is not quite as simple.

Douglas A. McIntyre is an editor at 247wallst.com.

Tags: commodities, corn prices, credit crisis, G-8, inflation, inthenews, oil prices

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Reader Comments (Page 1 of 1)

6-16-2008 @ 12:33AM

PJ said...

Is the E-8 more of a sounding board for the U.S., or is the E-8 really working together. How about the stench of the U.S. Dollar in comparison to the strength of the mighty Euro? Will it ever come closer to equal value? or are my vacations and summers in Ireland really over.

6-16-2008 @ 7:13AM

al coholic said...

One word describes the reason for so many of the world's woes and it is amazing it doesn't get more press. Population!

Nearly every long term problem we have is the result of it. Too many people to feed, too many people chasing too few goods to prevent inflation, the list goes on.

Maybe we don't hear as much about it because it is the problem without any solution, save a new black plague.

We are like a swarm of locusts, stripping our world of every resource until there are non left except for the elite.

6-16-2008 @ 8:14AM

Dan Barnett said...

Al,

You & Tom Malthus agree. There are too many people. Now short of a Black Plague, what do you suggest doing about it?

Mandatory population restrictions? Enforced by whom?

Mandatory lifestyle restrictions? Yeah right! Like that could ever be sold.

How about the same plan that proved Tom wrong (or at least premature) 350 years ago? Invest in technology & research to find other resources to provide for all of Earth's population.

Now, I'm not saying this will be easy, but it is time & past time, that we look past oil & fossil fuels for energy. It is time & past time to promote recycling on a massive scale. (& as William Lindblad has pointed out) It is time & past time to promote efficient use of fresh water.

6-17-2008 @ 7:20AM

al coholic said...

I wish I did have a solution. Some think there actually will be a plague of some kind that will solve the problem for us but I hope that's not in our future.

I'm sure technology will ease the pressure population growth has created, and some industrialized nations actually have a lower population growth record than was earlier
forecasted. But unfortunately the people who would benefit the most from restricting their numbers of offspring are the most prolific breeders.