Are We Selling Our Soul To Sell Our Dollars?
As I sit and watch the bottom completely fall out of the grain market I had an interesting conversation today with a guy that made me think of some things that I want to share.
We were talking about the grain markets and the fundamentals in it. We were having a good conversation about which direction we thought things will go in the next six months when the guy I was talking to brought up an interesting observation. Now this particular friend of mine is very smart, he is a farmer but is also a licensed commodity trader and follows news and the markets better than anyone I know. He has given up on TV since the switch to digital TV leaving him only the internet to receive his information. He also has predicted correctly about every move in the past two years in the grain market. So needless to say his opinions hold a lot of water in my eyes.
I was going on about how China has doubled their holdings in US Debt over the past year and how Russia has all of sudden tripled their holdings. My friend then made the comment on how it is so funny on how the commodity index has fallen apart since Giethner went to China on his recent sales trip to get them to buy more US debt. Also how funny it is that Obama is in Russia on a similar sales call.
Is it just me or are we seeing first hand the US government selling its soul to China and Russia in order to get them buy our bad debt? It is almost like they told us they would buy some debt but we need to do something for them like collapse our markets so that they can buy cheap commodities. It seems all too convenient to not have some bearing.
As I talked about this with some other people today I came to the conclusion that politicians will make more people happy and receive more votes with cheap grain than they will with expensive grain. With this being the case I see no reason why we will see a huge run up in grain prices anytime soon. I also feel we have a huge corn crop on the horizon so this deal could be perfect storm for the collapse in grain prices.
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