Abusive lending: reform needed now

Who benefits from minimum wage increase?

Interesting article from The Wall Street Journal on the benefit distribution of an increase in the minimum wage.

Jubilee Year???

Amazing idea: buy debt for pennies on the dollar, then. . .forgive it!

Check out Rolling Jubilee!

High risk

Not a Low-risk Investment

 The kingdom which was the theme of Jesus' preaching and teaching is not a low-risk, blue-chip investment created for our consumption. It can't be calmly considered and casually digested. It can't be domesticated, nor can its leader be restrained from his continuous challenge to our way of life.

Prologue, The Cotton Patch Parables of Liberation

--Bill Lane Doulos

Springsteen's Rock with a Message. . .

Rolling Stone published an interview with Bruce Springsteen conducted by Jon Stewart in its March 29, 2012 edition.  Springsteen spoke of his new album (Wrecking Ball) and of a number of his classic recordings that reflect his own social values and his vision for and concern about America.  His language is the language of community, fairness, compassion and collective will, as well as responsibility.  Here are some of his comments:

The first cut, "We Take Care of Our Own," is where I set out the questions that I'm going to try to answer.  The song's chorus is posed as a challenge and a question.  Do we take care of our own?  What happened to that social contract?  Where did that go over the past 30 years?  How has it been eroded so terribly?  And how is it that the outrage about that erosion is just beginning to be voiced right now?  I've written about this stuff for those 30 years, from Darkness on the Edge of Town to The Ghost of Tom Joad through to today. . . .

So these are issues and things that occur over and over again in history and land on the backs of the same people.  In my music--if it has a purpose beyond dancing and fun and vacuuming your floor to it--I always try to gauge the distance between American reality and the American dream.  The mantra that I go into in the last verse of "We Take Care of Our Own"--"Where are the eyes, where are the hearts?"--it's really:  Where are those things now, what happened to those things over the past 30 years?  What happened to the social fabric of the world that we're living in? What's the price that people pay for it on a daily basis?"  Which is something that I lived with intensely as a child, and is probably the prime motivation for the subjects I've written about since I was very, very young. . . .

You cannot have a social contract with the enormous income disparity--you're gong to slice the country down the middle.  Without jobs, without helping folks with foreclosures, without regulating the banks, without some sort of tax reform. . . .Without addressing those issues in some way, I don't think the country is going to hold together.  . . .at the end of the day, you can't have a society and you can't have a civilization without a reasonable amount of economic fairness, full employment, purpose and civic responsibility. (page 41)

"Bruce Springsteen's State of the Union"

Rolling Stone

Issue 1153, March 29, 2012

New study reveals startling picture of Dallas’ financial insecurity Assets & Opportunity Profile

A new report paints a tough, but realistic picture of life in Dallas at the lower levels of the economy.  It turns out that the numbers of people struggling with "asset poverty" are startling. 

Read the entire report on here.

More on this soon.

The complications of prayer. . .

Prayer can be complicated. 

Denver Broncos quarterback, Tim Tebow sees the NFL as a platform for witness in the form of an "in your face" display of religious action at the end of most successful touchdown drives and games.  The popular young player even displays biblical passages etched on his no glare, black eye strips. 

Hey, to each his own, I suppose. 

Still, Jesus did say on one occasion, "But when you pray, go into your room, close the door and pray to your Father, who is unseen.  Then your Father, who sees what is done in secret, will reward you" (see Matthew 6:5-8 for statement and context).

Even thanking God for the blessings of life can get complicated.  Don't you think? 

It seems important to be very thoughtful about how we pray and about those things for which we pray.  Prayer should be a time of deep reflection, a private alignment of human life with the values of faith as we come to understand the agenda of God.  What do you think?

Occupy Jerusalem

James W. McCarty, III posted this to Twitter from his blog not long ago.  I thought it was brilliant.  What do you think?




Jesus was an Occupier

December 8, 2011

Yesterday I wrote a piece responding to Tony Perkins’s piece at CNN in which he claims that Jesus was not an occupier, but was “a free-marketer.” Well, his piece upset me so much I’ve decided to write another response to that ludicrous claim. So, here you go:

Theologically speaking, Christians have a variety of answers to the question of why Jesus was killed: to appease God’s anger for human sin, to bear the just punishment owed to God by a sinful humanity, as a moral example of suffering love for God that future Christians should follow, as a sacrifice offered to God for the forgiveness of human sin, as the ultimate example of God’s unending love for humanity, and several other formulations. Historically speaking, however, there is a nearly universally accepted answer among scholars as to why he was killed: Because Jesus occupied the temple.

During Jesus’ life the temple in Jerusalem was the symbolic center of Jewish religious, political, legal, and economic power. It was, in the words of one of my former Bible professors, the White House, Supreme Court, and Federal Reserve combined. During the time of Jesus’ life the temple had a practice of using “moneychangers.” Moneychangers had the task of exchanging Roman and other money for ‘temple money,’ and charged an exorbitantly high exchange rate to do so. So, the poor, in order to pay their temple taxes or for the animals needed to go through with their religious sacrifices, had to pay more than real value for this necessity. This practice was especially unjust in light of the fact that God allowed for different animals to be sacrificed by people of different socio-economic classes to avoid placing too great a burden on the poor. This temple practice, in spirit if not letter, was a direct violation of God’s law which was constructed with an eye toward helping the poor.

Jesus, within the week that he was killed, became quite angry about this practice. He turned over the tables of the moneychangers and chased the animals and those selling them out of the temple courtyard where this was practiced. He even made a whip and drove people out condemning the powerful for their perversion of holy space and exploitation of the poor and accusing them of turning the house of God, a house of prayer, into a “den of robbers.” Jesus occupied the temple. And they quickly killed him for it.

The Gospel of Mark informs us that it is after this incident that the religious leaders began plotting about how to kill Jesus (Mark 11:18). No longer was Jesus only someone who challenged their religious traditions and authority; now he was messing with their money. Jesus chose to occupy the temple and those he offended chose to have him occupy the cross instead.

Historically speaking, Jesus was a religious leader put to death by the Roman Empire for being a political threat. What was that threat? Jesus challenged the reigning political-economic system (which was also tied to religion) by taking over the space those in power claimed to hold a monopoly over. He shut-down, even if only for a very short-time, the reigning economic system that contributed to reifying the positions of the rich and poor in ancient Israel. He was killed for being an occupier.

I do not share this story to claim that Jesus’ actions in the temple naturally lead to the actions of those occupying Wall Street. Rather, I tell this story because there are some who are claiming that Jesus was not an occupier, and implying that those who are currently occupying Wall Street and other streets are in some way unchristian. This sort of claim is historically inaccurate. In fact, Jesus’ life makes no sense, historically speaking, without the decisive moment leading to his death being that he actually was an occupier.

What does this mean for us today?

It means that we cannot dismiss out of hand the actions of the occupy movement as inherently unchristian or anti-Jesus. Rather, it seems that people engaging in such activity should receive the benefit of the doubt that they are, in fact, being quite faithful to at least one of the key moments in Jesus’ life. Those who oppose such actions and defend the reigning economic system are the ones who bear the burden of proof that they are, in fact, remaining faithful to the example and teachings of Jesus the occupier.

I am not claiming that the occupy movement is, in fact, representative of what Jesus would do today or that it is a new form of church. Rather, I am simply stating that those who claim such actions can have nothing to do with the way of Jesus have seemingly missed a historical fact: Jesus was, perhaps the first, occupier.

To visit the blog click here.

You have to make an effort to ignore!

The Importance/Necessity of Guides

I expect that most of us have heard the popular notion "Give a man a fish and he'll eat for a day.  Teach a man to fish and he'll eat for a lifetime."

Across the years several of us have appended the common wisdom with an additional statement, "But best of all is pond ownership, or at least a key to the gate that lets you in so you can fish!"  Access to opportunity is essential no matter what one's skill set.

My experience last Friday reminded me of another important component to success in any life-sustaining endeavor that involves skill development:  all of us need a guide.  Mentors who teach us the ropes beyond just the raw skills are absolutely essential to success and progress as individuals and as communities. 

My oldest grandson, Wyatt, his dad and I went to Lake Texoma to fish for small mouth bass, commonly known as Stripers.

We met Roger, our guide for the day. 

All of us had experience fishing. 

We all knew how to cast a line, to use a rod and reel.  We'd baited many a hook prior to this trip. 

Roger instructed us in a few of the fine points of the particulars of fishing for Stripers, but he did much more than that. 

Roger showed us where the fish were! 

He went right to them because he knew the vast lake that stretched out for miles before us like the back of his hand.  He knew when they would bite.  He had it all figured out. 

So, all three of us got busy with what we knew--fishing.  But we put our weight down on what he showed us as our guide.  He navigated the waters, prepared us for the cold wind and spray and led us to the treasure!  By the time our day was over we all considered Roger not only the expert, but more importantly, our good friend! 

The city is full of people with great potential, many skills and great desire. 

What's needed in every case is a trusted guide or guides to walk alongside for just a ways until everyone can find the path to what they need most.  It is a self-deluding myth to believe that we can somehow make it in life all on our own. There is really no such thing as a self-made man or woman.  We all need help.  Those of us who are doing relatively well have enjoyed plenty of it.

Oh, and I apologize for shamelessly displaying our catch.  But pictures seem to make my point best of all. 

I assure you, without the guide, we have no photos, to say nothing of a completely different set of memories! 

>1/2 of US qualifies for affordable housing at CityWalk in Dallas

Half of all U. S. workers earned less than $26,364 in wages during 2010. 

That's the latest based on payroll taxes reported to the Social Security Administration.  To read a complete analysis of the data click here.

CityWalk, our Downtown affordable housing development here in Dallas, uses "means testing" to qualify residents according to tax credit rules that are tied to a major source of the funding used to convert the old office building to homes.  Under these rules a tenant is allowed to earn approximately $27,000 annually.  Anyone earning more than that ceiling cannot live in the building. 

So, over 1/2 of all working Americans are eligible to occupy one of our apartments!  Most people regard the building as "affordable housing" for low-income persons and families. 

This fact illustrates something about the reality and pervasiveness of poverty in our country.  It also forces some questions on us about our attitudes toward "the poor" in our society, don't you think?

Update on payday lending regulation

CPPP APPLAUDS BIPARTISAN EFFORT TO REFORM

PAYDAY AND AUTO TITLE LENDING

(AUSTIN, Texas) Center for Public Policy Priorities released the following statement regarding payday and auto title lending bills moving through the Texas House of Representatives.

Over the past several years, unregulated and high-cost, short-term lending has taken a toll on Texas consumers and communities. Without state oversight, Texas consumers do not have basic protections against abusive lending practices or a way to escape the cycle of debt which traps Texans with unlimited fees. The 82nd Legislature has a unique opportunity to address these problems by enacting House Bill (HB) 2592, 2593, and 2594.

We strongly urge the 82nd Legislature to enact meaningful short-term lending reform to create “rules of the road” and provide basic protections for Texans and their communities.

To read the full statement and to discovery exactly what each of the three bills accomplish click here.
CONTACT

Brian Stephens
512.320.0222, ext. 112
512.565.0506 CELL

Greed or Enterprise

Ran across this interesting essay written by Charles Kadlec and published in the on-line jouranl, Business Insider, last week.  The column appears in a section tagged  "the Daily Reckoning." 

It's worth reading.  Let me know what you think after you've read it.  What do you make of his distinctions?

Enterprise, Not Greed, Creates A Better World
The Daily Reckoning
Mar. 16, 2011, 3:58 PM

Greed: The word itself has become central to the political debate over the budget, taxes, union benefits, what constitutes ethical behavior, and the shape of our society.

The problem is the indiscriminate use of the word has blurred its meaning.

Those on the left use the word as an epitaph against the successful as epitomized by Sen. Bernie Sanders “When is enough enough?” he asked in his impassioned plea for raising tax rates “on the rich.”

But at the same time, those on the right embrace “greed” as vital to the functioning of our economy. Economist Walter Williams, for example, wrote in his essay “The Virtue of Greed,” “It’s greed and not compassion that gets things done.”

This lack of moral clarity threatens our liberty. It destroys our ability to distinguish between theft and the pursuit of happiness; between vice and virtue, and undermines our ability to be a self-governing people based on the norms of ethical behavior.

To read the entire article click here.

Treating folks right. . .

Robert Egger is a hero of mine and of a number of us at City-Square.  Founder and CEO of the DC Central Kitchen, this man "gets it."  For him, hunger is not about food.  Rather, it is a symptom of a larger issue/problem. 

This report appeared recently in the Huffington Post.  Read it and watch it.  Give me your reactions.  Egger is attempting to align and redefine non-profit influence and power.

Robert Egger: Fighting Hunger And Stereotypes
The Huffington Post Abby Wendle
First Posted: 01/21/11 05:52 PM Updated: 01/21/11 06:26 PM

Robert Egger, founder of the DC Central Kitchen and the Campus Kitchens Project, has a unique approach to charity work, which came to him the first time he volunteered to feed the homeless.

I looked at the homeless men and women and thought, we can shorten the line if we make them part of the process," he said.

In the late 1980s, when Robert proposed the idea to take donated food from restaurants and train the homeless to cook it, people were skeptical.

"They were stuck in an old fashioned kind of charity. They had all these different reasons of why it wouldn't work. People would tell me, 'you can't train the homeless.' I was shocked by that," he said.

But Robert was determined. With a James Brown song as his mantra, "Open Up The Door I'll Get It Myself,", he spent months applying for grants and appealing to donors. Finally, he got a $25,000 grant, bought a refrigerated truck and opened DC Central Kitchen. At the time, he wasn't sure exactly how it would all work.

"I was making it up, no one had really done this before," he said. But people came. "Men and women who were alcoholics and heroine addicts, then crack addicts," he said. And they kept coming. "In 1996, we had welfare reform and a lot of women who had never worked before needed jobs. Now we're dealing with felons," he said.

The Kitchen also attracts some of D.C.'s biggest names to volunteer. The day President Clinton came remains in Robert's memory as an example of the power the kitchen has to get the well-off to rub elbows with the down-and-out.

Clinton didn't know how to cut a carrot," Robert said. "It was up to a student in the basement of a shelter to teach the President how to cut a carrot. That's the power of what we do. We show that everybody has a role to play and everybody has value. We don't fight hunger as much as we fight stereotypes," he said.

The organizations that Robert started do, in fact, also fight hunger. Everyday, the DC Central Kitchen takes 3,000 pounds of good food that would otherwise get thrown out and turns it into 4,500 meals that are served at shelters and addiction recovery centers. The Campus Kitchens project replicates DC Central Kitchen's model at 26 high schools and college campuses across America, teaching students to cook recovered cafeteria food and serve it to those in need. Combined, the kitchens are steadily fighting back against the food insecurity 50 million Americans, including 10 million children under the age of six, face.

But the kitchen also fights the stereotype that nonprofit organizations cannot be financially self-sustaining without donations.

"Right now, we're forcing people to choose between being a .org or a .com," Robert said. "The future is a hybrid, like economic Buddhism. We can take a middle road and do both."

Two unique aspects of Robert's organization allow it to walk this middle road. The DC Central Kitchen launched Fresh Start, a catering employment project, to generate revenue. Fresh Start currently generates 50 percent of the Kitchen's funding -- the rest come from grants and donations -- by buying fresh food from local farmers and successfully competing in Washington D.C.'s catering market. Fresh Start also provides made-from-scratch meals for seven elementary schools as part of a pilot project to improve the quality and nutrition of what students eat.

Secondly, the kitchen's Culinary Training Program trains dozens of Washington D.C. residents who are homeless, poor and convicted felons each year. Robert's "ragtag army of food lovers and badasses" learn to work in the food industry. The training program aims to get at the root problems that cause hunger.

"Hunger is so not about food -- hunger is a symptom. Hunger is about wage, it's about being in prison," he said.

Click here to read entire report and view YouTube video.

We agree with Egger, and we have for a long time. 

Practical justice, oft hidden reality. . .

A common, social truth observed:  "The poor are disliked even by their neighbors, but the rich have many friends." Proverbs 14:20

A hard community fact:  Over 34% of the households in Dallas, Texas live below the federal poverty line (a bit ovr $22,000 annual income for family of four).

A building block for community renewal:  "Those who dispise their neighbors are sinners, but happy are those who are kind to the poor."  Proverbs 14:21

A harsh result of much very hard work:  "The field of the poor may yield much food, but it is swept away through injustice."  Proverbs 13:23

A building block of community and economic development:  "Where there are no oxen, there is no grain; abundant crops come by the strength of the ox. . . .Honest balances and scales are the Lord's; all the weights in the bag are his work. . . . Differing weights are an abomination to the Lord, and false scales are not good."   Proverbs 14:4; 16:11; 20:23

Prayers for Labor Day

We are workers, God, just like you. But we confess that our work is not always done in a manner that affirms and honors each other. Our work is not always done in a spirit that is pleasing to you. We confess that, on some occasions, we have blindly bought goods made by people who are paid too little or work in unsafe conditions. We admit that we have failed to end an unjust system in which some workers have jobs that provide good wages, health insurance, sick leave, a pension, paid vacations, and other benefits, while others have jobs that do not.

Creator God, help us to build a new world out of the ashes of the old, a world where all workers are valued. One where those who clean houses are also able to buy houses to live in. A world where those who grow food can also afford to eat their fill. And one where those who serve us in stores, schools, nursing homes, and many other places are also served by us. It will be a world where all workers everywhere share in the abundance that you have given us.
Words of Assurance:

Our God is a God of grace and transformation. When we ask, God will give us the courage and strength to live out our faith in the workplace and the marketplace, as well as in the sanctuary.

UFW Prayer

Show me the suffering of the most miserable, so I may know my people’s plight.  Free me to pray for others, for you are present in every person.  Help me to take responsibility for my own life, so that I can be free at last.  Grant me courage to serve others, for in service there is true life.  Give me honesty and patience, so that I can work with other workers.  Bring forth song and celebration, so that the Spirit will be alive among us.
Let the Spirit flourish and grow, so that we will never tire of the struggle.  Let us remember those who have died for justice, for they have given us life.  Help us love even those who hate us, so we can change the world.

Amen.

Food, markets, hunger and profit

The July 2010 issue of Harper's Magazine contains a most disturbing story by Frederick Kaufman, "The food bubble: How Wall Street starved millions and got away with it."  If you are looking for a story of how greed and unregulated business practices on Wall Street and beyond affect life, literally in "life and death" scenarios, this is one you need to read and understand.  The essay is long.  I've cut and pasted pieces for your consideration. You may want to pick up a copy and read the entire essay. 
___________________________________________

The history of food took an ominous turn in 1991, at a time when no one was paying much attention. That was the year Goldman Sachs decided our daily bread might make an excellent investment.

Agriculture, rooted as it is in the rhythms of reaping and sowing, had not traditionally engaged the attention of Wall Street bankers, whose riches did not come from the sale of real things like wheat or bread but from the manipulation of ethereal concepts like risk and collateralized debt. But in 1991 nearly everything else that could be recast as a financial abstraction had already been considered. Food was pretty much all that was left. And so with accustomed care and precision, Goldman’s analysts went about transforming food into a concept. They selected eighteen commodifiable ingredients and contrived a financial elixir that included cattle, coffee, cocoa, corn, hogs, and a variety or two of wheat. They weighted the investment value of each element, blended and commingled the parts into sums, then reduced what had been a complicated collection of real things into a mathematical formula that could be expressed as a single manifestation, to be known thenceforward as the Goldman Sachs Commodity Index. Then they began to offer shares.

As was usually the case, Goldman’s product flourished. The prices of cattle, coffee, cocoa, corn, and wheat began to rise, slowly at first, and then rapidly. And as more people sank money into Goldman’s food index, other bankers took note and created their own food indexes for their own clients. Investors were delighted to see the value of their venture increase, but the rising price of breakfast, lunch, and dinner did not align with the interests of those of us who eat. And so the commodity index funds began to cause problems.

Wheat was a case in point. North America, the Saudi Arabia of cereal, sends nearly half its wheat production overseas, and an obscure syndicate known as the Minneapolis Grain Exchange remains the supreme price-setter for the continent’s most widely exported wheat, a high-protein variety called hard red spring. Other varieties of wheat make cake and cookies, but only hard red spring makes bread. Its price informs the cost of virtually every loaf on earth.

As far as most people who eat bread were concerned, the Minneapolis Grain Exchange had done a pretty good job: for more than a century the real price of wheat had steadily declined. Then, in 2005, that price began to rise, along with the prices of rice and corn and soy and oats and cooking oil. Hard red spring had long traded between $3 and $6 per sixty-pound bushel, but for three years Minneapolis wheat broke record after record as its price doubled and then doubled again. No one was surprised when in the first quarter of 2008 transnational wheat giant Cargill attributed its 86 percent jump in annual profits to commodity trading. And no one was surprised when packaged-food maker ConAgra sold its trading arm to a hedge fund for $2.8 billion. Nor when The Economist announced that the real price of food had reached its highest level since 1845, the year the magazine first calculated the number.

Nothing had changed about the wheat, but something had changed about the wheat market. Since Goldman’s innovation, hundreds of billions of new dollars had overwhelmed the actual supply of and actual demand for wheat, and rumors began to emerge that someone, somewhere, had cornered the market. Robber barons, gold bugs, and financiers of every stripe had long dreamed of controlling all of something everybody needed or desired, then holding back the supply as demand drove up prices. But there was plenty of real wheat, and American farmers were delivering it as fast as they always had, if not even a bit faster. It was as if the price itself had begun to generate its own demand—the more hard red spring cost, the more investors wanted to pay for it.

“It’s absolutely mind-boggling,” one grain trader told the Wall Street Journal. “You don’t ever want to trade wheat again,” another told the Chicago Tribune.

“We have never seen anything like this before,” Jeff Voge, chairman of the Kansas City Board of Trade, told the Washington Post. “This isn’t just any commodity,” continued Voge. “It is food, and people need to eat.”

The global speculative frenzy sparked riots in more than thirty countries and drove the number of the world’s “food insecure” to more than a billion. In 2008, for the first time since such statistics have been kept, the proportion of the world’s population without enough to eat ratcheted upward. The ranks of the hungry had increased by 250 million in a single year, the most abysmal increase in all of human history.

Then, like all speculative bubbles, the food bubble popped. By late 2008, the price of Minneapolis hard red spring had toppled back to normal levels, and trading volume quickly followed. Of course, the prices world consumers pay for food have not come down so fast, as manufacturers and retailers continue to make up for their own heavy losses.
______________________________________
Imaginary wheat bought anywhere affects real wheat bought everywhere. But as it turned out, index traders had purchased the majority of their long wheat futures on the oldest and largest grain clearinghouse in America, the Chicago Mercantile Exchange. And so I found myself pushing through the frigid blasts of the LaSalle Street canyon. If I could figure out precisely how and when wheat futures traded in Chicago had driven up the price of actual wheat in Minneapolis, I would know why a billion people on the planet could not afford bread.

The man who had agreed to escort me to the floor of the exchange traded grain for a transnational corporation, and he told me several times that he could not talk to the press, and that if I were to mention his name in print he would lose his job. So I will call him Mr. Silver.

In the basement cafeteria of the exchange I bought Mr. Silver a breakfast of bacon and eggs and asked whether he could explain how index funds that held long-only Chicago soft red winter wheat futures could have come to dictate the spot price of Minneapolis hard red spring. Had the world starved because of a corner in Chicago? Mr. Silver looked into his scrambled eggs and said nothing.

So I began to tell him everything I knew, hoping he would eventually be inspired to fill in the blanks. I told him about Joseph in Egypt, Osaka in 1730, the Panic of 1857, and futures contracts for cat pelts, molasses, and onions. I told him about Goldman’s replication strategy, Gorton and Rouwenhorst’s 2005 paper, and the rise and rise of index funds. I told him that at least one analyst had estimated that investments in commodity index funds could easily increase to as much as $1 trillion, which would result in yet another global food catastrophe, much worse than the one before.

And I told Mr. Silver something else I had discovered: About two thirds of the Goldman index remains devoted to crude oil, gasoline, heating oil, natural gas, and other energy-based commodities. Wheat was nothing but an indexical afterthought, accounting for less than 6.5 percent of Goldman’s fund.

Mr. Silver sipped his coffee.

Even 6.5 percent of the Goldman Sachs Commodity Index made for a historically unprecedented pile of long wheat futures, I went on. Especially when those index funds kept rolling over the contracts they already had—all of them long, only a smattering bought in Kansas City, none in Minneapolis.

And then it occurred to me: It was neither an individual nor a corporation that had cornered the wheat market. The index funds may never have held a single bushel of wheat, but they were hoarding staggering quantities of wheat futures, billions of promises to buy, not one of them ever to be fulfilled. The dreaded market corner had emerged not from a shortage in the wheat supply but from a much rarer economic occurrence, a shock inspired by the ceaseless call of index funds for wheat that did not exist and would never need to exist: a demand shock. Instead of a hidden mastermind committing a dastardly deed, it was old Mike Mullin’s “brainless entity,” the investment instrument itself, that had taken over and created the effects of a traditional corner.

Mr. Silver had stopped eating his eggs.

I said that I understood how the index funds’ unprecedented accumulation of Chicago futures could create the appearance of a market corner in Chicago. But there was still something I didn’t get. Why had the wheat market in Minneapolis begun to act as though it too had been cornered when none of the index funds held hard red spring? Why had the world’s most widely exported wheat experienced a sudden surge in price, a surge that caused a billion people—

At which point Mr. Silver interrupted my monologue.

Index-fund buying had pushed up the price of the Chicago contract, he said, until the price of a wheat future had come to equal the spot price of wheat on the Chicago Mercantile Exchange—and still, the futures price surged. The result was contango.

I gave Mr. Silver a blank look. Contango, he explained, describes a market in which future prices rise above current prices. Rather than being stable and steady, contango markets tend to be overheated and hysterical, with spot prices rising to match the most outrageously escalated futures prices. Indeed, between 2006 and 2008, the spot price of Chicago soft red winter shot up from $3 per bushel to $11 per bushel.

The ever-escalating price of wheat and the newfound strength of grain markets were excellent news for the new investors who had flooded commodity index funds. No matter that the mechanism created to stabilize grain prices had been reassembled into a mechanism to inflate grain prices, or that the stubbornly growing discrepancy between futures and spot prices meant that farmers and merchants no longer could use these markets to price crops and manage risks. No matter that contango in Chicago had disrupted the operations of the nation’s grain markets to the extent that the Senate Committee on Homeland Security and Governmental Affairs had begun an investigation into whether speculation in the wheat markets might pose a threat to interstate commerce. And then there was the question of the millers and the warehousers—those who needed actual wheat to sell, actual bread that might feed actual people.

Mr. Silver lowered his voice as he informed me that as the price of Chicago wheat had bubbled up, commercial buyers had turned elsewhere—to places like Minneapolis. Although hard red spring historically had been more expensive than soft red winter, it had begun to look like a bargain. So brokers bought hard red spring and left it to the chemists at General Mills or Sara Lee or Domino’s to rejigger their dough recipes for a higher-protein variety.

The grain merchants purchased Minneapolis hard red spring much earlier in the annual cycle than usual, and they purchased more of it than ever before, as real demand began to chase the ever-growing, everlasting long. By the time the normal buying season began, drought had hit Australia, floods had inundated northern Europe, and a vogue for biofuels had enticed U.S. farmers to grow less wheat and more corn. And so, when nations across the globe called for their annual hit of hard red spring, they discovered that the so-called visible supply was far lower than usual. At which point the markets veered into insanity.

Bankers had taken control of the world’s food, money chased money, and a billion people went hungry.

Mr. Silver finished his bacon and eggs and I followed him upstairs, beyond two sets of metal detectors, dozens of security staff, and a gaudy stained-glass image of Hermes, god of commerce, luck, and thievery. Through the colored glass that outlined the deity I caught my first glimpse of the immense trading floor of the Chicago Mercantile Exchange. The electronic board had already begun to populate with green, yellow, and red numbers.

The wheat harvest of 2008 turned out to be the most bountiful the world had ever seen, so plentiful that even as hundreds of millions slowly starved, 200 million bushels were sold for animal feed. Livestock owners could afford the wheat; poor people could not. Rather belatedly, real wheat had shown up again—and lots of it. U.S. Department of Agriculture statistics eventually revealed that 657 million bushels of 2008 wheat remained in U.S. silos after the buying season, a record-breaking “carryover.” Soon after that bounteous oversupply had been discovered, grain prices plummeted and the wheat markets returned to business as usual.

The worldwide price of food had risen by 80 percent between 2005 and 2008, and unlike other food catastrophes of the past half century or so, the United States was not insulated from this one, as 49 million Americans found themselves unable to put a full meal on the table. Across the country demand for food stamps reached an all-time high, and one in five kids came to depend on food kitchens. In Los Angeles nearly a million people went hungry. In Detroit armed guards stood watch over grocery stores. Rising prices, mused the New York Times, “might have played a role.”

On the plane to Minneapolis I had read a startling prediction: “It may be hard to imagine commodity prices advancing another 460 percent above their mid-2008 price peaks,” hedge-fund manager John Hummel wrote in a letter to clients of AIS Capital Management. “But the fundamentals argue strongly,” he continued, that “these sectors have significant upside potential.” I made a quick calculation: 460 percent above 2008 peaks meant hamburger meat priced at $20 a pound.

On the ground in Minneapolis I put the question to Michael Ricks, chairman of the Minneapolis Grain Exchange. Could 2008 happen again? Could prices rise even higher?

“Absolutely,” said Ricks. “We’re in a volatile world.”

I put the same question to Layne Carlson, corporate secretary and treasurer of the Minneapolis Grain Exchange. “Yes,” said Carlson, who then told me the two principles that govern the movement of grain markets: “fear and greed.”

But wasn’t it part of a grain exchange’s responsibility to ensure a stable valuation of our daily bread?

“I view what we’re working with as widgets,” said Todd Posthuma, the exchange’s associate director of market operations and information technology, the man responsible for clearing $100 million worth of trades every day. “I think being an employee at an exchange is different from adding value to the food system.”

Above Mark Bagan’s oversize desk hangs a jagged chart of futures prices for the hard red spring wheat contract, mapping every peak and valley from 1973 to 2006. The highs on Bagan’s chart reached $7.50. Of course, had 2008 been included, the spikes would have, literally, gone through the roof.

Would the price of wheat rise again?

“The flow of money into commodities has changed significantly in the last decade,” explained Bagan. “Wheat, corn, soft commodities—I don’t see these dollars going away. It already has happened,” he said. “It’s inevitable.”

Survival rate better snapshot on poverty

Last week a front page story published by The Philadelphia Inquirer reported that to survive in Philadelphia without public assistance a family of four would need to earn $59,501.  That earnings number is up from $53,611 that was reported to be the "survival" pay scale in 2008. 

The report and the study behind it substantiate what we see here at Central Dallas Ministries.  Simply because a family is earning wages that places them above the artificially low federal poverty line (about $22,000 a year for a family of 4) does not mean that they can survive and certainly not thrive.  People without skills to earn a living wage need guidance and partners who will help them craft a plan for life that includes enhanced skills development, counsel about public benefits and encouragement from a community that regards them as neighbors and real friends. 

Here's how the Philadelphia report begins: 

Study: To survive, family of four needs nearly $60,000
By Alfred Lubrano
Inquirer Staff Writer

To survive in Philadelphia without food stamps or other government assistance, a family of four needs to make nearly $60,000 a year - a hard-to-fathom "sticker-shock" number that shows how expensive life has become.

According to a study being released Thursday, two adults with one preschooler and one school-age child have to take in $59,501 a year to live on a bare-bones budget in the city. In 2008, the same family of four needed $53,611 to make it in Philadelphia.

That's the word from the Self-Sufficiency Standard for Pennsylvania, a highly respected University of Washington analysis that comes out every two years.

The problem is that nearly 62 percent of Philadelphia households take in less than $50,000 a year, according to census data analyzed by Dave Elesh, a sociologist at Temple University.

Life is pricier in the suburban counties, where the same-size family needs to take in even more money to survive without assistance. Salaries must range from $62,543 in Delaware County to $71,846 in Bucks County for a family to achieve self-sufficiency. A similar study for New Jersey in 2008 put the self-sufficiency incomes at $60,912 in Burlington County, $49,739 in Camden County, and $56,752 in Gloucester County.

A family of four is considered poor if it makes $22,050 a year - the federal poverty level.

That measure, which has been used for nearly 50 years, has long been criticized as failing to take a full measure of what it costs to live in America.

To read the full story click here.

Overcoming poverty with data

Esther Duflo uses her knowledge of economics to find solutions, real solutions to troubling issues emerging from poverty.

Give her a listen. I think you'll be glad you did.

Images from the Dallas' Mega-March for immigration reform. . .