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the greed of speculators knows no bounds

The overall reserves‐to‐production ratio ‐ an indicator of how long proven reserves would last at current production rates – outside of the Middle East is about 15 years comparing to roughly 80 years in the Middle East. It is for this reason that George Bush said in April 2007, US dependence on overseas oil is a "foreign tax on the American people ." This is one of the most volatile regions in the world; and its importance will only grow stronger. The US is currently very worried about political developments in this region. A return of the Khilafah as predicted by several think tanks can potentially cripple America’s economy, at a time where its political leverage is at its weakest since the end of the cold war. The Oil price crisis once again highlights that the greed of speculators knows no bounds. It was greed that drove many banks to lend sub prime loans to individuals with no ability to repay the loans. It is again greed that is driving speculators to bet on Oil prices with no intention of actually purchasing the oil in order to make profits on the price differences – whatever the affect on the world. Such speculators drove the bubble, and then moved to the sub prime bubble once it burst and now they are pouring into the last remaining sector commodities – it is for this reason oil prices have reached astronomical levels, well beyond the reach of those who need it most.

The Western world consumes 50% of the 21st century’s most important resource, it produced less then a quarter of it. It is over consumption rather then China and India that are causing the crisis. The US specifically produced only 8% of the world’s oil but consumes 25% of it. Global Food Crisis As the Credit crunch crisis matured another crisis hit the headlines. The soaring cost of food on the international markets raised the spectre of global inflation. The price of wheat alone has increased an astonishing 120% since August 2007, with the price of rice increasing by 75% since February 2008. With the Western world reeling from the collapse of the housing bubble crisis, the global food crisis would spell disaster due to food being essential for life.

Western policy makers have refused to link the credit crunch with the food crisis as many investment banks and speculators moved out of the sub‐prime sector and into commodities to shore up their losses and inflate another bubble to replace the housing bubble. To deflect attention several reasons were put forward by Western politicians’ and the mainstream Western media to explain the sudden price surge. The most commonly offered explanation was that food demand has increased globally over the last few years. In particular they cite the growing economies of China and India as having tightened global supplies of wheat, rice and corn; as they grow more affluent they are increasing their demand for meat based products for which these food stuffs are essential. They also cited poor harvests recently, particularly in Australia the worlds number two wheat producer, due to the ongoing drought the country is experiencing.

Another reason put forward is that the wheat fungus striking parts of Eastern Africa, Yemen, Iran and Pakistan. These increases together with the increase in Corn price have been blamed on the growth in countries such as Brazil and America using land to grow Corn for bio‐fuel derived Ethanol as a substitute for petrol. Thus, according to their argument, the land that could be used to grow wheat and rice is being lost. Although food prices have been rising these reasons in no way explain the sudden surge in prices globally in such a short space of time. Despite all the claims about corn being used for bio‐fuel, corn prices have only increased by a relative modest 31% as compared to the triple digit increases in wheat and rice prices in 2008. The populations of India and China have not increased to their present size in the space of a year. Neither have they grown proportionately affluent in the same space of time. China's economic growth has been underway for the last 30 years since it first started to reform its centrally controlled economy. India has also only introduced free market reforms since the early 1990s. Moreover global food production has increased twice as fast as the increase in the world population in the last 25 years.
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