Monday, September 3, 2012

Lose the Wheat, Transform Your Health

The "Paleo" diet is the new craze in America.  It is apparently based on the notion that ancient humans were more healthy than we are now due to a more "natural" diet.  It seems obvious that they were much thinner, but is it really because they did not eat pasteurized dairy or grains, but instead ate a lot of fruit (did they really eat a lot of fruit in Great Britain, for example?), or because they did not have easy access to a 3,300 calorie per day diet?  More evidence is emerging that we need not go back so far and buy into yet another silly and illogical diet fad.  

Today Dr. William Davis, the author of "Wheat Belly" appeared on CBS This Morning:



Davis asserts that we only need go back to days when we ate bread that was substantive, and was eaten for its nutrition, not just as a substrate for a meat snack.  Unfortunately, as he notes, the return to "good" wheat is probably very unlikely.  So let's say you want to follow his plan and eliminate wheat in order to transform your health.  If the store shelves are full of wheat-based products, and eating a lot of meat will mean an increase in fat consumption, this probably sounds like a big challenge.

In fact if you want to simply trade one carb source for another, that's very easy.  But more evidence shows that carbs are in fact the problem, not fat.  A recent study published in the prestigious New England Journal of Medicine showed that an Atkins-style diet led to more rapid calorie burning.  Also, a research review published last month showed that on average Atkins diet followers had much improved health, including improvements in cholesterol levels, blood pressure, etc.  

Despite all the evidence showing that a LOW CARB, NO WHEAT diet is best for our health, this Gallup poll shows that Americans still overwhelmingly believe that a LOW FAT diet is best.  

I believe a big part of this disconnect comes from the lack of good carb options.  The same big food companies that created a wheat-based health crisis now market "14 Grain" breads that actually contain about 2% of anything other than whole grain wheat.  In fact, one of the alternative grains used in these "healthy" breads is brewer's barley, which is a waste product from beer production.  This waste product is also very commonly used in dog food.  Yum.

As Dr. Davis says, the anti-wheat movement is really taking off.  Eventually this will lead to an organized marketplace for grains that perform well both agronomically and nutritionally, like buckwheat.  Yet another study recently showed the benefits of using a large amount of buckwheat flour in blended bread formulations.

I would be remiss not to comment on the recent food price spike, since the dramatic price inflation in wheat futures will be a factor in true alternative grains entering the marketplace, as those more expensive options (due to very small supply) are now closer in price to wheat.  As we saw two years ago, the dramatic price increase in wheat futures has nothing to do with supply.  Most of the wheat harvest was in the bins before the drought began this summer, and the USDA has shown over many years that livestock producers do not substitute wheat for corn or soybeans as speculators like to suggest.

Lose the wheat, eat mostly meat, and transform your health.  Eventually as more Americans transition back to the diet of their grandparents, good carb options like buckwheat will become more available.

Wednesday, July 25, 2012

Back to the Beginning?

Last year around this time, when markets were melting down and the world was seemingly coming to an end, Jack Vogel appeared on CNBC and lamented the high level of risk in the modern financial marketplace.

Today on CNBC, Sandy Weill, former chairman of Citi, visionary in his field like Vogel, and the man behind the modern investment banking structure, called for a return to sanity.  Specifically, he said it was a mistake to repeal Glass-Steagall, the set of Great Depression era reforms that, in essence, prevented banks from leveraging to infinity.

Will the markets pay heed to the advice of the man who essentially authored the repeal legislation, and who is now issuing a mea culpa?  Nah, all the way back in 2011 Vogel's main target was ETFs (exchange traded funds), which over the past year have seen record inflows and are now widely viewed as the main reason market liquidity has stayed relatively steady over that time (while nobody has tried to claim they are any less risky or understandable to investors).

All the way back in 2010, Alan Greenspan was on CNBC with a mea culpa about his cheap money policies.  Response?  QE, QE2, Son of QE, Bride of QE, QE does the Twist...

In related news, the new Farm Bill features even more money for Food Stamps than the previous one, taking up a far greater portion of limited funds than research or conservation incentives.  Why are these things related?  Because everybody loves welfare.  When you reach the point where you expand welfare for everybody from banks to single mothers or the entire economic system will collapse, you're supposed to stop.  This year we have another oracle trying to reason with a junkie, and so it goes.

Monday, November 21, 2011

The House Wins

I've written quite a bit about the Dodd-Frank financial regulation legislation and the power it gave to the Commodities Futures Trading Commission to curb commodities speculation.  Also covered here, a couple of months ago it became clear that the congress was not going to let the CTFC pursue its mandate.

Last week the CTFC budget was gutted, and now it looks like they will be laying off staff.  Incredibly, possibly the only government agency worth preserving in full seems to be the only one not growing in both power and numbers!

Pretty hard to regulate without regulators.  Congratulations America, the Wall Street Casino wins again.  Now listen to Newt #OWS, and go take a bath and get a job!

Sunday, September 25, 2011

Amerika 2011: Complainin', Grumblin', Cryin'

Yesterday President Obama spoke at a Congressional Black Caucus awards dinner, telling attendants to "take off your bedroom slippers. Put on your marching shoes." Yes, finally a courageous politician has encouraged people to join the Wall Street protesters! Right? Uh, no.

No, he was not calling for reinforcements to replace and fortify the peaceful protesters who were pepper sprayed by a coward in a uniform. He was calling for them to help him pass his jobs bill, which will fund construction on what some are calling "Obama's Bridge to Nowhere." And help him get re-elected of course. But the bridge is going to be paid for... by the Wall Street traders who are being protested, and protected by cowards in uniforms. So don't worry, because he's a warrior for the middle class.

Don't get excited about peaceful protesters being pepper sprayed for no reason, or the fact that police are now charging people with "disobeying a lawful order." No, not for violating any actual law or ordinance. Disobeying... an order. When I worked for the Army prosecutor we must have charged dozens of people with "disobeying a lawful order." We would have concluded that under yesterday's circumstances, that charge would not meet the elements of a crime and thrown the charges out. Why? Because even under military law a direct order needs to be issued by someone in a position of authority, a person with the legal authority to issue orders. Not any old police officer. In the military, police are specifically tasked with enforcing actual laws. So in the military, where soldiers willfully accept that they surrender some of their basic civil rights, police are certainly entitled to issue orders, but unless there is some underlying violation or the order was given by a person with the legal authority to give it, a solider cannot be held accountable for disobeying.

In Amerika 2011, civilians are required to OBEY any order that a police officer feels entitled to give.  Doesn't need to have a legal basis.  Squeamish yet?

It gets worse. These folks are not just some yippies from Brooklyn with nothing better to do. In a previous post I hi-lighted Vermont Senator Bernie Sanders' publication of the names of speculators who drove up oil prices in 2008. A couple weeks ago, Sanders essentially laid out the rallying cry of the protesters in an op-ed in the Washington Post. All this pressure surely is pushing freedom-lovin' politicians to grab Sanders' back, right? Right? Uh, no. Michele Bachmann and other Republicans running for president continue to call for the outright repeal of Dodd-Frank. Well, based on this article in the New York Times, maybe I finally agree with Bachmann (yes, I was smirking when I wrote that). You see, it appears that the Commodity Futures Trading Commission has turned from The People's Lion into Wall Street's Lamb. According to the article, some now believe that the rules the CFTC was tasked with enforcing in accordance with Dodd-Frank, will actually wind up favoring speculators.

Amerika 2011: De-fund and eliminate the regulators, because they are protecting and enabling the people they're supposed to regulate (see previous post on SEC corruption) [note: I doubt that this is Bachmann's position, seeing as how the finance industry has been a good friend over the years].

Ah, but there is hope. Remember, we still have the "warrior for the middle class."

Friday, August 19, 2011

Oil Speculators Outed

Yesterday the Wall Street Journal published a teaser article about oil trading during the speculative bubble of 2008.  The WSJ reveals few details except to note that Goldman Sachs and big hedge funds drove up the price of commodities.  The data was obtained from Senator Bernie Sanders (Socialist - Vermont).

This comes on the heals of the publication by the Commodity Futures Trading Commission (CFTC) of "large trader directional data," as promised by Commissioner Gary Gensler.  The commissioner promised the data a month ago while noting that recent purely speculative positions (people who never take physical delivery of a given commodity) were up to 88% of oil and grain markets.  This of course runs counter to the claims by hedge funds and banks that they either do not speculate, or that it's a small portion of the market and provides "needed liquidity."

My guess is Sanders believed the CFTC publication would be a significant revelation and that Gensler would make a big deal about it.  I found the data on the website - not exactly out front in blinking lights! - and it's useless.  There are no names and it covers a three year period of time where prices fluctuated wildly.  For the most part it evens out.  The report is a total whitewash.

Large trader data is confidential, but once it is produced to congress apparently all bets are off.  Sanders is on the committee that requested the data from CFTC, and the leak is clearly a shot across the bow, threatening that the CFTC should re-think using the Dodd-Frank legislation to put up more smoke and mirrors.

But how sad is it that an outright socialist is - completely on his own - taking this stand?  Where are all the Dems and Repubs who constantly seek out cameras to wax poetic about standing up for the little guy, and against commodity price speculation?

Wednesday, August 17, 2011

Of Corruption and Indifference

In my last post I discussed the beginning of futures trading enforcement actions under the Dodd-Frank legislation signed into law last year.  This is not a perfect piece of legislation by any means, but it should help to correct for abuses that have occurred since the repeal of Glass-Steagall.

How confident can we be that federal regulators will actually carry out their enforcement duties when we see stories like this one in Rolling Stone?  Apparently (also reported here in a shorter version) the Securities and Exchange Commission (SEC) has been destroying documents.

I doubt that anyone would be surprised that Wall Street banks and hedge funds engaged in lots of shady activity.  Few would be surprised that the SEC clearly fell down on the job during the entire past decade.  But even I am surprised that the SEC is alleged to have engaged in systematic cover-ups.

It's nice that Sen. Grassley is looking into the matter, but as my most recent post notes, he's one of the Republicans actively trying to thwart enforcement of Dodd-Frank.  The expression "smoke and mirrors" comes to mind.

Monday, August 8, 2011

Back to the Beginning

Here we are a little more than a year after the Federal Reserve started interfering in capital markets again. It was quite a run if you owned stocks or invested in fungible commodities. Now that QE2 is over, the U.S. credit rating has been downgraded for the first time in history, and markets around the world are tanking, it's time for a recap.

It was also about a year ago that I started this blog. I have held off on writing very much recently, letting events speak for themselves. Was there really any point in harping on the food price inflation connection to Syria's ongoing repression? Tunisia and Egypt gave us the verdict, we are now in the sentencing phase, with events on the ground providing daily impetus for banishing central bank inflationary policies to the dustbin of history.

In my initial posting, I hi-lighted a terrific article in Bloomberg Businessweek that raised the alarm bell about a new commodities trading tool called ETFs: Idahowheat Blog: A Proper Beginning.

Today, legendary investor Jack Bogle appeared on CNBC and gave his verdict on ETFs (beginning at 2:35) .

To be fair to the Fed, inflationary monetary policies may well have worked in a different era. But one has to wonder if they just did not account for the effects of de-regulation. There is simply no incentive for capital institutions to engage in what your father called investment, when there are so many opportunities to engage in mere speculation instead.

The full Bloomberg article deserves another look. Here are some of the more illuminating passages:
"Just as they did with subprime mortgage-backed securities, Wall Street banks are transferring wealth from their clients to their trading desks. 'You walk into a casino, you expect to lose money,' says Greg Forero, former director of commodities trading at UBS (UBS). 'It's the same with these products. You're playing a game with a very high rake, a very high house advantage, and you're not the house."
How did such an incredibly risky and misunderstood financial instrument come about?

"... In 2004, however, Deutsche Bank's Rich devised a commodity ETF that opened the door to retail investors when it launched two years later. There was an obstacle: The U.S. Commodity Futures Trading Commission, a regulatory board created in 1974 after a runup in grain prices, required buyers of certain commodity investments to sign a statement saying they understood the risks. The banks argued that it would be impossible to collect so many thousands of signatures for a product designed to trade like a stock. In 2005, Deutsche Bank lawyer Greg Collett, who had worked at the CFTC from 1998 to 1999, helped persuade the commission to waive the rule and let funds replace it with their prospectus. That would provide adequate warning, the CFTC concluded. Collett says he believed the fund "democratized" commodity investing."
Just as the U.S. federal government eliminated sensible laws and regulations like Glass-Steagall (1999), which were designed to prevent market manipulation, the trend continued all through the last decade. Republican lawmakers did not de-regulate because they are principled capitalists - they reacted to specific lobbying efforts designed to make certain wealthy individuals much wealthier (Glass-Steagall was repealed specifically so that former Clinton administration Treasury secretary Robert Rubin's bank, Citigroup, could operate in the new mortgage backed securities market - woops!).

At this point you may be asking where are the regulators. The Dodd-Frank legislation signed into law by the president last year was specifically designed to address complex financial instruments like ETFs:

"The financial reform bill President Barack Obama signed on July 21 includes a few provisions that may help the CFTC [Commodity Futures Trading Commission] address the commodity ETF mess. The new regulations enhance the CFTC's ability to prosecute trading abuses, and set position limits on over-the-counter swaps, like those UNG has been buying. How much the new law will help remains to be seen, says Jill E. Sommers, one of the agency's five commissioners, because Congress still needs to appropriate funds and write guidelines for implementation and enforcement. 'We'll need additional dollars to carry this out,' she says, adding that it's too early to say whether the CFTC has the authority needed to crack down on pre-rolling. 'We're at the beginning of the rule-writing process, so it's premature to say whether additional authority is going to be needed,' she says."
A few days ago the CFTC finally passed a rule designed to shed light on who was making big bets on commodities, i.e., speculating (you know, that thing speculators insist they don't do). Commissioner Gary Gensler announced there is more to come next month.

If you're under the impression that Republicans or Tea Partiers are standing on principle in order to "put the country back on track" and "stand up for ordinary Americans," think again. Tea Party champion Michelle Bachmann wants to eliminate Dodd-Frank altogether. Republicans will do everything they can to prevent Gensler from either passing new rules or enforcing them.

If you're finding it hard to reconcile rhetoric about protecting the little guy and specific actions designed to let the casino roll on, you're not alone.  The truth is, both parties are on the left, beholden to the wealthy and leaving the "little guy" standing in the middle of a wheat field in Genesee, Idaho, on a day when 1/4 of his wheat kernals are still soft and the wheat market is tanking along with equities, wondering who is really going to stand up for him.

Thursday, June 30, 2011

Maseratis in Moline

I could write many words about the current food price commodity slide and provide many links and charts to show that the price action in those markets over the past year was a massive bubble that is now bursting.  Instead I'll just share this segment from CNBC today.  The best part is a trader who has been short the market lately and is making a killing on the slide.  That starts at about 2:20.

Enjoy.

Wednesday, June 22, 2011

Bring On Normal

Sniping at Federal Reserve Chairman Ben Bernanke is nothing new, but I predict that the generally flattering treatment he has received from Wall Street and its media acolytes will cease pretty much immediately.  As noted today at Forbes.com, at an afternoon presser Bernanke basically said he's clueless as to why flooding the market with free cash made bankers richer, but didn't create jobs for Joe Sixpack.

I don't think that before today the market believed the Fed was really going to withdraw from its unprecedented interference in the economy.  But after today's sober assessment from Bernanke and reiteration that Quantitative Easing II is over, beginning tomorrow Wall Street will sound like a cacophony of jilted lovers.

Meanwhile, the price of wheat is in a free fall, with some folks reporting that demand is not there to support anywhere near the current Quantitative Easing II-inflated price.  Now where have I heard that before?