John Kelly - The Man who knows

£1000 invested in the commodities market at the begining of the year is now worth £3000. Great news for hedge funds pretty dire for you and me.

This year has been significant for its endless stream of economic scare stories. Milk, oil, metals, nothing has been safe. They have all been manipulated for the profit of the big investors.

Why? Because the banking sector did itself so much harm with the credit crunch that no-one sees there shares as a safe investment. Instead the money men have generated huge price rises on basic commodities using old fashioned rumours.

The good news is the bubble is about to burst. The much vaunted explosion in demand in Asia for everything has not materialised. Commodity prices will start to drop very soon. Sadly in the process the world economy has been hammered by this extremely cynical exercise. When you lose your job and/or home over the next year spare a thought for the Hedge Fund gurus who caused this mess.

Oil at $100 plus per barrel, grain prices doubling. There must be shortages of everything these days!

Strangely there isn't. There is plenty of oil getting produced but the price just keeps rising. Australia has had a bad harvest but the rest of the world didn't. Despite this the price of wheat is soaring. Strangely farmers aren't rushing to plant more wheat. Lamely the rising food prices have been blamed on all the Chinese and Indian's eating too many cakes and buns. Nonsense.

The current sky high commodity prices are the direct result of market speculation. The stock market is yielding dismal returns so our financial friends have turned their attention to the less prestigious but potentially lucrative Commodities market. Huge stockpiles of basic commodities have been bought as investments by Hedge funds and venture capitalists.

The producers get little of the benefit of the soaring prices thats why farmers aren't rushing to plant wheat. Oil companies are benefiting because they are selling their oil for a significant profit and watching happily as the high price of grain is blamed on crops being grown for biofuel production. A very similar thing happened during the 1970's energy crisis just as the biofuels market looked like taking off.

The planet's future has always been prey to financiers seeking a fast buck. Governments need to step in and re-balance the commodities market before our speculator chums push us into a recession like the 1970s. Control of the financial sector is key to maintaining a stable economy. In the past five years Western governments have lost control of the financial levers. The sub-prime debacle is a classic example of just how little we can trust the financial sector. The very existence of a prime and sub-prime market in the US is the product of an earlier US Govt intervention into the financial sector. The prime mortgage market in the US is ultimately underwritten and financed by the Federal government because the US banking sector proved to be extremely unreliable throughout its history. Despite this level of control and security the US financial industry chose to sell sub-prime mortgages to high risk customers and attempt to offset the debt by selling it in bundles to other institutions. Borderline fraud in simple terms. Northern Rock copied the approach and paid the price. Debt proved to be a dangerous commodity to trade.

Gordon Brown was a great Chancellor of the Exchequer able to keep his charismatic friend and rival Tony Blair in check. Sadly Gordon dreamt he was made for better things, he should be the PM.

Sometimes we should never try to fulfil our most cherished ambitions because they have a bad habit of turning into nightmares. Gordon has everything he ever wanted and like a kid at Christmas who discovers that he isn't all that good at Scalextric racing he is not enjoying himself.

Gordon probably dreams of halcyon days as a Finance minister with nothing to worry about except budgets and the odd banking collapse. Dead soldiers, european treaties, election dates, floods, lost data these are all things his old mucker Tony would have looked after.

The lesson for all of us is to remember that walking a tightrope looks easy until you try it.

The British Army is desperately short of recruits.  Young Britons it seems are not too keen on getting shot at by wild eyed Muslim fanatics. 

At the same time Britain is apparently being swamped by a tidal wave of illegal immigrants.  Call me a crazed right wing fascist but surely the simplest way to solve both problems is to give any illegal immigrant the option of being sent home or serving 5 years in her majesty's forces.  At the end of their 5 year term they would qualify for British citizenship.

The genuine migrants would I'm sure jump at the chance of representing their chosen homeland in battle.  The fraudsters would chose to go home pretty sharpish rather than end up patrolling in Kabul.

Go on Mr Brown and Ms Smith take up this idea, it'll win the next election.

Almost a year after my last post on the challenges facing Britain and the US in Afghanistan things have not changed in the slightest. The country is still unstable with western troops fighting a classic colonial war.

When will it end? Never unless we pull out. However pulling out is not going to be easy as the Afghan rebels would do their best to destroy the retreating forces in the manner of Akbar Khan back in 1841. I woonder how the American public would react to a re-run of the last stand at Gandamak. It certainly wouldn't win a presidential election for the Republicans.

So unable to pull out the only thing to do is stay and aggressively defend our position. This means garrisons in every town and multiple patrols every day and rough justice for any rebels encoutered.

A 19th century solution for a 21st century problem. not very palatable is it?