Friday, October 10, 2008

Now the Food Problem

Think that your 401(k) is a crisis? Think again.

The credit crisis is spilling over into the grain industry as international buyers find themselves unable to come up with payment, forcing sellers to shoulder often substantial losses.

Before cargoes can be loaded at port, buyers typically must produce proof they are good for the money. But more deals are falling through as sellers decide they don't trust the financial institution named in the buyer's letter of credit, analysts said.

"There's all kinds of stuff stacked up on docks right now that can't be shipped because people can't get letters of credit," said Bill Gary, president of Commodity Information Systems in Oklahoma City. "The problem is not demand, and it's not supply because we have plenty of supply. It's finding anyone who can come up with the credit to buy."

So far the problem is mostly being felt in U. S. and South American ports, but observers say it is only a matter of time before it hits Canada.

So--the US farmer ain't getting paid because Cargill (the exporter) can't pay him because the country of Whatsitstan can't get credit to buy the wheat.

And when that farmer doesn't get paid, does he buy a new Deere?

More important: what are the people in Whatsitstan going to eat?

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