The Way I See It

22/09/11 -- European stock markets are around 4% lower by mid-morning with the FTSE100 in danger of falling through the 5000 mark after the Fed warns of "significant downside risks to the economic outlook, including strains in global financial markets."

Is this new news? I don't think so - it's been pretty obvious for some time now that the world is fooling itself if it thinks that this financial crisis is anything like over.

Things ARE going to get a whole lot worse before they get better. And that's both sides of the Atlantic.

Certainly short-term that's bearish for grain prices. The question now is how short-term is short-term? And how low will prices go before there's a turnaround, if we get one, and what's likely to cause it?

Not easy questions to answer, particularly in that order, but I think I can answer the last one:

Inflation. And I don't mean monthly increases of 0.1 or 0.2 percent here. I mean rampant bite you on the bum inflation. The sort of inflation you get when governments irresponsibly print money that they haven't got in search of a desperate quick fix.

La Nina might lend a helping hand too.

For now though it looks like the fund managers are packing up and taking their bat and ball and shiny smart money with them. Will they be back? Yes. When? If I told you that I'd have to kill you...