Posts Tagged ‘Romania’
The Debt Of Nations
Tuesday, 04 June 2013 17:36
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Following on from our annual update on the wealth (re)distribution of nations, we thought it important to look at the other side of the household balance sheet – that of ‘debt’ to see just how much ‘progress’ has been made in the world. In the aftermath of the credit crisis (and the ongoing crisis in Europe), government debt levels continue to rise but combining trends in household debt highlights countries that have sustainable (and unsustainable) overall debt levels  – and thus the greatest sovereign debt problems. Whether the ‘number’ is from Reinhart & Rogoff or not, the reality is that moar debt is not better and the nations with the highest debt-per-capita may surprise many. Critically, despite the rise in ‘wealth’ from 2000-2008, the ratio of debt-to-net-worth rose on average by about 50% (and in many nations (Read more…) to rise).

With the regular occurrence of sovereign debt crises, relatively little attention has been given to the parallel issue of personal debt. Yet household debt has transformed over the past 30 years from low level borrowing mostly securitized on housing assets into wholesale credit seemingly available to anyone for any purpose.

As a consequence, household debt as a proportion of income has doubled almost everywhere, and has on occasion exploded by a factor of ten or more.

Our analysis of household debt highlights a number of facts that may come as a surprise. For example:

  • Canada now has the highest debt to income ratio among G7 countries, and Italy has the lowest.
  • The countries with the highest levels of household debt per adult – Denmark, Norway and Switzerland – are among the wealthiest and most successful;
  • Debt has risen significantly in developed countries over the past decade, but it is nowhere near the scale of the developing world, where almost every country has surpassed the global average of 45% growth during 2000–12.
  • While a high ratio of debt to net worth does not itself signify a problem for a country, it does appear to send a warning signal when combined with rapid growth in household debt. Greece, Hungary and the United Arab Emirates fall within this category and all have had problems with debt in recent years. These problems were not directly related to household debt, but rapid growth in personal debt in a highly indebted country is perhaps indicative of a relaxed credit environment that may have wider implications. 
  • Contagion in the Eurozone links Ireland, Italy, Portugal and Spain with the problems in Greece. Our estimates of household assets and debts suggest that Greece is an outlier among Eurozone countries, and that the other countries are better placed to absorb the rise in government debt. However, the deterioration in Ireland’s position since 2008 remains a source of serious concern. Beyond the Eurozone, Hungary and Romania are the countries that need to be most carefully monitored.

 

Via Credit Suisse:

Rising household debt has been one of the most enduring and widespread economic trends of the past 30 years. Evidence for G7 countries suggests that this phenomenon began around 1975. Before this date, the ratio of household debt to annual disposable income within countries remained fairly stable over time and rarely rose above 75%. By the year 2000, household debt in Canada, Germany, the UK and the USA was equivalent to at least 12 months’ income, and in Japan it equated to 15 months’ income (see Figure 1 below). Household debt in France and Italy started from a much lower base, but the gap narrowed considerably between 1980 and 2000, with the debt to income ratio approximately doubling in France and rising even faster in Italy. In most G7 countries, these trends continued until the financial crisis, and then moderated or reversed.

While the financial crisis prompted major debt reductions in the UK and the USA after 2007, the trend towards greater indebtedness has carried on regardless in Canada and Italy. Given its history and reputation for prudent economic policies, it is worth noting that Canada currently has the highest household debt-income ratio among G7 countries.

The regional composition of household debt is dominated by North America, Europe and Asia-Pacific countries (excluding China and India), which together account for 94% of the global total.

Average debt per adult shows even greater variation across countries than average income or average wealth. The highest levels of debt per adult are found in developed countries with well functioning institutions and sophisticated credit markets.

Based on average USD exchange rates since 2000, Denmark, Norway and Switzerland top the league table for household debt per adult in 2012, with values above USD 100,000 (see Figure 4 above). This is roughly twice the level seen in Canada, Sweden, the USA, the UK and Singapore, with Ireland and the Netherlands sitting between the two groups. By these standards, the average debt per adult in Spain (USD 31,200), Portugal (USD 25,800), Italy (USD 23,900) and Greece (USD 19,000) looks quite modest.

Figure 4 also shows that average debt per adult increased during 2000–07 in all the high debt countries apart from Germany, where average debt has been flat, and Japan, where household debt has declined – possibly due in part to the ageing population, given the negative relationship between debt and age. Countries with the highest debt per adult showed little tendency towards debt reduction in the aftermath of the financial crisis: Ireland, the USA and Hong Kong are the main exceptions. Apart from Germany and Japan, only Hong Kong and Singapore have debt levels in 2012 which are close to the levels recorded at the start of the millennium.

Expressed as a fraction of net worth, household debt is typically 20%-30% of wealth in advanced economies, but much higher levels are sometimes recorded, for example in Ireland (44%), the Netherlands (45%) and Denmark (51%).

The burden attached to the rise in household debt needs to be evaluated in the context of the substantial increase in personal wealth during the past decade. Despite the rise in wealth, in most countries where household debt exceeds USD 1 trillion, the ratio of debt to net worth rose on average by about 50% during the period 2000–08 (see Figure 5 above). Debt in the USA increased from 18.7% of net worth in 2000 to peak at 30.5% in 2008 before falling back to 21.7% in 2011. The UK exhibited a very similar pattern, with the debt ratio climbing from 15.2% to 23.4% between 2000 and 2008, subsequently dropping to 20% in 2012.The rise in the debt-wealth ratio was even more precipitous in the Netherlands and Spain, and although the increase abated slightly to 71% in the Netherlands, no reduction is evident in Spain, whose ratio is now 90% higher than it was in 2000.

In the developing world, the absolute level of debt is seldom more than USD 1,000 per adult, but exceptionally high levels – above USD 5,000 per adult – are evident in Brazil, Chile and South Africa

…the biggest changes were recorded in other transition countries: Russia, where average debt increased by a factor of 20 between 2000 and 2007; and Romania and Ukraine, where average debt has seen a fiftyfold increase since 2000 (see Figure 7 below).

The fact that the wealthiest and most economically successful countries tend to have relatively high levels of household debt suggests that debt is both a blessing and a curse. The problem is understanding how much household debt is needed to oil the wheels of economic progress without precipitating the crises of confidence seen recently in several European nations. Table 1 attempts to cast some light on this issue based on the cross-classification of countries according to their debt-wealth ratio and growth in debt per adult.

Several patterns are evident.

First, high-income economies congregate in the upper left section of the table: in other words, they tend to have medium or high levels of household debt relative to assets, and low to medium debt growth in recent years.

 

A second feature is the high growth in debt witnessed in most transition countries in recent years.This is not surprising given the lack of investment opportunities and credit and mortgage facilities in the pre-reform era. What is perhaps unexpected is the speed at which Hungary, Poland, Slovakia and Ukraine have joined the group of countries for which household debt exceeds 20% of net worth.

What is problematic is the speedy growth in household debt. It is worth noting that Greece, Hungary and the United Arab Emirates all appear in the upper right-hand section and all have made headlines in recent years with regard to debt problems. While these headline issues have not been directly linked to household borrowing, the high speed at which household debt has grown is perhaps indicative of a relaxed credit culture that can have further repercussions.

In almost all countries, government liabilities exceeded government financial assets in 2011, leaving the government a net debtor.

With the regular occurrence of sovereign debt crises, relatively little attention has been given to the parallel issue of personal debt. Yet household debt has transformed over the past 30 years from low level borrowing mostly securitized on housing assets into wholesale credit seemingly available to anyone for any purpose.

    



 
It’s A “0.6%” World: Who Owns What Of The $223 Trillion In Global Wealth
Sunday, 02 June 2013 13:03
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Back in 2010 we started an annual series looking at the (re)distribution in the wealth of nations and social classes. What we found then (and what the media keeps rediscovering year after year to its great surprise) is that as a result of global central bank policy, the rich got richer, and the poor kept on getting poorer, even though as we predicted the global political powers would, at least superficially, seek to enforce policies that aimed to reverse this wealth redistribution from the poor to the rich (a doomed policy as the world’s legislative powers are largely in the lobby pocket of the world’s wealthiest who needless to say are less then willing to enact laws that reduce their wealth and leverage). Now that the topic of wealth distribution (or rather concentration) is once again in vogue, (Read more…) we present the latest such update looking at a global portrait of household wealth. The bottom line: 29 million, or 0.6% of those with any actual assets under their name, own $87.4 trillion, or 39.3% of all global assets.

Here are the key highlights via Credit Suisse:

  • Global household wealth in mid-2012 totaled $223 trillion, equivalent to USD 49,000 per adult in the world.  This is a decline of $12.3 trillion mostly due to a $10.9 trillion decline in European wealth, however it is double the $113 trillion in total wealth at the start of the millennium
    • Losses in Africa, India and the Latin American countries were offset by modest gains in North America (USD 880 billion) and China (USD 560 billion),
  • CS expects total household wealth to rise by almost 50% in the next five years from $223 trillion in 2012 to $330 trillion in 2017. What CS does not say is that the bulk of this increase is courtesy of Federal Reserve-facilitated wealth redistribution from the lower and middle classes to the upper class.
  • The number of millionaires worldwide is expected to increase by about 18 million, reaching 46 million in 2017.
  • China is expected to surpass Japan as the second wealthiest country in the world. However, the USA should remain on top of the wealth league, with $89 trillion by 2017.

Drilling down the distribution of global wealth, in charts:

By the middle of 2011, global wealth had recovered from the 2007 financial crisis; at that time, total wealth matched or exceeded the pre-crisis levels in all regions except Africa.

Global wealth by country: The figure for average global wealth masks the considerable variation across countries and regions (see Figure 3). The richest nations, with wealth per adult over USD 100,000, are found in North America, Western Europe, and among the rich Asia- Pacific and Middle Eastern countries. They are headed by Switzerland, which in 2011 became the first country in which average wealth exceeded USD 500,000. Exchange rate fluctuations have reduced its wealth per adult from USD 540,000 in 2011 to USD 470,000 in 2012; but this still remains considerably higher than the level in Australia (USD 350,000) and Norway (USD 330,000), which retain second and third places despite falls of about 10%. Close behind are a group of nations with average wealth above USD 200,000, many of which have experienced double-digit depreciations against the US dollar, such as France, Sweden, Belgium, Denmark and Italy. Countries in the group which have not been adversely affected have moved up the rankings – most notably Japan to fourth place with wealth of USD 270,000 per adult and the USA to seventh place with USD 260,000 per adult.

Interestingly, the ranking by median wealth is slightly different, favoring countries with lower levels of wealth inequality. As was the case last year, Australia (USD 195,000) tops the table by a considerable margin, with Japan, Italy, Belgium, and the UK in the band from USD 110,000 to 140,000, and Singapore and Switzerland with values around USD 90,000. The USA lags far behind with median wealth of just USD 55,000.

 

Trends in wealth per adult and its components: As Figure 5 shows, average household net worth trended upwards from 2000 until the crisis in 2007, then fell by approximately 10% before recovering in 2011 to slightly above the pre-crisis level. Further setbacks this year have pushed wealth per adult back below the previous peak. However, exchange rate movements account for much of the year-onyear variation. Using constant USD exchange rates yields a smoother time trend and a single significant downturn in 2008, after which point the recovery has continued more or less unabated.

At the start of the millennium, financial assets accounted for well over half of the household portfolio, but the share declined until 2008, at which point the global wealth portfolio was equally split between financial and nonfinancial assets (mostly property). In the period since 2008, the balance has again tipped slightly towards financial assets.

On the liabilities side of the household balance sheet, average debt rose by 80% between 2000 and 2007, and subsequently leveled out. It now amounts to USD 8,600 per adult, about 7% lower than it was the same time a year ago. Expressed as a proportion of household assets, average debt has moved in a narrow range, rising over the period, but never exploding.

The composition of household portfolios varies widely and systematically across countries. The most persistent feature is the rise in the relative importance of both financial assets and liabilities with the level of development. For instance, financial assets account for 43.1% of gross assets in Europe and 67.1% in North America, but just 15.9% of gross assets in India. Household debt as a percentage of gross assets is 16% in Europe and 18.1% in North America, but only 3.7% in India and 8.7% in Africa. There is also variation in portfolios unrelated to the level of development. Some developed countries, like Italy, have unusually low liabilities (10.0% of gross assets), while others have surprisingly high debt, like Denmark (33.7% of gross assets). In addition, the mix of financial assets varies greatly, reflecting national differences in financial structure. The share of equities in total financial assets, for example, ranges from 43.4% in the USA, down to just 20.1% and 6.5% in Germany and Japan respectively.

 

Changes to household wealth from mid-2011 to mid-2012; The adverse global economic climate and the USD appreciation that occurred during the year until mid-2012 meant that household wealth rose by more than USD 100 billion in only four countries: the USA (USD 1.3 trillion), China (USD 560 billion), Japan (USD 370 billion) and Colombia (USD 100 billion). Figure 6 shows that Eurozone members suffered the largest losses, led by France (USD 2.2 trillion), Italy (USD 2.1 trillion), Germany (USD 1.9 trillion) and Spain (USD 870 billion). These losses were exacerbated by the unfavorable euro-dollar exchange rate movement, but even in euro terms, wealth declined by EUR 50 billion in Germany, EUR 148 billion in France, EUR 177 billion in Spain and EUR 286 billion in Italy. Sizeable USD wealth reductions were also recorded in the UK (USD 720 billion), India (USD 700 billion), Australia (USD 600 billion), Brazil (USD 530 billion), Canada (USD 440 billion) and Switzerland (USD 410 billion).

The largest percentage gains and losses generate a slightly different list. A steady USD exchange rate, combined with an 11% improvement in market capitalization, helped Colombia to top the country rankings with a 16% rise in household wealth. Algeria, Hong Kong, Peru and Uruguay also recorded gains of more than 5%. The downside is more evident, especially in Eurozone countries, where double-digit losses were recorded everywhere (see Figure 7). Other sizeable declines were recorded for Russia (–13%), Mexico (–14%), South Africa (–15%) and India (–18%), while Eastern Europe had a very poor year, led by the Czech Republic and Poland (both with –18%), Hungary (–25%) and Romania (–36%).

* * *

But in a globalized world with virtually unlimited capital flows (for now: see Cyprus) physical borders mean little. Which is why next we look at the global wealth pyramid which breaks down wealth as percentage of the world population: i.e., who owns how much without geographic prejudice. It is here that is becomes most obvious how global policies since the Great Financial Crisis have benefitted the wealthiest at the expense of everyone else.

Presenting the global wealth pyramid:

Here are the stunning facts:

  • In 2012, 3.2 billion individuals – more than two-thirds of the global adult population – have wealth below USD 10,000, and a further one billion (23% of the adult population) are placed in the USD 10,000–100,000 range.
    • The average wealth holding is modest in the base and middle segments of the pyramid, total wealth amounts to USD 39 trillion, underlining the potential for new consumer trends products and for the development of financial services targeted at this often neglected segment.
  • The remaining 373 million adults (8% of the world) have assets exceeding USD 100,000.
  • And then the top of the pyramid: 29 million US dollar millionaires, a group which contains less than 1% of the world’s adult population, collectively owns nearly 40% of global household wealth.
  • Some 84,500 individuals are worth more than USD 50 million, and 29,000 are worth over USD 100 million.
    • The composition of the wealth pyramid in 2012 is broadly similar to that of the previous year, except for the fact that the overall reduction in total wealth increases the percentage of adults in the base level from 67.6% to 69.3% and reduces the relevant population share higher up the pyramid by a corresponding amount. The respective wealth shares are virtually unchanged.

Breaking it down by class.

Lower Class (base level of pyramid):

The various strata of the wealth pyramid have distinctive characteristics. Although members of the base level are spread widely across all regions, representation in India and Africa is disproportionately high, while Europe and North America are correspondingly underrepresented (see Figure 2). The base tier has the most even distribution across regions and countries, but it is also the most heterogeneous, spanning a wide range of family circumstances. In developed countries, only about 30% of the population fall into this category, and for most of these individuals, membership is a transient or life cycle phenomenon associated with youth, old age, or periods of unemployment. In contrast, more than 90% of the adult population in India and Africa are located within this band. In many low-income African countries, the percentage of the population is close to 100%. Thus, for many residents of low-income countries, lifetime membership of the base tier is the norm rather than the exception. However, lower living costs mean that the upper limit of USD 10,000 is often sufficient to assure a reasonable standard of living.

While bottom-of-the-pyramid countries have limited wealth, it often grows at a fast pace. In India, for example, wealth is skewed towards the bottom of the wealth pyramid, yet it has tripled since 2000. Indonesia has also seen dramatic growth, and aggregate wealth in Latin America is now USD 8.7 trillion, compared to USD 3.4 trillion in 2000. In contrast, while North Americans dominate the top of the wealth pyramid, wealth in the USA has grown more modestly, from USD 39.5 trillion in 2000 to USD 62 trillion today.

 

Middle Class (middle level of pyramid):

The one billion adults located in the USD 10,000–100,000 range are the middle class in the global distribution of wealth. The average wealth holding is close to the global average for all wealth levels, and the total wealth of USD 32 trillion gives this segment considerable economic weight. The regional composition of this tier most closely corresponds to the global pattern, although India and Africa are underrepresented. The comparison of China and India is particularly interesting.  India is host to just 3% of the global middle class, and the share has been relatively stagnant in recent years. In contrast, China’s share has been growing fast and now accounts for over one-third of members, ten times higher than India’s. 

 

Upper Class (upper level of pyramid):

High wealth segment of the pyramid The regional composition changes significantly when it comes to the 373 million adults worldwide who make up the “high” segment of the wealth pyramid – those with a net worth above USD 100,000. North America, Europe and the Asia- Pacific region together account for 89% of the global membership of this group, with Europe alone home to 141 million members (38% of the total).  This compares with about 2.4 million adult members in India (0.6% of the global total) and a similar number in Africa.

The number of people in a given country with wealth above USD 100,000 depends on three factors: population size, the average wealth level, and wealth inequality within the country concerned. In 2012, only 15 countries have more than 1% of the global membership. The USA leads with 21% of the total. In this instance, the three factors reinforce each other: a large population, combined with high mean wealth and an unequal wealth distribution. Japan is a strong second and is currently the only country that challenges the hegemony of the USA in the top wealth-holder rankings. Although its relative position has declined over the past couple of decades due to the lackluster performance of its equity and housing markets, Japan has 18% of individuals with wealth above USD 100,000, a couple of points more than a year ago.

The most populous EU countries – Italy, the UK, Germany, and France – each contribute 6%–8% to the high wealth segment, and each country has experienced a small decline in its membership share during the year. For many years, these countries have occupied positions three to six in the global rankings, but this year China edged France out of sixth place, a dramatic improvement from the situation in 2000, when China’s representation in the top wealth groups was too small to register. Brazil, Korea and Taiwan are other emerging market economies with at least four million residents with a net worth above USD 100,000. Mexico accounted for more than 1% of the group in 2011, but has dropped below this benchmark this year. 

 

The Ultra-High Class (the very Top of the pyramid):

A different pattern of membership is again evident among the world’s millionaires at the top of the pyramid (see Figure 3). Compared to individuals with wealth  above USD 100,000, the proportion of members from the United States almost doubles to 39%, and the shares of most of the other countries move downwards. There are exceptions, however. France moves up to third place in the rankings, and Sweden and Switzerland both join the group of countries with more than 1% of global millionaires. Thank you Federal Reserve. 

 

Welcome to (say goodbye to) the Millionaire’s Club:

Changing membership of the “millionaire group”; Changes to wealth levels since mid-2011 have affected the pattern of wealth distribution. The overall decline in average wealth has raised the proportion of adults with wealth below USD 10,000 from 67.6% in mid-2011 to 69.3% in mid-2012 (as the poor get poorer), and reduced the number of millionaires by slightly more than one million (see Table 1). There were 962,000 new millionaires in the United States and 460,000 in Japan, but no significant increase in numbers elsewhere. However, Europe shed almost 1.8 million US dollar millionaires, most notably in Italy (–374,000), France (–322,000),Germany (–290,000), Denmark (–179,000), Sweden (–142,000) and Spain (–87,000). Australia, Canada, Brazil and Taiwan are the other countries in  the group of the top ten losers. The losses were sufficient to drop Brazil, Denmark and Taiwan (along with Belgium) from the list of countries with more than 1% of the total number of millionaires worldwide.

 

High net worth individuals; To estimate the pattern of wealth holdings above USD 1 million requires a high degree of ingenuity because at high wealth levels, the usual sources of wealth data – official statistics and sample surveys – become increasingly incomplete and unreliable. We overcome this deficiency by  exploiting wellknown statistical regularities in the upper parts of the wealth distribution to ensure that the top wealth tail is consistent with the annual Forbes tally of global billionaires and similar “rich list” data published elsewhere. This produces plausible estimates of the global pattern of asset holdings in the high net worth (HNW) category from USD 1 million to USD 50 million, and in the ultra high net worth (UHNW) range from USD 50 million upwards. While the base of the wealth pyramid is occupied by people from all countries of the world at various stages of their life cycles, HNW and UHNW individuals are heavily concentrated in particular regions and countries, and tend to share a similar lifestyle, participating in the same global markets for high coupon consumption items, even when they reside on different continents. The wealth portfolios of individuals are also likely to be similar, dominated by financial assets and, in particular, equity holdings in public  companies traded in international markets. For these reasons, using official exchange rates to value assets is more appropriate than using local price levels.

There are about 28.5 million HNW individuals with wealth between USD 1 million and USD 50 million in mid-2012, of whom the vast majority (25.6 million) fall in the USD 1–5 million range (see Figure 4). One year ago, Europe overtook North America as the region with the greatest number of HNW individuals, but tradition has been  restored this year, with 11.8 million residents (42% of the total) in North America and 9.2 million (32%) in Europe. Asia-Pacific countries excluding China and India have 5.7 million members (20%), and we estimate that there are currently a fraction under one million HNW individuals in China (3.4% of the global total). The remaining 753,000 HNW individuals (2.6% of the total) reside in India, Africa or Latin America.

Ultra high net worth individuals

There is an estimated are 84,500 UHNW individuals in the world, defined here as those with net assets exceeding USD 50 million. Of these, 29,300 are worth at least USD 100 million and 2,700 have assets above USD 500 million. North America dominates the regional rankings, with 40,000 UHNW residents (47%), while Europe has 22,000 individuals (26%), and 12,800 (15%) reside in Asia-Pacific countries, excluding China and India. In terms of individual countries, the USA leads by a huge margin with 37,950 UHNW individuals, equivalent to 45% of the group (see Figure 5). The recent fortunes created in China have propelled it into second place with 4,700 representatives (5.6% of the global total), followed by Germany (4,000), Japan (3,400), the United Kingdom (3,200) and Switzerland (3,050). Numbers in other BRIC countries are also rising fast, with 1,950 members in Russia, 1,550 in India and 1,500 in Brazil, and strong showings are evident in Taiwan (1,200), Hong Kong (1,100) and Turkey (1,000). Although there is very little comparable data on the past, it is almost certain that the number of UHNW individuals is considerably greater than it was a decade ago. The overall growth in asset values accounts for part of the increase, together with the appreciation of currencies against the US dollar over much of the period. However, it also appears that, notwithstanding the credit crisis and the more recent setbacks, the past decade has been especially conducive to the establishment of large fortunes.

 

Hail Bernanke (and Kuroda, and Draghi, and Carney, and Jordan, and so on), the ultra high net worth individuals on the chart below salute you.


    



 
Lobbying And GMO Giant Monsanto Buckles In Europe
Saturday, 01 June 2013 15:18
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Wolf Richter   www.testosteronepit.com   www.amazon.com/author/wolfrichter

(Read more…)

The “March Against Monsanto” in 52 countries, an unapproved strain of its genetically modified wheat growing profusely in Oregon, cancelled wheat export orders…. A rough week for Monsanto.

But now it threw in the towel in Europe – where its genetically modified seeds have faced stiff resistance at every twist and turn. Even its deep corporate pockets and mastery of lobbying have failed: “It’s counterproductive to fight against windmills,” its spokesman told the Tageszeitung.

The propitious week started last Saturday with the “March Against Monsanto,” when people in over 400 cities in 52 countries protested against the company, its influence over governments, and its GMO seeds. Much of it was focused on the mundane issue of labeling. Protesters wanted GMO ingredients in food to show up on the label, just like fat or protein. A simple solution to the controversy: let consumers decide.

But a red line for the industry. It’s worried that consumers will read the label – and choose an alternative. So Monsanto continued to assure us through its minions that labeling would be too costly, that it would kill the cupcake shop down the street, that we don’t need to know anyway because GMO foods are safe for human consumption, etc. etc.

These assurances bring up echoes from the past. Monsanto’s previous flagship products included the once harmless DDT, now banned worldwide; a family of industrial chemicals called PCBs that are now considered highly toxic; Agent Orange, the defoliant liberally used during the Vietnam War and promoted as harmless to people, with grave results for the Vietnamese and US soldiers who came in contact with it. And there was saccharine, the sweetener that ended up being a carcinogen. More recently, Monsanto reinvented itself and decided to save mankind not with a DDT successor, but with genetically modified seeds, whether people wanted them or not.

The hubbub of the “March Against Monsanto” had barely died down when the USDA confirmed that genetically modified wheat was mysteriously growing on a farm in Oregon. Something that we’d been assured could never happen. Numerous impenetrable precautions would prevent that. Monsanto had developed that strain years ago, but field trials ended in 2004, and the thing had never been approved for sale or consumption. The reaction was immediate.

Japan would “refrain from buying western white and feed wheat effective today,” a Japanese farm ministry official announced on Thursday, adding that the ministry is pressing the USDA for details of its investigation. US wheat imports would be on hold until at least a test kit is available to identify GMO wheat, he said. South Korea, which bought about half of its wheat imports from the US last year, announced that it would suspend imports of US wheat. The EU’s consumer protection office announced that any shipments that tested positive for GMO could not be sold in the EU. Other countries were making similar announcements. And everyone is badgering Washington for more information.

GMO contaminations have occurred before, most notoriously in 2006, when much of the US long-grain rice crop had been contaminated by an experimental strain of genetically modified rice concocted by Bayer CropScience. Japan and Europe banned imports of American rice, which caused its price to collapse in the US. The company settled with rice farmers in 2011 for $750 million. But rice export is small business in the US, compared to wheat. And this time, it’s Monsanto that is on the hot seat.

And now Monsanto threw in the towel in Europe where its efforts to bamboozle people into loving its seeds have had mixed results. “We won’t lobby any longer for cultivation in Europe,” Brandon Mitchener, Monsanto’s public affairs lead for Europe, told the Tageszeitung. They had no plans to apply for the approval of new genetically modified crops “at this time,” he said, and the company would also forgo new field trials with GMO seeds.

Monsanto’s largest European competitors – Bayer CropScience, BASF, and Syngenta – had already pulled out of the GMO crop business in Germany and many other Member States. “We understand that this doesn’t have wide acceptance right now,” chimed in Ursula Lüttmer-Ouazane, Monsanto’s spokeswoman in Germany.

Mitchener blamed it on the lack of interest from farmers. They have their reasons: in Germany, the cultivation of genetically modified crops is banned; and GMO foods, broadly rejected by consumers, are practically unsalable. Agriculture Minister Ilse Aigner, who’d thrown her weight around in 2009 to stop the cultivation of MON810 corn in Germany, explained it this way: “For agriculture in Europe, the promises of salvation made by the gene-technology industry have so far not been fulfilled.”

Monsanto’s surrender was only partial, however. In Spain, Portugal, and Romania, where laws and consumers were less squeamish about GMO crops, Monsanto would continue to hawk is MON810, Mitchener said. Nor was Monsanto finished lobbying in the EU: it would still try to get the EU to allow the import of GMO animal feed. But in terms of cultivation in Europe, Monsanto would focus on conventional seeds for corn, canola, and veggies.

Triumphs against multinational lobbying giants are rare. So, even mini triumphs count. And Monsanto’s admission that it would quit trying to force GMO crops down people’s throats in Europe, limited as this admission may be, is now celebrated as one of them.

Meanwhile, hunger is spreading from its strongholds in the global south to depression-hit Southern Europe. In Greece, reports are growing of children having to scrounge for food from classmates, while in Spain city dwellers have become inured to the spectacle of people rummaging in trash cans for a bite to eat. But there’s a reason. Read…. Starving the World for Power and Profit: The Global Agribusiness Model.