IMF – Why the spike in food/oil price is different from 2008

Wondering if history is repeating? IMF thinks that there are significant difference between the 2008 food/oil price spike and the one we are experiencing now in 2012. Main argument is that volatility is not the same as then and there is no uniform development across crops.

The analysis is sound in my mind. While I do not believe that the “IMF cure” is what we need with its focus on inflation as the only remedy. IMF acts like the surgeon who said “The operation was a success but the patient died”

However, one good point is that governments should reduce tax on food as a way to reduce the impact of a volatile food market.

Judge for your self:

http://www.imf.org/external/podcast/2012/Foodprices.mp3

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What is the difference between the crisis of 2011 and the one in 2008?

DAVOS/SWITZERLAND, 25JAN07 - Christine Lagarde...

Image via Wikipedia

We have another crisis looming here in 2011. The Greek economy is on the verge of collapse and many of the countries in southern Europe are in deep structural difficulties and we just do not have the options available that we had in 2008. But there are some key characteristics, which might help us pull through.

One might be that a lot of the stronger economies have pulled their resources and have made huge budget cuts. Here explained by Christine Lagarde director of the IMF.