Canary in the Coal Mine Is in Southeast Asia
by Simon Black: Countries
That Can Weather the Age of Turmoil
Laos is a small,
landlocked economy in Southeast Asia thats often overlooked
in favor of its neighbors: Thailand, China, and even Cambodia. But
there are a few important factors that set Laos apart and lead me
to believe that, when it comes to inflation, the country is the
canary in the coal mine.
is one of the most sparsely populated countries in Asia; with just
6.3 million people, its numbers pale in comparison to regional neighbors
such as Burma (50 million), Thailand (67 million) and Bangladesh
The other thing
thats important about Laos is that the country is home to
some of the most fertile soil in the world: more than 20% of its
land mass is ripe for agricultural use. This is an astounding number,
and its no wonder that agriculture makes up the preponderance
of the Laotian economy.
way, Laos, with its vast resources and small population, might loosely
be considered an agricultural version of Kuwait. But Laos is nowhere
near as wealthy, since oil is much pricier than rice, soy, and fish.
Given its resources,
it certainly seems ironic that the prices of staple foods in Laos,
including rice, have soared in recent months, and that the Laotian
government is now under intense pressure to do something
this sort of thing to happen in Algeria, where the population is
35 million, where only 2% of the land is cultivated, and where agriculture
makes up but a tiny percentage of the economy
but in Laos?
This is akin to finding Kuwaitis unable to afford filling up their
cars due to high gas prices. Its unthinkable.
Thing is, its
not that there are food shortages in Laos; this isnt an issue
where supply has failed to keep up with demand (thus resulting in
rising prices). The price hikes are simply another indicator of
monetary inflation causing severe price inflation, particularly
in the developing world.
How does this
happen? The trillions of new currency units being compulsively manufactured
by central bankers are finding their way to developing countries.
This surge heats up local markets, causing prices to rise.
the rest of the article
January 19, 2011
© 2011 Sovereign Man