Feeding The Globe

The Fed is doing what it can to fight deflation here in the states, but the result across the world is rising food prices in developing nations, and the political instability that goes with it.

Overheating emerging markets, in China in particular, pose the biggest threat to the market and political situation in 2011 according to Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets.

 “These economies are clearly overheating and governments are putting measures in place to slow them down to fight inflationary pressure. More than anything else, food inflation is a problem," Gijsels told CNBC.com.

"In countries were 70 percent to 80 percent and sometimes more of a family's budget goes to food, explosive price rises risk to destabilize these societies. Remember the old saying: 'hunger starves civilizations,’” he added.

“We believe that some of these governments will be quite aggressive in their inflation fight. And we do not even want to think about the consequences if this year were to have a disappointing monsoon,” Gijsels said.

He is worried that everyone is so bullish on China’s ability to engineer a soft landing. 

“There is almost no emerging market bear to be found. And that in itself is already scary," Gijsels said.

Emerging markets in developing countries are heating up so fast that they threaten to overwhelm the world commodity market for staples like rice, wheat, corn and soybeans.  Population growth and loss of arable land and potable water is leading to food shortages across the globe.

We're only seeing the bleeding edge of this in places like Tunisia and Algeria.  It will get worse as time progresses.  Global population is approaching 6.9 billion this month and will pass 7 billion this year, and a major chunk of that population growth is in emerging markets.

It's an unfortunate reminder that America isn't in this alone out there in the challenges that face the planet.  We're already seeing the effects of shortages and futures skyrocketing in developed countries like France.

2011 is not going to be pretty as the next global crisis works its way through the system.