In 2008 there was a major rice shortage in the world. Prices surged, and people were hurt/killed. This year (2011) we had another rice shortage, except this time it wasn’t a shortage. The world had a surplus of rice, yet the supply was cut off from the consumer. Governments refused to export rice, mainly from fear that they wouldn’t have enough for their citizens, but some also stopped exports because they knew they could profit from a shortage under-the-table. Some government officials in Southeast Asia profited by selling their stockpiled rice at very high prices. By stopping their exports, they created a fake shortage. There was plenty of rice to go around. Yet many people couldn’t buy rice for their family.
Recently I’ve been reading about the upcoming hard drive shortage. Thailand, one of the world’s largest manufacturers of hard drives has been suffering from heavy flooding. This has created a shortage. There’s no doubt about it. However, that shortage was projected to increase prices by around 10%. Instead, tech merchants started sounding an alarm that there was about to be a major shortage, and prices have jumped by as much as 180%. Many people I know are rushing to buy hard drives that they don’t actually need, just to avoid paying much higher prices for them later. This is a terrible time to buy hard drives. Sure their prices will be higher for a few quarters but eventually they’ll drop back down to what they are now. In fact, they’ll probably plummet as soon as production kicks back in to top gear. There will be a huge surplus of drives as everyone realizes they don’t really need as many as they bought. Merry Christmas, everyone!