Food prices to rise for years, biofuel firms say

LONDON – Staple food prices will rise for some years, but should eventually fall to historical averages as harvests increase, biofuel company executives said on Thursday.

Soaring demand for better quality food from rapidly industrializing emerging markets such as China, supply shortages, increased demand for biofuels, and a surging appetite for food commodities by investment funds, have combined to push prices of basic foods higher and higher in recent months.

Stephane Delodder, managing partner of Netherlands-based consultancy iFuel Corporate Advisory, told a conference the problem of rising food prices would persist for some years.

Market forces should eventually help rebalance supply and demand, especially in markets which are not highly regulated, but this could take some time.

“(It could be) a few years at most before the situation returns to normal,” Delodder said.

He said grains and oilseed futures markets, which have corrected down recently after meteoric rises, may already be signaling that supply will rise as farmers raise plantings.

Read moreFood prices to rise for years, biofuel firms say

Lawmakers Heavily Invested in Defense

WASHINGTON (AP) – Members of Congress have as much as $196 million collectively invested in companies doing business with the Defense Department, earning millions since the onset of the Iraq war, according to a study by a nonpartisan research group.

Read moreLawmakers Heavily Invested in Defense

We spied on 36,000 customers using the internet, admits BT

BT tested secret “spyware” on tens of thousands of its broadband customers without their knowledge, it admitted yesterday.

It carried out covert trials of a system which monitors every internet page a user visits.

Companies can exploit such data to target users with tailored online advertisements.

An investigation into the affair has been started by the Information Commissioner, the personal data watchdog.

Privacy campaigners reacted with horror, accusing BT of illegal interception on a huge scale. Yesterday, the company was forced to admit that it had monitored the web browsing habits of 36,000 customers.

The scandal came to light only after some customers stumbled across tell-tale signs of spying. At first, they were wrongly told a software virus was to blame.


BT carried out undercover trials of a system which records every website a customer visits (below)

Executives insisted they had not broken the law and said no “personally identifiable information” had been shared or divulged.

BT said it randomly chose 36,000 broadband users for a “small-scale technical trial” in 2006 and 2007.

The monitoring system, developed by U.S. software company Phorm, accesses information from a computer.

It then scans every website a customer visits, silently checking for keywords and building up a unique picture of their interests.

If a user searches online to buy a holiday or expensive TV, for example, or looks for internet dating services or advice on weight loss, the Phorm system will add all the information to their file.

One BT customer who spotted unexplained problems with his computer was told repeatedly by BT helpdesk staff that a virus was to blame.

Read moreWe spied on 36,000 customers using the internet, admits BT

Rush to restrict trade in basic foods

Governments across the developing world are scrambling to boost farm imports and restrict exports in an attempt to forestall rising food prices and social unrest.

Saudi Arabia cut import taxes across a range of food products on Tuesday, slashing its wheat tariff from 25 per cent to zero and reducing tariffs on poultry, dairy produce and vegetable oils.

On Monday, India scrapped tariffs on edible oil and maize and banned exports of all rice except the high-value basmati variety, while Vietnam, the world’s third biggest rice exporter, said it would cut rice exports by 11 per cent this year.

The moves mark a rapid shift away from protecting farmers, who are generally the beneficiaries of food import tariffs, towards cushioning consumers from food shortages and rising prices.

Read moreRush to restrict trade in basic foods

Neuromarketing could make mind reading the ad-man’s ultimate tool

Neuroscience and marketing had a love child a few years back. Its name – big surprise – is neuromarketing, and the ugly little fellow is growing up. Corporate pitchmen have always wanted to get inside our skulls. The more accurately they can predict how we’ll react to stimuli in the marketplace, from prices to packages to adverts, the more money they can pull from our pockets and transfer to their employers’ coffers.

But picking the brains of consumers hasn’t been easy. Marketers have had to rely on indirect methods to read our thoughts and feelings. They’ve watched what we do in stores or tracked how purchases rise or fall in response to promotional campaigns or changes in pricing. And they’ve carried out endless surveys and focus groups, asking us what we buy and why.

The results have been mixed at best. People, for one thing, don’t always know what they’re thinking, and even when they do, they’re not always honest in reporting it. Traditional market research is fraught with bias and imprecision, which forces companies to fall back on hunches and rules of thumb.

But thanks to recent breakthroughs in brain science, companies can now actually see what goes on inside our minds when we shop. Teams of academic and corporate neuromarketers have begun to hook people up to functional magnetic resonance imaging (fMRI) machines to map how their neurons respond to products and pitches.

Read moreNeuromarketing could make mind reading the ad-man’s ultimate tool

81% of Americans think country on ‘wrong track’

WASHINGTON – FOUR out of five Americans believe things are ‘on the wrong track’ in the United States, the gloomiest outlook in about 20 years, according to a New York Times/CBS News poll.

The poll, released on Thursday, found that 81 per cent of respondents felt ‘things have pretty seriously gotten off on the wrong track’. That was up from 69 per cent last year and 35 per cent in early 2003.

Only 4 per cent of survey respondents said the country was better off than it was five years ago, while 78 per cent said it was worse, the newspaper said.

Read more81% of Americans think country on ‘wrong track’

Federal Reserve staff move into offices of investment banks to monitor activities

The US Federal Reserve has sent staff into some of Wall Street’s biggest firms and its New York branch is gathering evidence on key traders’ activities as America’s central bank raises its scrutiny of risk to an unprecedented level.

Fed staff have set up shop in Goldman Sachs, Morgan Stanley, Lehman Brothers, Merrill Lynch, and Bear Stearns to monitor their financial condition just days after Henry Paulson, the US Treasury Secretary, proposed that the Fed become the financial industry’s “risk czar”.

This is the first time in more than a decade that the Fed has put staff in securities firms and is a response, in part, to its decision to extend to investment banks the “discount window” of cheap loans traditionally offered only to the commercial banks. The Fed argues that if it is to act as lender of last resort to the securities firms, it should keep a closer eye on their activities.

The move comes as the central bank’s New York branch separately compiles a list of names and numbers of key traders in specific, esoteric securities such as auction rate preferred securities. These obscure instruments can be traded only at auctions and demand for them has virtually evaporated in recent weeks.

A senior US mutual fund executive, whom the Fed has approached, said: “They are looking in every corner to understand every esoteric financial product – who its traders are, who holds the most, whether its market is liquid and how great the losses could be. They are approaching people like me to find the key players in particular securities and then contacting them to find out the details. I have never heard of that being done before.”

Read moreFederal Reserve staff move into offices of investment banks to monitor activities

Individual bankruptcy filings up 27%

American Bankruptcy Institute says first-quarter filings rose as households creak under heavy debt load.

NEW YORK – The number of individuals filing for bankruptcy surged during the first-quarter as American households struggled to stay on top of debt, according to a report released Wednesday.

The American Bankruptcy Institute said that consumer bankruptcy filings increased 27% nationwide in the first three months of the year, compared with the same period last year. In March alone, 86,165 individuals filed for consumer bankruptcy – a 13% increase over the 76,120 cases filed in February.

“Bankruptcies are rising due to the heavy burden of household debt and growing mortgage problems,” said ABI Executive Director Samuel J. Gerdano. “We expect this trend to continue through 2008.”

The ABI found that nearly 32% of all consumer bankruptcy cases were Chapter 13 filings, which is available to individuals with regular income and calls for budgeting some of the debtor’s future earnings to pay off creditors.

April 2, 2008: 12:15 PM EDT

Source: CNN Money

Bernanke Warns of Possible Recession

WASHINGTON (AP) – Federal Reserve Chairman Ben Bernanke said Wednesday a recession is possible and policymakers are “fighting against the wind” in trying to steady a shaky economy. He would not say if further interest rate cuts are planned.

Bernanke’s testimony before the Joint Economic Committee of Congress was a more pessimistic assessment of the economy’s immediate prospects than a report he delivered earlier this year. His appearance on Capitol Hill came amid a trio of economic slumps in the housing, credit and financial areas.

“It now appears likely that gross domestic product (GDP) will not grow much, if at all, over the first half of 2008 and could even contract slightly,” Bernanke told lawmakers. GDP measures the value of all goods and services produced within the United States and is the best barometer of the United States’ economic health. Under one rule, six straight months of declining GDP, would constitute a recession.


Federal Reserve Chairman Ben Bernanke testifies on Capitol Hill in Washington,
Wednesday, April 2, 2008, before the Joint Economic Committee.
(AP Photos/Susan Walsh)

Read moreBernanke Warns of Possible Recession

USA 2008: The Great Depression

Food stamps are the symbol of poverty in the US. In the era of the credit crunch, a record 28 million Americans are now relying on them to survive – a sure sign the world’s richest country faces economic crisis

We knew things were bad on Wall Street, but on Main Street it may be worse. Startling official statistics show that as a new economic recession stalks the United States, a record number of Americans will shortly be depending on food stamps just to feed themselves and their families.


Disadvantaged Americans queue for aid in New York

Dismal projections by the Congressional Budget Office in Washington suggest that in the fiscal year starting in October, 28 million people in the US will be using government food stamps to buy essential groceries, the highest level since the food assistance programme was introduced in the 1960s.

Read moreUSA 2008: The Great Depression

A $43 Trillion Dollar Market That Most People Have Never Heard Of

According to Bill Gross, a fixed income market guru, the size of the credit default swap market is “$43 trillion, more that half the size of the entire asset base of the global banking system.” If that is not scary enough he goes on to tell is that “total derivatives amount to over $500 trillion, many of them finding their way”………………….well, everywhere.

You are going to be hearing a lot more about these markets in coming weeks and months, which begs the question, why don’t most people even know what they are? And more importantly, why should we care?

Read moreA $43 Trillion Dollar Market That Most People Have Never Heard Of

Companies use scans to track employees

Some workers are doing it at Dunkin’ Donuts, Hilton hotels, even at Marine Corps bases. Employees at a growing number of businesses around the nation are starting and ending their days by pressing a hand or finger to a scanner that logs the precise time of their arrival and departure – information that is automatically reflected in payroll records.

Manufacturers say these biometric scanners improve efficiency and streamline payroll operations. Employers big and small buy them with the dual goals of curtailing fraud and automating outdated record keeping systems that rely on paper time sheets.

The new systems, however, have raised complaints from some workers who see the efforts to track their movements as excessive or even creepy.

“They don’t even have to hire someone to harass you anymore. The machine can do it for them,” said Ed Ott, executive director of the New York City Central Labor Council of the AFL-CIO. “The palm print thing really grabs people as a step too far.”

Read moreCompanies use scans to track employees

The Subprime Crisis is Just Starting

(Excerpt: “For these reasons, there is a powerful, powerful case for moving a substantial portion of your assets into tangible assets. Good examples of tangible assets include gold, silver, commodities, real estate, farmland and energy.”)

Financial Sense

by Daniel R. Amerman, CFA | March 20, 2008

Print

Overview

As the author of three books on mortgage finance and related derivative securities, and speaking as someone who first turned mortgages into rated securities in 1983, Iā€™m going to let you in on an unfortunate little secret ā€“ the real subprime mortgage securitization crisis may not have even started yet. But, there is a good chance the real crisis will arrive soon.

This assertion that the crisis could just be getting started may seem absurd and extraordinarily out of touch. What about the approximately 45,000 homeowners losing their homes to foreclosure in the United States every month? What about the 8.9% plunge in nominal housing prices in 2007, the largest decline in over 20 years? What about Bear Stearns losing 94% of the value of its stock in 2 days, with even the remaining 6% in value being based on an unprecedented loan from the Fed before JP Morgan would agree to the acquisition? How much worse could it get?

Read moreThe Subprime Crisis is Just Starting

Chaos on Wall Street


THE BAILOUT BOYS: S.E.C. Chairman Christopher Cox (left) with Paulson, President Bush and Bernanke.

The big banks’ fear of big losses is threatening to bring down the entire system, with dire consequences for all of us. Here’s what’s going on, and what we can do about it.

(Fortune Magazine) — What in the world is going on here? Why is Washington spending billions to bail out Wall Street titans while leaving struggling homeowners to fend for themselves? Why are the Federal Reserve and the Treasury acting as if they’re afraid the world may come to an end, while the stock market seems much less concerned? And finally, what does all this mean to those of us who aren’t financial professionals?

Okay, take a few breaths, pour yourself a beverage of your choice, and I’ll tell you what’s happening – and what I think is going to happen. Although I expect these problems will resolve themselves without a catastrophic meltdown, I’ll also tell you why I’m more nervous about the world financial system now than I’ve ever been in my 40 years of covering business and markets.

Read moreChaos on Wall Street

On the brink of disaster

The three newbies – the term auction lending facility, the primary-dealer credit facility, and the term securities lending facility – total more than half-a-trillion dollars, with more if needed. Much of this money is available not only to commercial banks but also to investment banks, which normally aren’t allowed to borrow from the Fed.

How can the Fed afford this largesse? Easy. Unlike a normal lender, the Fed can’t run out of money – at least, I don’t think it can. It can manage monetary policy while in effect creating banking reserves out of thin air and lending them out at interest.

That’s how the Fed reported a $34 billion profit in 2006, the last available year, of which $29 billion was sent to the Treasury. The Fed can even add to its $800 billion stash of Treasury securities by borrowing more of them from other big players.

Then there’s the Treasury. In March the Treasury – which failed this past winter to get private firms to establish a $100 billion “superfund” (please, no giggles from people who equate the term with Love Canal) to keep things called “structured investment vehicles” from having to sell their holdings in a bad market – unleashed Fannie Mae (FNM) and Freddie Mac (FRE, Fortune 500) and the Federal Home Loan Banks to buy hundreds of billions of dollars of mortgage-backed securities.

Read moreOn the brink of disaster

Brace for $1 Trillion Writedown of `Yertle the Turtle’ Debt

Be it ever so devalued, $1 trillion is a lot of dough.

That’s roughly on a par with the Russian economy. More than double the market value of Exxon Mobil Corp. About nine times the combined wealth of Warren Buffett and Bill Gates.

Yet $1 trillion is the amount of defaults and writedowns Americans will likely witness before they emerge at the far side of the bursting credit bubble, estimates Charles R. Morris in his shrewd primer, “The Trillion Dollar Meltdown.” That calculation assumes an orderly unwinding, which he doesn’t expect.

“The sad truth,” he writes, “is that subprime is just the first big boulder in an avalanche of asset writedowns that will rattle on through much of 2008.”

Expect the landslide to cascade through high-yield bonds, commercial mortgages, leveraged loans, credit cards and — the big unknown — credit-default swaps, Morris says. The notional value for those swaps, which are meant to insure bondholders against default, covered about $45 trillion in portfolios as of mid-2007, up from some $1 trillion in 2001, he writes.

Morris can’t be dismissed as a crank. A lawyer, former banker and author of 10 other books, he knows a thing or two about the complex instruments that have spread toxic debt throughout the credit system. He once ran a company that made software for creating and analyzing securitized asset pools. Yet he writes with tight clarity and blistering pace.

Read moreBrace for $1 Trillion Writedown of `Yertle the Turtle’ Debt

IMF: U.S. Economy Will Go Into Recession In 2008

The International Monetary Fund will next week forecast that the US economy will go into recession this year, a German newspaper reported Tuesday, citing an upcoming report.

The IMF believes the US will experience at least two successive quarters of negative growth — the technical definition of a recession — and will grow only half a percent over the whole of 2008, weekly Die Zeit reported.

Read moreIMF: U.S. Economy Will Go Into Recession In 2008

As Jobs Vanish, Food Stamp Use Is at Record Pace

Driven by a painful mix of layoffs and rising food and fuel prices, the number of Americans receiving food stamps is projected to reach 28 million in the coming year, the highest level since the aid program began in the 1960s.The number of recipients, who must have near-poverty incomes to qualify for benefits averaging $100 a month per family member, has fluctuated over the years along with economic conditions, eligibility rules, enlistment drives and natural disasters like Hurricane Katrina, which led to a spike in the South.

But recent rises in many states appear to be resulting mainly from the economic slowdown, officials and experts say, as well as inflation in prices of basic goods that leave more families feeling pinched. Citing expected growth in unemployment, the Congressional Budget Office this month projected a continued increase in the monthly number of recipients in the next fiscal year, starting Oct. 1 – to 28 million, up from 27.8 million in 2008, and 26.5 million in 2007.

The percentage of Americans receiving food stamps was higher after a recession in the 1990s, but actual numbers are expected to be higher this year.

foodstamps.jpg

Read moreAs Jobs Vanish, Food Stamp Use Is at Record Pace

Subprime crisis hits governments

THE SUBPRIME mortgage crisis that pushed homeowners into foreclosure and forced the Federal Reserve to bail out investment banker Bear Stearns has also sent state and local governments across the country scrambling to refinance municipal bonds before they are hit with exorbitant interest rates.At the center of the storm are long-term variable-interest bonds known as “auction-rate securities.” Unlike traditional fixed-rate bonds, the interest rates on these securities are reset every 7, 28 or 35 days through an auction process.

Historically, the rate paid has been less than on traditional bonds, making the national $160-billion auction-rate market a reliable source of cheap financing.

But that market has collapsed in the past two months, sending interest rates climbing. As a result, California, Richmond, the Bay Area Toll Authority, the East Bay Municipal Utility District and Sacramento County are among countless government agencies forced to restructure their bond debts.

Read moreSubprime crisis hits governments

Big Traders Dive Into Dark Pools

The alternative trading systems are luring big institutional customers by offering greater privacy and lower costs. Their growth could affect big exchanges.It’s not easy being a big player in the stock market. Trading huge quantities of stock on traditional exchanges has become ever more challenging, costly, and potentially disruptive. And if other players see your moves, they can disrupt your trades. That’s led to the emergence in recent years of alternative trading systems known as dark pools. And their growth could have significant implications for big stock exchanges-and individual investors.

Read moreBig Traders Dive Into Dark Pools

Nasdaq Gives High Rollers A Market Free Of Regulation

Nasdaq is set to launch tomorrow what its executives are calling one of the most significant developments on Wall Street in decades — a private stock market for super-wealthy investors.Minimum requirement for traders: $100 million in assets.

Any private firm can list on Nasdaq’s new platform, which is called the Portal Market, and raise money by selling stock to an elite group of shareholders. These companies would remain private and not have to make public their financial statements or submit to federal regulation, such as the Sarbanes-Oxley corporate accountability law.

Read moreNasdaq Gives High Rollers A Market Free Of Regulation

Developer Sues to Win $12.3 Billion in 9/11 Attack

Larry A. Silverstein, who has won nearly $4.6 billion in insurance payments to cover his losses and help him rebuild at the World Trade Center site, is seeking $12.3 billion in damages from airlines and airport security companies for the 9/11 attack.Mr. Silverstein, the developer of ground zero, sought the damages, whose amount was not previously known, in a claim filed in 2004, that says the airlines and airport security companies failed to prevent terrorists from hijacking the planes used to destroy the buildings.

His case was consolidated last week with similar, earlier lawsuits brought by families of some victims of the attack and by other property owners. But in seeking $12.3 billion, he is by far the biggest claimant in the litigation.

Read moreDeveloper Sues to Win $12.3 Billion in 9/11 Attack