The World Bank’s global Food Price Index remains close to its 2008 peak

Global food prices remain high, partly due to increasing fuel prices, and the World Bank’s Food Price Index is around its 2008 peak. Since June 2010, an additional 44 million people fell below the $1.25 poverty line as a result of higher food prices. Simulations show that a further 10% increase in the Food Price Index could lead to 10 million people falling into poverty, and a 30% increase could increase poverty by 34 million people.

http://www.worldbank.org/foodcrisis/foodpricewatch/april_2011.html

Downgrading of U.S. Credit Rating Just Tip of the Iceberg

credit-reporting agency Standard & Poor’s downgraded the U.S. “AAA” credit rating from “stable” to “negative.” It was one big, loud message: if the U.S doesn’t get spending under control, its credit rating will be jeopardized further.

So how did the markets react? They gave us the opposite of what is expected. Instead of the U.S. dollar falling in value, it rallied. Bond prices, instead of declining, rallied. And gold stock prices declined with crude oil prices.

Why would U.S.-dollar denominated assets rally on the news of a U.S. credit rating cut (aside from trying to confuse the heck out of investors)? The reality of the situation is that investors still foolishly flock to U.S. dollars in times of uncertainty—even when the debt rating of the country issuing the dollars, the U.S., has been downgraded.

http://wallstreetpit.com/71669-downgrading-of-u-s-credit-rating-just-tip-of-the-iceberg

McDonald's warns of higher food inflation

* Q1 profit $1.15 per share vs Street view $1.14

* Sees more food inflation in United States, Europe

* Plans small price increases this year

* Will sacrifice some margin to protect traffic

* Shares down 1.5 percent

http://www.reuters.com/article/2011/04/21/mcdonalds-idUSN2113482820110421

Killer Combo of High Gas, Food Prices at Key Tipping Point

The combination of rising gasoline prices and the steepest increase in the cost of food in a generation is threatening to push the US economy into a recession, according to Craig Johnson, president of Customer Growth Partners.

With gas prices now standing at about $3.90 a gallon, energy costs have now passed 6 percent of spending—a level that Johnson says is a "tipping point" for consumers.

"Energy is not quite as essential as food and water, but is a necessity in today's economy, and when gasoline costs more than bottled water—like now—then it takes a huge bite out of disposable spending," he said, in a research note.

Of the six US recessions since 1970, all but the "9-11 year 2001 recession" have been linked to—of not triggered by—energy prices that crossed the 6 percent of personal consumption expenditures, he said. (During the shallow 2001 recession, energy prices had risen to about 5 percent of spending, which is higher than the long-term 4 percent share.)

http://www.cnbc.com/id/42704213

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Bank Of America Analyst Advocates The “Unthinkable” — An Intentional Default On US Debt

No one need create the catastrophic event otherwise feared from a temporary deferral of interest payments on Treasury debt arising out of a political conflict. Politicians on both sides of the debate could help to avoid that outcome by setting market expectations. With appropriate direction from Treasury or Congress, holders of Treasury debt could accrue their missed interest payments while continuing to accrue future interest payments.

http://www.blacklistednews.com/Bank_Of_America_Analyst_Advocates_The_%E2%80%9CUnthinkable%E2%80%9D_%E2%80%94_An_Intentional_Default_On_US_Debt_/13560/0/0/0/Y/M.html

U.S. Companies Shrink Packages as Food Prices Rise

U.S. food prices have been rising in the last year, but it seems the growth is only just beginning. A sharp jump in commodities' prices this year will soon result in sticker shock for American consumers.

Large food companies have recently announced that they will raise the prices they charge grocery retailers for commodities-based products. For example, a chocolate bar will cost more soon: Hershey last week announced a 10% increase for most of its confectionery goods.

http://www.dailyfinance.com/2011/04/04/u-s-companies-shrink-packages-as-food-prices-rise/

Secret memos expose link between oil firms and invasion of Iraq

Plans to exploit Iraq's oil reserves were discussed by government ministers and the world's largest oil companies the year before Britain took a leading role in invading Iraq, government documents show.

The papers, revealed here for the first time, raise new questions over Britain's involvement in the war, which had divided Tony Blair's cabinet and was voted through only after his claims that Saddam Hussein had weapons of mass destruction.

http://www.independent.co.uk/news/uk/politics/secret-memos-expose-link-between-oil-firms-and-invasion-of-iraq-2269610.html

BRICS Make Move to Shove Dollar Aside

China and four other leading high-growth economies have taken landmark steps toward lowering the importance of the dollar in international financial transactions — part of a seminal shift in the move towards a multicurrency reserve and trading system.

Mind you, you wouldn't get an idea of anything dramatic from reading the official Chinese press on the conclusion of a summit meeting of the so-called BRICS economies (Brazil, Russia, India, China and South Africa) in the southern resort twin of Sanya in southern China last week.

"Leaders call for peace and prosperity" was the front-page headline in the China Daily. Stirring stiff. Even more striking was the prominent story the previous day that China's President Hu Jintao and visiting Brazilian President Dilma Rousseff had agreed to quicken trade procedures for "gelatin, corn, tobacco leaf, bovine embryos and semen." At least we know there's no holding back the Chinese rhetorical flourishes on these issues.

http://finance.yahoo.com/banking-budgeting/article/112563/BRICS-move-dollar-aside-marketwatch?mod=bb-budgeting%20&sec=topStories&pos=3&asset=&ccode=

Wall Street shares slump as S&P downgrades US debt outlook

Ratings agency cuts long-term outlook from stable to negative for first time since Pearl Harbor attack 70 years ago

Shares fell heavily on Wall Street on Monday after a leading ratings agency fanned fears of Europe's debt crisis spreading across the Atlantic by issuing a strong warning about America's failure to tackle its budget deficit.

In a move seen by Wall Street as a "shot across the bows" of bickering politicians in Washington, Standard and Poor's (S&P) said it was cutting the outlook on the US's long-term rating from stable to negative for the first time since the attack on Pearl Harbor 70 years ago.

http://www.guardian.co.uk/business/2011/apr/18/us-economy-credit-rating

Insolvent and Going Deeper

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Insolvent and Going Deeper
Share46EmailWednesday, April 13, 2011, 6:45 pm, by cmartenson
The US budget process is entirely out of control. By extension, its fiscal future is rather bleak.

All one has to do is back up two steps, entirely ignoring the meaningless budget scuffles currently ongoing in DC, to see that the federal government's fiscal situation is in complete shambles. In fact, as things currently stand in terms of spending and revenues, the US government is insolvent - its liabilities vastly exceed its assets on a net-present-value basis.

Yes, Obama has just laid out a plan that calls for cutting some $4 trillion of new, incremental deficit additions over the next 12 years, but this merely obscures the fact that the deficit will still grow by a rather hefty amount nonetheless. Plans from both sides of the aisle call for adding more debt but at a slower pace. True, that's progress of a sort, but not the type of progress you want to bring home to meet your mother.

http://www.chrismartenson.com/blog/insolvent-and-going-deeper/56407

World Bank: Food prices have entered the 'danger zone'

Food prices have entered the “danger zone”, threatening to condemn a generation to extreme poverty and malnutrition, the World Bank has warned.

Robert Zoellick, World Bank president, said food prices are at “a tipping point”, having risen 36pc in the last year to levels close to their 2008 peak. The rising cost of food has been much more dramatic in low-income countries, pushing 44m people into poverty since June last year.

http://www.telegraph.co.uk/finance/economics/8451684/World-Bank-Food-prices-have-entered-the-danger-zone.html

Toxic Dollar: Why Nobody Seems to Want US Currency

Traders are warning of a dramatic change in dollar selling. They fear central banks from the Middle East may force their Asian rivals to more aggressively drive the dollar down.

In 10 months, the Dollar Index has lost 14% because the world keeps accumulating dollars it doesn’t want and sells them. Asian central banks are key.

Many Asian central banks have been forced into waging wars to keep their currencies from appreciating because of the influx of investors to emerging markets. They sell waves of their own currencies into the market in an attempt to keep exports competitive.

http://www.cnbc.com/id/42479791

Treasury may borrow federal retirement funds in debt emergency

The government could temporarily tap tens of billions of dollars from two federal employee retirement programs if Congress fails to raise the federal debt ceiling next month, Treasury Secretary Timothy Geithner told lawmakers.

The government expects to hit a $14.3 trillion debt ceiling on May 16 or before, Geithner said in a Monday letter.

Geither implored Congress to extend the debt ceiling by that deadline and said that if Congress does not, Treasury will be forced to borrow money from the Civil Service Retirement and Disability Fund, and the Thrift Savings Plan's Government Securities Investment Fund, or G Fund, both of which are invested in U.S. Treasury securities. Those two moves could free up $142 billion through early July.

The government has taken similar steps before with no effect upon federal retirees. If the debt ceiling is extended by Congress within a couple months of the deadline, retirees and TSP participants should have nothing to worry about, several experts said. By law, both funds have to be repaid with interest, said Susan Irving, director for federal budget analysis at the Government Accountability Office.

http://www.federaltimes.com/article/20110405/BENEFITS02/104050306/

Sales of wholesale goods slip in February

Wholesale businesses boosted inventories for the 14th consecutive month but sold fewer cars, pieces of furniture and petroleum products in February.

Sales at the wholesale level slipped 0.8 percent in February, the first setback since June 2010, the Commerce Department reported Friday.

Inventories rose 1 percent and have been rising for more than a year. The string of inventory gains pushed them to $438 billion, up 13.4 percent from the low reached in September 2009.

The drop in sales is likely temporary, given expectation for gains in consumer demand in coming months, supported by tax cuts and stronger employment growth.

Auto sales at the wholesale level dropped 2.2 percent, furniture sales fell 2.2 percent, and sales of petroleum products declined 1 percent. Sales of petroleum products had surged 10.8 percent in January, a rise that was heavily influenced by a spike in oil prices.

http://finance.yahoo.com/news/Sales-of-wholesale-goods-slip-apf-1004846056.html?x=0

PIMCO goes short US government debt, raises cash holdings

PIMCO has shifted to a short position in U.S. government-related debt in the world's largest bond fund, while also raising cash holdings in a sign of the asset manager's serious concerns about the U.S. fiscal outlook.

http://www.reuters.com/article/2011/04/11/pimco-bonds-short-idUSL3E7FB10S20110411

$5 Fees May Be Coming to an ATM Near You

J.P. Morgan Chase [JPM 46.35 0.25 (+0.54%) ] and other banks are trying to recoup approximately $30 billion a year in lost overdraft fee income by testing $5 ATM fees, Consumer Action spokesman Joe Ridout told CNBC.

These banks have "historically been reliant on overdraft fees," he said, so they're "coming up with new ways to make up the difference." He said higher ATM fees and other rising costs penalize small depositors.

http://www.cnbc.com/id/42357880

Jim Rogers Predicts Soaring Oil Prices

“The price of oil is going to go much higher over the next decade,” said Jim Rogers, Chairman of Rogers Holdings. He added the demand for oil and natural gas will rise in the next few years as nuclear demand falls in response to Fukushima, but “we need nuclear whether we like it or not.”

http://www.prisonplanet.com/jim-rogers-predicts-soaring-oil-prices.html

Dimon Says a Hundred Municipalities in U.S. Won’t ‘Make It’ Out of Debt

JPMorgan Chase & Co. (JPM) Chairman and Chief Executive Officer Jamie Dimon said some municipalities will need to renegotiate debt and a hundred may not “make it.”

“I wouldn’t panic about what I’m about to say,” Dimon, 55, said today at a U.S. Chamber of Commerce event in Washington. “You’re going to see some municipalities not make it. I don’t think it’s going to shatter America, I just think it’s a part of the credit cycle.”

Speculation about widespread municipal-bond defaults intensified in December when bank analyst Meredith Whitney predicted that “hundreds of billions” of dollars of municipal bonds may default in 2011 amid pressure to balance budgets.

http://www.bloomberg.com/news/2011-03-30/dimon-says-hundreds-of-municipalities-in-u-s-won-t-make-it-out-of-debt.html