If you didn’t have ethanol, you would not have the prices we have today

The globe’s worst food crisis in a generation emerged as a blip on the big boards and computer screens of America’s great grain exchanges. As prices rise, major grain producers including Argentina and Ukraine, battling inflation caused in part by soaring oil bills, were moving to bar exports on a range of crops to control costs at home. It meant less supply on world markets even as global demand entered a fundamentally new phase.

At the same time, food was becoming the new gold. Investors fleeing Wall Street’s mortgage-related strife plowed hundreds of millions of dollars into grain futures, driving prices up even more. By Christmas, a global panic was building. With fewer places to turn, and tempted by the weaker dollar, nations staged a run on the American wheat harvest.

Foreign buyers, who typically seek to purchase one or two months’ supply of wheat at a time, suddenly began to stockpile. They put in orders on U.S. grain exchanges two to three times larger than normal as food riots began to erupt worldwide.

The food price shock now roiling world markets is destabilizing governments, igniting street riots and threatening to send a new wave of hunger rippling through the world’s poorest nations. It is outpacing even the Soviet grain emergency of 1972-75, when world food prices rose 78%. By comparison, from the beginning of 2005 to early 2008, prices leapt 80%. Much of the increase is being absorbed by middle men — distributors, processors, even governments.

At least 14 countries have been racked by food-related violence.The crisis, it fears, will plunge more than 100 million of the world’s poorest people deeper into poverty, forced to spend more and more of their income on skyrocketing food bills.

People worldwide are coping in different ways. Although China has tried to calm its people by announcing reserve grain holdings of 30 to 40% of annual production, a number that had been a state secret, anxiety is still running high. In India, the government recently scrapped all import duties on cooking oils and banned exports of non-basmati rice. Even wealthy nations are being forced to adjust to a new normal. In Japan, a country with a distinct cultural aversion to cheaper, genetically modified grains, manufacturers are risking public backlash by importing them for use in processed foods for the first time.

In the United States, experts say consumers are scaling down on quality and scaling up on quantity if it means a better unit price. In the meat aisles of major grocery stores, steaks are giving way to chopped beef and people used to buying fresh blueberries are moving to frozen. Some are even trying to grow their own vegetables.

A big reason for higher wheat prices, for instance, is the multiyear drought in Australia, something that scientists say may become persistent because of global warming. But wheat prices are also rising because U.S. farmers have been planting less of it, or moving wheat to less fertile ground. That is partly because they are planting more corn to capitalize on the biofuel frenzy. If market forces had played a larger role in food trade, some now argue, the world would have had more time to adjust to more gradually rising prices.

Consumers still face at least 10 years of more expensive food

From subsistence farmers eating rice in Ecuador to gourmets feasting on escargot in France, consumers worldwide face rising food prices in what analysts call a perfect storm of conditions. Freak weather is a factor. But so are dramatic changes in the global economy, including higher oil prices, lower food reserves and growing consumer demand in China and India. While the price of spaghetti has doubled in Haiti, the cost of miso is packing a hit in Japan.

In the long term, prices are expected to stabilize, but consumers still face at least 10 years of more expensive food. The Chinese middle class is starting to change the traditional thought process of beef as a luxury. Attempts to control prices in one country often have dire effects elsewhere. China’s restrictions on wheat flour exports resulted in a price spike in Indonesia this year, according to the FAO. Ukraine and Russia imposed export restrictions on wheat, causing tight supplies and higher prices for importing countries.

Boiler Room: An unflattering term used to describe a fraud scheme in which salespeople are hired to call unsuspecting individuals and push investment opportunities.

“Boiler rooms” that use high-pressure tactics to lure investors to buy stocks have become a worldwide problem, with operations identified in areas as far-flung as southeast Asia and Africa. Trying to close these operations, which commonly cold call potential investors and use fraudulent methods to push overpriced stocks, is a challenge because they can set up shop virtually anywhere and are hard to track.

Boiler rooms, a term that refers to the kind of makeshift offices these operations often use as their base, have been a focus of U.S. authorities for years. They involve brokers who refuse to say anything negative about the stocks they push and make baseless predictions about how much the shares are likely to jump.

One problem in monitoring the schemes is that the deceptive brokerages may hold themselves out as legitimate firms that are set up in one place but in fact are operating out of another locale. Southeast Asia and Africa are two regions where such activities have been identified, as well as in parts of Europe such as the UK and Spain.

International Organization of Securities Commissions (IOSCO), an umbrella organization for the world’s securities regulators, whose group promotes international cooperation among securities regulators, is pressing roughly half of its more than 100 member countries that have not yet signed a 2002 memorandum of understanding on sharing information. Most countries in the larger financial markets, including the United States, the UK, France, Germany, Japan and Australia, have signed the memorandum.

7 Countries Saying Bye Bye To The US Dollars

1. Saudi Arabia:  Saudi Arabia has refused to cut interest rates along with the US Federal Reserve. This is seen as a signal that a break from the dollar currency peg is imminent.
2. South Korea:  In 2005, Korea announced its intention to shift its investments to currencies of countries other than the US. There are whispers that the Bank of Korea is planning on selling $1 billion US bonds in the near future, after a $100 million sale this past August.
3.  China:  China is threatening a “nuclear option” of huge dollar liquidation in response to possible trade sanctions intended to force a yuan revaluation.
4. Venezuela:  In September, Chavez instructed Venezuela’s state oil company Petroleos de Venezuela SA to change its dollar investments to euros and other currencies in order to mitigate risk.
5. Sudan:   Sudan is, once again, planning to convert its dollar holdings to the euro and other currencies. Additionally, they’ve recommended to commercial banks, government departments, and private businesses to do the same.
6. Iran:  Iran is perhaps the most likely candidate for an imminent abandonment of the dollar. Recently, Iran requested that its shipments to Japan be traded for yen instead of dollars.
7. Russia:  They’ve discussed pricing oil in euros, a move that could provide a large shift away from the dollar and towards the euro, as Russia is the world’s second-largest oil exporter.

Why The Weak Dollar?  First, there’s the difference between the interest rate in the United States (the one the Federal Reserve just dropped) and the interest rates of other central banks around the world. When the United States dropped its rate, other banks did not follow. Now the spread between the interest rate at the European Central Bank and the Federal Reserve is smaller than it has traditionally been, and that has weakened the value of the dollar against the euro.

Second, central banks around the world have been diversifying their holdings away from dollars to euros, British pounds and so on. That means there are more dollars out there in currency markets available to purchase. More dollars floating around means diminished value.

What’s This All Mean?   Many of them want to protect their financial interests, and a number of them want to end the US oversight that comes with using the dollar. Although it’s not clear how many of these countries will actually follow through on an abandonment of the dollar, it is clear that its status as a world currency is in trouble. The dollar’s status as a cheaply-produced US export is a vital part of our economy. Losing this status could rock the financial lives of both Americans and the worldwide economy.

And we thought the French were the worst. The tourism slump is blamed on the shabby welcome many foreigners feel from Americans.

The number of foreign visitors to the United States has plummeted since the September 11, 2001 attacks on New York and Washington because foreigners don’t feel welcome. Since September 11, 2001, the United States has experienced a 17% decline in overseas travel, costing America 94 billion dollars in lost visitor spending, nearly 200,000 jobs and 16 billion dollars in lost tax revenue.

It’s clear what’s keeping people away in the post-9/11 environment: it is the perception around the world that travelers aren’t welcome. Travelers around the world feel the US entry experience is among the world’s worst. Do yourself a favor and be cordial to visitors. You’ll need the karma when you’re abroad.

Shanghai’s Jinmao Tower

The 101-story Shanghai World Financial Center, a 1,614 foot wedge-shaped tower with a rectangular hole at the very top, was topped out on Friday as its last beam was laid amid a drizzle that obscured the building’s panoramic view of endless high rises. After the Sept. 11, 2001, terrorist attacks in the United States, the building was redesigned into a so-called “megastructure,” with four huge pillars to make it stronger, said Japanese building tycoon Minoru Mori.

Taiwan’s Taipei 101, at 1,667 feet, beat the building’s height, taking the tallest sweepstakes in 2004. Developers of a skyscraper in oil-rich Dubai recently declared theirs the world’s tallest building when construction reached 1,680 feet — and the building is still far from finished.

Make Sure Your Prepared For Everything. Yes! Anything Can Happen to YOU

Only 40% of American companies have any type of travel risk-management program in place to help employees deal with medical emergencies, kidnapping and extortion threats or any of the other problems that can occur when traveling abroad, said Craig Banikowski, chairman of the global risk-management committee for the National Business Travel Association. The numbers are even more dismal when it comes to small business or the sole proprietor who travels. “People are under the impression that nothing bad can happen to them,” Mr. Banikowski said. “And if something does, they believe the embassy is going to step in and make everything right.” Truth is… “embassies can only do so much,” said Randy Spivey, executive director of the Safe Travel Institute, which provides survival training and travel risk-reduction training to companies like Wal-Mart and Boeing. “Business travelers have to take some responsibility to help themselves.” Small businesses and entrepreneurs do not have the resources of large corporations, but they can still mitigate risks. For example, experts suggest that you check out State Department warnings and advisories at travel.state.gov. The site also provides comprehensive information on other travel-related matters, including the role that United States embassies play when a traveler gets into trouble. They advise registering your trip with the State Department at http://travelregistration.state.gov/. Save those two sites for future travel.

• Make copies of all important documents, like a passport, credit cards, driver’s license and medical information and leaving a copy with a colleague or family member. Consider scanning and e-mailing these documents to yourself.
• Before going abroad for business/pleasure, find out if your medical policy covers sickness and injuries overseas. Even if policies do promise reimbursement, travelers probably will have to pay any costs upfront for medical care. Most insurance policies do not cover medical evacuation, which can easily run into the six figures.
• Purchase international health insurance. Some, for example, could range from a 10-day program for $80, which includes access to its 28 global alarm centers, medical assistance and evacuation, etc., to $4 to $6 a day for medical evacuation and cashless access to its worldwide network of 4,000 English-speaking doctors and 750 hospitals.

Payments Through Cell Phones

In many third world countries, where bank branches are few and far between, the development that finally may make financial services practical for the rural poor fits in the palm of a hand. Mobile devices like cellphones have the potential to effectively bring financial markets to the countryside, allowing banks and other lenders in urban areas to provide services like loans and savings accounts to a new population, according to a report by Vodafone and Nokia published last week.When Vodafone began a pilot microfinance project in Kenya in 2003 using mobile phones, said Nick Hughes, head of international payment services for Vodafone, “the idea was to reduce the cost of loan disbursal and recovery. But what we found was that customers were using it for person-to-person transfers” to make loan payments. As a result, three months ago, the company introduced a commercial program in Kenya to make payments possible by cellphone. Customer use has grown. One reason Vodafone has seen rapid growth in Kenya is that the formal banking sector reaches just 19% of its 36 million people. Jamii Bora, the largest microfinance institution in Kenya, has more than 150,000 borrowers.

Jamii Bora allows Kenyan clients in remote areas to make loan repayments, receive disbursements and conduct other transactions electronically. Once a client has logged in with a fingerprint, authenticating their identity on the point-of-sale device, they are connected to the central database in Nairobi. Geraldine O’Keeffe, director of implementation and support at Craft Silicon, the company that adapted point-of-sale devices for Jamii Bora, said she had seen other attempts to upgrade microfinance technology fail because of the cost of communications. The technology has allowed Jamii Bora to centralize operations and introduce a transparent accounting system to administer the loans and other services it provides, like health insurance. In doing so, the company said, it has increased efficiency and reduced the risk of fraud. If that reduces its operating costs, making the organization’s business more sustainable, Jamii Bora said, it could lower the size of its average loan from $95 and still break even.