Archive for January, 2011


Source: The Telegraph

Millions of the world’s poorest people and the state of the global economy are threatened by the food price rises, writes Geoffrey Lean.

‘Within a decade,” promised the top representative of the world’s mightiest country, “no man, woman or child will go to bed hungry.”

Dr Henry Kissinger, at the height of his powers as US Secretary of State, was speaking to the landmark 1974 World Food Conference. Since then, the number of hungry people worldwide has almost exactly doubled: from 460 million to 925 million.

And this week the airwaves have been full of warnings that the formidable figure could be about to increase further, as a new food crisis takes hold. Some experts warned that the world could be on the verge of a “nightmare scenario” of cut‑throat competition for the control of shrinking supplies.

The cause of such alarm? On Wednesday, the Food and Agriculture Organisation (FAO) reported that global food prices had hit a record high and were likely to go on rising, entering what Abdolreza Abbassian, its senior grains economist, called “danger territory”.

That is bad enough for Britain, adding to the inflationary pressures from the soaring cost of oil and other commodities, not to mention the VAT increase. But for the world’s poor, who have to spend 80 per cent of their income on food, it could be catastrophic.

Robert Zoellick, president of the World Bank, warns that the rising prices are “a threat to global growth and social stability”, and Nicolas Sarkozy has identified them as a priority for the G20, which he chairs this year.

Already they are higher than in 2008, when they drove the tally of the malnourished briefly above a billion for the first time in history, and caused riots in countries as far apart as Indonesia, Cameroon and Mexico. That ended nearly two decades during which the number of hungry people had stayed the same, while the world population grew by 1.2 billion, so that the proportion of an increasing humanity without enough to eat steadily fell.

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Source: Bradenton.com

David O’Brien is getting used to seeing damaged vegetables. The salesman for C&D Fruit and Vegetable in Manatee sees hundreds of acres of strawberries, cucumbers, beans and squash at the farm destroyed by the recent cold weather.

The result of all the produce destruction is being felt across the state as grocery shoppers are finding fresh vegetables in short supply along with soaring prices.

Arching her eyebrows at prices along the produce aisle, Ilene Ellman decided to alter her shopping routine.

Source: Natural News

Figures recently released by the Food and Agriculture Organization (FAO) index of 55 food commodities indicates that worldwide food prices hit a record high in December. Though the costs of some food commodities like rice, corn and soy actually decreased, oil seeds and sugar jumped significantly due to various factors including erratic weather and droughts, according to reports.

In the past, such ups and downs on the commodity market did not immediately affect actual food costs for consumers, but some experts say that this is no longer the case, and that “food inflation” will occur right alongside the commodity price gains. And rapid food inflation has already taken place in India, for example, with recent reports indicating that the country experienced an overall food inflation rate of 18 percent in 2010.

Low food stocks, droughts and poor weather conditions have all contributed to the escalating food crisis, which has led many nations to cut off exports in order to save supplies for their own populations. And the resulting global shortages only exacerbate the problem further as importing nations scramble to source needed commodities for their own populations.

Abdolreza Abbassian, a senior economist at the FAO, explained in a Bloomberg report that since not all commodity prices are rising, the overall indicator can be deceiving. Even so, prices across the board may increase as a result of a domino effect from the commodities that are in short supply, or even from the same conditions like droughts and poor weather that have caused shortages and price increases in the other categories.

Rising global food prices and supply uncertainty are just another reason why self-sufficiency is vital to long-term survival. Individuals who grow their own food and live off their own land as much as possible will not be affected by volatile supply and demand issues that affect the global food market.

Source: Financial Times

Brazil has warned that the world is on course for a full-blown “trade war” as it stepped up its rhetoric against exchange rate manipulation.

Guido Mantega, finance minister, told the Financial Times that Brazil was preparing new measures to prevent further appreciation of its currency, the real, and would raise the issue of exchange-rate manipulation at the World Trade Organisation and other global bodies. He said the US and China were among the worst offenders.

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Source: Bloomberg

Cash is king in Italy, a lesson Massimiliano Romano learned when he tried to pay for a cab with a credit card at Rome’s main train station.

“I thought my cards would be enough,” said Romano, head of research at brokerage Concentric Italy in Milan. “But I had to let 10 people go in front of me in the line before I found a driver who would accept a credit card.”

The Italian Banking Association has declared “war on cash” in a country where credit-card usage is less than half the European Union average, according to the Bank of Italy. The association, known by its Italian acronym ABI, says it costs banks and companies as much as 10 billion euros ($13.3 billion) a year to process cash payments, mainly in increased security and labor. Rome-based ABI aims to cut those expenses by promoting electronic payments with credit and debit cards and wire transfers in both the public and private sectors.

“Italy urgently needs these changes to catch up with other countries like France, which has allowed non-cash payments for public services for more than two decades,” said Rita Camporeale, head of payment systems and services at ABI.

Italy’s culture of cash is deeply rooted. Italians are the euro-region’s least-indebted consumers and among its biggest savers, according to 2009 Eurostat data. Companies often pay salaries in cash to evade taxes, particularly in Italy’s southern region, where organized crime is prevalent.

Lost Revenue

Italy loses about 100 billion euros of revenue a year from untaxed transactions in the so-called underground economy, which amounts to about 22 percent of gross domestic product, according to government statistics. The Finance Ministry agrees with ABI proposals to make public offices accept electronic payments and install point-of-sale terminals, Camporeale said in a Dec. 21 interview. Banks also want a ban on cash salaries, she said.

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Source: CS Monitor

Hungary, Poland, and three other nations take over citizens’ pension money to make up government budget shortfalls.

People’s retirement savings are a convenient source of revenue for governments that don’t want to reduce spending or make privatizations. As most pension schemes in Europe are organised by the state, European ministers of finance have a facilitated access to the savings accumulated there, and it is only logical that they try to get a hold of this money for their own ends. In recent weeks I have noted five such attempts: Three situations concern private personal savings; two others refer to national funds.

The most striking example is Hungary, where last month the government made the citizens an offer they could not refuse. They could either remit their individual retirement savings to the state, or lose the right to the basic state pension (but still have an obligation to pay contributions for it). In this extortionate way, the government wants to gain control over $14bn of individual retirement savings.

The Bulgarian government has come up with a similar idea. $300m of private early retirement savings was supposed to be transferred to the state pension scheme. The government gave way after trade unions protested and finally only about 20% of the original plans were implemented.

A slightly less drastic situation is developing in Poland. The government wants to transfer of 1/3 of future contributions from individual retirement accounts to the state-run social security system. Since this system does not back its liabilities with stocks or even bonds, the money taken away from the savers will go directly to the state treasury and savers will lose about $2.3bn a year. The Polish government is more generous than the Hungarian one, but only because it wants to seize just 1/3 of the future savings and also allows the citizens to keep the money accumulated so far.

The fourth example is Ireland. In 2001, the National Pension Reserve Fund was brought into existence for the purpose of supporting pensions of the Irish people in the years 2025-2050. The scheme was also supposed to provide for the pensions of some public sector employees (mainly university staff). However, in March 2009, the Irish government earmarked €4bn from this fund for rescuing banks. In November 2010, the remaining savings of €2.5bn was seized to support the bailout of the rest of the country.

The final example is France. In November, the French parliament decided to earmark €33bn from the national reserve pension fund FRR to reduce the short-term pension scheme deficit. In this way, the retirement savings intended for the years 2020-2040 will be used earlier, that is in the years 2011-2024, and the government will spend the saved up resources on other purposes.

It looks like although the governments are able to enforce general participation in pension schemes, they do not seem to be the best guardians of the money accumulated there.

The table below is a summary of the discussed fiscal-retirement situations (source):

*These figures do not include the costs of higher taxes, price inflation and low interest rates, which additionally devaluate retirement savings.

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