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Source: SFGate

For the first time since 2008, inflation is hitting consumers in the stomach.

Grocery prices grew by more than 1 1/2 times the overall rate of inflation this year, outpaced only by costs of transportation and medical care, according to numbers released Wednesday by the U.S. Bureau of Labor Statistics.

Economists predict that this is only the beginning. Fueled by the higher costs of wheat, sugar, corn, soybeans and energy, shoppers could see as much as a 4 percent increase at the supermarket checkout next year.

“I noticed just this month that my grocery bill for the same old stuff – cereal, eggs, milk, orange juice, peanut butter, bread – spiked $25,” said Sue Perry, deputy editor of ShopSmart magazine, a nonprofit publication from Consumer Reports. “It was a bit of sticker shock.”

But it makes sense. Since November 2009, meat, poultry, fish and eggs have surged 5.8 percent in price. Dairy and related products have gone up 3.8 percent; fats and oils, 3 percent; and sugar and sweets, 1.2 percent.

While overall inflation nationwide was 1.1 percent, grocery prices went up 1.7 percent nationally and 1.3 percent in the Bay Area, said Todd Johnson, an economist for the Bureau of Labor Statistics office in San Francisco. “The largest effects on grocery prices here over the last month were tomatoes, followed by eggs, fish and seafood.”

Produce steady

Across the country, the price of produce has remained fairly steady. But the U.S. Department of Agriculture predicts that next year the price of fruits and vegetables, like many other food commodities, could go up. The government agency is forecasting a 2 to 3 percent food inflation rate in 2011 – a pace that is not unusual in a rebounding economy.

“We usually err on the conservative side,” said Ephraim Leibtag, a senior economist with the USDA, adding that “2011 holds a bit of uncertainty, so I wouldn’t be surprised if it goes higher. If it goes to 6 percent, then we should be worried.”

Michael Swanson, an agricultural economist at Wells Fargo, said that as long as corn, soybean and energy prices continue to climb, food inflation could reach 4 percent in 2011.

“The USDA always plays it safe,” he said, adding that the nation is likely to see the biggest increases since 2008, when the food inflation rate was a record 5.5 percent.

The global demand for corn – used for food and ethanol – has swelled so much that feed costs for farmers and ranchers are being passed on to the consumer, Swanson said.

Gas, diesel play a role

Gas and diesel prices also are playing a role. Wheat costs went through the roof this year when 20 percent of Russia’s crop was destroyed by drought and wildfires, causing the country, the third-largest producer in the world, to ban exports of the grain. The price of sugar, also used for ethanol in parts of the world, is priced at a two-decade high.

Kraft Foods Inc., one of the world’s largest food producers, has already announced plans to increase its prices because of mounting ingredient costs and flagging sales. General Mills, maker of everything from flour and baking mixes to cereal and Yoplait yogurt, has said it, too, will raise some of its product prices in January. Experts said consumers can expect the same from Kellogg’s and Nestle.

The silver lining, Swanson said, is that retailers such as major supermarket chains and big-box stores are likely to push back at wholesalers to keep prices from jumping too much.

“Food is a high-frequency driver,” he said. “So if stores like Walmart and Kmart want to get shoppers in the door, it’s to their benefit to keep prices low.”

Source:Bloomberg

JPMorgan Chase & Co. cut a large position in the U.S. silver futures market, the Financial Times said, citing an unidentified person familiar with the matter. The decision was made to try to deflect public criticism of its dealings in silver, the FT said. The bank declined to comment on whether it had cut its position, according to the report.

Source: RawStory

VATICAN CITY – This is no ordinary bank: The ATMs are in Latin. Priests use a private entrance. A life-size portrait of Pope Benedict XVI hangs on the wall.

Nevertheless, the Institute for Religious Works is a bank, and it’s under harsh new scrutiny in a case involving money-laundering allegations that led police to seize euro23 million ($30 million) in Vatican assets in September. Critics say the case shows that the “Vatican Bank” has never shed its penchant for secrecy and scandal.

The Vatican calls the seizure of assets a “misunderstanding” and expresses optimism it will be quickly cleared up. But court documents show that prosecutors say the Vatican Bank deliberately flouted anti-laundering laws “with the aim of hiding the ownership, destination and origin of the capital.” The documents also reveal investigators’ suspicions that clergy may have acted as fronts for corrupt businessmen and Mafia.

The documents pinpoint two transactions that have not been reported: one in 2009 involving the use of a false name, and another in 2010 in which the Vatican Bank withdrew euro650,000 ($860,000) from an Italian bank account but ignored bank requests to disclose where the money was headed.

The new allegations of financial impropriety could not come at a worse time for the Vatican, already hit by revelations that it sheltered pedophile priests. The corruption probe has given new hope to Holocaust survivors who tried unsuccessfully to sue in the United States, alleging that Nazi loot was stored in the Vatican Bank.

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Source: WSJ

A federal judge has ruled that — as claimed by the state of Virginia — the new health-care overhaul law violates the Constitution when it requires most adults to purchase health insurance.

However, the judge said the ruling applies only to the individual mandate and provisions that hinge on it, not the law in its entirety. Nor would he grant an injunction that would immediately suspend the law or the individual mandate.

Here’s the ruling itself. Here’s the WSJ story on the decision. And here’s how the WSJ Law Blog broke down the judge’s ruling.

In a blog post, the White House said it disagreed with the ruling and that the Department of Justice is considering its appeal options.

The individual mandate is one of the law’s most unpopular provisions. But a post-election poll by the Kaiser Family Foundation found that even among the 49% who want all or part of the health law repealed, a majority wants to hang onto the provision that guarantees insurance regardless of health status. Proponents of the mandate say it’s hard to figure out how to have universal coverage without a mandate that everyone be insured.

The White House has been pointing towards court victories of its own. Most were procedural, but a few were on the merits. Still, the end game for all of this is likely a hearing before the Supreme Court. The WSJ quotes an administration official as saying that “we are confident that this law is constitutional, and we are confident that the Supreme Court when, and if, it hears this case will agree that it’s constitutional.”

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Source: Christian Science Monitor

The cyber attacks against corporations that move against WikiLeaks founder Julian Assange appear to be escalating.

After bringing down his Swiss bank’s website last week, and MasterCard’s site Wednesday, a loose coalition of hackers calling themselves Operation Payback brought down Visa’s website Wednesday afternoon.

Companies are fighting back. In the latest salvo, Facebook and Twitter both pulled Operation Payback’s websites Wednesday afternoon, cutting key lines of communication with the “troops” in this cyber-battle.

What damage remains is hard to assess, as MasterCard and Visa continue to try to re-establish full functioning of their websites. If nothing else, Operation Payback has drawn attention to the vulnerability of many companies to this sort of cyber-attack. As President Obama said in May 2009, “This cyber threat is one of the most serious economic and national security challenges we face as a nation…. This status quo is no longer acceptable – not when there’s so much at stake. We can and we must do better.”

For the attackers, the real benefit may be attracting attention to their cause.

Where did these so-called cyberwars begin?

Last week, WikiLeaks announced the planned release of thousands of classified government cables. Their website was quickly knocked out, presumably by those who didn’t want the material released, but WikiLeaks shored up their digital defenses and proceeded.

Governments, media, and others reacted with shock to the leaked cables, and responded by accusing WikiLeaks founder Julian Assange of assorted crimes, closing his accounts, and calling for his extradition. Private companies got involved as well: Amazon.com stopped hosting WikiLeaks, PayPal stopped allowing money transfers to him at the urging of the State Department, and this week MasterCard and Visa followed suit.

Angry supporters of WikiLeaks saw these moves as attempted censorship, and announced that they would “fight for freedom.” A group of hackers collectively called “Anonymous,” photographed only in Guy Fawkes masks, stepped into the fray.

“Mastercard, Visa, Paypal, Amazon all betray America by betraying Free Speech,” wrote “Guy Fawkes” on the Operation Payback Facebook page, early Wednesday morning. “You will all be dealt with. Anonymous is on your case. WikiLeaks cannot be silenced!”

Anonymous responded to Assange’s real-world challenges with cybersphere assaults against the various organizations.

Anonymous’s offensive division, known as Operation Payback, controlled a digital “cannon” that could blast websites of their choosing through “distributed denial-of-service” (DDoS) attacks. Operation Payback had previously targeted groups that tried to prevent the illegal download of movies, music, and games, as well as the Church of Scientology (no relation to the Church of Christ, Scientist, that publishes The Christian Science Monitor) and KISS performer Gene Simmons.

Source: BCC

Web attacks on the Mastercard site have disrupted payments, the BBC has learnt.

The site is among several targeted by the Anonymous group of hackers, who have pledged to pursue firms that have withdrawn services from Wikileaks.

Mastercard, which stopped processing payments to the whistle-blowing site, said the attack had had “no impact” on people’s ability to use their cards.

But the BBC has been contacted by a payment firm that said its customers had “a complete loss of service”.

In particular, it said that an authentication service for online payments known as Mastercard’s SecureCode, had been disrupted.

Other readers have also said that have had problems with online payments.

Mastercard has not responded to the claims.

Earlier, Doyel Maitra of the firm, said: “Mastercard is experiencing heavy traffic on its external corporate website – Mastercard.com – but this remains accessible.

“We are working to restore normal speed of service. There is no impact whatsoever on Mastercard or Maestro cardholders’ ability to use their cards for secure transactions.”

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Source:Money Control: The price of silver rose to a 30-year high on Monday and gold was approaching its all-time peak after Ben Bernanke raised the prospect of an expansion of the Federal Reserve’s programme of quantitative easing.
Silver has risen 10% in the past week, and 66% since August, as concerns over the debasement of paper currencies have boosted its appeal.

Comments from Ben Bernanke, chairman of the Federal Reserve, suggesting that the US central bank could increase its USD 600bn quantitative easing programme, weighed on the dollar on Monday morning and buoyed precious metals.
Spot silver gained as much as 1.9% to trade at USD 29.90 a troy ounce, the highest since the Hunt brothers cornered the market and sent the price to USD 50 in 1980.
Investors also see it as a cheaper alternative to gold, and so more likely to see a rapid rise in price. Gold rose to USD 1,418.55 on Monday before slipping later in the session as the dollar recovered against the euro.
Edel Tully, precious metals strategist at UBS in London, said she expected gold to test its all-time nominal high of USD 1,424.10 “as the undercurrent of buying overwhelms investor profit-taking”.
“Precious metals generally should be supported this week by the renewed focus on US quantitative easing following Bernanke’s comments,” she said.
Palladium was hovering near a nine-year high of USD 776.22 a troy ounce set on Friday, while platinum slipped to USD 1,717 a troy ounce.
Elsewhere, European milling wheat hit a new two-year high, surpassing the peak it hit in the wake of Russia’s decision to ban grain exports in August. The benchmark March milling wheat futures in Paris rose to Euro 238.75 a tonne. CBOT December wheat, the US benchmark, gained 0.1% to USD 7.39 a bushel.
Emmanuel Jayet, agricultural commodities analyst at Société Générale, said he expected European wheat to rise further relative to the US contract.
“Europe is exporting wheat at a brisk pace,” Mr Jayet said. “European wheat exports are going to have to slow down in the second half of the marketing season. But this will only happen when European wheat is no longer competitively priced against US wheat.”

Source: The Guardian

The German chancellor, Angela Merkel, has warned for the first time that her country could abandon the euro if she fails in her contested campaign to establish a new regime for the single currency, the Guardian has learned.

At an EU summit in Brussels at the end of October that was dominated by the euro crisis and wrangling over whether to bail out Ireland, Merkel became embroiled in a row with the Greek prime minister, George Papandreou, according to participants at the event’s Thursday dinner.

Merkel’s central aim, which she achieved, was to win agreement on re-opening the Lisbon treaty so a permanent system of bailout funding and investor losses could be established to deal with debt crises that have laid Greece and Ireland low and are threatening Portugal and Spain. The Germans also called for bailed-out countries to lose voting rights in EU councils.

At the Brussels dinner on 28 October attended by 27 EU heads of government or state, the presidents of the European commission and council, and the head of the European Central Bank, witnesses said Papandreou accused Merkel of tabling proposals that were “undemocratic”.

“If this is the sort of club the euro is becoming, perhaps Germany should leave,” Merkel replied, according to non-German government figures at the dinner. It was the first time in the 10 months since the euro was plunged into a fight for its survival that Germany, the EU’s economic powerhouse and the lynchpin of the euro’s viability, had suggested that quitting the currency is an option, however unlikely.

Merkel’s spokesman Steffen Seibert would not comment on her remarks today. But the threat, he said, was “not plausible. The chancellor sees the euro as the central European project, wants to secure and defend it and the government is not at all thinking of leaving it,” he said. “Germany is unconditionally and resolutely committed to the euro.”

Despite overwhelming opposition to her calls for depriving eurozone countries of their EU votes if they need to be bailed out, Merkel stuck to her guns on the issue at the summit, while conceding that the proposal would not feature at another summit in Brussels in two weeks’ time.

She argued that under the Lisbon treaty, which came into force a year ago, EU member states can have their voting rights suspended if deemed guilty of gross human rights violations. “If this is possible for human rights infringements, the same degree of seriousness needs to be awarded to the euro,” Merkel told the summit, according to the witnesses. She shelved the demand for suspension of voting, however, but won the argument on more limited change of the treaty to enable a “permanent crisis mechanism” to be established for the currency from mid-2013. This was rechristened the European stability Mechanism at last Sunday’s emergency meeting of EU finance ministers in Brussels which decided on an €85bn (£72bn) bailout for Ireland.

Insisting on the loss of votes would have outraged most other EU governments. The Lisbon treaty would have needed renegotiation, opening a pandora’s box of possible referendums in Ireland, the Czech Republic, and Britain, and placing immense strain on the EU’s survival.

EU finance ministers are to meet again early next week ahead of the summit on 16-17 December. The mood in Brussels is febrile and there have been rumours of another extraordinary summit or session of finance ministers this weekend.

Officials said today there were “no plans” for a weekend session. But it is virtually taken for granted that Portugal will need to be bailed out and the €750bn rescue fund agreed in May may need to be increased as insurance against a Spanish emergency. Two EU ambassadors told the Guardian Portugal would need to be rescued very soon, despite repeated public statements to the contrary.

The summit in two weeks’ time, said a senior European diplomat, would be preoccupied with the treaty change needed for a permanent bailout mechanism to be established when the €750bn fund expires in mid-2013. “The real question is, is there enough in the fund? If not, how much more do we need?” the diplomat added.

“Portugal will need to be saved. The big issue is Spain,” said another senior diplomat.

Since the euro crisis erupted this year with Greece heading for sovereign debt default until it was bailed out in May, Merkel has repeatedly insisted that the primacy of politics over the financial markets has to be restored. That has yet to happen as Europe’s leaders flail around in a mood of worsening “panic and despair”, according to diplomats and officials in Brussels.

The current phase in the crisis started when Merkel and the French president Nicolas Sarkozy met in mid-October and delivered an ultimatum to the other 25 EU leaders: the treaty would be reopened and a permanent rescue system created which would entail “haircuts” or losses for creditors and investors if eurozone countries need to be bailed out.

Although this is to take place only from 2013, the markets took fright at the scale of potential bond losses, pushed Ireland’s borrowing costs ruinously high, and forced last week’s bailout of the Irish.

Diplomats, analysts, and officials generally agree that Merkel is right to focus on “moral hazard”, insisting that the markets and not only governments and taxpayers have to share the losses if a eurozone country implodes. But her timing could not have been worse, they add.

Source: Bloomberg

World food prices climbed for a fifth month, rising to the highest level in more than two years in November on higher costs for cereals, sugar and cooking oil, the United Nations’ Food and Agriculture Organization said.

The FAO’s index of 55 food commodities jumped to 205.4 points, the highest level since July 2008, the Rome-based agency said in a monthly report on its website today. The indicator rose from 198.1 points in October.

Food prices may rise further unless global grain production rises “significantly” next year, the FAO said in a Nov. 17 report. The cost of food rose to a record in June 2008, prompting deadly riots in countries from Haiti to Egypt.

The advance is the longest since January, when the price index rose for six months before declining in February. Prices climbed for an uninterrupted 18 months through March 2008, falling the next month before rising to a record.

The cereal-price index jumped to 224.9 points from 219.9, while the indicator for cooking-oil prices rose to 243.3 points in November from 220 points in the previous month. The gauge for sugar prices advanced to 374.7 points from 349.3.

The index for dairy prices rose to 207.8 from 202.6 points and the meat-price index was unchanged at 138.5 points, the FAO data showed.

The basis for the FAO index is 2002-04. The gauge includes commodity quotations that the agency considers representative for international food prices.

Source: ZeroHedge

Is the Kriger/Keiser “Short Squeeze JPM to Oblivion” plan working? Judging by the wholesale availability of silver (or lack thereof) the answer is a resound yes. In Coin Updates News we read that “as of today, there are no longer any regular wholesale supplies of the 1 ounce through 100 ounce silver rounds and bars available for immediate delivery.  It may be possible to locate incidental quantities of some product, but most wholesalers are now promising two to four weeks delivery to allow time for the silver to be fabricated.” Over the weekend we noted that even at the smaller, retail level, Silver American Eagles sold by the US Mint, have surged to a 2010 high in just the first three weeks of November. Is America now fully intent on ending Jamie Dimon’s domination over the precious metal space?

More on the wholesale silver shortage:

As a result of the shortages, premiums have started to rise.  So far, the increases have been modest, on the order of 0.5-2%.  However, if the shortage grows, expect to see further and larger premium increases in the coming weeks.  We could see a repeat of the late 2008 gold and silver buying frenzy, where product availability got as slow as 1-4 months after payment.

At the COMEX close yesterday, registered (dealer) silver inventories fell below 50 million ounces.  Even if you include the eligible (investor) silver inventories in the COMEX bonded warehouses, which are not available to fulfill COMEX deliveries unless the investor specifically chooses to do so, there were barely 107 million ounces to fulfill around 725 million ounces of contractual obligations.  COMEX silver inventories are now down more than 10% from mid-June even while the amount of silver owed has soared!

On September 16, the COMEX further raised the silver contract margin requirement to $7,250—even though the price of silver had been dropping since November 9!  What is suspicious is that a lot of “insiders” were liquidating their silver positions starting the afternoon of November 15.  Is it possible that they may have received advance notice of the coming change in the minimum margin account requirement and sold in anticipation of lower prices the next day?

The next round of gold and silver options expiration occurs on Tuesday, November 23.  The attempt to suppress gold and silver prices upon the release of the US jobs and unemployment report on November 5 was almost a complete failure.  Unless something is done to knock down gold and silver prices before November 23, a lot of call options will be exercised, which would further increase the demand for physical precious metals.

I suspect, as do many others, that the two rounds of increasing gold and silver margin requirements were timed for no other reason other than to try to help hold down prices through November 23.

Most of this should not be news to Zero Hedge regulars who now realize that the last battle of endless fiat liability dilution is being fought not in the stock market, but in the precious metals arena, where the onslaught of physical purchases versus shorting in paper claims has never gotten as far as it has in the past month. Should JPM be forced to continue covering, not even instituting an infinite margin requirement on silver purchases by the Comex will do much if anything to prevent the “dreaded” end of a fiat system. Speaking of, if anyone has the recent performance of Blythe Masters, we would be overjoyed if it were shared with the Zero Hedge community.

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