Cost of food up globally

(Reuters) – Global food prices rose in March for a third straight month with more hikes to come, the UN’s food agency said on Thursday, adding to fears of hunger and a new wave of social unrest in poor countries.

Record high prices for staple foods last year were one of the main factors that contributed to the Arab Spring uprisings in the Middle East and North Africa, as well as bread riots in other parts of the world.

The cost of food has risen again this year after coming down from a February 2011 record peak.

The FAO index, which measures monthly price changes for a basket of cereals, oilseeds, dairy, meat and sugar, averaged 215.9 points in March, up from a revised 215.4 points in February, the United Nations’ Food and Agriculture Organisation (FAO) said.

Although below the February 2011 peak of 237.9, the index is still higher than during a food price crisis in 2007-08 that raised global alarm.

“The food crisis has not gone away since then,” said Emilia Casella, spokeswoman for the U.N.’s World Food Programme. “Prices are a big concern and have remained a large reason why people are food insecure.”

The FAO’s senior economist and grain analyst Abdolreza Abbassian told Reuters there was scope for more price rises in the first half of this year, particularly for corn and soybeans, which could also drive up the price of wheat.

Higher food prices mean higher import bills for the poorest countries, which do not produce enough food domestically.

ST. LOUIS (Reuters) – A top Federal Reserve official said on Thursday that the central bank’s projection of late 2014 for the first likely increase in interest rates sends too pessimistic a signal as the economic recovery strengthens.

“The 2014 language in effect names a date far in the future at which macroeconomic conditions are still expected to be exceptionally poor,” St. Louis Federal Reserve President James Bullard said. “This is an unwarranted pessimistic signal for the (Fed) to send.”

Bullard, who is not a voting member of the Fed’s policy-setting Federal Open Market Committee this year, said the central bank should now pause for several months and assess developments in the economy.

The June end of the Fed’s current program of lengthening the average maturity of its bond portfolio — known as “Operation Twist” — should not be interpreted as a de facto tightening of monetary policy if it is not replaced by any new programs, he said.

“I don’t think the end of the program is a particularly significant event,” he said.

Interest rates did not spike as some had feared after the Fed ended past easing initiatives and are unlikely to jump when Twist ends, Bullard added.

His comments illustrate a likely debate within the Fed on whether to declare that recent improvements in labor markets signal the recovery is firmly on track and policymakers should begin to consider the timing of the exiting their ultra-accommodative monetary policy stance.

Bullard is viewed as a centrist on the spectrum of Fed officials, although he has recently stressed his belief in the durability of the recovery and his concern about the risks of committing over a long period of time to an ultra-easy stance.

However, a core group of Fed leaders, including Chairman Ben Bernanke, have been more cautious about the outlook, questioning whether the lofty 8.3 percent unemployment rate will continue falling as quickly as it has since last August.

The Fed cut rates to near zero in December 2008 and has bought $2.3 trillion in bonds to keep rates low and boost growth. Minutes of the Fed’s March policy meeting released Tuesday showed that at that gathering, a dwindling number of officials thought the central bank should launch another bond-buying initiative if the outlook worsened.

Fed officials disagree on how to calibrate policy given the conflicting pressures of continued high unemployment and a brightening outlook for the economy. While some still believe the central bank should be poised to deliver more stimulus should the recovery falter, others like Bullard believe monetary policy is close to the limits of its abilities to spur faster growth.

Bullard on Thursday reiterated his view that the so-called output gap — how much the economy is falling short of its full potential — is overstated.

LONDON (Reuters) – Gold prices rose on Thursday as its fall to a near three-month low the previous day tempted some buyers back, but gains were capped by a rise in the dollar and fading hopes for more U.S. monetary stimulus.

Spot gold was up 0.6 percent at $1,628.34 an ounce at 1420 GMT. It briefly broke back above $1,630 an ounce as a drop in jobless claims pulled the dollar from its highs and stocks from their lows, but was unable to sustain the move.

Commerzbank analyst Daniel Briesemann said a countermove after the sharp price fall of recent days was to be expected, but said he expects prices to trade lower, possibly below $1,600 an ounce, after the current correction has run its course.

“Gold is highly correlated to equities and commodities at the moment and as long as the equity markets and the commodity markets are going down, so is gold,” he said.

European shares hit a two-month low on Thursday and more losses are expected as worries build over Spain’s debt burden and the possibility of more trouble in weaker euro zone states. safe-haven German bunds rose.

Investors will be looking to the March nonfarm payrolls report from the United States on Friday for further clues on the health of the labour market.

A spate of better-than-expected U.S. economic data has curbed investor appetite for gold by raising expectations that quantitative easing will prove unnecessary, especially after Fed minutes on Tuesday suggested more monetary stimulus was unlikely.

Ultra-loose monetary policy, which keeps real interest rates and consequently the opportunity cost of holding gold low, helped push the metal to record highs in 2011.

FRANKFURT (Reuters) – European Central Bank President Mario Draghi dismissed a German-led push for the bank to start planning a retreat from emergency crisis-fighting, but stressed it was keeping a close eye on price pressures.

After holding interest rates at a record low of 1.0 percent of Wednesday, Draghi said “downside risks to the economic outlook prevail” and the ECB would need time to see the full impact of bumper funding operations it has used to help banks.

The ECB has pumped over 1 trillion euros into the financial system with the twin 3-year funding operations, or LTROs, to head off a credit crunch that late last year risked exacerbating the euro zone crisis and jeopardizing the currency project.

Draghi dismissed the push to begin preparing an exit from the ECB’s crisis mode – a drive led by Bundesbank President Jens Weidmann, with whom Draghi has stressed in recent months he has an excellent relationship.

“Given the present conditions of output and unemployment, which is at historical high, any exit strategy talking for the time being is premature,” he said, adding bluntly: “I think the president of the ECB is the one who has the last word on this.”

(CNN) — The U.N. Commission of Inquiry on Syria recently determined that the fighting in Syria is not an “armed conflict” (PDF) — the legal term for war — under international law because the opposition forces are not sufficiently organized. Yet surely the protesters, dissident fighters and terrified citizens caught up in the violence in Syria believe they are at war.

States and other international legal experts are following the same overly technical approach and, as a result, not applying the law designed for just this situation: the law of war. The international community is left unable to use every available tool in its efforts to halt the violence and protect civilians from extraordinary suffering.

Failing to call Syria’s upheaval an armed conflict — the legal term for war — has real and immediate consequences. Contrary to what events in Syria suggest, war is not waged in a legal vacuum. International law regulates permissible conduct during war, even civil war.

The law of war exists specifically to restrain brutality in war, protect innocent civilians from direct attack and minimize suffering. It prohibits deliberate attacks on civilians and using them as human shields, requires humane treatment of the wounded or detained personnel, obligates parties to respect and protect medical aid providers, mandates efforts to facilitate delivery of humanitarian relief, and imposes criminal responsibility on those who disregard these obligations. These basic and essential protections apply during any armed conflict.

NEW YORK (CNNMoney) — As U.S. sanctions on Iran tighten and gas prices reach record levels, it is becoming more likely that a release of oil from the U.S. Strategic Petroleum Reserve is in the works. Yet analysts aren’t convinced tapping the SPR is a good idea.

Administration officials said Friday that reserves from the SPR were taken into account when they determined that oil markets could handle the loss of Iranian oil.

Even before the tighter sanctions were announced, there was talk the administration was working with European countries on a plan to tap oil reserves in both the United States and Europe. The rumors have already pushed global oil prices down slightly, although they remain over $120 a barrel.

Still, analysts are skeptical about what impact tapping the SPR would have on prices.

NEW YORK (CNNMoney) — It’s crunch time for Detroit.

City and state officials are facing a Thursday deadline to save the city from the threat of looming financial insolvency or a takeover of city government by Michigan.

Fierce opposition from unions — in a city that remains a bastion of labor power — has so far stymied efforts to pass a rescue package.

A deal backed by Mayor Dave Bing and Michigan Gov. Rick Snyder, a Republican, would grant the city the power to void contracts and slash costs but not provide state funding or loans to bail the city out of its financial problems.

Without city council agreement on that deal, Snyder can by law appoint an “emergency manager” who will assume the powers of the mayor and council to run day-to-day operations. He has until Thursday to take such action.

The city council is under pressure from the public and city unions to reject the deal with the state. At the same time, it would lose its powers if Snyder goes ahead and names an emergency manager.

The council was set to meet again Wednesday. So far the only action it has taken this week to deal with the crisis was to double the city’s corporate income tax to 2%.

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In a move that shows Republicans are coalescing around the party’s front-runner, Mitt Romney plans to begin raising money jointly with the Republican National Committee this week as both the candidate and the GOP brace for an expensive general-election fight against President Barack Obama.

The arrangement will allow top donors to write checks as large as $75,000 per person, by giving to party organizations in addition to the campaign. That’s far more than the $2,500 ceiling that applies to individual donations to a presidential candidate for the fall election.

The move reflects a general clamor within the party to begin amassing the funds needed to compete with Mr. Obama’s fundraising operation, Romney and RNC advisers said. “Our donors are ready to mobilize for November,” said Andrea Saul, a Romney spokesperson. For the Republican nominee to be able to compete with the president’s re-election effort, “they need to get started now.”

Acknowledging that the nomination fight isn’t over, the RNC also invited other candidates to participate in joint fundraising, but with little expectation they would agree, RNC officials said. A spokesman for Newt Gingrich said he didn’t plan to work alongside the RNC. Rick Santorum’s campaign said they had no plans to join forces, but “would be happy to raise money with the RNC.” Ron Paul’s campaign declined comment. It makes little sense for challengers scrapping for cash in the primaries to ask donors to give large sums to the party, GOP operatives said.

Eyeing potential wins Tuesday in Wisconsin, Maryland and the District of Columbia, the Romney campaign also plans to move this week to raising funds for the general election, a step it has delayed for months as all donations have gone to fund Mr. Romney’s primary campaign.

“We’re already a little behind where we should be. The sooner we get at this, the better,” said Brian Ballard, one of Mr. Romney’s top fundraisers in Florida and a member of his national finance team.

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Maybe President Obama should have bought shares in Groupon’s I.P.O.

If he had, he would understand what some Groupon investors may be feeling as he prepares this week to sign a new piece of legislation to help start-ups get financing. Had he purchased $10,000 worth of shares on the open market on the first day of public trading for Groupon, the online coupon company based in his hometown Chicago, he would have lost a good chunk of his investment, putting him in the red by almost $4,100 today.

That means he would have lost about 41 percent of his investment in Groupon in just five months, while the Nasdaq rose some 16 percent. All the while, Groupon has faced nagging questions about accounting irregularities and continued losses. This is despite the fact that its co-founder Eric Lefkofsky had publicly promoted the stock – against Securities and Exchange Commission rules – saying that “Groupon is going to be wildly profitable.”

So Mr. Obama may want to weigh the fate of Groupon’s investors as he sits down on Thursday to put his signature on the Jumpstart Our Business Startups Act. That legislation is intended to help start-ups raise capital and go public, but may also lead to many more money-losing, Groupon-like I.P.O.’s.

The measure, known as the JOBS Act, is a well-intentioned bill with bipartisan support aimed at making it easier for small businesses to find investors early and to continue to grow in the public markets by lowering some of the bureaucratic barriers. It also promotes “crowdfunding,” a mechanism by which entrepreneurs can raise up to $1 million online from individual investors with minimal financial disclosure.

Its goal is noble: start-ups and small businesses are the lifeblood of our economy, and it is hard to argue with helping entrepreneurs build businesses and hire employees.

LONDON (Reuters) – One of London’s most prominent bankers was fined 450,000 pounds ($720,000) for passing on inside information in a case that will embarrass his employer J.P. Morgan Cazenove and which marks a push by British regulators to target high-profile figures.

Top “rainmaker” Ian Hannam resigned on Tuesday, to fight the fine imposed by the Financial Services Authority (FSA) in relation to 2008 emails that contained information about one of his clients, Heritage Oil.

The gruff former special forces soldier, who rose from humble beginnings, is the fifth person to be fined in relation to improper disclosure this year by the regulator, which has previously been accused of being ineffectual in its fight against financial crime. Of the five, Hannam is the most prominent.

Hannam resigned from his position as JPMorgan’s Global Chairman of Equity Capital Markets, after two decades at the firm, JPMorgan informed staff in an internal memo, which became the talk of the London financial world.

Hannam, a veteran banker in his fifties with a focus on resources and mining and whose current deals include advising miner Xstrata (XTA.L) on its merger with Glencore (GLEN.L), said he had fully cooperated with the FSA and would appeal against the decision.

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In an unexpected reversal, both newly started foreclosures and finalized foreclosures dropped precipitously in February.

So-called foreclosure starts fell 15.2 percent month-to-month. Foreclosure sales, the final stage of the process (not sales of already bank-owned properties) fell 19 percent month-to-month, according to a new report from Lender Processing Services.

Most had expected both starts and sales to ramp up, following the $25 billion dollar settlement between five of the nation’s largest banks and state attorneys general and federal agencies over the now infamous “robo-signing” scandal. The drop in finalized foreclosures was nationwide, in states where a judge is involved in the process as well as in non-judicial states.

“For both foreclosure starts and sales, we’re finding that so far, the sustained increase isn’t there, though we do see sporadic ‘bursts’ of activity,” says Herb Blecher of LPS Applied Analytics. “These are sometimes focused around particular investors (i.e., Fannie Mae and Freddie Mac foreclosure starts) and may reflect seasonal trends, loss-mitigation activities, legislative impacts, or other operational factors. We can’t say specifically what those bursts correlate to, because we just don’t see that in the data.”

This sudden stall, however, if prolonged, could lead to an overall drop in home sales, given that foreclosures are such a large share of the market. That has at least one well-known analyst warning of more problems ahead for housing.

“Through relentless meddling with delusions that ‘foreclosures are bad,’ they effectively destroyed the macro housing market,” says California-based mortgage analyst Mark Hanson, referring to government intervention in the housing market. “Contrary to popular thinking, the eradication of foreclosures will lead this housing market into paralysis, not recovery.”

RIVERSIDE, Calif. — At least 20 times a day, Alan Hladik walks into a fixer-upper and tries to figure out if it is worth buying.

As an inspector for the Waypoint Real Estate Group, Mr. Hladik takes about 20 minutes to walk through each home, noting worn kitchen cabinets or missing roof tiles. The blistering pace is necessary to keep up with Waypoint’s appetite: the company, which has bought about 1,200 homes since 2008 — and is now buying five to seven a day — is an early entrant in a business that some deep-pocketed investors are betting is poised to explode.

With home prices down more than a third from their peak and the market swamped with foreclosures, large investors are salivating at the opportunity to buy perhaps thousands of homes at deep discounts and fill them with tenants. Nobody has ever tried this on such a large scale, and critics worry these new investors could face big challenges managing large portfolios of dispersed rental houses. Typically, landlords tend to be individuals or small firms that own just a handful of homes.

But the new investors believe the rental income can deliver returns well above those offered by Treasury securities or stock dividends. At the same time, economists say, they could help areas hardest hit by the housing crash reach a bottom of the market.

This year, Waypoint signed a $400 million deal with GI Partners, a private equity firm in Silicon Valley. Gary Beasley, Waypoint’s managing director, says the company plans to buy 10,000 to 15,000 more homes by the end of next year. Other large private equity investors — including Colony Capital, GTIS Partners and Oaktree Capital Management, in partnership with the Carrington Holding Company — have committed millions to this new market, and Lewis Ranieri, often called the inventor of the mortgage bond, is considering it, too.

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Crude oil and gold prices are likely to fall as risk appetite sours and the US Dollar gains if minutes from March’s FOMC outing dents the probability of QE3.

Commodity prices are looking to the release of minutes the March Federal Reserve policy meeting for direction over the coming 24 hours. Broadly speaking, the outcome seems likely to reflect the relatively upbeat tone of the policy statement while reiterating a commitment to press on with accommodative monetary policy, which increasingly looks like a reference to the pledge of near-zero rates through late 2014 rather than additional non-standard measures.

With this in mind, the report’s market-moving potential will be found in any discussion of the various policy options open to the Federal Reserve in the event that additional easing is needed. Specifically, markets will want a gauge of how high the bar for triggering a third round of asset purchases has been set and what preliminary steps can be taken (like an extension of “Operation Twist”, so-called “sterilized QE”, and so on) before the Fed decides to embark on such a course.

Simply put, traders will want to get a sense for the likelihood of a QE3 program and the environment needed to produce it. If officials’ commentary is judged to signal that another expansion of the balance sheet is relatively likely, growth-sensitive copper and crude oil prices are likely to advance. Such an outcome also stands to weigh on the US Dollar, boosting gold and silver as alternatives to paper currency. Alternatively, a sense that QE3 is fading as a probable turn for Fed policy is likely to produce the opposite result.

WASHINGTON (AP) — A former MF Global executive has refused to answer lawmakers’ questions about $200 million that was transferred out of a customer account days before the firm collapsed, invoking her Fifth Amendment right against self-incrimination.

Edith O’Brien, a former assistant treasurer at MF Global, was subpoenaed to testify before the House Financial Services oversight subcommittee hearing about an email she sent, which appears to contradict testimony from Jon Corzine, the firm’s then-CEO.

The email says Corzine ordered the transfer on Oct. 28 to cover an overdraft in the firm’s bank account in London. The committee cited the email in a memo released last week.

“On the advice of counsel, I respectfully decline to answer based on my constitutional right,” O’Brien responded to a question about the transfer.

Corzine testified in December that he never directed anyone to use customer funds to fix the overdraft and he wasn’t told that customer money was used.

SAN FRANCISCO (Reuters) – Social networking site Facebook is halting the sale of its shares on secondary markets effective next week, aiming to reduce churn in its valuation which could complicate matters as it sets an IPO price, a person familiar with the situation said on Wednesday.

The company, which is preparing for what could be Silicon Valley’s largest initial public offering, has asked firms that arrange trading of its privately held shares to stop, the person said.

Earlier this week, one of the firms that arranges trading in Facebook shares, SharesPost Financial, told investors it was moving up the closing date for its Facebook auction to March 30 from April 2.

Facebook filed its paperwork to go public in early February. Its IPO, expected to value the company at around $100 billion, is expected in coming months.

A Facebook spokesman declined to comment. Representatives at SharesPost and SecondMarket, another firm that arranges trading in private shares, didn’t immediately respond to requests for comment.

Sweet. Say hello to rotting infrastructure. If new plants are going to be this hindered compared to old plants, old plants become way more valuable. I wonder how many Senators have been stocking up on utilities?

WASHINGTON – The Obama administration forged ahead on Tuesday with the first-ever limits on heat-trapping pollution from new power plants, ignoring protests from industry and from Republicans who have said the regulation will raise electricity prices and kill off coal, the dominant U.S. energy source.

But the proposal also fell short of environmentalists’ hopes because it goes easier than it could have on coal-fired power – one of the largest sources of the gases blamed for global warming.

“Right now, there are no limits to the amount of carbon pollution that future power plants will be able to put into our skies — and the health and economic threats of a changing climate continue to grow,” said Lisa Jackson, the head of the Environmental Protection Agency.

Older coal-fired power plants have already been shutting down across the country, thanks to low natural gas prices, demand from China driving up coal’s price and weaker demand for electricity.

Regulations from the EPA to control pollution blowing downwind and toxic emissions from power plants have also helped push some into retirement, causing Republicans in Congress and on the campaign trail to claim the agency will cause blackouts. Numerous studies and an AP survey of power plant operators have shown that is not the case.

The proposed rule will not apply to existing power plants or new ones built in the next year. It will also give future coal-fired power plants years to meet the standard, because it will eventually require that carbon pollution be captured and stored underground, or injected to extract more oil and natural gas. Such carbon capture technology is not yet commercially available.

By contrast, a new natural gas-fired power plant would meet the new standard without installing additional controls.

“There are areas where they could have made it a lot worse,” said Scott Segal, director of the Electric Reliability Coordinating Council, a coalition of power companies. Still, “the numerical limit allows progress for natural gas and places compliance out of reach for coal-fired plants” not planning to capture and sequester carbon dioxide, the chief greenhouse gas.

Developing…

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Paul Ceglia’s claim on Facebook may finally face the music.

Citing a wealth of forensic evidence, Facebook on Monday filed a motion to dismiss what it labelled a “shakedown” lawsuit by Paul Ceglia, who sued the world’s biggest social network in June 2010 for breach of contract — claiming a document entitles him to ownership of 85 percent of the company.

“Today’s motion proves what Facebook and Mark Zuckerberg have emphatically stated all along: this case is a fraud,” said Orin Snyder, partner with Gibson Dunn and the attorney for Facebook and Mark Zuckerberg.

Along with the motion, Facebook filed what it described as a “treasure trove” of evidence attacking the authenticity of the contract and a series of emails between Zuckerberg and Ceglia.

“The motion … demonstrates that Ceglia has forged documents, destroyed evidence, and abused the judicial system in furtherance of his criminal scheme. Ceglia must be held accountable,” Snyder said.

Digital forensics experts with Stroz Friedberg hired by Facebook uncovered what they call the authentic contract between Ceglia’s company StreetFax and Zuckerberg on hard drives submitted by Ceglia as evidence. That contract dates to 2003 — before the creation of the social network.

What they mean to say is that bin Laden and his family were invited to receive asylum by Pakistan, and now the fire is too hot so Pakistan is going to pretend like they had no idea bin Laden and his kin were there, and prosecute all of them, including the women, who probably are so devoid of civil rights they have no idea what is even going on.

ISLAMABAD – A Pakistani court is set to charge five members of Usama bin Laden’s family with illegally entering and living in the country, their defense lawyer said Monday.

The Al Qaeda chief’s family has been in Pakistani detention since last May, when U.S. commandos raided the house where they were living in the northwest army town of Abbottabad and shot and killed bin Laden.

Pakistan was outraged by the raid because it was not informed beforehand. Officials have insisted they did not know the Al Qaeda chief was living there, and the U.S. has not found any evidence that they did.

A Pakistani court will charge three of bin Laden’s widows and two of his daughters on April 2 when the hearing against them resumes, said their lawyer, Mohammad Amir. The court gave the five women copies of the case and evidence against them on Monday, he said.

Pakistani legal experts have said the maximum punishment the women could receive is five years in jail.

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Twenty-five journalists with the Gannett media group in Wisconsin signed a petition calling for the recall of Republican Gov. Scott Walker, according to a Green Bay newspaper where some of those journalists work.

Kevin Corrado, publisher of the Green Bay Press-Gazette, disclosed the actions of Gannett Wisconsin Media employees in a recent column and said they are facing disciplinary action.

“It was wrong, and those who signed the petition were in breach of Gannett’s principles of ethical conduct,” Corrado wrote.

The state’s Gannett investigative team recently broke the story about how 29 circuit court judges had signed the very same recall petitions.

Corrado said nobody involved in that project, or in “our news or political coverage,” had signed the petitions. “Had they been directly involved, we would identify them,” Corrado wrote.

Still, he said the fact that any employees signed it — including seven at the Press-Gazette — is “disheartening.”

Corrado wrote that some of the journalists equated signing the petition to casting a vote in an election — something journalists routinely do.

But Corrado suggested that signing the petition got them “personally involved” in the issue.