Weather Report: The Economy, Oil, Food and Something More

THE ECONOMY: Regarding the IndyMac bank failure (the second largest in U.S. history) and the FannieMae and FreddieMac financial tribulations: a world of articles are currently available discussing these topics.

Here’s the nut:

1. The FDIC currently has more than enough resources necessary to handle IndyMac. The problem arises over how many other banks out there are likely to go bad .
2. The Federal Reserve, in connection with the U.S. government, has decided that some financial institutions/businesses are too big, too leveraged, or both, to fail. They appear to have chosen, for good or ill, to support financial stability over price/dollar stability.

OIL: Breitbart. Com had an interesting article on July 11 regarding Russia’s new drive for oil in the Arctic .

It indicated that Prime Minister Putin noted that Russia’s oil production decline has put it’s oil industry at a critical crossroads and that major efforts were needed to stimulate oil production in the Arctic.

FOOD; Reuters AlertNet has recently (July 11) presented some information from USDA indicating that the U.S. soybean harvest will be down by 3% due to heavy rains and floods in the Midwest. Though this would push prices up about 20% above ‘07’ levels, supplies will still be tight into the fall of’09’ at a minimum.

SOMETHING MORE; Recent World Bank estimates indicate that the cost of food staples have risen about 83% over the last three years with some fairly modern countries experiencing food insecurity (a situation wherein people are unable to get sufficient food to meet their dietary needs). An recent article in The International Herald Tribune evidences the forgoing condition in one country but other countries, perhaps being a little more fortunate, show a different situation. This coming Friday we’ll discuss another countries approach to the difficult problem of food security.

Meanwhile, keep your eyes on the horizon.

July 16, 2008