Economic Stories of Relevance in Today's World -- May 25, 2014

The Solution To Record Meat Prices: The Return Of Pink Slime - Zero Hedge - Tyler Durden - Mat 25, 2014 - According to the USDA, reported by Reuters, conditions in California could have "large and lasting effects on U.S. fruit, vegetable, dairy and egg prices," as the most populous U.S. state struggles through what officials are calling a catastrophic drought. Alas, the USDA had nothing to say about the Fed's unprecedented desire to reflate the US economy which is still suffering from the catastrophic depression which started nearly 7 years ago.
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The consumer price index (CPI) for U.S. beef and veal is up almost 10 percent so far in 2014, reflecting the fastest increase in retail beef prices since the end of 2003. Prices, even after adjusting for inflation, are at record highs.                          "The drought in Texas and Oklahoma has worsened somewhat in the last month, providing further complications to the beef production industry," USDA said.                    Beef and veal prices for the whole of 2014 are now forecast to increase by 5.5 percent to 6.5 percent, a sharp advance from last month's forecast for a 3 to 4 percent rise. Pork prices are set to rise by 3 percent to 4 percent, up from a 2 to 3 percent advance expected a month ago.                       The USDA said overall U.S. food price inflation for 2014, including food bought at grocery stores and food bought at restaurants, would rise by 2.5 percent to 3.5 percent in 2014.                      That is up from 2013, when retail food prices were almost flat, but in line with historical norms and unchanged from April's forecast.                          "The food-at-home CPI has already increased more in the first four months of 2014 then it did in all of 2013," USDA noted. At-home spending accounts for about 60 percent of the U.S. food CPI.

The Social Cost of GMOs — Paul Craig Roberts - May 22, 2014 -
Monsanto has reduced the measured cost of food production by producing genetically modified seeds that result in plants that are pest and herbicide resistant. The result is increased yields and lower measured costs of production. However, there is evidence that the social or external costs of this approach to farming more than offsets the lower measured cost. For example, there are toxic affects on microorganisms in the soil, a decline in soil fertility and nutritional value of food, and animal and human infertility.
When Purdue University plant pathologist and soil microbiologist Don Huber pointed out these unintended consequences of GMOs, other scientists were hesitant to support him, because their careers are dependent on research grants from agribusiness. In other words, Monsanto essentially controls the research on its own products. http://articles.mercola.com/sites/articles/archive/2014/05/18/gmo-foods-inflammation.aspx?e_cid=20140518Z1_SNL_Art_1&utm_source=snl&utm_medium=email&utm_content=art1&utm_campaign=20140518Z1&et_cid=DM45056&et_rid=524903968
In his book, Genetic Roulette, Jeffrey M. Smith writes: “Genetically modified (GM) foods are inherently unsafe, and current safety assessments are not competent to protect us from or even identify most dangers.” The evidence is piling up against such foods; yet the US government is so totally owned by Monsanto that labeling cannot be required.
Pesticides damage birds and bees. Some years ago we learned that ingestion of pesticides by birds was bringing some species near to extinction. If we lose bees, we lose honey and the most important pollinating agent. The rapid decline in bee populations have several causes. Among them are the pesticides sulfoxaflor and thiamethoxam produced by Dow and Syngenta. http://earthjustice.org/features/the-case-of-the-vanishing-honey-bee?utm_source=crm&utm_content=button Dow is lobbying the Environmental Protection Agency to permit sulfoxaflor residues on food, and Syngenta wants to be able to spray alfalfa with many times the currently allowed amount of thiamethoxam.
http://salsa3.salsalabs.com/o/50865/p/dia/action3/common/public/?action_KEY=13999
As the regulators are more or less in the industry’s pocket, the companies will likely succeed in their efforts to further contaminate the food of people and animals. The profits of Monsanto, Dow, and Syngenta are higher, because many of the costs associated with the production and use of their products are imposed on third parties and on life itself.
Many countries have put restrictions on GMO foods. Lawmakers in Russia equate genetically engineered foods to terrorist acts and want to impose criminal penalties. http://rt.com/news/159188-russia-gmo-terrorist-bill/ The French parliament has approved a ban on GMO cultivation in France. http://www.reuters.com/article/2014/05/05/france-gmo-idUSL6N0NR2MZ20140505 However, Washington lobbies foreign governments on behalf of its agribusiness and chemical donors. Dick Cheney used his two terms as vice president to staff up the environmental agencies with corporate friendly executives. Just as the political appointees at the SEC would not let SEC prosecutors bring cases against the big banks, environmental regulators have a difficult time protecting the environment and food supply from contamination. The way Washington works is that the regulators protect those they are supposed to regulate in exchange for big jobs when they leave government. The economist, George Stigler, made this clear several decades ago.
The public favors labeling of genetically engineered food, but Monsanto and the Grocery Manufacturers Association have so far been successful in preventing it. On May 8 the governor of Vermont signed a bill passed by the state legislature that requires labeling. Monsanto’s response is to sue the state of Vermont.



Many U.S. families report feeling strapped - CBS Moneywatch - Alain Sherter - May 22, 2014 - Roughly half of all American families who define themselves as middle class say they are just getting by, struggling financially or feel poor, according to a new study by Allianz. The financial firm, which polled more than 4,500 households with annual incomes of at least $50,000, also found that more than 40 percent of respondents report living paycheck-to-paycheck.                   "The economy is picking up, but it doesn't seem to be trickling down to American families," said Katie Libbe, vice president of consumer insights with Allianz Life, a unit of the company that offers retirement products and services.                           If the sluggish economy is chiefly responsible for that hardship, how families are structured also appears to affect their relationship to money and finances. Less than a fifth of U.S. households today consist of married, heterosexual couples with kids, down from roughly 40 percent in 1970, according to the U.S. Census Bureau, while non-traditional family arrangements are increasingly the norm.
Other findings from the study:

• 36 percent of modern families have collected unemployment benefits, versus 21 percent of traditional households
• 35 percent of modern families have unexpectedly lost a main source of income, compared with 23 percent of traditional households
• 22 percent of modern families and 11 percent of traditional households have declared bankruptcy
• 25 percent of modern families and 20 percent of traditional ones aren't saving any money

Electric bills expected to rise with closing of coal-fired plants - AP through Tulsa World News - May 25, 2014 - Electricity prices are probably on their way up across much of the U.S. as coal-fired plants, the dominant source of cheap power, shut down in response to environmental regulations and economic forces.                New and tighter pollution rules and tough competition from cleaner sources such as natural gas, wind and solar will lead to the closings of dozens of coal-burning plants across 20 states over the next three years.                          And many of those that stay open will need expensive retrofits.                         Because of these and other factors, the Energy Department predicts retail power prices will rise 4 percent on average this year, the biggest increase since 2008. By 2020, prices are expected to climb an additional 13 percent, a forecast that does not include the costs of coming environmental rules.                 The Obama administration, state governments and industry are struggling to balance this push for a cleaner environment with the need to keep the grid reliable and prevent prices from rocketing too much higher.                       "We're facing a set of questions that are new to the industry," says Clair Moeller, who oversees transmission and technology for the Midcontinent Independent System Operator, which coordinates much of the electric grid between Minnesota and Louisiana.                       Coal is the workhorse of the U.S. power system. It is used to produce 40 percent of the nation's electricity, more than any other fuel. Because it is cheap and abundant and can be stored on power plant grounds, it helps keep prices stable and power flowing even when demand spikes.                        Natural gas, which accounts for 26 percent of the nation's electricity, has dropped in price and become more plentiful because of the frackingboom. But its price is on the rise again, and it is still generally more expensive to produce electricity with gas than with coal. Also, gas isn't stored at power plants because the cost is prohibitive. That means it is subject to shortages and soaring prices.                             During the brutally cold and snowy winter that just ended, utilities in several states struggled to secure natural gas because so much was also needed to heat homes. Some utilities couldn't run gas-fired plants at all, and power prices soared 1,000 percent in some regions.


Sears reports wider loss, may close more stores - USA TODAY - David Carrig - May 22, 2014 -
Sears Holdings reported a wider loss in the first quarter as the retailer continued to struggle to turnaround its business.                   Sears CEO Edward Lampert said the company may also close more stores this year in addition to the 80 locations now being closed.                 The parent company of Kmart and Sears said it lost $402 million, or $3.79 per share, for the period ended May 3. That compares with a loss of $279 million, or $2.63 per share, in the same period a year ago
Excluding certain items, the retailer lost $2.24 per share. That was worse than the loss of $1.91 a share expected by analysts, according to FactSet.                        Revenue fell 6.8% to $7.88 billion, which was better than the $7.72 billion analysts expected.



Target has lost its cheap, chic edge - USA TODAY - Hadley Malcolm - May 21, 2014 - Target may have been knocked down by a huge holiday season data breach last year, but its most recent quarterly earnings report and continuing replacement of top management show the retailer has other, bigger problems to address.                         Target's Canadian expansion has suffered from poorly managed inventory planning and a lack of understanding of the Canadian market. Meanwhile, merchandise even in U.S. stores has lost its gotta-have-it quality, and foot traffic had been slowly declining, even before the breach happened...                       In the first quarter, Target's net earnings fell 16% to $418 million, or 66 cents a share, compared with $498 million in the same period last year, the company announced Wednesday. Sales increased 2.1% over last year to about $17 billion. Earnings related to U.S. stores decreased 13.5% to about $1.1 billion from about $1.2 billion last year.                       For the year, Target cut its estimated earnings per share to between $3.60 and $3.90 compared with prior guidance of $3.85 to $4.15. Brian Yarbrough, an analyst with Edward Jones, suspects that's because the chain plans to be highly promotional to try to get customers back in stores, which will eat into profit margins.


Chattanooga's super-fast publicly owned Internet - CNN Money - James O'Toole - May 20, 2014 - Chattanooga, Tenn., may not be the first place that springs to mind when it comes to cutting-edge technology. But thanks to its ultra-high-speed Internet, the city has established itself as a center for innovation -- and an encouraging example for those frustrated with slow speeds and high costs from private broadband providers.                        Chattanooga rolled out a fiber-optic network a few years ago that now offers speeds of up to 1000 Megabits per second, or 1 gigabit, for just $70 a month. A cheaper 100 Megabit plan costs $58 per month. Even the slower plan is still light-years ahead of the average U.S. connection speed, which stood at 9.8 megabits per second as of late last year, according to Akamai Technologies...                           The city had to contend with lawsuits from Comcast and local cable operators as it worked to get the network up and running. But aided by an $111 million stimulus grant from the Department of Energy, the service was up and running by September 2009. The EPB currently has around 5,000 business customers along with 57,540 households, which have access to "triple play" bundles of video, phone and Internet service just like they would from a private provider.                        "Deploying a network for telecommunications is not fundamentally different from deploying a network for power," said Benoit Felten, a broadband expert with Diffraction Analysis. "Chattanooga is the prime example of that, and it's absolutely worked."                              The Federal Communications Commission recognizes the potential of muncipality-run broadband, saying earlier this year that it will push for the repeal of state and local laws supported by the cable industry that make it harder for cities to set up their own networks.                          Chattanooga officials say the network has helped spark a burgeoning local tech scene and the relocation of a number of businesses, drawn by both the fast Internet and the reliability offered by the smart grid.                            Hunter Lindsay, regional director of IT services firm Claris Networks, said the 85-person company moved its data-center operations from Knoxville to Chattanooga "just because of the network."

Economic Relevance - Inflation in commoditoes + Deflation in property = the Great Reset - The Hickory Hound - May 23, 2014