Daily Digest 10/29 - Signs Hyperinflation is Arriving, Global Food Crisis Forecast, Solar Power Projects Face Hurdles

• Fed Asks Dealers to Estimate Size, Impact of Debt Purchases
• Signs Hyperinflation Is Arriving
• Solar Power Projects Face Hurdles
• Subsidies Seen Endangering OPEC Prosperity
• Surging Price Of Oil Forces U.S. Military To Seek Alternative Energy Sources
• U.S. Navy Completes Successful Test On Boat Powered By Algae
• Global Food Crisis Forecast As Prices Reach Record Highs

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Economy

Fed Asks Dealers to Estimate Size, Impact of Debt Purchases (cmartenson)

The Federal Reserve asked bond dealers and investors for projections of central bank asset purchases over the next six months, along with the likely effect on yields, as it seeks to gauge the possible impact of new efforts to spur growth.

The New York Fed survey, obtained by Bloomberg News, asks about expectations for the initial size of any new program of debt purchases and the time over which it would be completed. It also asks firms how often they anticipate the Fed will re- evaluate the program, and to estimate its ultimate size.

Signs Hyperinflation Is Arriving (Johnny Oxygen)

Back in late August, I argued that hyperinflation would be triggered by a run on Treasury bonds. I described how such a run might happen, and argued that if Treasuries were no longer considered safe, then commodities would become the store of value.

The two key commodities that have been rising as of late are oil and grains, specifically wheat, corn and livestock feed. The BLS report on Producer Price Index of commodities is here.

Learn how to protect your wealth against the Three E forces using our 'What Should I Do?' guide

Energy

Subsidies Seen Endangering OPEC Prosperity (cmartenson)

Member countries of the Organization of Petroleum Exporting Countries are thriving on oil export revenue but, in many cases, eroding their export capacities by subsidizing domestic consumption, warns the Centre for Global Energy Studies, London.

“Unless OPEC’s citizens are weaned off oil subsidies, the organization will hit a barrier beyond which it will not be able to push the price of oil without harming its oil export revenues,” it says. “As things stand today, that barrier is still some way off, but it is out there somewhere, and OPEC should take heed.”

Surging Price Of Oil Forces U.S. Military To Seek Alternative Energy Sources (cmartenson)

It's a secret just how much oil the US military uses, but estimates range from around 400,000 barrels a day in peacetime – almost as much as Greece – to 800,000 barrels a day at the height of the Iraq war.This puts a single nation's armed forces near Australia as an oil consumer and among the top 25 countries in the world today. Either way it is by far the world's largest single buyer of oil and the last thing any admiral, general or under secretary of defence has had to be been concerned about is whether there's gas in the tanks or that the navy's carbon emissions are a bit extravagant.

U.S. Navy Completes Successful Test On Boat Powered By Algae (cmartenson)

It looked like a pretty ordinary day on the water at the US naval base in Norfolk, Virginia: a few short bursts of speed, a nice tail wind, some test manoeuvres against an enemy boat.

But the 49ft gunboat had algae-based fuel in the tank in a test hailed by the navy yesterday as a milestone in its creation of a new, energy-saving strike force. The experimental boat, intended for use in rivers and marshes and eventually destined for oil installations in the Middle East, operated on a 50/50 mix of algae-based fuel and diesel. "It ran just fine," said Rear Admiral Philip Cullom, who directs the navy's sustainability division.

Solar Power Projects Face Hurdles (joemanc)

The Ivanpah plant is the first of nine multibillion-dollar solar farms in California and Arizona that are expected to begin construction before the end of the year as developers race to qualify for tens of billions of dollars in federal grants and loan guarantees that are about to expire. The new plants will generate nearly 4,000 megawatts of electricity if built — enough to power three million homes.

But this first wave may very well be the last for a long time, according to industry executives. Without continued government incentives that vastly reduce the risks to investors, solar companies planning another dozen or so plants say they may not be able to raise enough capital to proceed.

Environment

Global Food Crisis Forecast As Prices Reach Record Highs (cmartenson)

Rising food prices and shortages could cause instability in many countries as the cost of staple foods and vegetables reached their highest levels in two years, with scientists predicting further widespread droughts and floods. Although food stocks are generally good despite much of this year's harvests being wiped out in Pakistan and Russia, sugar and rice remain at a record price.

Global wheat and maize prices recently jumped nearly 30% in a few weeks while meat prices are at 20-year highs, according to the key Reuters-Jefferies commodity price indicator. Last week, the US predicted that global wheat harvests would be 30m tonnes lower than last year, a 5.5% fall. Meanwhile, the price of tomatoes in Egypt, garlic in China and bread in Pakistan are at near-record levels.

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