America’s economy risks mother of all meltdowns Prof Roubini is even fonder of lists than I am. Here are his 12 – yes, 12 – steps to financial disaster.

Demand for wheat puts India at risk
B.C. Khatua, the chairman of the Forward Markets Commission, which regulates futures trading for food commodities ranging from wheat and rice to dried beans, said India urgently needed to improve agricultural productivity to stem food price rises, which hit the nation’s poor majority the hardest. “India has a deficit of oilseed, a deficit of many pulses and now a deficit of wheat – all the major staples are now getting hit by the demand-supply gap,” said Mr Khatua.

The Bonfire of Capital
It all sounds more complicated than it really is. Imagine a 200 ft. conveyor belt with two burly workers and a mountain-sized pile of money on one end, and a towering bonfire on the other. Every time a home goes into foreclosure; the two workers stack the money that was lost on the transaction, plus all of the cash that was leveraged on the home via "securitization" and derivatives, onto the conveyor-belt where it is fed into the fire. That is precisely what is happening right now and the amount of capital that is being consumed by the flames far exceeds the Fed's paltry increases to the money supply or Bush's projected $168 billion "surplus package". Capital is being sucked out of the system faster than it can be replaced which is apparent by the sudden cramping in the financial system and a more generalized slowdown in consumer spending..


..Harvard economics professor and former Council of Economic Advisers under President Reagan, Martin Feldstein, made this candid admission:
"There is plenty of blame to go around for the current situation. The Federal Reserve bears much of the responsibility, because of its failure to provide the appropriate supervisory oversight for the major money center banks.

Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish
Each time the mortgages change hands, the sellers are required to sign over the mortgage notes to the buyers. In the rush to originate more loans during the U.S. mortgage boom, from 2003 to 2006, that assignment of ownership wasn't always properly completed, said Alan White, assistant professor at Valparaiso University School of Law in Valparaiso, Indiana.

Quick Overview

• Turkish troops launched a ground invasion into northern Iraq in pursuit of Kurdish rebels.
  

• Canada's retail sales rose 0.6% MoM and 5.8% YoY
  

• India’s gold imports in January fell 72% to around 24 tonnes from a year ago as soaring prices reduced demand, a senior official at World Gold Council said.
  

• The Far Eastern Freight Conference, whose member’s control 75% of Asia-Europe trade, experienced an eastbound volume increase of 4.8% YoY.
  

Government investigating link between ethanol, beef recalls
Studies from two universities show evidence that feeding cattle a byproduct of ethanol production known as distillers grains can increase their levels of a deadly form of E. coli bacteria.

Quick Overview

• The Philadelphia Fed's regional index of manufacturing fell from -20.9 to -24.0
  

• The Conference Board's index of leading indicators fell 0.1% in December
  

• U.K.'s retail sales volume rose 0.8% in January,
  

• The USDA said that its 2008 preliminary planting estimate for:
  Corn is 90 million acres, down 4% from the previous year.
  Soybeans are 71 million acres, up 12% from the previous year.
  Wheat is 64 million acres, up 6% from the previous year.
  Cotton is 9.5 million acres, down 12% from the previous year.
  
  

• The U.S. DoE said:
  Supplies of crude oil rose 4.2 million barrels to 305.3 million barrels.
  Supplies of gasoline rose 1.1 million barrels
  Supplies of heating oil fell 1.5 million barrels.
  Refinery use fell from 85.1% to 83.5%
  Gasoline demand rose 0.5%
  Distillate demand fell 1.9%
  Supplies of natural gas fell 172 billion cubic feet to 1.770 trillion cubic feet.
  

Record U.S. Cash Reserves: Waiting To Be Deployed, But When? There is a massive mountain of U.S. investable cash sitting on the sidelines, earning an ever dwindling rate of interest. This cash pile will help buoy financial markets, but only once the buyers’ strike in the credit markets ends.

Famines May Occur Without Record Crops This Year, Potash Says
``As protein consumption increases, as they move from fish to chicken, chicken to pork, and pork to beef, the demand for commodities increases almost by an order of magnitude.''

The people who hustle granite countertops are finally getting a rest News came yesterday, that the Fed has quietly lent some $50 billion to member banks using a new method - an "auction facility" that allows banks to put up unconventional collateral. The government no longer reports a figure for M3, the broadest measure of the money supply, but shadow analysts say it is going up at 15% per year - about six times faster than GDP growth.

Quick Overview

• U.S. Housing starts rose 0.8% MoM, but fell 28% YoY.
  

• U.S. Consumer prices rose 0.4% in January and 4.3% YoY.
  

• Canada's composite index of leading indicators rose 0.2%.
  

• The per-acre cost of fertilizer to produce corn has gone from $95 an acre to $130, says David Asbridge, a senior economist for Doane Advisory Services.
  

• India is likely to import 3.5 million tonnes pulses in FY09. Rajasthan and Madhya Pradesh, the main pulses producing states, have not received enough rainfall.

Coffee Jumps in N.Y. as Inventories Dwindle, Commodities Surge
Stockpiles in warehouses monitored by ICE Futures U.S. have dropped 3 percent this year. Coffee inventories in Brazil, the world's biggest grower, are at a 50-year low, said Jaime Menahem, a trader at Alaron Trading Corp. in Miami. The UBS Bloomberg Constant Maturity Commodity Index surged as much as 3.1 percent to the highest ever, led by record crude-oil and gasoline prices.

Quick Overview

• YoY Consumer prices in Canada rose 2.2%
  

• Czarnikow lowered the world sugar production surplus for 2007-2008 from 10.5 to 9.7 million tons.
  

• The Supreme Court turned down a legal challenge to the warrantless domestic spying program Bush created.
  

• Toshiba is pulling out of the HD DVD business, handing victory to Sony's Blu-ray.
  

• Fidel Castro retired.
  

• Banks "quietly" borrowed $50 billion from the Fed.

• 
  

• Crude oil rose to $100.10 on speculation OPEC will cut production.

A Financial War With No Winners
So, maybe the stock market is looking at this situation, too. And maybe it sees stocks as a protection from inflation…maybe it's guessing that an investment in a profit-making business is a better place for money than a bank account. Maybe it wants to go up because of inflation…and wants to go down because of a coming slump. In the end, it goes nowhere.

And maybe the bond market sees the same picture. Maybe it sees a slowdown…which would be good for bond prices…but rising rates of inflation too, which would be bad. What should it do? It doesn't know any more than anyone else. So, it bides its time, waiting to see how the war will turn out.

Quick Overview

• U.S. industrial production rose 0.1%
  
  

• U.S. consumer sentiment fell from 78.4 to 69.6
  

• Reuters said lack of rain in the Ivory Coast for the last couple of months may delay this year's mid-crop cocoa harvest
  

• GDP in Indonesia rose 6.25% QoQ.
  
  

• Argentina extended restrictions (again) on exports of wheat in an attempt to provide for domestic supply. The U.S. banking and food industry would like Washington to follow suit.

• Because of weather problems, sugar output in Chinas Guangxi region, the country's largest producer, may drop 1 million tons from the original 8 million-ton forecast.

Quick Overview

• U.S. exports rose $2.2 billion in December, while imports fell $2.2 billion—resulting in $58.8 billion of net imports.
  
  

• Australia’s unemployment rate improved from 4.3% to 4.1% in January,
  

• Canada's exports fell 3.1% in December, while imports rose 0.7% -- resulting in $2.4 billion of net exports.
  

• GDP in the Euro zone rose 0.4% QoQ and 2.3% YoY.
  

• GDP in Japan rose 0.9% QoQ and 1.8% YoY.

• BOJ kept interest rate unchanged at 0.5%.
  
  

• Thailand has started requiring that all its diesel fuel include a component made from palm oil, a move that could reduce costly energy imports but is driving up prices for the commodity.
  
  

• Grain and oilseed prices rose on fresh signs of demand and shrinking supply. Almost half of China’s autumn and winter rapeseed crop was negatively affected by the recent rain and snow storms, the China National Grain & Oils Information Center said.
  
  

• The U.S. is importing wheat?? According to Dow Jones Newswire a million bushels of German wheat has been bought by a U.S. firm (Cargill?)for blending with other U.S. wheat.
  
  

Americans Selling Homes See Prices Go Below Mortgage (Update2)
By the end of this year as many as 15 million U.S. households may owe more on their mortgages than their homes are worth, according to an estimate from Jan Hatzius, chief U.S. economist of New York-based Goldman Sachs Group Inc.

Quick Overview

• U.S. retail sales rose 0.3% in January -- better than expected.
  

• U.K.'s unemployment rate improved to 5.2%, the lowest since 1975.

• Producer prices in Japan rose 3.0% YoY.
  

• Consumer confidence in Australia fell 103.1 to 97.4
  

• Industrial production in the Euro area fell 0.2%.
  

• The DOE said: Supplies of crude oil rose 1.1 million barrels to 301.1 million barrels.
  Supplies of gasoline rose 1.7 million barrels
  Supplies of heating oil rose 600,000 barrels.
  Refinery activity improved from 84.3% to 85.1% of capacity
  Gasoline demand rose 0.4% YoY
  Distillate demand fell 2.8% YoY
  

Quick Overview

• Warren Buffett unveiled a plan to “reinsure” $800 billion of municipal bonds.
  

• Six U.S. Banks launched a program aimed at staving off home foreclosure for seriously delinquent borrowers.
  

• Consumer prices in the U.K. rose 2.2% YoY.
  

• The Senate passed a White House demanded surveillance measure that grants legal impunity to companies that helped the government's warrantless spying program.
  

• The DOE said OPEC's oil production increased from 32.15 to 32.23 million barrels a day while surplus capacity fell from 1.50 to 1.40 million barrels a day.

Quick Overview

• Dow-Jones said Bank of America and Chevron will replace Altria Group and Honeywell International in its Dow-Jones Industrial Average effective Feb. 19th.
  

• Bush signed the $170 billion stimulus package.
  

• U.K.’s producer prices rose 5.7% YoY
  

• Goldman Sachs raised its three- and six-month outlook for Chicago wheat futures by 47 percent to $13.50 a bushel after the U.S. Department of Agriculture cut projected 2007/08 U.S. wheat ending stocks to 272 million bushels, the lowest level since 1947/48.
  
  

• The global corporate default rate in junk debt will jump to 4.6% by the end of this year, Moody's Investors Service said.
  
  

• South Africa's electricity shortage continues with state owned Eskom, which won't be able to increase capacity until 2013, asking consumers to cut usage by 10 percent.

Quick Overview

• The U.S. Congress passed and sent to Bush a $168 billion economic stimulus package.
  
  

• Canada’s unemployment rate improved from 6.0% to 5.8%
  

• The USDA's estimate of 2007-2008 U.S. ending stocks of:
  Corn unchanged at 1.438 billion bushels.
  Soybeans were lowered from 175 to 160 million bushels.
  Wheat was lowered from 292 to 272 million bushels.
  Sugar was raised from 2.006 to 2.029 million tons.
  Cotton was raised from 7.90 to 8.20 million bales.
  

• The USDA's estimate of 2007-2008 world ending stocks of:
  Corn was raised from 101.3 to 101.9 million tons.
  Soybeans were lowered from 46.2 to 45.8 million tons.
  Wheat was lowered from 110.9 to 109.7 million tons.
  Cotton was raised from 54.75 to 57.33 million bales.
  
  

• The USDA lowered its estimate of the 2007-2008 Florida orange crop from 168 to 166 million boxes, but increased its estimate of the juice yield from 1.60 to 1.62 gallons per box
  
  

• There are rumors that Brazil may start buying US wheat as soon as April.
  
  
  

THE REAL SCANDAL
At the crisis' core are loans that were made with virtually nonexistent underwriting standards - no verification of income or assets; little consideration of the applicant's ability to make payments; no down payment.

Most people instinctively understand that such loans are likely to be unsound. But how did the heavily-regulated banking industry end up able to engage in such foolishness?

India's Wheat Imports May Rise 68%, Bolstering Record Prices
``I will be surprised if India matches last year's output as planting got delayed because of dry weather,'' Samson said

Quick Overview

• The National Association of Realtors said its index of pending home sales fell 1.5% in December. YoY pending sales fell 24%.
  

• The Bank of England lowered its interest rate from 5.50% to 5.25%, as expected.
  
  

• The unemployment rate in New Zealand improved from 3.5% to 3.4%
  

Quick Overview

• U.S. non-farm productivity rose 1.8% QoQ and 2.6% YoY, stronger than expected.
  

• U.S. unit labor costs rose 3.1% in 2007.
  

• Japan's index of leading indicators at 40%
  

• SINGAPORE (Reuters) - Forget about graphs, charts and economic forecasts. Wary investors in Asia are turning to feng shui masters to tell them which way the markets will head in the Chinese Year of the Rat.
  
  

Nearby spring wheat sees spec, supply squeeze
"As of yesterday, there were still 20,000 contracts deliverable against March and only enough wheat in inventory in the delivery points for about 2,000 contracts," Brugler explained. "So very much a squeeze situation."

In fact, Brugler said some have quietly calculated that at current prices, it’s actually cost-effective to bring European spring wheat into Minneapolis delivery points. Brugler adds that it's clear the sharp price rise still hasn’t limited buying interest in the contract. What’s less clear, Brugler said, is exactly why that is.

CDO Ratings to Fall as Losses Trigger Fitch Overhaul The New York-based company may lower the notes by as much as five levels after failing to accurately assess the risk of debt that packages other assets, according to guidelines proposed by Fitch today. CDOs with AAA grades that are based on credit-default swaps and aren't actively managed may face the steepest reductions.

Quick Overview

• The Institute of Supply Managements' index of services fell from 54.4 to 41.9 in January, weaker than expected.
  
  

• Index of services in the Euro area dropped from 53.1 to 50.6.
  

• Services in the U.K. increased from 52.4 to 52.5 in January.
  

• Retail sales volume in the Euro area fell 0.1% in December.
  
  

• Australia's central bank raised its interest rate by a quarter point to an 11-year high of 7%.
  
  

• Ethanol production hit a new record high of 14.356 million barrels in November, up 338,000 barrels from October and up 40% YoY.
  

• Excessive rains have increased Asian rust problems on up to 25% of Brazil’s soybean belt.
  

• Canada’s wheat stocks fell 30% YoY. Corn stocks rose15%, and Canola stocks fell 9% YoY.
  

• The Bush budget proposal sent to Congress will let the 54c a gallon ethanol import tariff expires when the FY 2009 budget begins Oct 1, 2008;
  

• Indonesia's government will impose a 15% export tax if palm oil exceeds $1,100 a metric ton.
  
  

• Thai rice exporters could start defaulting on orders due to rapidly rising domestic rice prices, the Bangkok Post reported.
  
  

• The SEC is beginning to approve some "active" exchange-traded funds, which pick securities rather than simply track an index.

Russian economy succumbs to the oil curse
Nice Tsarist flats fetch $3m to $4m. Even Bolshevik boxes are booming. Moscow boasts 150,000 home millionaires in dollars, says Sergei Polonsky, the Mirax Group tycoon. In a good year, prices double

Quick Overview

• U.S. factory orders rose 2.3% in December-- less than expected. Excluding transportation, orders rose 0.7%.
  
  

• Australian home price rose 12% in 2007,
  
  

• Producer prices in the Euro area rose 0.1% in December and 4.3% YoY.
  
  

• Bush wants to spend $3.1 trillion in 2008-2009, up 76% since1999.
  
  

• China is building an enormous logistics facility covering nearly 70 hectares for the newly-launched Sino-Germany Container Railway. It is predicted that the volume of Germany-bound boxes on this railway will reach 20,000 to 26,000 TEU by 2010 while Beijing-bound boxes will be about 10,000 TEU.