Farm-Credit Squeeze May Cut Crops, Spur Food Crisis (Update1)
(Bloomberg) -- The credit crunch is compounding a profit squeeze for farmers that may curb global harvests and worsen a food crisis for developing countries.

Europe on the brink of currency crisis meltdown
Experts fear the mayhem may soon trigger a chain reaction within the eurozone itself. The risk is a surge in capital flight from Austria – the country, as it happens, that set off the global banking collapse of May 1931 when Credit-Anstalt went down – and from a string of Club Med countries that rely on foreign funding to cover huge current account deficits.

Quick Overview

• The National Association of Realtors said existing home sales were at an annual rate of 5.18 million units, up 5.5% in September.
  
  

• U.K.'s GDP fell 0.5% in the third quarter.
  

• YoY Canada’s consumer prices rose 3.4%.
  

• YoY GDP in South Korea rose 3.9%
  

• OPEC wants to cut oil production by 1.5 million barrels a day
  

• The port of Rotterdam announced that throughput during the first nine months of the year rose by 6.1% YoY. Most types of cargo showed a positive trend, with agribulk up 26% YoY, liquid bulk up 16%, ores and scrap up 11%, coal up 9%, crude oil up 7%, containers up 6%.
  

• The IMF is aiding Iceland with about $2.1bn.
  

Tough to believe Greenspan's disbelief .."those of us who have looked to the self-interest of lending institutions to protect shareholder's equity (myself especially) are in a state of shocked disbelief."
Cue up Casablanca, and the "I'm shocked, shocked, to find gambling here," line from the Captain Renault character.
The truth is that the executives at financial institutions had very little interest in protecting shareholder's equity.

GLG's Roman, NYU's Roubini Predict Hedge Fund Failures, Panic
Nouriel Roubini, the New York University Professor who spoke at the same conference, said hundreds of hedge funds will fail as the crisis forces investors to dump assets. ``We've reached a situation of sheer panic,'' said Roubini, who predicted the financial crisis in 2006. ``Don't be surprised if policy makers need to close down markets for a week or two in coming days.''

Quick Overview

• U.S. jobless claims were up 15,000 last week to 478,000, more than expected.
  

• New Zealand cut its interest rate from 7.5% to 6.5%
  

• Sweden cut its interest rate from 4.25% to 3.75%
  

• U.K.'s retail sales volume fell 0.4% in September.
  

• Industrial new orders in the Euro area fell 1.2% in August
  

• RealtyTrac said 765,558 foreclosure filings were made on U.S. properties in the third quarter of this year - up 3% from the second quarter and 71% YoY.

Greenspan Urges Tighter Regulation After `Breakdown' (Update1)
(Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan called for tighter regulation of financial companies, distancing himself from the free-market culture that he helped to create.

Credit-Rating Companies `Sold Our Soul' for Pay, Employees Said
(Bloomberg) -- Employees at Moody's Investors Service told executives that issuing dubious creditworthy ratings to mortgage-backed securities made it appear they were incompetent or ``sold our soul to the devil for revenue,'' according to e-mails obtained by U.S. House investigators.

Quick Overview

• Canada’s retail sales fell 0.3%. Excluding autos, retail sales rose 0.4%
  Canada’s index of leading indicators fell 0.2% in September
  

• Australia's consumer prices rose 5.0%.

• New Zealand's central bank cut its benchmark interest rate by a record 1% to 6.5%
  
  

• The U.S. Department of Energy said:
  Supplies of crude oil rose 3.2 million barrels to 311.4 million barrels
  Supplies of gasoline rose 2.7 million barrels
  Supplies of heating oil rose 800,000 barrels.
  Refinery use increased from 82.2% to 84.8% of capacity
  Gasoline demand fell 4.3% YoY
  Distillate demand fell 5.8% YoY
  

Don't make a drama out of this financial crisis
The scale of what has happened is breath-taking. The oil price has halved since July. Wheat prices have halved since spring. Rice prices are down by a third. Remember that early this year there were riots in many developing countries – not over the antics of Wall Street investment bankers but over the price of food. And in many countries, until recently anyway, the forces pushing towards recession have been more about the squeeze on real incomes than about the credit crunch. What will happen now is that, thanks to the fall in commodity prices, the squeeze will go into reverse, thereby handing purchasing power back to the consumers.

Spreading the wealth
And there is a lot of spreading potential: income distribution in America is the widest of the 30 countries of the OECD. The top 10% (or decile) of earners have an average $87,257 of disposable income, while those in the bottom decile have $5,819, among the very lowest of any country.

Quick Overview

• The Chicago Federal Reserve's index of national activity fell from -1.81 to -2.57 in September.
  

• Canada reduced its interest rate from 2.50% to 2.25%.
  

• (Bloomberg) -- Argentine bonds plunged, sending benchmark dollar yields over 24 percent, and stocks sank the most in a decade on speculation the government will nationalize pension funds in a bid to attain financing and stave off a second default this decade.
  

• Cash strapped Pakistan is looking for loans from the IMF and other bodies of up to $15 billion to avert a balance of payment crisis.

• China will raise tax rebates for a quarter of its exports and jumpstart infrastructure projects, trying to buffer the impact of weaker overseas demand.

• China intends to set up a soybean reserve of up to 1.5 million tonnes.

The United States, Europe and Bretton Woods II
The Europeans are not looking to challenge the reality of American power, they are looking to increase the degree to which the rest of the world can influence the dynamics of the American economy, with an eye toward limiting the ability of the Americans to accidentally destabilize the international financial system again.

Coffee and chocolate are the key to long life
Chocolate, coffee and tea are among the key foods and drinks needed to live a long and healthy life, according to a leading nutritional scientist.

Quick Overview

• Bernanke endorsed a new economic stimulus package -- Bush is open to the idea.
  

• YoY China's economy expanded at 9% in the third quarter.
  

• Sweden became the latest European economy to introduce a bailout plan to support its banks.
  

• Canada wholesale sales fell 1.5% in August
  

• U.K.'s budget deficit out at 37.6 billion pounds in the first half of 2008-2009.

• India cut its discount rate from 9% to 8%.

Lahde Quits Hedge Funds, Thanks `Idiots' for Success (Update1)
``I was in this game for money,'' Lahde, 37, wrote in a two-page letter today in which he said he had come to hate the hedge-fund business. ``The low-hanging fruit, i.e. idiots whose parents paid for prep school, Yale and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government.

``All of this behavior supporting the Aristocracy, only ended up making it easier for me to find people stupid enough to take the other sides of my trades. God Bless America.''

Quick Overview

• Warren Buffett said “bad news is an investor's best friend” – he’s buying U.S. stocks.
  

• U.S. housing starts were at an annual rate of 817,000 in September, down 6.3% MoM, and down 31% YoY.
  

• The University of Michigan's consumer sentiment index fell from 70.3 to 57.5
  
  

Quick Overview

• U.S. consumer price index unchanged in September -- up 4.9 YoY. Excluding food and energy prices rose 0.1% -- up 2.5% YoY.
  

• U.S. industrial production fell 2.8% in September
  

• U.S. Capacity utilization fell from 78.7% to 76.4%.
  

• The Philadelphia regional index of manufacturing fell from +3.8 to -37.5
  

• Canada’s manufacturing sales fell 3.7% in August.
  
  

• The U.S. Department of Energy said:
  Supplies of crude oil rose 5.6 million barrels to 308.2 million barrels.
  Supplies of gasoline rose 7.0 million barrels
  Supplies of heating oil fell 200,000 barrels.
  Refinery use rose 80.9% to 82.2% last week.
  Gasoline demand fell 5.2% YoY
  Distillate demand fell 6.9% YoY.
  

Quick Overview

• U.S. stocks dropped the most since the crash of 1987, fed by bleak economic data.

• Japan pledged unlimited supply of dollars to lenders.
  

• Hong Kong guaranteed all bank deposits.

• European car sales fell 8.2% last month. BMW has begun to idle three plants - Opel has shut a factory.

• U.S. producer prices fell 0.4% MoM, but rose 8.7% YoY.
  

• U.S. retail sales fell 1.2% in September, weaker than expected.
  

• The Empire State manufacturing index fell from -7.4 to -24.62 in October.
  

• YoY consumer prices in the Euro area rose 3.6% in September.
  

• The U.K.'s unemployment rate rose to 5.7% from 5.5%.

• Investors pulled at least $43bn from US hedge funds in September.
  

Bloomberg (October 14, 2008) Roubini Sees Worst Recession in 40 Years, Rally's End (click for video):

Europe stuns with €1.5 trillion bank rescue, as France plays role of saviour
Germany, France, Italy, Spain, Holland and Austria have joined forces to launch the greatest bank bail-out in history, offering over €1.5 trillion in guarantees and fresh capital in a "shock and awe" blitz to halt the credit panic.

Quick Overview

• Bush said the government is taking a $250 billion stake in the nation's top financial institutions as part of its latest plan to tackle the credit crisis.
  

• U.K.'s consumer prices rose 5.2%.
  

• Industrial production in the Euro area rose 1.1% in August, but fell 0.7% YoY.
  

• Australia will spend A$10.4 billion to help stimulate the economy.
  

• Europe's cocoa grind fell 0.7% QoQ. YoY it is up 2%.
  

Paulson's statement on actions to protect the US economy
Today I am announcing that the Treasury will purchase equity stakes in a wide array of banks and thrifts. Government owning a stake in any private U.S. company is objectionable to most Americans – me included. Yet the alternative of leaving businesses and consumers without access to financing is totally unacceptable. When financing isn’t available, consumers and businesses shrink their spending, which leads to businesses cutting jobs and even closing up shop.

This Is What Denial Does
But one of the benefits of modernity is our ability to spot trends and predict results. If fish in a depleted ecosystem grow by 5% a year and the catch expands by 10% a year, the fishery will collapse. If the global economy keeps growing at 3% a year (or 1700% a century) it too will hit the wall.

Quick Overview

• The U.S. government is closed for Columbus Day.
  

• The Dow Industrials rose 936.42 points -- 11%, as global plans to rescue banks through capital injections sent the DJI to its biggest one-day point gain ever.
  
  

A light at the end of the tunnel?
..At first blush—and in contrast to previous failures after half-hearted efforts—the new plans seem to be working...

European Leaders Vow Bank Guarantees, Bid to Stop Financial Rot
The key measures announced today are: a pledge to guarantee new bank debt issuance until the end of 2009; permission for governments to shore up banks by buying preferred shares; and a commitment to recapitalize any ``systemically'' critical banks in distress.

Lehman Brothers demise triggers huge default
An auction of Lehman’s bonds yesterday determined that the bank’s borrowings were worth only 8.625 cents on the dollar. The valuation leaves the insurers of the debt a bill of about $365 billion. It is not clear whether the insurers, which are required to settle the bill in the next two weeks, will be able to pay – a development that could further undermine increasingly stressed capital markets.

Paulson Says Will Buy Bank Equity `Soon as We Can' (Update2)
(Bloomberg) -- U.S. Treasury Secretary Henry Paulson said the U.S. will buy equity ``as soon as we can'' in banks and other financial institutions to restore market stability and revive economic growth.

G-7 Commit to `All Necessary Steps' to Stem Crisis (Update2)
``The current situation calls for urgent and exceptional action,'' the G-7's finance ministers and central bankers said in a 266-word statement after talks in Washington. Officials pledged to ``take all necessary steps to unfreeze credit and money markets'' without detailing how that would be accomplished.