"Can chaos theory teach us anything about international relations?"

The Israel/Hezbollah mutually fighting zombies story was not the link I was going for earlier today, this was.
From Foreign Policy:

This year marks that 50th anniversary of the branch of mathematics known as chaos theory. Appropriately enough for a field of study premised on the idea that seemingly insignificant events can have large and unpredictable consequences, the eureka moment of chaos is generally considered to be a short dense paper titled "Deterministic Nonperiodic Flow" published on page 130 of volume 20 of the Journal of the Atmospheric Sciences in 1963.

As James Gleick writes in his very entertaining history, Chaos: Making of a New Science, "In the thousands of articles that made up the technical literature of chaos, few were cited more often than "Deterministic Nonperiodic Flow." For years, no single object would inspire more illustrations, even motion pictures, than the mysterious curve depicted at the end, the double spiral that became known as the Lorenz attractor." 

The paper's author, Edward Lorenz, was an MIT mathematician working on an early computer weather modeling simulation. One day in 1961, in an effort to save time waiting for his vacuum tube-powered Royal McBee computer to run the program, Lorenz started his simulation from the middle, manually entering in data from an earlier simulation, but crucially, rounding a six decimal point number to three decimal points in order to save space. What Lorenz found after returning from a coffee break was that these tiny, seemingly arbitrary changes in his initial inputs had led to vastly different outcomes in the weather models he created.

As Gleick writes, "Lorenz saw more than randomness embedded in his weather model. He saw a fine geometrical structure, order masquerading as randomness." Lorenz, who died in 2008, would later become best known for coining the metaphor of the "butterfly effect" to describe systems that are extremely sensitive to their initial conditions.

Most casual readers can't understand much of the mathematics of chaos theory, but the basic principles were popularized thanks in part to Gleick's bestselling book,  not to mention the trippy Mandelbrot Set images that have graced countless screensavers and dorm room posters and, of course, Jeff Goldblum's character in Jurassic Park.

Chaos doesn't have quite the pop culture cachet that it used to, but the study of what Lorenz called nonlinear systems - those in which outputs are not necessarily proportional to inputs --  has been highly influential in fields ranging from physics, to engineering, to astronomy, agriculture to economics. (One of the main themes of Gleick's books is that researchers in different fields were often working along very similar lines without being aware of each other. Some of this work was actually going on years before Lorenz's "discovery.")

The late mathematician Benoit Mandelbrot's ideas about turbulence in financial markets have enjoyed something of a renaissance in recent years thanks the global financial crisis. I was lucky enough to get the chance to interview Mandelbrot for FP a year before his death....MUCH MORE

"19 Tweets From The Audubon Society/Barack Obama Twitter Feud"

From L'oignon

HT: peHUB

And On Top of Everything Else We've Got a Hindenburg Omen

From our April 17 post:
Oh Great. Now We've Got a Hindenburg Omen Sighting

From Investor Verlag (Tuesday):

Goldaktien im freien Fall

in den vergangenen Tagen haben wir einen als klassisch zu bezeichnenden Ausverkauf geseheen. Nein, nicht nur bei Gold und den anderen Edelmetallen. Seit gestern haben wir auch für die US-Aktienmärkte ein Hindenburg-Omen vorliegen....

Even if you don't speak the language of love, the meaning is pretty clear: "Gold in free-fall but it's not just gold, since yesterday we have a Hindenberg Omen in U.S. markets."

Important caveat after the jump! 

From ZeroHedge which I sometimes have trouble translating:
Stocks Slide On Hindenburg Omen Sighting

...Third, and perhaps more important to some, based on intraday data so far, the much-discussed Hindenburg Omen has been spotted. The last time we were this high in stocks and the Hindenburg was spotted was October 2007...MORE

 ...and The Hindenburg Omen... (red bars on upper pane)... click for large version...



See also, from August 2010:
Thanks Alphaville: "Testing the Hindenburg Omen"

Although CXO Advisory is one of our 1300 feeds and one I try to get to at least twice a week I somehow missed this. FT Alphaville didn't.
First CXO goes through the methodology of their test, in-depth as always, then:

...In summary, evidence from simple tests of a publicly available set of “confirmed” Hindenburg Omens suggests the possibility of usefulness, but reservations regarding small sample size and potential sample bias are strong.
The vivid image evoked by the name may be an important factor in media attention to the Hindenburg Omen.

Gee, d'yuh think?...MORE

Monsanto Down 4% on GMO Wheat, Now Europe (zero tolerance) is Mulling its Options (MON)

The stock closed at $ 100.64 -$4.33 (-4.12%) which was the low for the day.
Now it turns out that Monsanto may have been regaling the USDA with tall tales.
From Bloomberg:
Monsanto Resumed Field Trials of Roundup Ready Wheat

Monsanto Co. (MON), the world’s largest seed company, resumed planting of experimental wheat engineered to survive Roundup herbicide, U.S. data show, reviving a similar program that has caused international concern with the discovery that the crop escaped in Oregon.

Monsanto last year planted 150 acres of wheat in Hawaii that was genetically modified to tolerate glyphosate weedkiller, which the company sells as Roundup, according to a Virginia Tech database administered by the U.S. Department of Agriculture. Another permit allows Monsanto to test wheat with multiple traits, including Roundup tolerance, on 300 acres in North Dakota this year.

Monsanto said May 29 in a statement that it ended its program to develop Roundup Ready wheat nearly a decade before the USDA announced this week that the experimental crop was discovered growing on an Oregon farm. The Roundup Ready wheat in the new field trials is “an entirely different event” than the escaped crop reported by the USDA, Monsanto said.

“This research is still in the very early phases and at least a decade away from commercial approval,” Lee Quarles, a Monsanto spokesman, said in an e-mail response to questions today. “The Roundup Ready wheat project that is the subject of the USDA report was previously discontinued.”
The Oregon discovery prompted Japan to suspend imports of western-white wheat and feed wheat and South Korea to increase inspections on imports. In the statement, Monsanto said it completed “closing out the Roundup Ready wheat program” nine years ago.

The USDA is investigating how the experimental wheat was found so long after Monsanto said research ended. Monsanto conducted eight Oregon field trials on herbicide-tolerant wheat between 1999 and 2002, according to the Virginia Tech database....MORE 

And from the Washington Post:
European Union urges testing of U.S. wheat imports for unapproved Monsanto strain

The European Union advised member states Friday to test certain wheat shipments from the United States, and South Korea joined Japan in suspending some U.S. wheat imports in response to the recent discovery of unapproved genetically modified wheat in an 80-acre field in Oregon.

The E.U. consumer protection office said in a statement that it was “following carefully the presence of this non-authorized GM [genetically modified] wheat in Oregon in order to ensure that European consumers are protected from any unauthorized GM presence and make sure that the E.U. zero tolerance for such GM events is implemented.”

The 27-member European Union imports more than 1.1 million tons of American wheat a year, 80 percent of which is soft white white, the Associated Press reported. Spain is the leading buyer....MORE 

Earlier:
UPDATED--Japan Refuses to Buy U.S. Wheat Because of Monsanto (MON)

Controlling Your 3D Printer With Your Mind

From DVICE:

Dreaming up reality: 3D printed objects created by your mind

Wearing a neuro-headset, Thinker Thing's George Laskowsky has done the unimaginable. He has thought an object into existence. From the sound of it, this is something that just can't happen. It is a power reserved not for man, but for the gods. And yet this little orange robotic-looking arm was created by the power of a human brain.

Well, that and a whole lot of software — and a 3D printer. So the object in question didn't just wink into existence when Laskowsky thought of it. Unless, that is, you look at the event in the right light.

Here's how the whole thing works: First you strap on the EPOC headset, built by Emotiv. Then the Thinker Thing program starts, showing you a display of a very basic shape. Next, as you watch, the object begins to mutate and evolve.

You emotionally react, approving and disapproving shapes based on how close they are to the object you've thought up. The mental signals that you're sending off with your emotions are picked up by the EPOC headset and guide the future development of the Thinker Thing program. Eventually, the object upon the screen resembles your mental picture and it's time to hit print....MORE

Inflation: Core Personal Consumption Expenditures At All-time Low

From Advisor Perspectives:

The BEA's Personal Consumption Expenditures Chain-type Price Index for April shows core inflation well below the Federal Reserve's 2% long-term target at 1.05%, the lowest Core PCE ever recorded; the previous all-time low was 1.06% in March 1963, fifty years ago. The Core Consumer Price Index release earlier this month, also data through April, is significantly higher at 1.72%. The Fed is on record as using PCE as its primary inflation gauge.

The inflation rate over the longer run is primarily determined by monetary policy, and hence the Committee has the ability to specify a longer-run goal for inflation. The Committee judges that inflation at the rate of 2 percent, as measured by the annual change in the price index for personal consumption expenditures, is most consistent over the longer run with the Federal Reserve's statutory mandate. Communicating this inflation goal clearly to the public helps keep longer-term inflation expectations firmly anchored, thereby fostering price stability and moderate long-term interest rates and enhancing the Committee's ability to promote maximum employment in the face of significant economic disturbances. [Source] Note: Bolding added by me.

Elsewhere the Fed stresses the importance of longer-term inflation patterns, the likelihood of persistence and the importance of "core" inflation (less food and energy). Why the emphasis on core? Here is an excerpt from one of the Fed FAQs.

Finally, policymakers examine a variety of "core" inflation measures to help identify inflation trends. The most common type of core inflation measures excludes items that tend to go up and down in price dramatically or often, like food and energy items. For those items, a large price change in one period does not necessarily tend to be followed by another large change in the same direction in the following period. Although food and energy make up an important part of the budget for most households--and policymakers ultimately seek to stabilize overall consumer prices--core inflation measures that leave out items with volatile prices can be useful in assessing inflation trends. [Source]

Fed's Short-Term Target Broadened to 2% to 2.5%
In the shorter term, however, the Fed has raised the top range of its inflation target by half a percent. The change was announced to the public in the December 12, 2012 FOMC press release...MORE including charts

"There is a movie where Israel and Hezbollah ally to fight zombies"

From Foreign Policy's Passport blog:

Dan Drezner, call your office. A new Israeli horror film, Cannon Fodder, depicts the tribulations of an IDF commando team that enters south Lebanon -- only to discover their problem isn't Hezbollah, but marauding zombie hordes.  

To make a not particularly long but certainly confusing story short, the Israeli commandos and the Lebanese paramilitary organization join forces in order to combat the zombie menace. Along the way, there are people beheading zombies with swords, a man on fire, and no shortage of puns about the real-life Mideast conflict. As the preview intones: "In a region infected by war ... where bad blood consumes all hopes for peace ... the fight for borders has lost its meaning."...MORE

Where Has Izabella Kaminska Been?

You have probably noticed she hasn't posted at Alphaville this week.
From her personal blog, Dizzynomics:

Generation clash

After my panel yesterday I was approached by a gentleman who was greatly offended by my proposition that a) the Roman Empire collapsed because it failed to make the next great technological leap into a more sophisticated fuel economy and b) felt necessary to lecture me about the inflation problems of the 80s and that my suggestion that QE didn’t have to end badly was naive as a result.

On the latter point I felt that he really thought I needed to be educated about the 70-80s inflations, that I had obviously never heard of the episode and that this was the single most important lesson in all economic history. He was very patronising, dismissive, accusatory and arrogant in his manner.

I countered with the point that inflation can not be a major issue if there is no shortage of goods or wage pressures due to unemployment. Second, hyperinflation is almost always associated with countries which have liabilities denominated in foreign currencies.

He retaliated a bit with some repetition of the same points he originally made as if he had not actually listened. I repeated. I think he finally got the point. Changed subject to something else gold buggy.

Before that there was the Roman confrontation, which involved him preaching to me (BA ancient history) that the Romans were the best technologists in the ancient world and then.. In the weirdest statement of all time… That i was being stupid because how could the Romans have invented combustion or an oil-based economy because that didn’t get invented till the 19th century. Like this invention was always set in stone for the 19th....MORE

Here's the homepage.

Ms Iz is defining the term "Multi-platform".
She has this Wordpress blog, she has a Tumblr, She has FT Alphaville, She has a Financial Times column e.g. "The property illusion":

One man’s wealth tax becomes another man’s wealth confiscation 

And she has the podcasts.
I'm just waiting to see her take the FT off Pearson's hands and start writing editorials.

"The True Costs of the Gatsby Life" (or, F. Scott Fitzgerald joins the 1%)

From Barron's Penta (as in $5 mil net worth) blog:

How much does it cost to be Jay Gatsby today? Or simply the literary scribe F. Scott Fitzgerald?

A lot more and a lot less than you think. In his ledger for 1923, Fitzgerald budgeted $100 a month for “wild parties” and another $80 a month for “house liquor.” That year he and his family were living in Great Neck on Long Island–the model for West Egg of The Great Gatsby–and he was just getting started on what would become his most famous book.

While it wasn’t exactly Gatsby money, $100 a month for wild parties was no small sum. Adjusted for inflation, that’s $1,360 in 2013 dollars, or more than $16,000 a year.

But Fitzgerald could afford it at the time.

According to his accounts, he earned $28,758.79 from his writing in 1923, including a $3,939 advance for Gatsby, enough to put him in the top 1% of taxpayers. The same detailed ledger suggests his effective tax rate was 8.3%. (For more on Fitzgerald’s high life and tax returns, see “Living on $500,000 a Year” in  The American Scholar, a study by University of South Carolina law professor William J. Quirk.)

Today, that $29k in annual earnings would equal $390,000, and Jeffrey Pretsfelder, senior tax analyst at Thomson Reuters, calculates that the tax rate, including payroll taxes and New York State taxes, would be 37.5%. So a dollar of earned income in 1923 went 20 times further than it does today.

That income side of his ledger helps puts his outgoings in perspective. Furthermore, the cost of being rich has gone up considerably since then, which is why Gatsby’s over-the-top extravagance, much on display in Baz Luhrmann’s compelling and spectacular new film of the book, doesn’t seem implausible at all....MORE

"The Cities That Are Stealing Finance Jobs From Wall Street"

Shhhh, don't tell mayor Bloomberg that this happened on his watch while he was preoccupied with soft drinks.
From Joel Kotkin's blog:

Appearing in: 

Forbes.com

Over the past 60 years, financial services’ share of the economy has exploded from 2.5% to 8.5% of GDP. Even if you believe, as we do, that financialization is not a healthy trend, the sector boasts a high number of relatively well-paid jobs that most cities would welcome.
Yet our list of the fastest-growing finance economies is a surprising one that includes many “second-tier” cities that most would not associate with banking. To identify the cities making the biggest gains, we ranked metropolitan statistical areas’ employment growth in the sector over the long-term (2001-12), mid-term (2007-12) and the last two years, as well as momentum.

Best Cities for Jobs in Finance Industries

• Small Sized Cities
• Medium Sized Cities
• Large Sized Cities
• All Cities

New High-Fliers
Tops on our list among the 66 largest metro areas is Richmond, Va., where financial sector employment has grown an impressive 12% since 2009. This reflects the presence of large banks such as Capital One Financial , the area’s largest private employer with 10,900 jobs, and SunTrust Banks , which employs 4,400. The insurer Genworth Financial is based in Richmond, and Wells Fargo and Bank of America also have sizable operations there. Along with the Northern Virginia metropolitan statistical area (an area encompassing the state’s suburbs of Washington, D.C., including Fairfax, Arlington, Loudoun and Prince William counties), which is No. 7 on our list, the Old Dominion is quietly becoming a major financial power.
In once-gritty Pittsburgh, which places second on our list, financial services is now the largest contributor to the regional GDP, according to the Allegheny Conference. Long seen as a backwater, the area has begun to lure the kind of highly trained workers used by financial firms, leading Rust Belt analyst Jim Russell to joke, “Pittsburgh is becoming the new Portland.” Financial employment there has grown nearly 7% since 2009. The strongly reviving local economy spans everything from energy to medical technology.

Like Pittsburgh, some of the areas doing well in financial services are also thriving generally. These include such Texas high-fliers as No. 3 Ft. Worth-Arlington, where financial services employment has expanded over 12% since 2007, as well as No. 4 San Antonio-New Braunfels. And it is not real estate that is driving this boom—in Fort Worth, for example, the “real estate and rental and leasing” sub-sector of financial services shed jobs over the last five years while the “finance and insurance” subsector expanded almost 20%.

Some metro areas that aren’t exactly setting the world on fire are scoring in the financial job sweepstakes. Jacksonville, Fla., ranks fifth on our list and St. Louis, MO-IL ranks eighth. In St. Louis, financial sector employment is up 6.4% since 2007 by our count, and the number of securities industry jobs has increased 85% to 12,000 over that span, according to the Wall Street Journal.

What’s Driving Dispersion of Financial Services?
The largest traditional financial centers appear to be losing their edge. New York, home to by far the largest banking sector with 436,000 jobs, places a meager 52nd on our list of the cities winning the most new jobs in the sector. Big money may still be minted in Gotham, but jobs are not. Since 2007 financial employment in the Big Apple is down 7.4%....MORE

Canada Sharply Ramps up Imports of U.S. Crude

File under "Headlines I did not expect to see".
From the EIA via the CME:

Canadian refineries, like those in the United States, are working to increase their use of growing production of crude oil from Texas and North Dakota.

Monthly exports of crude oil from the United States to Canada have historically averaged 24,000 barrels per day (bbl/d) and were principally delivered to refineries in central Canada. However, U.S. exports to Canada averaged nearly 100,000 bbl/d over the first 3 months of 2013.

While the Midwest (PADD 2) has been the traditional delivery source for U.S. crude oil exports to Canada, the recent increase in exports is being led by deliveries from the Gulf Coast (PADD 3) and the East Coast (PADD 1).

Nearly all of the PADD 3 crude exports to Canada were light crude oil. Trade press reports indicate that Suncor Energy, Irving Oil, Trafigura and Valero are among the companies that have already shipped, or will soon ship, crude oil from the U.S. Gulf Coast to refineries in eastern Canada.
PADD 1 exports were barrels that moved east from North Dakota's Bakken region by rail and then were exported through New York state.

According to the Canadian Association of Petroleum Producers, Canadian refineries in 2011 processed 878,000 bbl/d of western Canadian crude, 110,000 bbl/d of eastern Canadian crude, and 680,000 bbl/d of imports.

The imports primarily supply refineries in eastern Canada that have limited access to western Canadian production or are configured to run light crude oil....MORE

"Tesla’s Musk: Good Chance of Google Partnership, $35,000 Auto" (TSLA)

Following up on "Live Blog: Tesla's Elon Musk Speaks to CNBC (TSLA)".
From Barron's Stocks to Watch Today column:

During a CNBC appearance this morning, Tesla founder and CEO Elon Musk said Tesla could partner with Google on self-driving car technology.

Tesla Motors (TSLA) shares are down $1.50, or 1.5%, at $103.36. Shares of Google (GOOG) are up less than a point to $875.31 in morning trading.

But before you get too excited about the prospect of 22nd-Century cruise control — a coffee in one hand and smartphone in the other — the government saw fit to issue a new policy yesterday on vehicle automation  – see this U.S. Department of Transportation press release.

Today, in a series of CNBC questions from Carl Quintanilla, Jim Cramer, and David Faber, Musk said there is a “good chance” Tesla would partner with Google to develop self-driving cars. But he said there is nothing planned at the moment, and that Tesla is interested, itself, in developing a self-driving car technology.

Musk said Tesla  may be able to produce a model costing $35,000 or so in about three to four years. When Cramer asked whether cheaper models would hurt the resale value of the current “Model S,” Musk said he thinks the current car will maintain its value because demand will be higher than the company’s own manufacturing ability for some time to come....MORE

PIMCO Speculates on the End of QE and The Time Bill Gross Acted Like a Cheap Prick to a Waitress

First up, ZeroHedge:

With The G-4 Central Banks "All In", Pimco Speculates When QE Finally Ends

With economic analysis no longer a relevant consideration in the New Normal as Jeff Gundlach explained yesterday, the only real question since the advent of global QE, first in the US, then in Japan, soon everywhere else, is when does the Fed stop. And not just Taper, because while the Fed may slow down the flow pace of liquidity injection one month, it will promptly reaccelerate it just after when risk tumbles, but the structural, and terminal end of QE.

Our previous speculation on this topic has focused on the eventual increase in interest on reserves, both in a rising rate environment and simply from perpetuation of reserve expansion, as well as the Fed's relentless monetization of duration risk: recall that Bernanke owns 30.5% of all 10 Year equivalents currently, a number which is set to hit 100% by 2018, but which will break the bond market long before that. In brief: open-ended QE is anything but, at least until the Fed breaches it mandate and start "monetizing" outright risky assets just like the BOJ - a step it very well may be forced to engage in.

So to supplant the critical perspective on when/if the Fed finally pulls the plug we present the following observations by Pimco's Richard Clarida who looks at the end of QE from a more conventional macroeconomic perspective. His thoughts are presented below in their entirety.

But before absorbing the full analysis, here is Clarida's punchline distinguishing between those who believe the Fed is doing something positive, versus those who, correctly, understand it is Ben Bernanke's own fault for clogging up the monetary transmission mechanism, and for de facto "breaking the market" which is now - like a liquidity-addicted drug addict - impossible to visualize a world in which the Fed does not provide zero-cost training wheels from here until eternity:

QE detractors... see something quite different. They see QE as not responding to the collapse in the money multiplier but to some extent causing it. In this account QE – and the flatter yield curves that have resulted from it – has itself broken the monetary transmission mechanism, resulting in central banks pushing ever more liquidity on a limper and limper string. In this view, it is not inflation that’s at risk from QE, but rather, the health of the financial system. In this view, instead of central banks waiting for the money multiplier to rebound to old normal levels before QE is tapered or ended, central banks must taper or end QE first to induce the money multiplier and bank lending to increase.

This is absolutely spot on, but unfortunately this "liquidationist" path to fixing a problem that should have been addressed five years ago is now a dead end, as Bernanke knows he can not end QE in some interim phase without achieving (runaway) inflation or all that he has "accomplished" for the market, if not the economy will be undone. Even if, ironically, the market crash that results, would be just the debt-liquidating economic catharsis the developed world has been begging for since the advent of central planning....MUCH, MUCH MORE

And from 2011, "PIMCO's Bill Gross Tells Investors About The Time He Acted Like A Cheap Prick To A Waitress":
Last year we had Mr. Gross turning down loan requests from Warren Buffett and Sam Walton.
Now this, from DealBreaker:

As most of civilized society knows, it’s considered pretty classless to mistreat waiters or waitresses, and a pretty fool-proof indication of your character. In fact, there’s only one acceptable way to act like an insufferable prick to a person waiting on you, and that’s beginning a meal by whipping out a stack of singles and telling the server, “Let’s establish something. You are, I assume, expecting a tip? This pile of one dollar bills represents your potential tip. Every time you please me, you’ll see the pile grow. However, if I am unsatisfied...MORE

MarketBeat picked up on the waitress story but appears to take particular umbrage at the very notion of Mr. Gross' literary stylings:

Bill Gross: His Most Obnoxious Note Ever!

Where should we start? Bond king — or former bond king? – Bill Gross is out with his monthly investment outlook note. Mr. Gross is not merely satisfied managing the world’s largest bond fund. (Pimco Total Return Fund: $240.7 billion in assets in December.) Nay, he fancies himself something of a scribe, and his monthly investment outlook is where he talks his book for a few hundred words spicing it up with some belabored metaphors and a self-serving analogy, or several. But there are a few things that stick in our craw about this month’s note....MORE 

That is professional pixilator Matt Phillips.
[Don't mind Mr. C, he's trying to combine the computer science term pixelate with a word for whimsical/bemused.  el vs. il. I prefer the second of these definitions -ed]

UPDATED--Live Blog: Tesla's Elon Musk Speaks to CNBC (TSLA)

TSLA $102.22 -$2.73.
Liveblogging their own show.
From CNBC:

Elon Musk, the billionaire, ground-breaking entrepreneur and driving force behind Tesla Motors, SpaceX and SolarCity is set to speak with CNBC's "Squawk on the Street" at 10:30a ET Friday (Today).

The following is a live blog of the interview, as well as the perspective from CNBC hosts and guests weighing in throughout the morning.

Check back here for the latest. See what Tesla's stock price is doing right now.

10:49 am: Musk denies dating Cameron Diaz. "I don't know where people got that from," he said....MUCH MORE

Update: 
"Tesla’s Musk: Good Chance of Google Partnership, $35,000 Auto" (TSLA)

UPDATED--Japan Refuses to Buy U.S. Wheat Because of Monsanto (MON)

In the recently decided Bowman v Monsanto case the Supreme court basically said "You made it, you own it unto the Nth generation", a win for Monsanto.

Should wheat farmers suffer damages because one of the largest buyers of U.S. wheat doesn't want the stuff, the Bowman decision just might end up biting MON in the butt.
More after the jump.

From Reuters:

WRAPUP 1-US genetically modified wheat stokes fears, Japan cancels tender

*Japan cancels tender to purchase U.S. wheat
* Asian consumers jittery about gene-altered food imports
* Importers to seek details from U.S. government (Recasts with details, quotes)

A strain of genetically modified wheat found in the United States fuelled concerns over food supplies across Asia on Thursday, with major importer Japan cancelling a tender offer to buy U.S. grain.

Other top Asian wheat importers South Korea, China and the Philippines said they were closely monitoring the situation after the U.S. government found genetically engineered wheat sprouting on a farm in the state of Oregon.

The strain was never approved for sale or consumption.

Asian consumers are keenly sensitive to gene-altered food, with few countries allowing imports of such cereals for human consumption. However, most of the corn and soybean shipped from the U.S. and South America for animal feed is genetically modified.

"We will refrain from buying western white and feed wheat effective today," Toru Hisadome, a Japanese farm ministry official in charge of wheat trading, told Reuters.

The U.S. Department of Agriculture on Wednesday said the wheat variety was developed years ago by biotechnology giant Monsanto Co. It was never put into use because of worldwide opposition to genetically engineered wheat....MORE

Here's Mother Jones with some backround on what led to the Japanese decision:

Rogue Monsanto Wheat Sprouts in Oregon

One of the four major US crops—corn, soybeans, hay (alfalfa), and wheat—is not like the other.

For one, wheat is mainly consumed directly by people, while the others are mostly used as animal feed. Its status as people food—the stuff of bread, the staff of life—probably explains why wheat is different from the other three in another way: It's also the only one that genetically modified Monsanto hasn't turned into a cash cow. The company has made massive profits churning out corn, soy, and (most recently) alfalfa seeds genetically altered to withstand doses of its own herbicide, Roundup. But the company has never commercialized a GM wheat variety—and stopped trying back in 2004, largely because of consumer pushback against directly consuming a GM crop. And thank goodness, too, because Roundup Ready technology is now failing, giving rise to a plague of herbicide resistant weeds and a gusher of toxic herbicides.

Wheat's non-GMO status is why the Internet went berserk when the US Department of Agriculture revealed Wednesday that Roundup Ready wheat had sprouted up on a farm in Oregon. According to the USDA, a farmer discovered the plants growing in a place they shouldn't have been and tried unsuccessfully to kill them with Roundup. Oops. USDA testing confirmed that the rogue wheat was the same experimental Roundup Ready variety that Monsanto had last been approved to test in Oregon in 2001....MORE

Update:
In March the Senate passed a continuing resolution to fund the U.S. government through September.
Hidden in the CR was a bland little amendment that Monsanto thinks exempts it from judicial review of what they do. Critics call it The Monsanto Protection Act..

The only working farmer in the Senate, John Tester of Montana was furious and had some words for his colleagues prior to passage. From the Senator's Senate Homepage:
Tester slams ‘corporate giveaways’ in government funding bill

(U.S. SENATE) - Senator Jon Tester today called out the House of Representatives for slipping ‘corporate giveaways' into a must-pass government funding bill designed to keep the government running past March 27.

Tester slammed the inclusion of two provisions that will hurt family farmers and ranchers while benefitting large meatpacking corporations and companies that develop genetically-modified crops. Tester said backroom deals replaced open government and vowed to strip the provisions from the bill.

"Montanans elected me to the Senate to do away with shady backroom deals and to make government work better," said Tester, who has made improving government openness a hallmark of his time in the Senate. "These provisions are giveaways worth millions of dollars to a handful of the biggest corporations in this country and deserve no place in this bill."

Tester introduced two amendments to remove the controversial measures from the bill. The first provision gives large meatpacking corporations more power over the livestock market, while the second tells the U.S. Agriculture Department to ignore any judicial rulings that block the planting of crops that the court determines to be illegal.

Tester, speaking on the Senate floor, said the inclusion of the measures made a mockery out of "Sunshine Week" - when the federal government highlights the need for greater transparency and openness in government....MORE

So, for our long-suffering readers, just because we haven't written much about this stuff doesn't mean we haven't been following it.

Oil: Straight Talk on The Recent Declines in Miles Driven

From New Geography:

There are grains of reality, misreporting and exaggeration in the press treatment of a report on driving trends by USPIRG. The report generated the usual press reports suggesting that the millennial generation (ages 16 to 35) is driving less, moving to urban cores, and that with a decline in driving per capita, people are switching to transit. These included the usual, but not representative anecdotes about people whose lifestyles and mobility needs are sufficiently served by the severe geographical and travel time limitations of transit.

Further, in an important contribution, the USPIRG report provides driving trend forecasts that are lower than other projections. If accurate, these would result in materially greater greenhouse gas emissions reductions to 2040 than projected by the Department of Energy, further undermining the justification for anti-mobility policies as well as urban containment.

Millennials and More Urban and Walkable Living
It is again reported that millennials "like to live in the city center." Last year, a report by USPIRG cited a poll indicating that 77 percent of millennials plan to live in urban cores. Their actual choices have been radically different.

In fact, 2010 census data indicates that people between 20 and 29 years old were less inclined to live in more urban and walkable neighborhoods than their predecessors. In 2000, 19 percent of people aged 20 to 29 lived in the core municipalities of major metropolitan areas, where transit service and walkable neighborhoods are concentrated. Only 13 percent of the increase in 20 to 29-year-old population between 2000 and 2010 was in the core municipalities. By contrast, the share of the age 20 to 29 living  in the suburbs of major metropolitan areas was 45 percent, higher than the 36 percent living there in 2000 (Figure 1).

The Decline in Driving
Driving per capita in urban areas peaked in 2005. Between 2005 and 2011, driving declined seven percent. In the context of rising gasoline prices, and economic trends, the real news is not how much driving has fallen, but rather how little. A seven percent reduction is slight compared to the one and one-half times increase in gas prices over the past decade (Figure 2). Per capita travel by car and light truck has fallen back only to 2002 levels, which remained above the driving rates of previous years.

Drivers: Not Switching to Transit
The USPIRG report gives the impression that instead of driving, Americans are switching to other modes of transport, principally transit. In discussing the report, Nick Turner, of the Rockefeller Foundation said: "Americans are making very different transportation choices than they did in years past."...MORE

"...Someone Could Get Hurt in Repo Market"

From MoneyBeat:

The repo market is among the least glamorous businesses on Wall Street.

There aren’t any hot new offerings like the equity guys get. There aren’t any splashy deals like the investment bankers get. The repo guys look down the hall at the fixed-income guys and envy their exciting lives of long-term interest-rate worry and credit-rating anxiety.

Overnight loans might be the world’s dullest one-night stand. Yet these short-term loans are the lifeblood of credit, keeping companies and banks flush and giving investors a place to park their cash and make a few bucks.

Repos are a more-than-$2 trillion-a-month market. And when the financial crisis exploded in 2008, the repo market froze, cutting off credit across the economy and partly setting the stage for the Great Recession.

A study on repo markets published in 2009 by Gary B. Gorton and Andrew Metrick of the National Bureau of Economic Research concluded that “ultimately it was the loss of liquidity at the firms that were the biggest players in the securitized banking system that led to the financial crisis.”

In other words, the repo market wasn’t just a part of the meltdown. It was the meltdown.
Given the history, you would think regulators would have considered how this market was set up and how it could be made a little safer. But for the most part, the repo market is running pretty much as it was precrisis.
This is especially true for the triparty repo market, a premium form of the repo in which an intermediary manages the collateral backing the loans. That part of the market is especially susceptible to panics. It took a beating in 2008.

Another issue: After the crisis laid waste to multiple banks, there are now only two primary places where triparty repos, are cleared and settled: J.P. Morgan Chase JPM +1.71% & Co. and Bank of New York Mellon Corp. BK +1.53%...MORE

HT: The Reformed Broker

In Re: Godzilla v. Mothra (AMZN; GOOG)

From Jeff Jordan:

Amazon and Google are on a collision course.

When I was at eBay, we had a belief that no one was going to compete with us by replicating exactly what we were doing.  We had first mover advantages and network effects.  Amazon and Yahoo! both launched auction marketplaces in response to eBay’s strong growth, and both businesses were essentially DOA.  What did concern us was that someone would compete with us with a new, disruptive approach—a completely different take on the business.

Early on, we came to believe that Google’s emerging search business was the biggest threat that eBay faced.  eBay helped users find hard-to-find, unique products.  Google’s goal of organizing the world’s information also helped users find hard-to-find, unique products.  The mechanisms and models were different, but the overlap was clear and we came to view Google as our top competitive threat.

This thought was validated after the fact by then-Google executive Sheryl Sandberg.  We both were guest speakers at the same Intuit event a few years back, and I stayed after my talk to listen to Sheryl.  In response to a question, Sheryl said something along the lines of, “We knew early on at Google that our key competitor was eBay.”  I almost jumped to my feet shouting, “I knew it!”  It did not make me feel any better that eBay was one of Google’s very top advertisers at the time, and that we were paying them tons of money that they were in turn using to compete with us.

In Google’s case today, I am becoming increasingly convinced that their most challenging competitor isn’t another search engine like Yahoo!, Bing, Baidu or Yahoo! Japan.  It’s Amazon, which is bringing a completely different take on search—in this case, product search.

Amazon is a vertical search engine focused on helping users find products.  The overwhelmingly dominant way to find things on their site is the search box.  Users enter a keyword phrase and are presented with results that match his or her query.   The order of the search results is determined by algorithms that seek to optimize relevance and monetization.  Sound familiar?

In my personal website use, I increasingly find myself searching for products on Amazon instead of Google.  Shopping on Amazon is a superior user experience and it runs the table on the magical retailer formula of selection, price and convenience.  It has an increasingly comprehensive product assortment, with their ever-expanding direct sales supplemented by third-party merchants who sell on the platform.  Prices are almost always extremely competitive, so much so that I have pretty much stopped using Google to comparison-shop at different merchants.  And it offers the fastest and most cost effective shipping solutions, particularly in Prime (which has the interesting impact of making me want to buy goods on Amazon to make sure I get the most out of my $79/year Prime membership).  I can buy an item on Amazon in a minute, secure in the knowledge that I’m likely paying the lowest price while getting free shipping and fast delivery....MORE

Algos: "Next generation trading tools take shape"

From DJ's eFinancial News:

Brokers and software vendors are under renewed pressure to further develop electronic trading tools, as buyside investors demand more sophisticated technology to help them squeeze the last drop of profit from every single trade.

Two recent reports from capital markets consultancies Tabb Group and Greenwich Associates highlight the critical importance of sophisticated trading desk technology and the tools demanded by institutional investors in their quest for optimal trade performance.

The Tabb Group study released yesterday looks at the evolution of algorithmic trading for equities. Having previously been touted as a way to automate “simpler” orders, thereby allowing traders to focus on trickier trades, buyside firms now expect strategies to incorporate quantitative analytics to understand the most appropriate strategies for a given order. 

Tabb found that long-only buyside houses use an average of 50 algorithmic strategies from between eight and 12 providers.

Miranda Mizen, principal and director of equities research at Tabb and author of the report, said in a statement: “In the low-touch environment, the arms race is shifting to the intelligence built into algorithms and algorithmic strategies to give buyside traders an optimal choice of tools and strategies and clear visibility of liquidity across the marketplace.”....MORE

OPEC to Cut Back on Oil Shipments

From Boomberg via Futures Magazine:

OPEC to curb shipments amid demand slump, Oil Movements says

The Organization of Petroleum Exporting Countries (OPEC) will reduce crude shipments into mid-June as demand growth slows, tanker tracker Oil Movements said.

 

The group that supplies about 40% of the world’s oil will ship 23.91 million barrels a day in the four weeks to June 15, compared with 24.12 million in the previous period to May 18, the researcher said in an e-mailed report. The figures exclude two of OPEC’s 12 members, Angola and Ecuador. The organization will meet in Vienna tomorrow to discuss its production target, which is currently 30 million barrels a day.
Demand from western nations is “limping,” reducing imports from the Middle East and West Africa, Roy Mason, the company’s founder, said today by telephone from Halifax, England. “There is no spectacular increase in supply.”

Middle Eastern shipments will slip by 1.1% to 17.58 million barrels a day, compared with 17.78 million in the month to May 18, according to Oil Movements. That figure includes non-OPEC nations Oman and Yemen.

Crude on board tankers will advance 1.7% to 476.96 million barrels versus 468.88 million in the previous period, data from Oil Movements show. The researcher calculates the volumes by tallying tanker bookings. Its figures exclude crude held on vessels for storage....MORE

Weekly EIA Natural Gas Storage Report

From the Energy Information Administration:

Weekly Natural Gas Storage Report

for week ending May 24, 2013.   |   Released: May 30, 2013 at 10:30 a.m.   |   Next Release: June 6, 2013

Working gas in underground storage, lower 48 states Summary text CSV JSN
								Historical Comparisons
	Stocks billion cubic feet (Bcf)							Year ago (05/24/12)				5-Year average (2008-2012)
Region	05/24/13		05/17/13		change			(Bcf)		% change		(Bcf)		% change
East	910		857		53			1,319		-31.0		1,020		-10.8
West	380		368		12			408		-6.9		333		14.1
Producing	851		828		23			1,078		-21.1		876		-2.9
Salt	243		239		4			260		-6.5		166		46.4
Nonsalt	608		589		19			817		-25.6		710		-14.4
Total	2,141		2,053		88			2,805		-23.7		2,229		-3.9

...MORE
From the CME, analysis by Cominick Chirichella:
Nat Gas inventories neutral to slightly bearish 

 Nat Gas futures are breaking down as the newly anointed spot July contract is now trading well below the key technical support level of $4.16/mmbtu. Since the EIA inventory report (see below for a more detailed discussion) was issued the market has traded slightly lower than where it was just prior to the report release. The EIA injection was within the market consensus, greater than last year but below the five year average. Overall I would categorize the report as neutral to slightly bearish.

At the moment the market is now back trading in the $3.90 to $4.16/mmbtu trading range that was in play from the end of April and through most of May. The market only spent 6 trading sessions in the higher trading range. The market is looking for fundamental support to move back to the higher trading range that it just declined out of. The way the market is trading I would expect another week of the speculative community reducing their net long positions as they have done for the last three weeks in a row. If the market settles below the $4.16/mmbtu level it would suggest that lower prices are likely on the horizon from a technical viewpoint.

From a fundamental perspective there is less nuclear outages compared to both last year and the five year average at the moment. Currently there are 13,603 MW of nuclear power sidelined versus 17,417 MW last year and 14,404 MW versus the five year average. As such the call on Nat Gas to supplement nuclear power generation is less than the historical data and suggestive that the upcoming inventory injections are likely to over perform.

In addition the latest NOAA temperature forecasts are less supportive than those issued earlier in the week. The area of above normal temperatures is now projected only over the east and west coasts with the rest of the country expecting normal temperature with a few small pockets of below normal temperatures in the mid-west through June 12th. Based on the latest forecast it does not appear that there is going to be a surge in Nat Gas cooling related demand anytime soon.

Thursday's EIA report was neutral versus the market consensus, bearish versus last year and slightly bullish compared to the five year average. The report showed a net injection that at the market expectations, greater than last year but slightly below the five year average net injection for the same period. The 88 BCF injection (about normal for this time of the year) was modestly equal to the Reuters market consensus calling for an injection of around 88 BCF. The build of 88 BCF was slightly below my model forecast (90 BCF injection) this week. The year over year inventory situation remains in a strong deficit position versus last year but has narrowed this week with the deficit versus the more normal five year average holding steady. The current inventory deficit came in at 88 BCF versus the normal five year average or about a negative 3.9 percent....MORE

Finally, from FinViz the 5-minute chart:

Who Has the Ultimate Power to Set Interest Rates: Goldman Sachs or the Fed?

We'll use GS as a proxy for the primary dealers and the rest of the market participants including long-term holders.
From Calafia Beach Pundit:

QE3 proves the Fed is powerless to manipulate interest rates

If the Fed bought three quarters of the new issuance of Treasury securities over an 8-month period, with a focus on longer maturities, the 10-yr Treasury yield would almost certainly fall, right? And if the Fed bought all the new issuance of MBS over an 8-month period, increasing its share of home mortgages by over 40% in the process, yields on MBS would almost certainly fall, right?

Wrong. The Fed has indeed been a huge buyer of Treasuries and MBS since last September, but Treasury yields and MBS yields have moved significantly higher, not lower.

What we've witnessed over the past 8 months—the duration so far of the Fed's Quantitative Easing Part 3—is almost a laboratory experiment designed to discover which is the more important determinant of longer-term interest rates: the market's willingness to hold the existing stock of bonds, or the actions of a very large purchaser of bonds on the margin (i.e., the stock vs. flow argument).

It's my impression that most market participants have been persuaded by the flow argument: namely, that the Fed's massive QE3 purchases have artificially depressed market interest rates. After all, that's been the Fed's stated intention: to buy lots of bonds in order to depress interest rates and thereby stimulate borrowing and economic activity. This line of reasoning says that the fact that 10-yr Treasury yields averaged an exceptionally low 1.75% over the past year has nothing to do with the market's view of inflation or economic growth; Treasury yields have in fact become meaningless inputs to valuation models and offer no insight into market and economic fundamentals, other than as a distorting influence.

I've argued to the contrary on many occasions over the years. I believe that interest rates are determined by the market's willingness to hold the existing stock of bonds, especially since Fed purchases on the margin represent only a small fraction of the existing stock. I think the Fed can only influence yields to the extent that the market's view of the economy is similar to the Fed's. If both expect the economy to be very weak, yields will be low, and prices will behave as if Fed purchases of bonds to stimulate the economy are in fact achieving their stated objective. But if the market thinks the economy is improving and/or inflation is rising, then no amount of Fed purchases will be able to keep yields from rising. That's the situation today, and it's been unfolding (in fits and starts) almost from the day QE3 began.

Since last September, when the Fed announced it would begin buying $40 billion per month of MBS, the Fed's holdings of MBS have increased by about $330 billion, and that means the Fed has essentially purchased all of the new MBS issuance since last September. As the chart above shows, the Fed now owns over 12% of all home mortgages, up from less than 9% at the end of last September. Yet despite these massive purchases, the yields on MBS have increased by over 100 bps!...MORE

Steve Keen on Quantitative Easing and Double Entry Bookkeeping

In 1994 there was great gaiety and celebration to mark the 500th anniversary of the publication of Luca Pacioli's treatise on, well, everything, hence the title: Summa.  Accounting nerds around the world paid homage to the section on bookkeeping. You had to be there.

Unfortunately Benedikt Kotruljević had plowed the ground 36 years earlier with his Delia Mercatura et del Mercante Perfetto (Of Trading and the Perfect Trader) and the accounting profession had actually missed the quincentenary of the presentation of double entry bookkeeping to the world.

From Credit Writedowns:

How QE works and what this means for asset prices and credit

America is a land of contention, and one of the most contentious topics here (I’m in Seattle as I write) is the impact of the Federal Reserve’s policy of “Quantitative Easing” – otherwise known as ‘QE’. The Federal Reserve has committed to spending $85 billion every month buying a wide range of bonds from banks, until such time as the US unemployment rate falls below 6.5 per cent.

The Fed has implemented this policy because it believes it is the best way to stimulate demand in a depressed economy. Its critics oppose it because they believe this massive amount of ‘money printing’ must inevitably lead to ruinous inflation.

I reckon they’re both wrong, and in a seriously wonky post I’ll try to explain why, using my modelling program Minsky.

Minsky develops a model of monetary flows using double-entry bookkeeping – which is the same way that banks run their businesses – so it’s a powerful way to cut through the confusion over what actually happens in QE. But double-entry bookkeeping can make your head spin because it involves lots of ALE – and unfortunately not the fun intoxicating kind, but the boring accounting trio of Assets, Liabilities and Equity.
The heart of accounting is the principle that the difference between the debts other people owe to you (your Assets) and the debts you owe to them (your Liabilities) is your net worth (your Equity). This is drummed into accounting students as the “Fundamental Equation of Accounting”: “Assets equal Liabilities plus Equity”.
Double-entry bookkeeping (DEB for short) enforces this equation in two ways. Firstly, it records any Asset as a positive amount, and Liabilities and Equity as negative amounts. Secondly, it ensures that any transaction between accounts sums to zero. So, for example, if a rich aunt died and left you $1 million in her will, your accountant would show that as your Assets changing by plus $1 million and your Equity changing by minus $1 million. It sounds counter-intuitive when you first learn it, but it works to make sure you don’t make mistakes when tracking financial transactions.

Minsky uses a similar approach: Assets are shown as positive sums, so assets are increased by adding to them – no big deal there. But Liabilities (and Equity) are shown as negative sums, so increasing a Liability involves subtracting from it (is your head spinning yet?).  So a loan of $1,000 from a bank is recorded as plus $1,000 in its loan account – an increase in its Assets – and as minus $1,000 in your deposit account – an increase in its Liabilities to you. The sum across the row that records the transaction is zero.

Then Minsky assembles a model of financial flows from the economy’s point of view, in which everything is shown as a positive – just as the Federal Reserve does when it compiles its Flow of Funds record of the entire economy.

Boy, I’ve probably lost half my normal audience already – and probably to Ales of a different kind. But if the rest of you have survived that intro, let’s plug on and build a model of QE....MUCH MORE

GDP Release: Corporate Profits DOWN in Q1

From The Market Ticker:

Warning: Market Destruction Ahead

Larry Kudlow loves to say "profits are the mother's milk of stock prices."
So what do you take from this when the tit has run dry?

Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) decreased $43.8 billion in the first quarter, in contrast to an increase of $45.4 billion in the fourth. Current-production cash flow (net cash flow with inventory valuation adjustment) -- the internal funds available to corporations for investment -- increased $110.9 billion in the first quarter, in contrast to a decrease of $89.8 billion in the fourth.

That is not good.  Domestic profits decreased materially and so did international profits by US business....MORE

Bonfire of the Subsidies: Europe Returns to Early Stone Age Fuel as Putin Mocks

From the Economist April 6th:

Europe’s wood subsidies show the folly of focusing green policy on “renewables”

TO GO by the Domesday Book, the record of taxable lands produced for William the Conqueror in 1086, the manor of Drax, in the West Riding of Yorkshire, was not much of a place: six villagers, a priest and a value to its lord of a single pound. But it did have five leagues of woodland.

Today Drax is home to one of the most impressive pieces of engineering in Britain, a power station with a value to its owners of £2.5 billion. But it does not have much woodland. And, given the way Europe’s renewable-energy subsidies work, the appetites of that facility, and others around Europe, may mean that wood is in short supply in many places before long.

 In 2009 the European Union set itself the target of getting 20% of its energy from renewable sources. For all the fields and roofs covered with solar panels and the once-empty uplands enlivened by wind turbines, by far the biggest power source in the plans is biomass: wood, crop residues and other burnable recently living stuff. The EU’s planners want to get 1,210 terawatt hours of energy from biomass in 2020, compared with 494TWh from wind. About 80% of that biomass energy would be used to heat things—wood-burning stoves and boilers are widely used in many European countries. But the 20% used to generate electricity would still equal all the energy expected from solar panels and offshore wind. With wind power not growing at the rate that planners want, biomass may be called on to do even more....MORE

They want to return to the U.S. ca. 1800:

 

The story is also at the Wall Street Journal May 27:
Europe's Green-Fuel Search Turns to America's Forests

WINDSOR, N.C.—Loggers here are clear-cutting a wetland forest with decades-old trees.
Behind the move: an environmental push.

The push isn't in North Carolina but in Europe, where governments are trying to reduce fossil-fuel use and carbon-dioxide emissions. Under pressure, some of the Continent's coal-burning power plants are switching to wood.

But Europe doesn't have enough forests to chop for fuel, and in those it does have, many restrictions apply. So Europe's power plants are devouring wood from the U.S., where forests are bigger and restrictions fewer.

This dynamic is bringing jobs to some American communities hard hit by mill closures. It is also upsetting conservationists, who say cutting forests for power is hardly an environmental plus....

....Drax has long burned coal in a plant rising from pastoral Yorkshire fields. This has become an increasingly unattractive practice, for a variety of reasons that include a carbon tax floor the U.K. made effective this year. Drax has set out to convert half its coal units to wood.

The plant has converted one of its six units so far, and last year it sold about $90 million of renewable-energy credits to other companies, a spokeswoman said. After it fully converts two more units, Drax expects to burn about seven million tons of wood annually and collect about $600 million a year from renewable-energy credits.....

Not everyone is turning to wood. Because of the decision to shut down their nukes Germany is burning braunkohle to keep the lights on
Reuters:
Germany's clean energy drive fails to curb dirty brown coal

Germany's green energy drive is proving surprisingly good for dirty brown coal as utilities squeezed by rival renewables and low wholesale gas prices use more of it.

East Germany was a huge user of brown coal, or lignite, and Germany remains the world's biggest producer, but its use poses a problem for Berlin's environmental plans.

Limiting brown coal use is politically difficult, however, with 20,000 mining and utilities jobs involved and any move that could raise already high energy bills for consumers a risky gambit ahead of federal elections in September.

Coal also remains important to profits at utilities such as RWE and the German arm of Sweden's Vattenfall....MORE

Finally, from Nov. 2012:

Mocking Europe's Energy Policy: "Putin invites Europeans to Siberia for firewood"
From RT:

European countries should pursue a balanced energy policy, otherwise they will have to buy the firewood in Siberia, Russian Prime Minister Vladimir Putin has joked.

Putin made it clear again that Europe and Russia are dependent on each other. He was speaking with German businessmen in Berlin on Friday. They gathered at a business conference organized by the German newspaper Sueddeutsche Zeitung.

“The German public does not like the nuclear power industry for some reason,” Putin said, adding that he would not comment on it. “But I cannot understand what fuel you will take for heating,” he said anyway.

“You do not want gas, you do not develop the nuclear power industry, so you will heat with firewood?” Putin asked, as reported by Itar-Tass. “Then you will have to go to Siberia to buy the firewood there,” he said, adding that Europeans “do not even have firewood.”

Good yuks from the old propagandists  at the former Russia Today.

St. Louis Fed Posts Q1 Farmland Price Decline

The St. Louis Fed (8th) doesn't have as intensely agricultural an economy as the 9th, Minneapolis; the 7th, Chicago or the 10th, Kansas City but it does include a big chunk of the southern Illinois corn belt and the #1 rice producer, Arkansas and thus could be a harbinger for a leveling off of the land price increases and even some downticks.

From the Federal Reserve bank of St. Louis:

...Surprisingly, reported quality farmland, ranchland or pastureland prices are down slightly relative to the prices indicated in the fourth quarter of 2012...

The decreases were 2.3% for quality farmland and 5.1% for ranchland and pastureland.
More troubling, cash rents were down 8.6%.
Here's the Agricultural Finance Monitor (5 page PDF)

As I said back in 2011:

We've been following this trend for the last three years and have been asked when will it top?
One sign will be when Optima Fund Management brings their American Farmland Company public, still a few years away....

I think we're closer to the end of the boom than the beginning. The key now is farm income.
We'll be back with more tomorrow.

What Are People Doing With the Raspberry Pi Computer? Wired UK on Sale May 30

Following up on "Build your own supercomputer out of Raspberry Pi boards"  I just want to hammer home the point that a lot of people smarter than I think a $35 computer can have an impact.
Here's the UK print edition's cover:



Here's a post from the Raspberry Pi blog:

Reddit: What do people use their PiS for?

A thread about Raspberry Pi ended up on the front page of Reddit today, and it’s a doozy. There are thousands of people taking part, and some Pi projects mentioned that we’d never even imagined people taking on. Some of them made our little hearts swell with pride. Teaching machines for schools in Ecuador, prosthetic knees in the USA, musical instruments controlled by eye movements for disabled people, solar flare detection, wood engraving, pocket-money analyser – there’s something here for everyone.
You guys are brilliant. With your ideas and our tiny computer, we could get together to rule the universe. Bags I get to wear the hat with the diamonds.
(Update to add: Incidentally, the guy who says his friend disassembled a Pi and built a better one, so we gave him a job? Big fat liar.)

Here are a couple stories on what tinkerers around the world are up to:
cnet
25 fun things to do with a Raspberry Pi

ars technica:
10 Raspberry Pi creations that show how amazing the tiny PC can be

And here's a guy who uses it to circumvent the Great Firewall of China, from the Reddit thread above:

I study in China, so I have to fight against censorship everyday. I set my Raspberry to automatically connect to my VPN server through OpenVPN, and then share the connexion with a wifi dongle, using hostapd software. I use it on daily basis with my iPhone and Android tablet (way better than the included VPN client) but the good thing is that, wherever I go, i just bring my Raspberry, plug it to ethernet and to any usb plug, and after a few minutes, I have my censor-free wifi hotspot :)

edit : Wow, reddit gold, hope it wont get stolen by PRC's Firewall

UPDATED--"Build your own supercomputer out of Raspberry Pi boards"

Update below.
Original post:
If you are new to this stuff, listen up. What's going on with Rasberry Pi is a throwback to Packard and Hewlett, Jobs and Wozniak or any other garage band you can think of.
Folks are taking these tiny computers and using them to do everything from controlling LEGO robots to this impressive bit of tinkering.
From ZD Net:

Who says you need a few million bucks to build a supercomputer? Joshua Kiepert put together a Linux-powered Beowulf cluster with Raspberry Pi computers for less than $2,000.

When you think do-it-yourself (DIY) computing, you probably think of setting up a screaming gaming computer or putting together the best possible components for the least amount of money. You're almost certainly not considering putting together a supercomputer. Maybe you should. Joshua Kiepert, a doctoral student at Boise State's Electrical and Computer Engineering department, has managed to create a mini-supercomputer using Raspberry Pi (RPi) computers for less than $2,000.

Say hello to a homebrew Raspberry Pi-based supercomputer.

Raspberry Pi is a single-board Linux-powered computer. They're powered by 700MHz ARM11-processors and include a Videocore IV GPU. The Model B, which is what Kiepert is using, comes with 512MBs of RAM, two USB ports and a 10/100 BaseT Ethernet port. For his project Kiepert overclocked the processors to 1GHz.

By itself the Raspberry Pi is interesting, but it seems an unlikely supercomputer component. But, Kiepert had a problem. He was doing his doctoral research on data sharing for wireless sensor networks by simulating these networks on Boise State's Linux-powered Onyx Beowulf-cluster supercomputer. This modest, by supercomputer standards, currently has 32 nodes, each of which has a 3.1GHz Intel Xeon E3-1225 quad-core processor and 8GBs of RAM.

A Beowulf cluster is simply a collection of inexpensive commercial off the shelf (COTS) computers networked together running Linux and parallel processing software. First designed by Don Becker and Thomas Sterling at Goddard Space Flight Center in 1994, this design has since become one of the core supercomputer architectures.

So with a perfectly good Beowulf-style supercomputer at hand, why did Kiepert start to put together his own Beowulf cluster? In a white paper, Creating a Raspberry Pi-Based Beowulf Cluster,  (PDF Link) he explained,

"First, while the Onyx cluster has an excellent uptime rating, it could be taken down for any number of reasons. When you have a project that requires the use of such a cluster and Onyx is unavailable, there are not really any other options on campus available to students aside from waiting for it to become available again. The RPiCluster provides another option for continuing development of projects that require MPI [Message Passing Interface] or Java in a cluster environment....MUCH MORE

Update: "What Are People Doing With the Raspberry Pi Computer? Wired UK on Sale May 30"