Note that Starbucks stock was actually down today while the major indices experienced strong rallies.

For more detail see “Starbucks to raise prices in certain regions“

Starbucks had a great 2011. Did today's news end the coffee run for now?

Coffee prices have been sliding for months and ended 2011 down from 2010

Here’s an excerpt:

The concert hall at the Syndey Opera House holds 2,700 people. This blog was viewed about 10,000 times in 2011. If it were a concert at Sydney Opera House, it would take about 4 sold-out performances for that many people to see it.

Click here to see the complete report.

“Across much of the Midwest the sharp increase in farm earnings has driven the price of farmland to previously unimaginable — and, some say, unsustainable — levels. But in the process, to much less fanfare, the financial rewards have also encouraged farmers to put ever more land into production, including parcels that until recently were too small or too poor in quality to warrant a second glance…

…farmers, flush from the most profitable years in decades and looking for better places to store money than low-interest savings accounts or a turbulent stock market, are putting their money in land.”

According to an Iowa State study, farmland in Iowa increased 32% last year to $6,700 per acre.

See “As Crop Prices Soar, Iowa Farms Add Acreage” for more details.

Here is a key quote that describes the situation:

“World food prices tracked by the United Nations retreated for a fifth consecutive month in November, the longest decline in more than two years. The U.S. government said Dec. 9 that combined global inventories of corn, soybeans and wheat will be 3.2 percent larger than anticipated a month earlier. Cocoa capped its longest slump in 50 years last week on increasing supplies from Ivory Coast, the world’s biggest producer.”

DBA, the PowerShares DB Agriculturae Fund ETF, tells the story. the ETF has now sunk to 14-month lows. Today’s price marks the previous post-recovery high in 2009.

After going straight up for nine months starting in 2010, DBA has now gone nearly straight down since its April highs

Note that this compares to a UPS rate hike of 4.9% for ground shipping, and recent moves by the U.S. Postal Service to hike shipping rates to stave off bankruptcy.

Her general conclusion is that it is cheaper to do the “non-glamorous” things at home, but glamorous activities like raising chickens, goats, and turkeys cost too much in infrastructure to make it worthwhile. It is definitely cheaper to make your own bread and muffins but more expensive to make candied ginger. It is cheaper to buy lemonade than make it – not to mention all the effort it takes to squeeze the lemons. Reese also addresses convenience, food quality, and moral choices.

The book looks like a worthwhile read for those considering to beat higher food costs with homegrown and homespun creations.

For more details see AP story: “Postal prices going up for express, priority mail.”

For more details see “Government asks Iranians to stop buying dollars” (CNBC, November 19, 2011).

A truly fascinating tale of a completely avoidable bubble in the price of rice.

For more details see “Redbox rental prices to rise.”

Note well that I cannot think of a single retailer who consistently charges lower prices than Wal-Mart on anything. So maybe this whole thing is more a marketing gimmick than anything else?

For more details see “Wal-Mart introduces Christmas price guarantee program.”

Under Alan Greenspan, the Federal Reserve was known to stand on the sidelines while bubbles in asset prices grew and grew. Greenspan had a lot more faith in the Federal Reserve’s ability to mop up the subsequent mess caused by a bubble’s collapse than in its ability to stop a bubble, much less identify one.

It seems times have changed. On October 13, Businessweek chronicled the Fed’s efforts to make sure that soaring prices in agricultural land do not lead to another messy bubble and economic calamity. Prices have indeed soared across the midwestern United States:

“The Kansas City Fed reported land values were 20 percent higher than a year ago. The Chicago Fed reported a 17 percent increase in its district, the fastest increase since the 1970s. Nonirrigated farmland in the Minneapolis Fed district increased 22 percent in price.”

The factors driving these increases are the same as I reported from a related Planet Money piece: “Land prices have doubled in Iowa over the past few years“: “elevated crop prices, soaring farm income, and record-low interest rates.”

As a result, nervous regulators are demanding rigorous stress tests of banks up to their gills in agricultural loans. Businessweek also reports that regulators are “…scrutinizing the lending standards, loan documentation, and risk management at the country’s 2,144 agriculture banks.”

I will be very interested in the outcome of all this scrutiny. The same Federal Reserve that helped create record low interest rates is working to ameliorate the impact of those very same interest rates. This episode is a reminder that flooding an economy with liquidity does not produce equal outcomes for all sectors. Recovery and prosperity does not even need to appear in the sectors most impacted by the malaise the Federal Reserve scrambles to repair. Instead, the money tends to collect where it will generate the highest returns due to other economic factors. Currently, it seems that the bet is on farming. I believe the Federal Reserve was aiming for housing…

While the city celebrates the extra money it makes, the citizens can only lament the extra inconvenience and hassle of remembering to pay meters on these holidays, not to mention the additional costs in parking. The disparity in fines versus collected fees likely demonstrates (or confirms for me) that parking rules are mainly about generating lucrative fines.

For more details see “Holiday parking enforcement: cash cow for the city“

“Between June 2009, when the recession officially ended, and June 2011, inflation-adjusted median household income fell 6.7 percent, to $49,909, according to a study by two former Census Bureau officials. During the recession — from December 2007 to June 2009 — household income fell 3.2 percent.”

This is a sobering statistic that has potentially dire implications for the economy in general. Compare this situation to that in China where an on-going study in the New York Times concludes that China’s government has propped up its banks and large corporations at the expense of Chinese workers (see “As Its Economy Sprints Ahead, China’s People Are Left Behind.”):

“Under an economic system that favors state-run banks and companies over wage earners, the government keeps the interest rate on savings accounts so artificially low that it cannot keep pace with China’s rising inflation. At the same time, other factors in which the government plays a role — a weak social safety net, depressed wages and soaring home prices — create a hoarding impulse that compels many people to keep saving anyway, against an uncertain future.

Indeed, economists say this nation’s decade of remarkable economic growth, led by exports and government investment in big projects like China’s high-speed rail network, has to a great extent been underwritten by the household savings — not the spending — of the country’s 1.3 billion people.

This system, which some experts refer to as state capitalism, depends on the transfer of wealth from Chinese households to state-run banks, government-backed corporations and the affluent few who are well enough connected to benefit from the arrangement.”

Neither system, in the U.S. or China, appear stable to me. With China dependent on the income (or rising debt) of U.S. workers to keep its exports alive, these systems of increasing inequity actually start to look increasingly unstable. I will be monitoring these processes even more closely going forward. They are certainly deflationary, not inflationary.

If negotiation go poorly, the actors will be left with zero pay. Hopefully, they will still get a cut of the treasure trove that awaits in syndication. NPR states that “…one analyst noted that ending the show would make it worth even more in syndication — perhaps $1.5 million for each of the show’s 506 episodes, which would bring in something like $750 million.” This means the studio actually has a large incentive to end the series rather than continue to pay high production costs to keep the show going.

For more, see or listen to “Do Rising Costs Have ‘The Simpsons’ On The Ropes?“

Finally, one “seasoned farmer” warns that this boom is indeed a bubble and points to the crash in land prices in the 1980s after a similar period of exuberance.

Listen to “The Tuesday Podcast: The Land Boom“

“Caterpillar is announcing price action of 0 – 3% worldwide on most machines. This price change will be effective January 2012.

In addition, emissions-related price increases of 2-6% will also apply in January for applicable products and regions.

This price change is a result of current industry factors as well as general economic conditions. Details by product will be released to dealers in the near future, and will vary across geographic regions and products.”

This is a surprising announcement given the rapid decline in commodity prices in the past several months and an earnings warning from Ingersoll-Rand (IR) announced just today. This pricing news suggests that global economic conditions are not yet recessionary.

For more details see: “Argentina targets news reporting of inflation data.”

Part of the government’s motivation may also be to protect profligate spending that is boosting the economy at least in nominal terms. For more on the aggressive spending programs launched by Fernandez see “Argentine economic plan: Raise spending, salaries.”

The pumpkin crop is facing additional problems:

• Postponed planting due to heavy rains before the hurricane.
• A fungus breakout
• A cold snap that could kill the remaining few pumpkins

Very scary.