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Monday, April 14, 2008

Food Riots and Falling Russian Oil Production

by Calculated Risk on 4/14/2008 09:45:00 PM

Here are two scary stories:

From CNN: Riots, instability spread as food prices skyrocket

Riots from Haiti to Bangladesh to Egypt over the soaring costs of basic foods have brought the issue to a boiling point and catapulted it to the forefront of the world's attention, the head of an agency focused on global development said Monday.
From the WSJ: Russian Output Slumps As Oil Hits New Highs
Russian output fell for the first time in a decade in the first three months of this year, according to the International Energy Agency, which represents industrialized oil-consuming countries. It said Russian production averaged about 10 million barrels a day, a 1% drop from the first-quarter of 2007.
These stories are related. High food prices are due in large part to high oil prices.

Falling oil prices would really help cushion the U.S. recession. If oil prices stay high because of global demand - then at least U.S. exports will probably be strong. But if oil prices stay high because of falling production, then the recession will be much worse than I currently expect. And the impact on the World's poor will be severe.

These stories are much scarier than the TED spread expanding again.