An index of world food prices compiled by the UN reached a record level in December, surpassing its previous high of June 2008, a year in which the cost of food sparked rioting in Haiti and elsewhere. Unlike then, the prices of some staple cereals such as rice remain relatively stable, though the price of wheat is rising. The increasing costs of other cereals and sugar were the main factors behind the rise in the index.
The presidential commission investigating the causes of last year’s oil spill in the Gulf of Mexico released a chapter containing the key findings of its final report, due on January 11th. The chapter stated that “most of the mistakes and oversights” leading to the explosion at BP’s well “can be traced back to a single overarching failure – a failure of management”.
The private network
It emerged that Facebook has secured $500m in financing from Goldman Sachs and Digital Sky Technologies, a Russian investment firm, to fuel its expansion plans. Goldman also set up an investment vehicle for its clients to buy into privately held Facebook’s equity. The arrangement values Facebook at $50 billion, up from an estimated $10 billion just 18 months ago, prompting questions about whether the rules for disclosure on trading in the stock of private firms need to change.
The European Financial Stabilisation Mechanism issued a bond to raise money for bailing out Ireland. There was strong demand for the sale of €5 billion ($6.7 billion) in five-year debt.
Markets kept a wary eye on other bond issues in the euro zone. Portugal successfully sold €500m ($665m) in six-month treasury bills, though the average yield was 1.64 percentage points higher than at its last sale of a similar maturity in September. Spain received a boost, however, when Li Keqiang, China’s deputy prime minister, said that his country would still buy Spanish debt and had particular confidence in the
Spanish financial market.
Trichet’s potential headache
Inflation in the euro zone rose to 2.2% in December, the highest since October 2008 and above the European Central Bank’s target of close to but below 2%.
Chile’s central bank announced that it was committing $12 billion over the next year to intervening in foreign-currency markets in an effort to keep the value of the Chilean peso down. It is the latest shot in the “currency wars”, in which some emerging economies are using a variety of measures to stop their currencies appreciating. But India’s Financial Stability Development Council, at its first meeting, criticised policies that attempt to keep currencies artificially low, which was seen as a dig at China.
Qualcomm, the world’s biggest maker of chips for mobile phones, said it was buying Atheros Communications, which is based in San Jose. The $3.1 billion acquisition is Qualcomm’s biggest to date and expands its business in wireless chipsets of the kind used in smart-phones and tablet computers. Separately, Microsoft said its next version of Windows would run on chips designed by ARM, which are better suited to mobile devices than those supplied by Intel, Microsoft’s established partner.
Bank of America paid $2.8 billion to settle claims brought by Fannie Mae and Freddie Mac, two housing-finance giants, against the mortgage-lending practices of Countrywide Financial, a distressed bank that BofA acquired in 2008.