China’s once-rampant inflation has cooled to its slowest pace is 22 months, opening the door for aggressive interest rate cuts that could potentially kick-start its economy back into high gear.

While China may blame the rest of the world for its dramatic decline in exports, Beijing has no one else to blame but itself for the steep drop in dairy exports.

Two of the top emerging markets are grappling with food production and costs – resulting in higher prices in the months to come. The outlook for China and Brazil could portend higher grain prices, giving investors a chance to cash in on a potential rebound.

The usual Christmas rush will hold little relief for retailers and a flagging U.S. economy, as the National Retail Federation (NRF) predicts a lackluster holiday shopping season. The NRF Tuesday released its estimate for the 2008 holiday shopping season. The largest global retail trade association forecast a scant 2.2% increase to $470.7 billion in end-of-year retail purchases.

Americans’ views on the general state of the country have hit an all-time low, with 81 percent saying the prospects for the United States are declining… the worst-ever number for this barometer. Some will argue that this just reflects the current economic slowdown or the monumental unpopularity of President Bush.

The US dollar isn’t the only thing shrinking these days. After struggling for months to keep margins up in the face of skyrocketing grain prices, Michigan cereal giant Kellogg Co (K:NYSE) has decided not to raise prices (again) for several popular brands.

Here at Casey Research we have been on the record as bearish on the outlook for the economy for some years now. Lest you think that is loose boasting, I can offer proof in Doug Casey’s August 2005 article, the dramatically titled “Profiting from the End of Western Civilization”.

Midwest floods might not push up corn prices as much as was feared, according to a report released by the US Department of Agriculture on the damage to crops caused by recent Midwest flooding.

According to the report, US farmers will harvest almost 9% less corn this year than last. Offsetting the flood damage is the more than 1 million additional acres of corn planted in March.

Corn futures, which were about $7.60 last week, dropped to about $7.25 yesterday on the Chicago Board of Trade.

Editors Note: At least 29 countries have limited food exports in recent months, according to The New York Times, pushing already record food prices around the world even higher. Could it be time to consider investing in genetically-modified foods?

When it comes to rice, India, Vietnam, China and 11 other countries have limited or banned exports. Fifteen countries, including Pakistan and Bolivia, have capped or halted wheat exports. More than a dozen have limited corn exports. Kazakhstan has restricted exports of sunflower seeds.

The restrictions are making it harder for impoverished importing countries to afford the food they need. The export limits are forcing some of the most vulnerable people, those who rely on relief agencies, to go hungry.

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Six times a year, the Agora Financial editors converge from all over the world on Baltimore to exchange ideas about the state of the world and what it means for your investments. Much of the discussion yesterday was frankly grim.