However, many analysts are skeptical that such an initiative will ever gain traction.

“Though we are the food center of the world, we have had little influence on the price,” Thailand government spokesman Vichienchot Sukchokrat said last week. “With the oil price rising so much, we import expensive oil but sell rice very cheaply, and that’s unfair to us and hurts our trade balance.”

Thailand is the world’s leading rice supplier, having exported an estimated 9.5 million metric tons of rice in 2007. With countries like Vietnam, India and Indonesia curbing exports to shore up domestic supplies, Thailand could be responsible for even more of the world’s rice intake.

Rice export volume from Thailand rose 36% in the first four months of the year, the Bangkok Post reported. According to the country’s Foreign Trade Department, Thailand may supply 45% of the world’s rice exports this year.

With rice prices soaring, Thailand has taken the lead in rallying support for a cartel that would include: Laos, Myanmar, Cambodia, and Vietnam. Combined, these five nations account for 14% of world output.

Laos Foreign Ministry spokesman Yong Chanthalansy said Friday that his country would “seriously consider” the idea. Thai officials have also confirmed that discussions were held with Myanmar last Wednesday and Cambodia has voiced support for such action in the past.

“By forming an association, we can help prevent a price war and exchange information about food security,” Khieu Kanharith, Cambodia’s chief government spokesman, told the Associated Press.

However, many experts are skeptical such an organization will ever form because of the tremendous amount of coordination and effort that would have to be involved. While the nations involved would be able to discuss a pricing scale and share information and technology, rice supplies cannot be as easily manipulated as oil production.

“It’s impossible. We can’t fix prices as OPEC does because we can’t control our production like OPEC,” Chookiat Ophaswongse, President of the Thai Rice Exporters Association, told Reuters. “It might be easy for Communist Laos or Vietnam to control their farmers, but we can’t do that in a free-market economy like Thailand. Farmers will rush to grow more rice when prices go up and shift to other crops when prices fall.”

The would-be group includes two democracies, two Communist states and a military dictatorship.

The idea of a cartel was previously discussed in 2001, when Thai exports were struggling to compete with markedly less expensive rice from India, Pakistan and Vietnam. The proposal fizzled then as it seems destined to now.

Nonetheless, agricultural ministers will further probe the possibility in September at a meeting of the 10-nation ASEAN regional group.

On April 7, Taipan Daily stated, “The global food crunch could make the credit crunch look tame.” (You can read that episode here.)

This week, the financial elite said much the same. As The New York Times reports, “The world’s economic ministers declared… that shortages and skyrocketing prices for food posed a potentially greater threat to economic and political stability than the turmoil in capital markets.”

Two weeks or so ago, Taipan Daily wrote, “If you think of grain availability like financial liquidity in a time of crisis, the picture becomes clear.” Now the picture is clearly becoming worse. Kazakhstan, one of the world’s biggest wheat exporters, has halted outside sales. Major rice producers are banning exports, too. On the other side of the ledger, countries like Haiti are descending into chaos.

This is very serious business. The food crunch is well on its way to eclipsing the credit crunch… but that doesn’t mean the credit crunch has gone away.

Turning to credit and housing for a moment, the news flow from California continues to shock and amaze. West Coast home prices are now heading into “free fall” as a result of the credit crunch.

It turns out that Golden State home prices soared to insane levels with the help of “jumbo loans” — extra-large borrowing packages that required huge leverage to take on. Now that the banks are pulling in their horns, those loans have disappeared. They are simply nowhere to be found, and the Fannie Mae / Freddie Mac substitutes aren’t nearly as generous. The most a homebuyer can hope to borrow these days — without paying backbreaking fees — is something like $417,000.

That’s barely enough to cover the back patio in Calfornia. Or at least, that’s the way it used to be. With no more jumbo loans, there is no more market for $85K-a-year households buying $700K worth of house. This leaves a huge gap between what new buyers can buy and what desperate sellers are hoping to fetch. For California in general — and especially for the higher priced urban areas — $417K is a long, long way down.

Think of Wile E. Coyote taking a gulp as he realizes there is no ground beneath his feet. Or Tom Petty belting out “Free Fallin’” on the radio.

It’s a looong day, livin’ in Reseda… There’s a freeway, runnin’ through the yard…

Anyway, enough of that.

As usual, though, the news isn’t all bad. (It almost never is.) Ann Sosnowski has found a way to make credit lemons into lemonade for Diligent Investor readers. Her latest pick can help put you on the path to a recession-proof portfolio, and give you the opportunity to turn a nice profit to boot. Take a look. And despite all the troubles out there, enjoy your weekend!