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Effects of this summer's extended drought, which has scorched corn and soybean crops across the Midwest, will ripple around the globe.

 LONDON -- Attempts by major food importing nations to shelter their populations from the effects of a U.S. drought may make a bad situation worse, five years after the last jump in crop prices provoked rioting in some of the world's most fragile states.

Many governments have watched on the sidelines as drought in the U.S. farm belt sent prices of corn, soybeans and wheat soaring, hoping that the market would eventually ease.

However, their nerve seems to have broken with Mexico, the world's second biggest corn importer which suffered "tortilla riots" in 2007, making a huge purchase last week.

With fears growing that drought will also cut the wheat harvest in the Black Sea region, buyers in the turbulent Middle East are now also pouring on to the markets.

"A cascade effect is not inconceivable and may well be taking place -- wheat prices have shot up nearly 50 percent since the beginning of July," said J.Peter Pham, a director with U.S. think tank the Atlantic Council.

"If such proves to be the case, some of the most fragile states may well be shaken," added Pham, who also advises U.S. and European governments on strategic issues.

In 2007-2008, food prices rose when a jump in oil -- which pushed up production costs such as for chemical fertilizers -- mixed lethally with speculation on commodity markets and export restrictions imposed by some leading agricultural nations.

The resulting food emergency hurt the world's poor worst, provoking unrest from Egypt to Mozambique and Mexico. However, prices soon crumbled spectacularly as the global economy slowed, oil fell again and markets bet on lower demand for commodities.

This time around the problem is simpler, some have argued, blaming the drought in the United States, a leading world producer of corn, wheat and soybeans.

Global grain prices saw a fierce rally in June and July, with corn and soybean prices rising 50 and 20 percent respectively. Wheat also jumped around 50 percent due to the worst drought U.S. Drought in more than half a century.

July was the hottest month in the continental United States on record, beating the devastating Dust Bowl summer of 1936 when drought and bad farming practices of the time led to soil blowing away in vast clouds.

Analysts expect this year's drought, the worst since 1956, to yield the smallest corn crop in five years.

The effects are profound, as corn is not only used directly for making food. It is also fed to livestock for meat production and used to make ethanol, demand for which is strong as governments try to meet targets for moving towards biofuels and reducing reliance on fossil fuels.

Several bodies including humanitarian agencies, governments and food companies concluded that the latest price surge was not as serious as in 2007-2008. For instance, Nestle, the world's biggest food group, said it expected raw material prices to ease in the second half of 2012.

Earlier this year the United Nations food agency also played down the problem, but on Thursday it acknowledged the risks.

"Prices have the potential to increase further," the Food and Agriculture Organisation's senior economist and grain analyst Abdolreza Abbassian told Reuters. "There is potential for a situation to develop like we had back in 2007/08.

The FAO Food Price Index, which measures monthly price changes for a food basket of cereals, oilseeds, dairy, meat and sugar, was up 6 percent from June, after three months of declines.

Wheat output is also looking shaky as drought blights large producers such as Russia, Ukraine and Kazakhstan, and raises the risk that they might impose export bans to hold down prices on their home markets.

Weather woes are also showing up in other significant wheat producers Australia and India.

Governments in large importing countries, which were shaken by unrest last time, had held off from making major purchases of grain as prices bubbled but now they are jumping back in to keep their stocks healthy and their populations satisfied.

The Mexican government, keen to avoid a repeat of the tortilla riots when corn prices jumped, has tried to secure lower corn prices by purchasing in bulk, buying a massive 1.516 million tons last week.

In 2007 tortillas cost on average 5.73 pesos per kilo and today they're 9.76 pesos per kilo, according to data from the economy ministry.

"I don't see social problems because the government is very focused on controlling the price of something that is an integral piece of the Mexican diet. They'll keep protecting the people," said Alvaro Ley, head of AMEG, the Mexican meat fatteners association.

However, dealers say the Mexican tactic could touch off a frenzy of buying by other countries wrongfooted by the U.S. drought. Iran, Algeria and Jordan are all shopping for grain this week.

One notable absentee so far is leading wheat buyer Egypt, which snaps up more than 10 million tonnes a year.

Pham noted that Egypt, which is still experiencing social and political tensions following last year's revolution, gets a quarter of what it consumes from the United States.

"Any upward movement in U.S. wheat prices will have significant impact on the lives of ordinary Egyptians, nearly half of whom subsist on less than two dollars a day," he added.

Economists expect to see fewer changes in diets as a result of the corn and soy-led rally than they did in 2007-08, when consumers in poorer areas of the Middle East, North Africa and Asia found alternative food supplies as rice and wheat soared.

High corn and soybean prices will trickle down to meat consumers in wealthier countries, still reeling from the financial crisis, as crops are used to feed livestock.

"The human implications of this are probably very different than the 2008 run-up in prices," said Pat Westhoff, director of the Food and Agricultural Policy Research Institute.

While the world's poor respond to higher food prices by finding something cheaper or simply eating less, many consumers in wealthier countries can afford to pay more, so demand holds up better. This indicates corn and soybean prices could stay stronger for longer.

Meat and other food producers in Japan, the world's biggest corn importer, will bear the brunt of the rally as the cost of feeding livestock rises, but deflationary pressures in the domestic market mean they cannot proportionately raise prices of beef and pork for consumers.

Feed mills are trying to offset the problem by increasing the use of corn from Brazil, Chinese soymeal in cattle feed and domestically produced and stockpiled soybeans for Tofu, but alternatives are limited.

Hog farmers in China, which accounts for 60 percent of the soybean traded across the world, are already facing higher feed costs with domestic soymeal prices hitting a record high of 4,048 yuan a tonne earlier this month.

Drought is also affecting parts of Europe including Spain, whose wheat harvest is expected to fall by over a quarter this year from 2011. Spain's debt crisis has exacerbated the problem, all but cutting off lines of credit to any other than the largest grains trading houses.

Domestic grain stocks are low and enough to last only until late August, according to Miquel Angel Berges, an analyst at agricultural exchange Mercolleida.

"It could be a major problem as many small and medium-sized businesses don't have the resources to finance themselves... we could see slaughterhouses and meat producers start to close by year-end if we don't see a return to June prices," he said.

Food price pressures are also simmering in parts of Africa. While inflation in much of the region remains below peaks scaled in 2008, there are worrying signs costs related to the crop pipeline might not subside as quickly as they did in 2009.

In South Africa, the continent's biggest economy and corn producer, the inflation measure used by the central bank for monetary policy was 5.5 percent in June compared with 11.6 percent at the same point in 2008.

Almost no economist sees South African inflation racing next year to 13 percent, as it did in mid-2008, but many see food price pressures continuing to erode the household incomes of the country's poor.

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LOS CABOS, Mexico -- The scene at the just-concluded Group of 20 summit held in this seaside resort would have been unthinkable a decade ago: Hundreds of dignitaries gathered in opulent Mexican hotels and convention halls to hammer out an economic bailout for Europe. Meanwhile, the leaders of Brazil and China kicked in tens of billions of dollars to the International Monetary Fund to rescue downtrodden Spain and Greece.

Although the gathering didn't produce a solution for the ailing euro zone, it did outline the globe's new balance of power. Developing countries projected optimism and wealth over the summit's two days, while European and U.S. leaders struggled just to stay solvent.

A lot has clearly changed since the 1990s, when Asian and Latin American economies were slogging through recessions while Washington-based power brokers ordered up the very kind of austerity-minded prescriptions now sparking street protests in Europe.

Even during recent economic crises in the U.S. and Europe, China has been posting annual growth rates topping 8 percent. Countries with booming Chinese trade, such as Argentina and Ethiopia, have similarly seen their economies thrive. China's economy surpassed Japan's over the past year to become the world's second biggest; Brazil's overtook the U.K.'s to take sixth place.

"It is a different picture and reflects the fact that (developing) economies are not only the largest and fastest growing economies but are among the biggest economies in the world," said Uri Dadush, director of the international economics program at the Carnegie Endowment for International Peace. "Clearly, neither the Americans nor the Europeans are in any position to tell the biggest economies what to do."

Mexican President Felipe Calderon cut to the point while speaking to reporters Tuesday afternoon as he noted developing world contributions to the IMF for a possible European bailout. Although the countries still have lower standards of living, their economies are growing and many have amassed large foreign reserves.

China had pledged $43 billion to the fund, while India, Mexico, Brazil and Russia each chipped in $10 billion. The United States, Calderon drily noted, was not giving a single penny, due to "serious restrictions of a legal and political nature." In other words, coughing up billions to save Europe was impossible for deadlocked U.S. politicians, especially in an election year and as the country struggled with its own budget deficits, economic analysts said.

University of Maryland economist Phillip Swagel, a former Treasury Department official in the George W. Bush administration, said developing countries' new economic power was already translating into growing political might.

In fact, the BRICS countries representing Brazil, Russia, India, China and South Africa were the ones making demands on Europe during the summit, saying they should be given a bigger role in the governance of the IMF if they were going to send billions to the fund. Europeans have traditionally led the organization since its founding nearly seven decades ago.

"With their resources comes a greater say," Swagel said. "It's a big change. We were once telling Asian counties what to do."

The power shift was clear in the air-conditioned hallways and balmy outdoor lounges of the G-20 where dignitaries and reporters mingled.

News crews from Ethiopia and China filled press conferences, while Brazilian and Russian leaders drew the most attention. Humbled European heads of state stepped before TV cameras to thank China for helping out while promising that their countries would do better.

Heloisa Castro, a Washington-based reporter for the Brazilian network Record TV, said Brazilians were energized by their new prominence, after so many decades of suffering dreadful busts and booms. Still, she said, they had no right to preach solutions to Europe, a point President Dilma Rousseff made to an international gaggle of reporters Tuesday.

Preventing European and U.S. turmoil from dragging down Brazil was the order of the day, Castro said, as economic growth in some developing countries has slowed sharply this year.

"I think it's very curious that now, we who have been through all these IMF adjustment programs in the past with their draconian conditions, we now are seeing European countries go through the same thing," Castro said. "But if the economies in Europe and the U.S. go down, we all suffer. We can't only live with the BRICS countries."

Joe Raedle / Getty Images file

The United States spends more than any other country but has the eighth-lowest life expectancy in the Organization for Economic Co-operation and Development survey.

This week, the Supreme Court considered President Obama’s health care reform law. The Patient Protection and Affordable Care Act expands health coverage to millions of uninsured Americans. If the law is overturned, health care costs covered by the federal government would drop substantially.

While government spending on health care could decline, that will not result in lower health care costs. Based on data published by the Organization for Economic Co-operation and Development on global health issues, 24/7 Wall St. identified the countries where health care costs are the highest per person.

Spending a great deal on health care does not result in a healthier population. Of 34 OECD member countries, only three that spent the most per person have citizens that live the longest. The United States spends more than any other country but has the eighth-lowest life expectancy in the OECD. Japan, meanwhile, spends $2,878 per person -- about $5,000 less than the U.S. -- and has the highest life expectancy among developed nations. 

According to the OECD's Matthias Rumpf, health care spending does not result in better treatment. In countries that spend more, he says, people opt for expensive tests and elective procedures that drive up costs. To discourage excess in Germany, for example, citizens are penalized if they see a specialist without first consulting their doctor.

In most of the OECD countries, health care expenses come to more than $2,000 per person each year. In the case of the 10 countries with the highest costs, expenses are roughly twice that. In the U.S., spending on health care per capita comes to nearly $8,000 per person. Many proponents of public health care blame the U.S.’s highly privatized system as the reason for such high costs. But according to Rumpf, a number of factors influence the national spending on care.

How patients use medical services impacts health care expenses. Expensive diagnostic procedures and elective surgeries, like MRI scans and corrective knee surgeries, drive up costs. Conversely, irregular visits to the doctor impair preventative care.

In many of these countries, the source of high costs is drug prices. In four of the countries with the most expensive health care, pharmaceutical expenses come to at least $600 per person per year. In the U.S., those costs are more than $950 per capita.

Another factor that increases cost is poor health-related behavior of the population. Of course, excessive alcohol consumption, tobacco use and poor exercise increase health problems. The incidence of these behaviors is different country to country.

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Many of the countries that spend the most per capita on health care have highly privatized systems. In the U.S. and Switzerland, which spend the most and third-most on health care, respectively, the government pays less than 65 percent of the total health care costs. In most of the countries in the developed world, public expenditure accounts for at least 70 percent of total costs.

Many of the countries with the highest expenditure per capita on health care also have among the most government-funded health care systems. The governments of Denmark, Austria and Luxembourg pay 84 percent or more of the total health care cost. Total public spending in these countries, without accounting for private health care spending, ranges from 6.5 percent of GDP in Luxembourg to the OECD-high 9.8 percent of GDP in Denmark. In most of the OECD nations, the government foots the majority of the health care bill.

These are the countries that spend the most on health care. 

1. United States

• Total expenditure on health per capita: $7,960
• Expenditure as percent of GDP: 17.4 percent (the most)
• Annual growth of total health expenditure: +2.2 percent (14th least)
• Life expectancy: 78.2 years (27th highest)

The U.S. has, by far, the highest total expenditure on health care per capita. America spends approximately $2,600 more per person annually than Norway, the second-highest spender. Only 47.7 percent of this amount is public expenditure -- the third-smallest percentage among developed countries. However, the actual amount of public spending, $3,795, is among the highest. The U.S. also spends the largest amount on pharmaceuticals and other medical nondurables. The country has fairly low rates of doctors and hospital beds relative to its population. It also has the eighth-lowest life expectancy, at 78.2 years.

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2. Norway

• Total expenditure on health per capita: $5,352
• Expenditure as percent of GDP: 9.6 percent (16th most)
• Annual growth of total health expenditure: +8.4 percent (4th most)
• Life expectancy: 81.0 years (10th highest)

After its neighbor, Denmark, Norway has the most nationalized health care system in the developed world. Of the country’s $5,352 expenditures per person, 84.1 percent are covered by the public sector. Access to health care in the country is high. There are approximately four physicians per 1,000 people, the third most in the OECD. Despite the high percentage of total costs covered by the public, the nation’s residents still pay more than $800 per person on health care.

3. Switzerland

• Total expenditure on health per capita: $5,344
• Expenditure as percent of GDP: 11.6 percent (5th most)
• Annual growth of total health expenditure: +2.8 percent (17th most)
• Life expectancy: 82.3 years (2nd highest)

Switzerland currently spends the third most on health care per capita, or the equivalent of 11.6 percent of the country’s GDP. Switzerland has one of the most privatized health care systems in the world, with 30.9 percent of expenses coming out of pocket. Because of the wealth of country, this comes to $1,650 per person, more than double every country in the developed world except the U.S.

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4. Netherlands

• Total expenditure on health per capita: $4,914
• Expenditure as percent of GDP: 12 percent (second most)
• Annual growth of total health expenditure: +16.4 percent (the most)
• Life expectancy: 80.6 years (14th highest)

Health care costs in the Netherlands amount to $4,914 per person each year. The Dutch health expenditure is equivalent to 12 percent of the nation’s GDP -- the second greatest relative health expenditure of every nation in the OECD except the U.S. Total expenses jumped by 16.4 percent between 2008 and 2009, the most among OECD nations. Despite this increase, total out-of-pocket expenses per capita are just $227 per person, the fourth-lowest in the OECD.

5. Luxembourg

• Total expenditure on health per capita: $4,808
• Expenditure as percent of GDP: 7.8 percent (seventh least)
• Annual growth of total health expenditure: +8 percent (6th most)
• Life expectancy: 80.7 years (tied for 12th highest)

Health care expenditure in Luxembourg is $4,808 a year, or 7.8 percent of national GDP. This is the greatest decrease among OECD countries. Of that, public expenditures account for 84 percent of the total, the eighth-highest rate among OECD countries. The country’s system faces some difficult challenges in offsetting unhealthy lifestyle choices. For instance, Luxembourg has the highest annual rate of alcohol consumption at 15.5 liters per capita.

Click here to read the rest of the countries that spend the most on health care.

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Mahmoud Raouf Mahmoud / Reuters

Nearly nine years after the U.S. began combat operations in Iraq, violence continues to ravage the capital city of Baghdad.

By Michael B. Sauter, 24/7 Wall St.

Recently, a series of roadside bombs killed 11 people and injured dozens more in the Iraqi capital of Baghdad. The attacks were part of coordinated assaults by insurgent elements around the country that killed 32 people and remind us how violent the area remains.

Research consulting firm Mercer has released its 2011 Quality of Living Report, which includes ranking of the cities according to the level of personal safety. Baghdad is the most violent city on the list. Based on Mercer’s list, 24/7 Wall St. has examined the 10 most dangerous cities in the world.

24/7 Wall St.: Cities where violent crime is soaring

All of these areas suffer from great political instability that has led to politically motivated violence. This climate of instability also has created an ideal breeding ground for crime motivated by profit. Whether the violence is criminal or political in nature, it perpetuates socioeconomic conditions that keep those nations’ economies depressed.

Nearly all the countries of the cities on the list have experienced a violent coup or national war in recent past. In Tbilisi, the capital of Georgia, a brief but severe military conflict with Russia in 2008 led to long-term economic problems and the increased availability of firearms.

In many of these cities, the central national violent conflict is ongoing. In Yemen, long-reigning president Saleh has just stepped down, but a large group of citizens are demanding his execution. As a result, firefights between protesters and government troops are ongoing.

For all the cities on the list, the U.S. Department of State has urged Americans to avoid the country altogether and in many cases suggested citizens who remain there leave.

To illustrate the violent conditions in each city, 24/7 Wall St. reviewed travel warnings issued by the U.S. Department of State’s Bureau of Consular Affairs. These reports detail the type of crime or violence in the area, including whether Americans are being targeted. We also included the socioeconomic conditions for each country to reflect how violence and depressed living conditions are almost always interconnected. We referred to adult literacy rates, adult mortality rates and the percentage of the population living on less than $1 per day, based on data from the United Nations. To demonstrate the impact that violence has on the economy, we obtained GDP per capita from the International Monetary Fund.

1. Baghdad, Iraq

• GDP per capita: $2,531.15 (66th lowest)
• Adult literacy rate: 74.1 percent
• Adult mortality rate per 1,000: 291
• Population living on less than $1 per day: n/a

Nearly nine years after the U.S. began combat operations in Iraq, violence continues to ravage the capital city of Baghdad. Intermittent suicide bombings, random gunfire, roadside bombs and other attacks still occur throughout the city. In the past two weeks, dozens of Iraqi civilians have been killed in separate events. With American troops leaving the country, many are unsure whether Iraqi security forces can keep the region at even the current level of stability.

24/7 Wall St.: Cities that have fired their police forces

2. N’Djamena, Chad

• GDP per capita: $837.01 (34th lowest)
• Adult literacy rate: 12.2 percent
• Adult mortality rate per 1,000: 447
• Population living on less than $1 per day: 58.7 percent

Just 12.2 percent of Chad’s population is literate, the third-worst rate in the world according to the UN. Also, 447 out of every 1,000 residents who reach the age of 15 will not make it to the age of 60. According to the State Department, the capital city of N’Djamena is actually the safest place to be in the country. The fact that the city is still rated by Mercer as the second most dangerous city in the world is proof of how unsafe the country as a whole is. In June, the Bureau of Consular Affairs issued a travel warning to the country, and has prohibited any government employees to travel outside of N’Djamena.

3. Abidjan, Côte d’Ivoire

• GDP per capita: $1,042.52 (41st lowest)
• Adult literacy rate: 48.7 percent
• Adult mortality rate per 1,000: 390
• Population living on less than $1 per day: 20.4 percent

After former-president Laurent Gbagbo refused to give up power following his loss in the October, 2010 election, violence broke out in Côte d’Ivoire. Gbagbo has since been arrested and is set to go on trial at the Hague. However, according to the Department of State, “Although Abidjan (the largest city in the country) is considerably calmer since the arrest of former President Gbagbo, law and order have yet to return to all of Abidjan’s neighborhoods and some parts of the countryside.”

Read the rest of the list at 24/7 Wall St.'s site.