Members of the G-8 nations (Britain, Canada, France, Italy, Germany, Japan, Russia, and the United States) met in Leece, Italy, yesterday to discuss the state of world affairs. The main topic on the table was whether they should end their stimulus efforts and let world economies float their own boats.

The meeting, which Russian finance minister, Alexei Kudrin, described as "stormy," concluded with agreement that there would be no immediate end to the stimulus programs. U.S. Treasury Secretary Geithner indicated that the U.S. had no intention of moving toward a tighter policy. He said, "it's too early to shift toward a policy of restraint." It must be noted that the more fiscally conservative governments of Germany and Canada favored ending the stimulus programs as soon as they are no longer needed.

The need to fulfill promises of increased aid for Africa, and a general agreement between the United States and Russia on an approach to Iran's nuclear program took center stage as leaders from the Group of Eight industrial nations met Monday in Japan, The Associated Press reported.

President Bush, attending his last summit as a sitting U.S. president, underscored the importance of providing aid for Africa, calling on wealthy nations to provide mosquito netting and other aid to prevent needless deaths, the AP reported.

Basic items - - even equipment as basic as mosquito netting - - can reduce mortality rates in sections of Africa. Mosquito netting prevents children and others from dieing of bites from disease-carrying mosquitoes.

In 2005 the G-8 pledged to increase global aid to $130 billion, and increase assistance to Africa to $50 billion. ONE, a nonpartisan group working to end extreme poverty, predicted that the U.S. and the United Kingdom will meet their commitments, while France, Italy, Germany and Canada are off the mark, Bloomberg News reported Monday.

Increased global food aid likely

Economist Glen Langan, whose specializations include agricultural economics, said increased aid for food and agricultural development will likely be announced by G-8 leaders at the summit, or soon thereafter, due to the rising cost of food's impact on poorer nations. "The aid will be targeted to meeting basic needs first, but with an eye toward directing some funds to self-sustaining agriculture," Langan said, adding that Africa "has the potential to achieve food production gains greater than South America."

Oil fell more than $5 to about $140 per barrel Monday morning after Iran's foreign minister expressed confidence in talks with western governments regarding the nation's nuclear program, Bloomberg News reported.

Iran's foreign minister Manouchehr Mottaki told CNN talks are "in a new environment" and "new approaches" are possible.

A rising dollar Monday morning also helped push oil lower. The dollar strengthened against the euro and the British pound on expectation G-8 industrial leaders will verbally support the dollar at an upcoming economic summit in Japan.

Oil fell $5.14 to $140.15 per barrel Monday morning before recovering slightly to $141.30. The other major energy commodities also plunged in early Monday trading. Heating oil plummeted 13 cents to $3.97 per gallon, unleaded gasoline fell about 10 cents to $3.47 per gallon, and natural gas plunged 42 cents to $13.16 per million BTUs.

Economist Glen Langan, who argues that fundamentals (primarily rising demand) are the major factors determining oil's price, said legitimate progress on the Iran uranium enrichment issue would ease traders' concerns about Iran's supply. "Iran is still OPEC's No. 2 producer and a major exporter of oil, so lasting good news with regard to Iran will ease traders minds about tensions in and near the Persian Gulf. That will take some pressure off prices," Langan said. About 20% of the world's oil flows through the Persian Gulf and the Strait of Hormuz.

The dollar rose to its highest level in more than a week Monday morning on talk leaders at the G-8 summit in Japan will support the currency in an attempt to halt rising commodity prices.

The dollar strengthened about one-half cent versus the euro to $1.5629 and about 1 cent versus the British pound to $1.9659 in Monday morning trading. The dollar also rose about one-half yen to 107.66 versus Japan's yen.

Ian Stannard, a senior currency strategist at BNP Paribas SA (NASDAQ: BNPQY), France's largest bank, told Bloomberg News Monday that support for the dollar in the form of verbal invention continues, driven by the thesis that a stronger dollar, globally, is in everyone's interest.

Many economists agree that a falling and weak dollar has been a factor in rising commodity prices. Oil and other commodities tend to rise when the dollar falls as investors / traders seek to preserve purchasing power of the decreased value of dollar-denominated commodities by bidding their price up. However, economists differ regarding the extent of the weak dollar's commodity-inflation impact, with some arguing it is only a mild factor.

'Actions speak louder than words'

Further, economist Peter Dawson told BloggingStocks Monday, dollar bulls should not feel too emboldened by a verbal stance by the G-8.

Perhaps no other economic phenomenon better characterizes this initial decade of the twenty-first century than the development of -- and GDP growth in -- the developing world.

The economies of Brazil, Russia, India, and China -- often referred to as the BRIC economies -- are major reasons why the developing world will grow 6.7% in 2008, far outpacing growth rates in the United States, Europe, and Japan.

New York Times columnist Roger Cohen argues that what we're seeing is not just the development of markets, not just 'the world is flat,' to use the term popularized by his Times colleague Thomas Friedman, but a reversal: the world is upside down. In Cohen's interpretation, the new economic tigers' accomplishments are large, ongoing, and system changing. Moreover, a power shift is occurring from the U.S and Europe to the new engines of growth.

For Cohen, Brazil is the economic model of the age: abundant minerals and crops, investment capital pouring in, a sugarcane-based energy policy, rising personal incomes, and an increasingly prosperous middle class, with plenty of land to mine, to plant, to expand. It is, in many ways, much of what the United States is not in 2008.

The agendas of the G-8 meetings, gatherings of the finance ministers of the most powerful countries in the world, are still concerned about the credit crisis that has brought many financial firms to their knees and has caused chaos in the housing markets. Even so, they are now much more concerned about inflation.

According to Bloomberg, "Finance ministers from the Group of Eight nations said surging food and fuel prices have replaced the credit squeeze as the biggest threat to the world economy."

It happened fairly fast. At the beginning of the year, the world's credit problems began to accelerate. Mortgage-backed paper write-offs were so bad that many financial company stocks hit multi-year lows in March. Most had to go begging for new capital.

It was only as the first quarter ended that oil prices began huge run-ups and news turned to sharp increases in the price of corn and other agricultural commodities.

The "advantage" with inflation is that central banks can put money into commercial banks and brokerages, propping them up until the storm clouds pass. Getting oil and corn prices down is not quite as simple.

Douglas A. McIntyre is an editor at 247wallst.com.

German Chancellor Angela Merkel said continental Europe should take the lead in financial market reform because the "Anglo-Saxon" model of regulation had failed, The Financial Times reported Wednesday.

Merkel, speaking before her meeting with U.S. President Bush and ahead of next month's G-8 leading industrialized nations economic summit, called for a European credit ratings agency to counter-balance Moody's and Standard & Poor's (NYSE: MHP), adding that despite the progress Europe has made with the euro, the financial regulatory framework is still "a strongly Anglo-Saxon dominated system."

Reforms sought by Berlin will include a ban on agency ratings for products they helped to create, new capital adequacy ratios for banks, and the prevention of bank sale of products they don't understand.

London-based economist Mark Chandler told BloggingStocks Wednesday he agrees with Merkel on the need for both financial market reform and a Europe-based counterweight to complement the largely U.S.-based regulatory framework, but is slightly surprised by Merkel's rhetoric.