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The Federal Reserve’s Beige Book, a collection of anecdotal reports from the 12 Fed Bank districts, tells of a cooling economy in advance of the FOMC meeting on December 11.

Seven of the 12 districts reported slower growth, according to MarketWatch’s read of it. Forbes.com talked to John Lonski, the chief economist at Moody’s Investors Services, who said: “It’s consistent the markets view of slower economic growth that provides the Fed with more than enough room to cut interest rates in order to assure an adequate supply of financial capital.”

“Demand for residential real estate remained quite depressed, with only a few tentative and scattered signs of stabilization amidst the ongoing slowdown,” the Beige Book says, and Reuters reports.

The report shouldn’t be much of a surprise. Bernanke said the economy was slowing earlier this month (read our story on what he said).

The data in the Beige Book is current as of November 16. You can download the Book yourself here.

[Image from the Fed]

Canadian regulators have launched an investigation into Nestlé, Cadbury, Hershey, Mars and others that may have been involved in a price-fixing chocolate cartel that bilked consumers out of billions of dollars.

CBC has the news [via Fark]: “We can confirm that we are investigating alleged anti-competitive practices in the chocolate confectionery industry,” said John Pecman, the bureau’s assistant deputy commissioner in the criminal matters branch. “The volume of commerce affected here is definitely potentially in the billions of dollars per year.”

Another rich case study chance for some graduate student some place. Throw it on the pile, next to the airline price-fixing scandals we reported on earlier this week.

[Image from PhillipsChocolate.com]

Minutes from Federal Reserve Directors meetings in October reveal that the area banks were split on whether to cut rates. The WSJ reports that Richmond, Atlanta, Chicago, St. Louis and San Francisco and  New York Fed banks all voted to cut rates. The banks voting against a rate change were the Philadelphia, Minneapolis, Boston, Cleveland, Kansas City and Dallas Federal Reserve banks.

The FOMC voted 9-1 in favor of the October cut with Kansas City Fed President Thomas Hoenig the lone holdout for no change.

We reported on the FOMC minutes release earlier this month, which also showed a split decision on whether to cut rates.

You’d expect that to have some impact on the futures market, but nope–the market still expects another cut in December.

Poland has dropped its opposition to Russia joining the Organization of Economic Co-Operation and Development, a move that’s sure to make economists happy the world over.

The organization doesn’t have much in the way of real power, but it does do data. The OECD collects data from its members and puts it through rigorous testing and analysis. Then we get it and the real fun begins.

Still, joining the OECD could be a step toward economic clarity and economic efficiency. One of the organization’s programs is its Anti-Bribery Convention, which went into effect in 1999.

Coverage of the news from RussiaToday. The AFP has this useful bit of context: Relations between Warsaw and Moscow have been at their lowest ebb since Poland broke free from the communist bloc in 1989, notably because the Kremlin was riled by what proved to be crucial Polish support for the pro-Western “Orange Revolution” in Ukraine in 2004.

[Image from Wikipedia]

Microsoft has decided to open a datacenter in the northern-most regions of Russia, a smart move, designed, no doubt, to take advantage of inexpensive energy the region can afford.

The New York Times has the story. The company has yet to choose a site for its operations there.

The country is working through its e-government strategy, an initiative designed to deploy information technologies in government agencies.

Technology companies will increasingly see gains from operations in Russia, and inexpensive electricity to run datacenters is just the beginning. There’s a great wealth of human capital just waiting to find good opportunities.

Denmark will consider dropping its currency, the Krone, in favor of the Euro on the country’s upcoming referendum. The AP has the story.

The Krone is already tied to the Euro and the Danish central bank shadows the interest rate moves of the European Central Bank.

Membership of the euro is clearly still controversial. It was rejected in 2000 by 53 to 47 per cent, after an emotional campaign that saw a grassroots No movement outpoll all the main political parties, backed by the Danish employers, the trade unions and most of the media.

Economists argue that Denmark gains nothing by being outside the single currency, for the krone is tied to the euro, and the Danish central bank shadows the interest moves of the European Central Bank – often within 15 minutes of a change.

[Image From Wikipedia]

The Nasdaq exchange has launched an index that tracks Internet-related companies, including everything from destination sites and eCommerce platforms, to hosting services and website customization services. TechCrunch has the story, but still no word on whether the Index will be price-weighted or market-weighted.

The difference is important. The Dow Jones Industrial Average, for example, is a price-weighted average portfolio, where the degree of holding represented in the portfolio is proportional to each company’s share price. The Dow-style portfolio has four times as much invested in stock XYZ than ABC just because XYZ’s share price is four times that of ABC and XYZ dominates the average. For an Internet index, that spells Google (see why V ditched the stock).

A market-value-weighted index, such as the S&P500, weighs each company in the portfolio based on its market capitalization–which makes a heck of a lot more sense given the propensity of companies to do stock splits. Google would still be an 800-pound gorilla in this system, but not quite as badly as under a price-weighted.

[Picture from PascalRossini.com]

Finally there’s a new software service that simplifies the stupefying world of foreign exchange trading. TechCrunch has the story on eToro and a comprehensive review.

The takeaway? It looks and feels like online gambling, despite the company’s best efforts to eschew such comparisons. From Roi Carthy’s story:

The one thing I found odd about eToro is its rigid insistence on the lack of parallels when comparing it to online gaming operators. This is a rather naïve point-of-view for several reasons: First, one of the company’s co-founders and its CTO is David Ring who was a key R&D leader at Israeli-based 888.com (a major online casino and poker room operator). Second, eToro’s client application is strikingly similar to gambling apps, and this cannot be a pure coincidence. Third, eToro is a BVI company, (a.k.a., a British Virgin Islands company)—classic tax strategy by gambling operators. Fourth, the company’s affiliate marketing offering is extremely reminiscent of gaming operators, “Receive 25% of eToro’s Revenues or Get $2 per every free registered user.”

It’s hard to imagine serious traders jumping onto eToro to make their investments. It’s similarly hard to imagine the casually interested getting involved. Still, with the falling dollar driving interest in currency issues, the company may have a niche to fill.

[Image from TechCrunch]

There is, no doubt, a graduate student somewhere who is working on a paper about airline price fixing. Now he or she has at least one more set of data to analyze thanks to Austrailia’s Qantas.

The AP reports: Qantas sought to eliminate competition by fixing the rates for shipments of cargo to and from the U.S and elsewhere from at least January 2000 through February 2006, according to the charges filed in the U.S. District Court for the District of Columbia.

The story goes on to point out that this case is one of three this year. British Airways and Korean Air Lines each plead guilty to price fixing of both passenger and cargo flights. Each paid $300 million in criminal fines for their actions (not that it means much to companies recording their profits in currencies other than the U.S. Dollar).

The cause for the price fixing? Good old fashioned greed mixed with the increased cost of fuel. The price of fuel is up 44% this year, according to reports. Read our story about it from earlier this month.

[Image thanks to tsvc.com]

The United Arab Emirates is considering ending its 30-year peg to the dollar, citing falling currency concerns that are driving inflation and an increasing price of imports for the country. Bloomberg covered the story earlier this month.

The move would not be unprecedented. Kuwait dropped its U.S. Dollar peg in May. OPEC is also considering dropping the dollar in favor of a basket of currencies, as we’ve written about earlier this month. The U.A.E.’s move is unlikely to upset the U.S. applecart just as the OPEC move is similarly unlikely to.

French President Nicolas Sarkozy went to China and complained about the Government’s strangle-hold on the Yuan and begged the government to let the currency appreciate against the Euro. Reuters has the story.

Keeping the yuan low makes it easier for Chinese businesses to export their goods. Other countries, especially the U.S., are complaining that China’s currency policy is giving its exporters an unfair advantage over domestic suppliers.

Henry Paulson, secretary of the U.S. Treasury, made similar statements earlier this month. He said China needs to loosen its choke-hold on its currency and let it adjust to market prices and appreciate faster. The secretary said China was “out of step,” with the rest of the world’s perception of what it needs to do with its currency. (Read our story about his statements here.)

Some pundits have opined that the U.S. is attempting to replicate China’s protectionist currency policy–devaluing the dollar to stimulate exports and domestic production. I wouldn’t bet on that actually happening however.

[Image from FoxNews.com]

I got out of my Google stock just before the end of October, at the beginning of what would later be a $100 slide in share price. I just had a feeling that the super returns I had gotten over the last two years were about to evaporate.

Now I don’t pour over the Google earnings announcements, or go stalking the company’s Mountain View HQ, but my hunch about the stock seemed to be right (for once) so I’ve been looking for justification for the move since.

I finally found it at VesTopia, where one writer explains why he too ditched the stock. The takeaway is two-fold: Google was gearing up for a mean-reversion for its performance and inflation of its keyword rates was driving earnings faster than new products.

The mean-reversion argument is of particular interest to an economist. The idea is that any performer that exhibits an above-average return or outcome will eventually end up performing about the same as everyone else.

I’m not sure I totally buy it from a statistical perspective, but my gut surely agrees. The real question is when exactly a company will begin executing its mean-reversion. I wish I knew better!

[Image from SciFi Blog]