June 9 Linkfest

Investing:

The Consequences of Asia Rising: Perhaps the most important lesson to be learned from the Asian experience is that economic growth is not a zero sum game where the winners take jobs and opportunities away from the losers. The growth of China, India, and Indonesia is helping all the countries in Southeast Asia. Singapore gets more shoppers from neighboring countries and Hong Kong believes it will remain the financial capital for a burgeoning China since its open and transparent markets can attract more investors.

Similarly the U.S. has much to gain from the growth in Asia. Brand names are very important to the Asians and the consumer market in these developing countries is just opening up.

If we shut ourselves off from developments abroad, we will be the major ones to suffer. Opportunities abound in these developing markets. You can be sure that if the U.S. does not catch them, others most certainly will. (Yahoo! Finance)

U.S. economy’s fate in Saudi hands: Saudi Arabia is running the U.S. economy.
I’m not sure the Saudis want the task, but they’ve got it. Because the United States still doesn’t have a national energy policy, we’ve thrown decisions about how fast our economy grows and whether our standard of living rises or falls into the hands of Saudi Arabia’s oil ministry. (Jubak’s Journal – MSN Money)

How Ethanol Bites you in the wallet: Ethanol is attractive as a solution to high gasoline prices because it promises a free lunch:

* U.S. farmers would grow corn.

* U.S. ethanol companies would turn the corn into ethanol.

* U.S. consumers would go about business as usual.

* And everyone in the U.S. would be less dependent on foreign oil producers.

* But, repeat after me: There is no free lunch.

So far, this not-so-free lunch has resulted in higher food prices and rising U.S. dependence on fertilizers produced by, you guessed it, foreign oil and natural gas producers.

The costs are just starting to work their way through the U.S. and global economies. But it’s none too early for investors to revise their portfolios to take account of the costs of this free lunch.

On June 4, corn (No. 2 Yellow, Central Illinois) sold for $3.77 a bushel. A year ago, the price was just $2.25 a bushel. That’s a 67% jump in price in a year. (The futures markets say prices will stay here, too, with corn for December delivery selling at $3.83 a bushel on June 4.) (Jubak’s Journal – MSN Money)

Economy/Inflation:

Years of Global Growth Raise Inflation Worries: For the past decade, low-priced labor from China, India and Eastern Europe has helped much of the world enjoy economic growth without the sting of inflation. Now that damper on prices is beginning to reverse — and global inflation pressure is starting to build. (WSJ)

General Mills Raises Price on Line of “Big G” Cereals: General Mills Inc. is expecting consumers to pay more for fewer Cheerios. By reducing the size of its cereal boxes, General Mills will be selling less for more. The new, smaller boxes will mean a low single-digit percentage increase in the price per ounce of such well-known cereal (WSJ)

Hot Commodities Ignite “Agflation” fears in Europe: Red hot agricultural markets are pushing food prices up in Europe, putting central bankers on alert for a new phenomenon economists have termed “agflation”. (Reuters)

Bank of England May Need to Move Faster on “Sticky” Inflation: The Bank of England, which left interest rates unchanged yesterday, may have to move faster to curb the U.K.’s worst bout of inflation in a decade. (Bloomberg)

Globalization Creates Secular not Cyclical Inflation: The conclusion that this round of inflation is cyclical rather than structural is ridiculous. It brings us to the central debate – is globalization inflationary or deflationary? As the article implies, the growth of low-cost India and China has been a deflationary force on labor prices and certain manufactured goods. While this is undoubtedly true, this growth also has created inflation in many other sectors of the global economy. (Will’s Blog)

General:

Why So Many Suicides in Japan: Japan’s agriculture minister hanged himself Monday amid allegations of bid-rigging and padding government expenses. The following day, an executive allegedly linked to one of the scams leapt to his death. In 2005, 32,552 people killed themselves in Japan—one of the highest suicide rates among industrialized nations. Why are there so many suicides in Japan? (Slate)

Iran Adding Attack Boats in Persian Gulf: Iran is increasing its fleet of small attack boats capable of challenging warships and disrupting oil traffic in the Strait of Hormuz, the sea route for two-fifths of the world’s daily supply of crude oil, the U.S. Navy says. The boats — up to 70 feet long and capable of speeds up to 57 miles per hour — are armed with torpedoes and rocket- propelled grenades as well as cruise missiles and also are used to lay mines. The U.S. estimates Iran has 5,000 sea mines. (Bloomberg)

Gay Lawyers Come Out as Clients Demand More Diversity: The number of openly gay, lesbian, bisexual and transgendered lawyers increased by more than 50 percent from 2002 to 2006, according to the National Association for Law Placement. (Bloomberg)

Hong Kong Winters May Vanish in 50 Years: Hong Kong’s winters could vanish within 50 years, with the number of cold days declining virtually to zero due to global warming and urbanization, the head of the city’s weather observatory warned on Friday. (Yahoo! News)

Personal Finance

More Advice Graduates Don’t Want to Hear: While there may be a debate among economists about how much 50- and 60-year-olds should be saving for retirement, there is little dispute about how much the young should save: more. (NYT)

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