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Opening Bell: 4.17.06

Dobbs, Schumer Fall For Mercantilist Fallacies (TCS Daily)
Why are trade and immigration so important here? Because protectionism is almost certainly a graver threat to the economy and then anything we need to be protected from. So keep reminding your friends that folks like Lou Dobbs and Chuck Schumer are falling for old mercantilist fallacies. Their mistake, as Don Boudreaux puts it, is assuming that the world's human capital is a fixed asset, and that the growth of it in places like Asia somehow lessens it here: But one of the defining features of the modern world is capital's expansiveness, its non-fixity. Capitalists the world over know that in every place governed by a rule of law and marked by a reasonably free market, a strong work ethic, and a spirit of commerce, profits can be made by employing workers there. And this employing of workers is done by creating capital in those places.
Have China's manufacturing powers been exaggerated? (RGE Monitor)
The China debate, in all of its forms, never ceases to confuse, yet somehow we feel compelled to follow each of its twists and turns. The latest chatter is on the question of the country's manufacturing prowess, whether it's overrated, and whether manufacturing is profitable there. Brad Setser says no, it isn't overrated. For an economy 1/6th the size of the US', it's excellent that they have a manufacturing sector 1/2 as big. He's also skeptical of the idea that it's all low-margin, no value added manufacturing, as they have built up a large capital reserve, and the cash to buy some big-ticket items from abroad.
Bandwidth Glut Almost Over? (GigaOM)
Could it be true that the nearly unlimited stock of bandwidth we build up in the 90's is actually becoming a scarce resource once again. No wonder the optical/fiber/networking stocks are back (hello JDSU). It also makes sense that they're all talking about merging (both to supply to the telecoms better, and to gain some pricing power for a future round of infrastructure buildouts. One difference is that bandwidth is now being added slowly, on an as-needed basis as opposed to massive buildouts. Still, it may be hard for operators to show restraint, and they may be tempted to build out big swaths, if their latest in-hand Gartner report tells them to do so. Perhaps Enron's broadband trading operations will be vindicated, too.

Japanese Recovery Driving Up Interest Rates (WSJ)
If your hedge fund borrows money in Japan and lends it in Iceland, you may need to go looking for a new strategy. The slow upward rise of Japanese long-term rates is threatening current global capital flows, as the country can't just be a lender. Domestic Japanese investors may (gasp) buy their own country's debt... which, fortunately, push rates right back down again.
Japanese Stocks Fall; Dollar Down vs. Yen (AP)
As we noted Friday, this headline, or some permutation of it, is incredibly common. Most investors in the US probably think that they Yen or the BOJ are the only factors affecting the Japanese Market, given how one dimensional coverage of the markets there tend to be. Still, it's interesting how consistently the markets move opposite to the currency in Japan. That's how it was last year, and it seems to work on a day-to-day basis this year.
China president at Gates house, not White House (Reuters)
Chinese President Hu Jintao will be having dinner with Bill Gates at his $100 million Seattle house when he comes to visit the United States this week. Something seems awfully 90's about this. Maybe because they're meeting at Bill's house, as opposed to Sergey Brin's house, or maybe it's because we thought the days of international politicians hob-nobbing with business leaders seems sort of quaint to us -- harkening back to a day when BIll Gates, Bono, Kofi Annan, and The Baldwins would all play golf together at Davos. Aah, the good old days, back for a day at least.
Chinese bank seen eyeing Bear Stearns stake (Reuters)
Dear readers, time to brush up on your Mandarin. Well, that is if they don't outsource your job to Mumbai, in which case you should brush up on whatever it is you studied in college. Think of it as a chance to reconnect with your passions, maybe finish that novel you started.
Where the umpire and player begin to merge (Financial Express India)
While the stock markets here have been getting their party on, there's caution in India, on the rush to demutualize and list every exchange to be traded. There, a reasonable question is being asked about potential conflicts of interest between the profit-seeking aspect of the exchange, and their role in providing oversight and regulation to their market. It's almost impossible to believe that we won't see some scandal, to that effect, here, in the future. Meanwhile, The Times finally got around to asking a question we've been asking for like a whole week, at least -- Are Shares of Exchanges Entering Bubble Territory? Well, maybe, and judging by the exuberance, share prices, spate of IPOs, froth, etc. most people might say yes. Of course, newspaper columnists tend to be a couple years in early in calling a bubble top. Wait for the Kansas City cattle markets to come public before declaring this a bubble.
Mortgage Lenders: Who's Most At Risk (BusinessWeek)
Speaking of bubbles, perhaps you've heard that a lot of lenders have become really aggressive and that the entire country is dangerously addicted to (take your pick of risky lending instrument). This has been fueled, we're told, by shaky lending operation, looking to push $500,000 on whoever will sign the dotted line. If you believed the media, or analysts, these places are so sketchy, it's unlikely they even keep records of their loans, as they just take in cash (from the Chinese) and push it on anyone. Find out which ones will fail, here.