Increasing number of data points suggesting that southeast Asia is under major stress. Currencies falling, countries are abandoning/cutting oil subsidies, and inflation is on a tear. Could we be at a breaking point?

More reading:

• Poverty-hit Bangladesh forced into huge fuel price hike (AFP)
• Vietnam's hard economic lesson for China (AsiaTimes)
• The case for lower fuel subsidy (Malaysian Star)
• China tells domestic oil producers to "dig deep" into potential (Xinhua)
• China airlines to raise fuel surcharge up to 50 pct (Reuters)

[Update] My friend @dickc suggest the following magnificent faux Variety headline for Vietnam's tumbling currency:

"No Hong Kong: Investors Long Dong Sing Swan Song"

I call bullshit on naive contrarianism. There are too many people looking to take the rhetorical other side of every short-term blip in market sentiment. Every amateur contrarian -- many of whom admittedly talk a good game, but never trade that way, of course -- prattles endlessly at each supposed sentiment inflection point about "going the other way". Case in point: I'm hearing lots of such talk today from the chattering class.

The trouble is, empty-headed contrarian calls like these have lost investors money repeatedly over the last twelve months. It is naive and facile illogic. Because while the investing pack is sometimes wrong, and big inflection points are often missed, the market's investing pack is usually right: Going the other way against the crowd too early or too late is indistinguishable from being dead wrong. So, while contrarianism can work, the art is in knowing when to bother trying, not to shout "buy now" every few points up or down, like you're at some CNBC-watching drinking game.

Whatever your feelings about the bankers behind the Bank of International Settlements, go read its just-released 2007/08 annual report. It's thought-provoking stuff, especially the discussion of recoupling risks, and of the totemic fascination with inflation that allowed interest rates to stay low for so long that it helped sow the seeds of the current credit crisis.

Admittedly I wouldn't want to be running a small U.S. bank right now, but you have to be in awe at downbound stats like these:

...more than half of those institutions with assets worth between $1bn and $10bn have commercial real estate loan portfolios that exceed 300 per cent of their capital, according to recent FDIC data.

Similarly, almost 30 per cent of US community banks have construction and development loans exceeding 100 per cent of capital.

[Emphasis mine]

In short, a lot of smallish U.S. banks are utterly screwed.

[via FT]

Last week I cited a welling@weeden interview with two Credit Suisse strategists that made the case for inflation rapidly coming down, here is a Gavel report -- albeit somewhat graph-happy -- that makes the same case.

The crux of the piece is the following two graphs. The first shows the role of banks in expanding credit in the economy and helping drive inflation, and the second argues that the velocity of such credit expansion has gone nastily negative.

Read on.

Got any friends that smoke? Buy them a mobile phone, ideally one with an expensive data plan, like an iPhone. Turns out that the incremental expense could save their life:

Using panel data from 2,100 households in 135 communities of the Philippines collected in 2003 and 2006, the analysis finds that mobile phone ownership leads to a 20 percent decline in monthly tobacco consumption. Among households in which at least one member smoked in 2003, purchasing a mobile phone leads to a 32.6 percent decrease in tobacco consumption per adult over the age of 15. This is equivalent to one less pack of 20 cigarettes per month per adult. The results are robust to various estimation strategies. Further, they suggest that this impact materializes through a budget shift from tobacco to communication.

[via SSRN]