Article Source By Jeffrey Frankel Today, we're fortunate to have Jeff Frankel, Harpel Professor at Harvard's Kennedy School of Government, as a guest blogger. His blog is here. The possibility that some Gulf states, particularly the UAE, might abandon their long-time pegs to the dollar is getting increasing attention (from Martin Feldstein and Brad Setser, for instance). It makes sense. The combination of high oil prices, rapid growth, a tightly fixed exchange rate, and the big depreciation of the dollar against other currencies (especially the euro, important for Gulf imports) was always going to be a recipe for strong money inflows and inflation in these countries. The economic dynamism -- most striking in Dubai -- is admirable and fascinating, but also now clearly indicative of overheating. Indeed inflation, as predicted, has risen alarmingly. Among other ill effects, it is producing ...

The BEA released the end-2007 International Investment Position data on June 27. Several observations: As in recent years, the NIIP to GDP ratio continues to deteriorate. However, the NIIP to GDP ratio as of end-2007 is improved relative to the originally reported end-2006 NIIP/GDP ratio. In the last year, the dollar change in the NIIP deviates substantially (i.e., is more positive) than the corresponding current account reported on a NIPA basis. This repeats the pattern from the previous five years. Interestingly, 2005 stands out by far as an outlier, wherein the the NIIP improves while the CA is in substantial deficit. There appears to be a measurable correlation between dollar depreciation against other major currencies and the deviation between change in NIIP and CA. The first two observations are illustrated in Figure 1. Figure 1: Net international investment position to GDP ratio, 2007 release (blue), ...

Pacific Growth Equities’ Analyst Yun Kim recommends Bankrate (RATE) based on the following: 1. Bankrate, Inc. and its subsidiaries own and operate an Internet-based consumer banking and personal finance network. Its Web site, Bankrate.com aggregates information on mortgages, credit cards, automobile loans, money market accounts, certificates of deposit, checking and ATM fees, home equity loans, and online banking fees.

2. The assumption that there will likely be a surge in demand for deposits this year as many major banks are looking to boost their deposits in anticipation of write-downs of bad credit-card debt and home-equity loans.

3. According to Kim, there currently isn’t much online infrastructure to support a surge in demand, and that there aren’t any established players in this area of consumer finance, except for Bankrate.

4. The expected strength in its deposits business can more than offset this volatility.

5. The stock currently trades at 13.2 times

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