Economy: Panicked About Expensive Food And Oil? Don’t Be.

Skyrocketing energy prices and food inflation have been held up as major threats to the global economy in 2008. Just last month, oil was in danger of surging past $100 a barrel, and U.N. sources say the price of food has risen an unprecedented 40 percent in the last year. Economists worry that the higher prices will bring back the scourge of inflation, a threat the world has not seen in almost 30 years. In fact, some economists argue that inflation is already here—it's just not counted in the "core" inflation figures (which exclude food and energy) most central banks use to control the money supply.

But in the spirit of the holidays, let's look at the bright side. There are signs that oil and food prices may actually fall in 2008. If the United States is heading for a downturn, as many economists expect, slower growth would reduce demand for oil. Moreover, speculative money may have added $10 to $20 to the price per barrel in recent months, and speculators like hedge funds are starting to unwind bets that energy prices will continue to rise. Supply constraints appear to be loosening, too: nearly 3 million more barrels per day are due to come on the market as OPEC reverses cuts. "We see the possibility of pretty significant fundamental easing by the end of the year," says Michael Waldron, oil-markets analyst at Lehman Brothers. Most analysts expect oil to drop to at least less than $90 in 2008's first quarter. Many expect it to settle to as low as $60 or $70 by the end of the year.

As for food, most economists believe that prices have neared their peak. The dire forecasts tend to cite rising demand from prospering Chinese and Indians, and increasing competition for grain supplies from the ethanol industry. But the No. 1 reason for the recent spike in food prices was a string of bad harvests, thanks to floods and droughts in 2007 that are unlikely to be repeated. Already, Australian harvests are improving, and farmers in the United States and Latin America have been planting more crops. Demand should also drop now that many think producing biofuels from corn is inefficient. Some analysts even question the widespread assumption that rising consumption in developing nations will continue to force up food prices. Paul Ashworth, senior international economist at Capital Economics, calls that argument a "red herring," saying that consumption of meat in China and India has reached a plateau.

Of course, a disruption in oil production or large-scale crop damages could spike prices. But with more oil and food supplies on the way, it could be a happier New Year than many predict.
—Patrick Falby

Markets: New Money Stays Home
The New York and London stock exchanges are losing ground as the top spot for global listings. According to a fresh report by Ernst & Young, there has been "a remarkable rise" in the size and number of IPOs on non-Western stock exchanges in 2007. Of the 20 biggest deals, a record 14 were listed on emerging-market exchanges, including CITIC Bank (Shanghai, $5.9 billion), DP World(Dubai, $5 billion) and Ecopetrol (Bogot?, $2.8 billion). Companies in China, India, Russia and Brazil raised $107 billion of IPO money from January to November, compared with $63.6 billion raised by peers in the United States, Germany, Britain and Japan.

Why are firms staying home? Not only because they can raise plenty of money, but also for higher valuations, and less paperwork and litigation. "The stock-exchange business has become globally competitive, just like any other," says Ernst & Young analyst Gil Forer.
—Stefan Theil

Jihad: Extreme Profession
Poverty, Arab nationalism and alienation—all have been tested and rejected as causes of terrorist behavior. Now Oxford University academics have a new predictor: engineering.

Sociology professor Diego Gambetta and doctoral student Steffen Hertog reviewed the biographies of 404 Islamists who have carried out or plotted terrorist attacks since the 1970s. They found 78 had studied engineering and that engineers were represented nine times more among terrorist attackers than in their home-country populations.

What explains the link? Gambetta and Hertog suggest that engineers are drawn to terror because their mind-set makes them likely to systematize and simplify the world.

Gambetta cautions against using his study as an indictment of engineers; the vast majority show no leaning to violence. Still, the tie now looks like something for gearheads to think about.
—Patrick Falby

Ancient Spin: The Cave Of The Politicians
Twice in the past month Rome's Mayor Walter Veltroni and Italy's Culture Minister Francesco Rutelli gave journalists sneak previews of newly unveiled discoveries—and twice it aroused suspicion of political motivation. First, mere days after former prime minister Silvio Berlusconi announced his plan to form a political party to compete with Veltroni and Rutelli, they showed the ancient Lupercale, the grotto where the mythical she-wolf nursed Romulus and his twin brother, Remus. Berlusconi called the timing "suspect." Then came the showing of four frescoed rooms in the Palace of Augustus, Rome's first emperor. The restoration has been underway for two decades, but the media preview took place when support for Romano Prodi's ruling coalition had dropped significantly in the polls. In fact, this is nothing new for Rome. Exploiting its relics is as old as the city itself. Even Augustus asserted his authority, building his palace over the Lupercale, a site ancient Romans worshiped as the city's birthplace.
—Barbie Nadeau

Health : High Weight, Low Goals
Two thirds of adult American women fall into the overweight or obese category, and new research suggests that number will not decrease any time soon. A study published in the journal Eating Behaviors found that while overweight and obese women express great dissatisfaction with their bodies, the pounds they say they would "ideally" like to lose are so few that they would still be categorized as overweight. Why the modest weight-loss aspirations? One study author suggests that the overweight and obese women aimed for such small diet goals because lower numbers on the scale seemed unattainable. "If you're 5 feet 2 and 200 pounds, maybe it seems like a pipe dream that your weight could be 120 pounds," says study author Lori Neighbors, an assistant professor of nutrition at the University of Wisconsin in Madison, Wis. There's also some evidence that heavier women are more likely to take their cues from the people they see around them. "If more of their friends are overweight, maybe that changes their perception of what it means to be overweight," says Neighbors. In that case, it looks like fat may be the new normal.
—Barbara KantrowitzandPat Wingert

Fast Chat: ' Who Wants Strangers? '
Emmanuel Iii Delly, the Iraqi recently named to the College of Cardinals, has criticized American forces and the Iraqi government for Iraq's chaos and insecurity. The 80-year-old Patriarch of Babylon for the Chaldeans, Delly spoke (through an interpreter) with NEWSWEEK's Larry Kaplow. Excerpts:

NEWSWEEK: You ' ve objected to some American actions in Iraq. What did you mean?
DELLY: It is a must always for those in authority to do good for the whole world. I always ask them to provide security … God does not accept anything that contradicts brotherhood and love. God is love and peace, and we should walk in his path. That is what I said.

Have the Coalition forces here violated people ' s rights?
Everyone feels happy in his house, so do you want a stranger in your house? The stranger is always a stranger, therefore he should respect the house he enters, and if that house cannot protect itself, the stranger should help protect it.

Do you have a message you would like to send for Christmas?
I hope that Christmas will be one of peace and love not only for Iraqis but for all nations, and I wish peace and love to everyone. I hope for a happy holiday for everyone.

The Iowa Caucuses: Migrating Policy Positions
Republicans are skewing right in Iowa, pursuing passionate voters who will turn out for the caucuses. Four of the five top candidates (except John McCain) have all but reversed course to compete for the rightmost flank.

Fred Thompson
In Senate, backed greater visa access. Now wants to deputize local cops as border agents and "punish employers" for hiring illegals.

Mitt Romney
Supported a path to citizenship because deporting 12 million people is impractical. Now accuses Giuliani of running a "sanctuary city."

Rudy Giuliani
In 2006 advocated a path to citizenship; now wants a high-tech border fence to stop terrorists, drug dealers and criminals.

Mike Huckabee
Previously said deportation advocates were "driven by racism or nativism." Now he would give illegals 120 days to get out of the U.S.