Don't look now, but the shirt in your back could be worth more today. Why? Cotton prices are surging due to supply shortages.

Rumors often drive commodity prices. Pakistan is experiencing the worst flooding in history. Pakistan is the world's fourth largest grower of cotton. Another rumor of frost in China added to the rally. China is the world's largest cotton producer. India is placing high export duties on cotton, thus fueling the rally, according to data reported by the Financial Times.

Looking for a new emerging market? Try Pakistan! Despite a continued sense of tension with India and open hostility along the Afghan border, the country's bond market is the best in the world, according to data from JPMorgan Chase & Co. (NYSE: JPM). Debt sold by Pakistan has surged 88% this year -- topping the 45 emerging markets that JPMorgan watches and the 19 that Merrill Lynch & Co. (NYSE: BAC) follows.

And, the stock market may be next.

Money managers, according to a report by Bloomberg, believe that the Pakistani equity market could become the next global superstar. The Karachi Stock Exchange 100 Index is only trading at 9.6X earnings, making it the lowest in Asia (excluding Japan) . . . and this follows a 21% increase year-to-date.

A former chief economist for the International Monetary Fund is dispelling any notion that the global financial crisis will not have significant ripples for the developing world.

Simon Johnson, former IMF chief economist, said emerging market countries may need as much as $1 trillion, given difficulty accessing money in international credit markets, Bloomberg News reported.

"If we are really facing the problem I think we are, you need about $1 trillion," Johnson said.

IMF starts new liquidity facility

This week the IMF announced it's establishing an emergency loan program, an IMF Short-Term Liquidity Facility (SLF), that almost doubles borrowing maximums for emerging market countries. The goal is to prevent contagion, or the collapse of developing nation economies -- including overcome short-term liquidity problems -- due to the financial crisis.

A modicum of good economic news, at least on the commodities front: rice prices are headed for their biggest weekly drop in four years, on the prospect that exports from Japan and Pakistan will ease concerns that a global food shortage is worsening, Bloomberg News reported Friday.

As of mid-day Friday, rice had plunged 14% this week to $19.80 per 100 pounds.

Pakistan, the world's fifth-largest rice exporter, will allow shipment of 1 million metric tons because local needs have been met, Bloomberg News reported Friday. India may also ease its ban on rice exports. Rice is a staple for about 50% of the world's population.

Long-term, secular factors, including expanding middle classes (who consume more calories daily than lower-income groups) in Asia and Latin America, rising oil prices (which increase farming costs), have propelled a global rise in commodity, ingredient, and food prices.

It has been a long time coming. After a big move in 2007, the markets hoped that oil would stay put in the $90 range. OPEC has been pumping at the same rate for most of the year; so have Mexico, Venezuela and most big African producers.

The theory was that demand would drop off in big consuming nations like China and the U.S. because the economy's growth has been slowing. But there are no figures to show that this has happened.

Oil moved above $100 for the first time today. As Joe Lazzaro had already posted, political trouble in Nigeria and Pakistan were partly to blame. Concerns about U.S. supply during a cold winter contributed.

According to MarketWatch, "US crude inventories have likely fallen by 1.8 million barrels in the week ending Dec. 28, according to a Dow Jones Newswires survey of analysts."

Those are the easy answers, though. The harder facts are that oil-producing nations are keeping more of their crude to build their own infrastructures and support growing numbers of cars and trucks within their own borders. Crude is getting harder to find and it is more expensive to drill, especially in deep water. The appetite for oil in the U.S. is not going away. In China, the government underwrites that cost of gas and diesel to keep the economy moving, so cheap supply is provided by the national treasury.

It is not the short-term price of oil that should trouble the market. It is what is likely to happen over the next ten years.

Douglas A. McIntyre is an editor at 247wallst.com.

MAJOR PAPERS:

• In a setback for U.S. foreign policy, General Musharraf of Pakistan has imposed emergency rule amidst a political crisis, tightly controlling the courts, and media outlets, in addition to holding about 500 government opponents and changing several Supreme Court justices, according to the Wall Street Journal (subscription required).
• For the first time in 20 years, the Writers Guild of America, whose members total 12,000, has failed to reach an agreement with the Alliance of Motion Pictures and Television Producers, and a strike is expected to take effect today, reported the Wall Street Journal.
• Kraft Foods (NYSE: KFT) may sell its Post cereals to Ralcorp Holdings (NYSE: RAH) for about $2.8B, according to the Wall Street Journal.

OTHER PAPERS:

• The U.K. Times reported that Vodafone Group (NYSE: VOD) is the frontrunner to acquire a 25% stake in Telekom International, a division of state-controlled Telekom Malaysia.
• Shares of British supermarket chain J Sainsbury (OTC: JSAIY) plunged 18% in London today after Qatar Investment Authority abandoned its GBP10.6B bid for Sainsbury, reported the U.K. Times.
• Google (NASDAQ: GOOG) is expected to hold a press conference today to unveil a suite of software for mobile phones that will be based on open-source technology and will be backed by some of the largest wireless industry companies in the world, reported CNet.com.

As bigwigs hobnob at the elite World Economic Forum in Davos, a big topic of conversation is, of course, private equity.

And, according to a report from the Daily Times, the Prime Minister of Pakistan, Shaukat Aziz, is also talking it up.

He mentioned that the private equity firm, the Carlyle Group Inc., plans to invest billions in Pakistan, as well as in the Middle East.

Apparently, Pakistan has been growing strongly (6% to 8% per year).

But isn't the political situation a bit shaky?

Perhaps so. Interestingly enough, that means the opportunity is probably even greater -- as valuations should be lower. Besides, as the first private equity investor in the country, Carlyle has a chance to get the top deals.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Brazilian model Daniela Cicarelli obviously never read Rule No. 1 of The Celebrity Handbook which states, "never do anything in public that you wouldn't want publicized." And, I'm thinking, that would include a public beach in broad daylight, which is where she was caught on tape during an intimate moment with her boyfriend.

When the video clip appeared on Google Inc.'s (NASDAQ:GOOG) new acquisition YouTube, a Brazilian judge ordered a site shutdown until all copies were removed. So how, you may ask, does a foreign government go about shutting down YouTube?

Easily. Though not effectively. Thanks to this story from Slate, we learn about a process called "packet filtering," during which a government can enforce Internet service providers to block their customers' access to certain IP addresses. But it doesn't always work so well. When Pakistan tried to obstruct several Blogger.com sites during the Muhammad cartoon furor, it wound up blocking every single one. This is because the networks are not centralized in many countries.

According to Slate's Christopher Beam, "Some countries opt for more sophisticated techniques that look for specific words in a site's Web address. With software like SmartFilter, a government can censor the results of a search engine query."

Apparently, our government has already started censoring the term, "Barbra Streisand Tickets."

B. Brandon Barker is the author of Operation EMU