Investment expert eyes Pacific Rim’s strength

Author and mutual fund executive Paul Dietrich on Wednesday advised investors to put much of their money into commodities and Pacific Rim markets where explosive growth is lifting demand for everything from steel to doughnuts.

Speaking in Spokane, he said the U.S. economic recovery will be mediocre, with higher inflation adding to the challenges Americans face by the end of 2011.

In the last 50 years, Dietrich said, Americans have lived through the greatest economic expansion in history. The next one will be bigger, and it will be centered in Asia, he said.

But Dietrich, chairman and chief investment officer of Foxhall Capital Management, said American farmers will be among the biggest beneficiaries of a prosperous Asia. And companies like Boeing that are allowed to compete in China dominate in their niches, he said.

General Electric, for example, will build 45 nuclear power plants in China, and Wal-Mart is that nation’s biggest grocer, Dietrich said. One-quarter of all restaurant receipts are collected by Starbucks, KFC and other U.S. food franchises.

“Boy, do they love Dunkin’ Donuts,” Dietrich told an audience of Eastern Washington University graduates and Greater Spokane Inc. members.

China and the U.S. have equal numbers of middle-class families, Dietrich said, but China’s is doubling every seven years.

He said increased prosperity has created a hunger for more protein, and the results are stark: Well-fed Chinese adolescents tower over parents whose generation did not eat as well.

Only 38 percent of the land in Asia is arable, he said, so the Chinese and Indians will turn to the United States for more food. They also will buy more copper, oil and other raw materials, which will drive prices higher for years, he said.

Dietrich said the U.S. has lost as many as 4 million manufacturing jobs to China, “and they’re never coming back.”

But as those jobs were exported, he said, the American companies created 29 million new positions in telecommunications and other high-tech industries.

He warned progress has been slowed by “awful” U.S. immigration policies that expel foreign students trained on American college campuses. Limits on visas forced Microsoft to establish on office in Bangalore because that was the only way to tap the expertise of Indian software engineers, said Dietrich, who criticized the short-term thinking by “empty suits” that has caused many of the nation’s economic problems.