Subject: Social Security is Fine From: Terri To: All Date Posted: Fri, Apr 08, 2005 at 10:56:03 (EDT) Email Address: Not Provided Message: An endowment that is growing, as our endowment for Social Security is growing, as the economy is growing will readily enable us to pay full Social Security benefits. At least for 2 generations there is no Social Security, likely far longer if economic growth is historically reasonable.

Subject: Bond Income From: Terri To: All Date Posted: Fri, Apr 08, 2005 at 10:50:07 (EDT) Email Address: Not Provided Message: Of course, the bonds I may own today are a saving and investment for tomorrow. Why ever else would I own bonds? And, we ought to wish Congress would allow bond interest the same tax treament as stock dividends. We had best worry about the fact that this year our international income, our return on saving and investment internationally, will finally be less than what we owe in income abroad. Yes; bond holders save and we had best be saving more.

Subject: Hunger-Based Lines Lengthen From: Emma To: All Date Posted: Fri, Apr 08, 2005 at 10:17:06 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/04/08/opinion/08fri3.html Hunger-Based Lines Lengthen at the Faith-Based Soup Kitchens By FRANCIS X. CLINES The 1,130 soup kitchen guests, as they're respectfully called, began gathering outside the church doors an hour early, curling around the corner in a long line to await a free main meal - their safety-net highlight in another day of being down and out, part of the working poor, or surviving somewhere in between. The repast, at 2,500 calories a serving, steamed aromatically: chicken à la king, rice, buttered spinach, peaches. A staff member in the nave of the building, the Church of the Holy Apostles, cued dozens of volunteer helpers: 'Ladies and gentlemen, it's showtime. Thanks be to God.' And from Ninth Avenue in Manhattan, the diners flowed in. The sight of masses of Americans gratefully chowing down on free food is indeed a show, an amazingly discreet one that is classified not as outright hunger but as 'food insecurity' by government specialists who are busy measuring the growing lines at soup kitchens and food pantries across the nation. There were 25.5 million supplicants regularly lining up in 2002; they were joined by 1.1 million more the next year. And even more arrive as unemployment and other government programs run out. Much as the diners at Holy Apostles peered ahead to see what was being dished up at the steam tables, soup kitchen administrators across the country are currently eying governments' trilevel budget season and wincing at all the politicians' economizing vows. They know that 'budget tightening' eventually means longer lines outside their doors. 'It's a desperate thing,' said the Rev. Bill Greenlaw, director of the Holy Apostles charity, one of the largest among 1,298 kitchens and pantries regularly helping more than one million residents in New York City. 'Every level of government seems to have the same mantra, that these programs are vulnerable. 'We're bracing that all three levels of government are coming down at the same time.' Most immediately, food charities are pleading against further cuts in the federal emergency food and shelter program, which directly fights hunger. Last year, 48 soup kitchens closed in the city as supplies were exhausted, and hundreds of others reported to be making do by cutting back on daily portions. Beyond that, however, administrators know that the myriad of severe program cuts looming in Washington - for everything from low-income wage supplements to health care spending for poor people - can only lead to further cuts down the revenue food chain in statehouses and city halls and, finally, longer lines of people silently begging for food. The budget debate in the Republican-run Capitol presents a Hobson's choice between the House's five-year, $30 billion-plus in program cuts for the poor and the Senate's $2.8 billion in cuts - one-tenth the pain, but focused most heavily on nutrition programs. The compromise cuts are likely to lean toward the House, levying more than their fair budget share on the poor, even as President Bush and the G.O.P. leaders argue that still more upper-bracket tax cuts are somehow justifiable. So Father Greenlaw can only turn to pleading for even more charity from the city's better-off residents. According to a survey by the New York City Coalition Against Hunger, seven out of 10 of the city's pantries and kitchens are 'faith based,' using the terminology of the Bush administration. But their besieged directors overwhelmingly warn that government, not charities, must take the lead if poverty is to be properly confronted. 'We're faith-based by the old rules, not the new ones,' Father Greenlaw carefully noted. 'We'll be feeding more guests unless and until society decides we don't have to tolerate a huge underclass in our cities.' In the meantime, the pungent scene in the nave at Holy Apostles is unabashedly hunger-based. People are being fed, not proselytized, at dining tables where the pews used to be. A midday hubbub of satiation rises up, plain as the pipes of the church organ, as the line lengthens outside.

Subject: One Hundred Years of Uncertainty From: Emma To: All Date Posted: Fri, Apr 08, 2005 at 10:15:13 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/04/08/opinion/08greene.html?pagewanted=all&position= One Hundred Years of Uncertainty By BRIAN GREENE JUST about a hundred years ago, Albert Einstein began writing a paper that secured his place in the pantheon of humankind's greatest thinkers. With his discovery of special relativity, Einstein upended the familiar, thousands-year-old conception of space and time. To be sure, even a century later, not everyone has fully embraced Einstein's discovery. Nevertheless, say 'Einstein' and most everyone thinks 'relativity.' What is less widely appreciated, however, is that physicists call 1905 Einstein's 'miracle year' not because of the discovery of relativity alone, but because in that year Einstein achieved the unimaginable, writing four papers that each resulted in deep and formative changes to our understanding of the universe. One of these papers - not on relativity - garnered him the 1921 Nobel Prize in physics. It also began a transformation in physics that Einstein found so disquieting that he spent the last 30 years of his life in a determined effort to repudiate it. Two of the four 1905 papers were indeed on relativity. The first, completed in June, laid out the foundations of his new view of space and time, showing that distances and durations are not absolute, as everyone since Newton had thought, but instead are affected by one's motion. Clocks moving relative to one another tick off time at different rates; yardsticks moving relative to one another measure different lengths. You don't perceive this because the speeds of everyday life are too slow for the effects to be noticeable. If you could move near the speed of light, the effects would be obvious. The second relativity paper, completed in September, is a three-page addendum to the first, which derived his most famous result, E = mc2, an equation as short as it is powerful. It told the world that matter can be converted into energy - and a lot of it - since the speed of light squared (c2) is a huge number. We've witnessed this equation's consequences in the devastating might of nuclear weapons and the tantalizing promise of nuclear energy. The third paper, completed in May, conclusively established the existence of atoms - an idea discussed in various forms for millenniums - by showing that the numerous microscopic collisions they'd generate would account for the observed, though previously unexplained, jittery motion of impurities suspended in liquids. With these three papers, our view of space, time and matter was permanently changed. Yet, it is the remaining 1905 paper, written in March, whose legacy is arguably the most profound. In this work, Einstein went against the grain of conventional wisdom and argued that light, at its most elementary level, is not a wave, as everyone had thought, but actually a stream of tiny packets or bundles of energy that have since come to be known as photons. This might sound like a largely technical advance, updating one description of light to another. But through subsequent research that amplified and extended Einstein's argument (see Figures 1 through 3), scientists revealed a mathematically precise and thoroughly startling picture of reality called quantum mechanics. Before the discovery of quantum mechanics, the framework of physics was this: If you tell me how things are now, I can then use the laws of physics to calculate, and hence predict, how things will be later. You tell me the velocity of a baseball as it leaves Derek Jeter's bat, and I can use the laws of physics to calculate where it will land a handful of seconds later. You tell me the height of a building from which a flowerpot has fallen, and I can use the laws of physics to calculate the speed of impact when it hits the ground. You tell me the positions of the Earth and the Moon, and I can use the laws of physics to calculate the date of the first solar eclipse in the 25th century. What's important is that in these and all other examples, the accuracy of my predictions depends solely on the accuracy of the information you give me. Even laws that differ substantially in detail - from the classical laws of Newton to the relativistic laws of Einstein - fit squarely within this framework. Quantum mechanics does not merely challenge the previous laws of physics. Quantum mechanics challenges this centuries-old framework of physics itself. According to quantum mechanics, physics cannot make definite predictions. Instead, even if you give me the most precise description possible of how things are now, we learn from quantum mechanics that the most physics can do is predict the probability that things will turn out one way, or another, or another way still. The reason we have for so long been unaware that the universe evolves probabilistically is that for the relatively large, everyday objects we typically encounter - baseballs, flowerpots, the Moon - quantum mechanics shows that the probabilities become highly skewed, hugely favoring one outcome and effectively suppressing all others. A typical quantum calculation reveals that if you tell me the velocity of something as large as a baseball, there is more than a 99.99999999999999 (or so) percent likelihood that it will land at the location I can figure out using the laws of Newton or, for even better accuracy, the laws of Einstein. With such a skewed probability, the quantum reasoning goes, we have long overlooked the tiny chance that the baseball can (and, on extraordinarily rare occasions, will) land somewhere completely different. When it comes to small objects like molecules, atoms and subatomic particles, though, the quantum probabilities are typically not skewed. For the motion of an electron zipping around the nucleus of an atom, for example, a quantum calculation lays out odds that are all roughly comparable that the electron will be in a variety of different locations - a 13 percent chance, say, that the electron will be here, a 19 percent chance that it will be there, an 11 percent chance that it will be in a third place, and so on. Crucially, these predictions can be tested. Take an enormous sample of identically prepared atoms, measure the electron's position in each, and tally up the number of times you find the electron at one location or another. According to the pre-quantum framework, identical starting conditions should yield identical outcomes; we should find the electron to be at the same place in each measurement. But if quantum mechanics is right, in 13 percent of our measurements we should find the electron here, in 19 percent we should find it there, in 11 percent we should find it in that third place. And, to fantastic precision, we do. Faced with a mountain of supporting data, Einstein couldn't argue with the success of quantum mechanics. But to him, even though his own Nobel Prize-winning work was a catalyst for the quantum revolution, the theory was anathema. Commentators over the decades have focused on Einstein's refusal to accept the probabilistic framework of quantum mechanics, a position summarized in his frequent comment that 'God does not play dice with the universe.' Einstein, radical thinker that he was, still believed in the sanctity of a universe that evolved in a fully definite, fully predictable manner. If, as quantum mechanics asserted, the best you can ever do is predict probabilities, Einstein countered that he'd 'rather be a cobbler, or even an employee in a gaming house, than a physicist.' This emphasis, however, partly obscures a larger point. It wasn't the mere reliance on probabilistic predictions that so troubled Einstein. Unlike many of his colleagues, Einstein believed that a fundamental physical theory was much more than the sum total of its predictions - it was a mathematical reflection of an underlying reality. And the reality entailed by quantum mechanics was a reality Einstein couldn't accept. An example: Imagine you shoot an electron from here and a few seconds later it's detected by your equipment over there. What path did the electron follow during the passage from you to the detector? The answer according to quantum mechanics? There is no answer. The very idea that an electron, or a photon, or any other particle, travels along a single, definite trajectory from here to there is a quaint version of reality that quantum mechanics declares outmoded. Instead, the proponents of quantum theory claimed, reality consists of a haze of all possibilities - all trajectories - mutually commingling and simultaneously unfolding. And why don't we see this? According to the quantum doctrine, when we make a measurement or perform an observation, we force the myriad possibilities to ante up, snap out of the haze and settle on a single outcome. But between observations - when we are not looking - reality consists entirely of jostling possibilities. Quantum reality, in other words, remains ambiguous until measured. The reality of common perception is thus merely a definitive-looking veneer obscuring the internal workings of a highly uncertain cosmos. Which is where Einstein drew a line in the sand. A universe of this sort offended him; he could not accept, as he put it, that 'the Old One' would so profoundly incorporate a hidden element of happenstance in the nature of reality. Einstein quipped to his quantum colleagues, 'Do you really think the Moon is not there when you're not looking?' and set himself the Herculean task of reworking the laws of physics to resurrect conventional reality. Einstein waged a two-front assault on the problem. He sought an internal chink in the quantum framework that would establish it as a mere steppingstone on the path to a deeper and more complete description of the universe. At the same time, he sought a grander synthesis of nature's laws - what he called a 'unified theory' - that he believed would reveal the probabilities of quantum mechanics to be no more profound than the probabilities offered in weather forecasts, probabilities that simply reflect an incomplete knowledge of an underlying, definite reality. In 1935, through a disarmingly simple mathematical analysis, Einstein (with two colleagues) established a beachhead on the first front. He proved that quantum mechanics is either an incomplete theory or, if it is complete, the universe is - in Einstein's words - 'spooky.' Why 'spooky?' Because the theory would allow certain widely separated particles to correlate their behaviors perfectly (somewhat as if a pair of widely separated dice would always come up the same number when tossed at distant casinos). Since such 'spooky' behavior would border on nuttiness, Einstein thought he'd made clear that quantum theory couldn't yet be considered a complete description of reality. The nimble quantum proponents, however, would have nothing of it. They insisted that quantum theory made predictions - albeit statistical predictions - that were consistently born out by experiment. By the precepts of the scientific method, they argued, the theory was established. They maintained that searching beyond the theory's predictions for a glimpse of a reality behind the quantum equations betrayed a foolhardy intellectual greediness. Nevertheless, for the remaining decades of his life, Einstein could not give up the quest, exclaiming at one point, 'I have thought a hundred times more about quantum problems than I have about relativity.' He turned exclusively to his second line of attack and became absorbed with the prospect of finding the unified theory, a preoccupation that resulted in his losing touch with mainstream physics. By the 1940's, the once dapper young iconoclast had grown into a wizened old man of science who was widely viewed as a revolutionary thinker of a bygone era. By the early 1950's, Einstein realized he was losing the battle. But the memories of his earlier success with relativity - 'the years of anxious searching in the dark, with their intense longing, their alternations of confidence and exhaustion and the final emergence into the light' - urged him onward. Maybe the intense light of discovery that had so brilliantly illuminated his path as a young man would shine once again. While lying in a bed in Princeton Hospital in mid-April 1955, Einstein asked for the pad of paper on which he had been scribbling equations in the desperate hope that in his final hours the truth would come to him. It didn't. Was Einstein misguided? Must we accept that there is a fuzzy, probabilistic quantum arena lying just beneath the definitive experiences of everyday reality? As of today, we still don't have a final answer. Fifty years after Einstein's death, however, the scales have certainly tipped farther in this direction. Decades of painstaking experimentation have confirmed quantum theory's predictions beyond the slightest doubt. Moreover, in a shocking scientific twist, some of the more recent of these experiments have shown that Einstein's 'spooky' processes do in fact take place (particles many miles apart have been shown capable of correlating their behavior). It's a stunning finding, and one that reaffirms Einstein's uncanny ability to unearth features of nature so mind-boggling that even he couldn't accept what he'd found. Finally, there has been tremendous progress over the last 20 years toward a unified theory with the discovery and development of superstring theory. So far, though, superstring theory embraces quantum theory without change, and has thus not revealed the definitive reality Einstein so passionately sought. With the passage of time and quantum mechanics' unassailable successes, debate about the theory's meaning has quieted. The majority of physicists have simply stopped worrying about quantum mechanics' meaning, even as they employ its mathematics to make the most precise predictions in the history of science. Others prefer reformulations of quantum mechanics that claim to restore some features of conventional reality at the expense of additional - and, some have argued, more troubling - deviations (like the notion that there are parallel universes). Yet others investigate hypothesized modifications to the theory's equations that don't spoil its successful predictions but try to bring it closer to common experience. Over the 25 years since I first learned quantum mechanics, I've at various times subscribed to each of these perspectives. My shifting attitude, however, reflects that I'm still unsettled. Were Einstein to interrogate me today about quantum reality, I'd have to admit that deep inside I harbor many of the doubts that gnawed at him for decades. Can it really be that the solid world of experience and perception, in which a single, definite reality appears to unfold with dependable certainty, rests on the shifting sands of quantum probabilities? Well, yes. Probably. The evidence is compelling and tangible. Although we have yet to fully lay bare quantum mechanics' grand lesson for the underlying nature of the universe, I like to think even Einstein would be impressed that in the 50 years since his death our facility with quantum mechanics has matured from a mathematical understanding of the subatomic realm to precision control. Today's technological wizardry (computers, M.R.I.'s, smart bombs) exists only because research in applied quantum physics has resulted in techniques for manipulating the motion of electrons - probabilities and all - through mazes of ultramicroscopic circuitry. Advances hovering on the horizon, like nanoscience and quantum computers, offer the promise of even more spectacular transformations. So the next time you use your cellphone or laptop, pause for a moment. Recognize that even these commonplace devices rely on our greatest, yet most puzzling, scientific achievement and - as things now stand - tap into humankind's most supreme assault on the idea that reality is what we think it is. Brian Greene, a professor of physics and mathematics at Columbia, is the author of “The Elegant Universe,’’ and, most recently, “The Fabric of the Cosmos.”

Subject: Cheap rent on its way!! From: Pete Weis To: All Date Posted: Fri, Apr 08, 2005 at 10:14:57 (EDT) Email Address: Not Provided Message: Raymond James must be losing out on annuity commissions and stock investing clients as the herd heads for real estate. Get along little doggies!! From the Miami Herald: Posted on Thu, Apr. 07, 2005 The specter of a South Florida real estate bust This has the making of a ghost story. As night snuffed out the last remnants of twilight in Fort Lauderdale, I looked up at the tall new residential tower by the New River and shuddered. It was a 31-story tower of darkness. Lights shone from no more than a dozen of the 315 condos. The rest were a study in black windows and empty balconies. As if the condo dwellers were phantoms. But are they spectral beings? Or just speculators? Speculation madness has gripped the real estate market in South Florida, particularly the high-rise condos going up along the beaches and in the old coastal urban centers. Real estate analysts estimate that anywhere from 50 to 75 per cent of our new luxury condos are being scarfed up by high stakes real estate gamblers. Last month, Raymond James & Associates warned that ''anecdotal reports'' indicated speculators and investors accounted for 85 per cent of Miami high-rise condo sales. No one actually knows, said Michael Y. Cannon, managing director of Integra Building Resources' Florida operation. Cannon, who predicted condo bust of the early '80s, said this time around the data is either sparse or a few months old and not of much use in market careening ahead at such reckless speed. But Cannon knows that we're in the midst of a speculation epidemic. He calls it ''hyper flipperism,'' as buyers put up their 20 percent for condos under construction and try to flip the contracts, at a profit, before the buildings are completed. There are reports of condos changing ownership two or three times without an actual human being ever moving in. OMINOUS WARNINGS Robert Shiller, the Yale economist who warned that the late 1990s tech-fueled stock market was overheated, overpriced and in for a brutal fall, said Wednesday on National Public Radio that the U.S. housing market was now nurturing that same reckless abandon. He said the danger was particularly acute in what he called the glamor markets -- like South Florida. And Shiller warned that this bubble, too, may burst. Such talk casts a peculiar light over the raging debate about new residential construction in downtown Fort Lauderdale. The Broward County Commission reacted with something like outrage last month when the city commission requested approval for another 13,000 new housing units in the urban core. The county reduced the number to 3,000. There were sharp words about so much traffic on the highways, so many more children in the schools and other stresses on the infrastructure if the city got another 13,000 units. But phantoms don't drive cars. Ghosts don't pack classrooms. If those 13,000 new units were to be built, along with the 45,000 new luxury units coming on line in Dade County, the big problem might be avoiding speculators as they hurled themselves from the balconies of their overpriced high-rise condos. HOUSING SOLUTION? If nothing else, when the bubble bursts, South Florida will have a ready-made solution to its affordable housing problem. After the big bust in the 1980s, a regular Joe could land himself a luxury high-rise condo on Miami's Brickell Avenue for 60 grand. I wonder if we're supposed to feel any sorrier for flippers snared in this real estate Ponzi scheme than, say, chumps who gamble away their paychecks at the Hard Rock Casino. But Shiller warns in his book Irrational Exuberance, updated to include the current real estate madness, that when they start abandoning their 20 percent deposits en masse, it could mean trouble for all of us. ``The bad outcome could be that eventual declines would result in a substantial increase in the rate of personal bankruptcies, which could lead to a secondary string of bankruptcies of financial institutions as well. ``Another long-run consequence could be a decline in consumer and business confidence, and another, possibly worldwide, recession.'' Suddenly, our little ghost story turns very, very scary.

Subject: Indian Call Center Employees Hack US Bank Accounts From: johnny5 To: All Date Posted: Fri, Apr 08, 2005 at 07:39:08 (EDT) Email Address: johnny5@yahoo.com Message: http://slashdot.org/articles/05/04/08/061245.shtml?tid=98&tid=172 Posted by CowboyNeal on Friday April 08, @05:49AM from the easy-money dept. The Ascended One writes 'Call center employees working for an Indian software company, MSource, supposedly used confidential client information to transfer client funds to themselves. The alleged perpetrators used the personal information of four NY-based clients to transfer ~$350,000 (Rs. 1.5 crores) in their names, a large sum in Indian currency. They were caught after the victims alerted the bank officials in the US, who then traced the crime to the Indian city of Pune. While the name of the bank has not been revealed, the article indicates that the bank in question is Citibank.'

Subject: Barro and Social Security From: Yann To: All Date Posted: Fri, Apr 08, 2005 at 07:09:35 (EDT) Email Address: Not Provided Message: http://post.economics.harvard.edu/faculty/barro/bw/bw05_04_04.pdf

Subject: Social Security is Fine From: Jennifer To: Yann Date Posted: Fri, Apr 08, 2005 at 07:25:26 (EDT) Email Address: Not Provided Message: The end of Social Security would be a tragedy, but this is what is wished for with privatizing plans. Social Security is wonderful and fine.

Subject: Caution From: Terri To: All Date Posted: Fri, Apr 08, 2005 at 05:49:40 (EDT) Email Address: Not Provided Message: Among analysts I trust there is more expression of caution than I can recall, sadly more caution than in 2000 from what I can tell. Possibly the difference is energy pricing. Possibly it is general valuation. But, where were the bears in 2000? I can not tell.

Subject: Realism From: Terri To: Terri Date Posted: Fri, Apr 08, 2005 at 06:30:28 (EDT) Email Address: Not Provided Message: Well, this is a time for caution. That is what realism dictates, and has nothing to do with worry or hope, for we cvan always be hopeful.

Subject: Re: Realism From: johnny5 To: Terri Date Posted: Fri, Apr 08, 2005 at 07:35:12 (EDT) Email Address: johnny5@yahoo.com Message: Well spoken Terri, hope and optimism will always overcome the paralysis of worry.

Subject: Speculation From: Terri To: All Date Posted: Fri, Apr 08, 2005 at 05:31:53 (EDT) Email Address: Not Provided Message: What is interesting month after month is the evident lack of volatility in any and every sector of stock, bond, and currency markets. In the currency market, though there must be huge private positions against the dollar, the dollar moved gently when it was weakening and is moving gently in strengthening. Where then are the speculators so many economists including Paul Krugman properly worried about?

Subject: Market Patterns From: Terri To: Terri Date Posted: Fri, Apr 08, 2005 at 05:41:05 (EDT) Email Address: Not Provided Message: Why is there so little evident speculation in markets that bearish analysts are so worried about? The stock and bond markets are about even for the year, while the dollar gradually strengthens against the Euro and Yen. Energy and materials and utilities sectors are strong. Health care look to be modestly strengthening. All else are about even to mildly negative. I have not known such an extended mild market period. REITs are much complained about, but even REITs are only mildly weak.

Subject: History will not repeat will it?? From: johnny5 To: All Date Posted: Thurs, Apr 07, 2005 at 16:38:24 (EDT) Email Address: johnny5@yahoo.com Message: http://www.siliconinvestor.com/readmsgs.aspx?subjectid=54696&msgnum=27090&batchsize=10&batchtype=Next Daily Reckoning compares World War I to our modern day economic war with China This past weekend marked an important anniversary. On April 2nd, 1917, Thomas Woodrow Wilson stood before a joint session of Congress. 'We must put excited feeling away,' said the president, and then launched into one of the greatest mob-inciting harangues ever delivered. Wilson was urging Congress to declare war against Germany. The Huns, he said, were governed by a 'selfish and autocratic power.' What they had done to justify trying to kill them was a matter of great dispute. Robert 'Fighting Bob' La Follette, senator from Wisconsin, thought they hadn't done much of anything. They were accused of bayoneting babies and cutting off the arms of boys in Belgium. But when a group of American journalists went on a fact-finding mission to get to the truth of the matter, they could find no evidence of it. Clarence Darrow, the lawyer who made a monkey out of William Jennings Bryan in the Scopes Trial, said he would offer a $1,000 reward to anyone who came forward whose arm had been cut off by the Germans. A thousand dollars was a lot of money back then... for this was when the Fed had barely settled down to work... equal to about $20,000 today. Still, no one claimed the money. The Germans had also sunk a few ships. But there was a war going on in Europe and Germany had tried to impose a blockade of English ports with the only weapon it had, submarines. You took a risk trying to sail into England, especially if your ship was carrying ammunition, and everyone knew it. The English were blockading German ports too. The difference was that the English had a bigger navy and were better at it. Try to run their blockade and you were almost certain to die; so few ships dared. It was a long and complicated story. In retrospect, the United States was better off minding its own business. Robert La Follette knew it. He told anyone who would listen that the struggle in Europe was best understood as a political and commercial rivalry. The Germans were challenging the English everywhere. The German economy was growing faster. While Britain seemed to be peaking out, the Germans were building new factories and developing new markets. In Africa, German colonialists were menacing English territories; in Europe, German manufacturers were taking market share from their English competitors. On the high sees, the German navy was growing more competent. And so, the English and the Germans were having it out. Leave them to it, said 'Fighting Bob.' But Woodrow Wilson had his own ideas. 'Civilization itself' seemed in the balance, he told the politicians. 'We shall fight for the things we have always carried in our hearts - for democracy, for the right of those who submit to authority to have a voice in their own governments, for the rights and liberties of small nations, [he did not mention, Mexico, Puerto Rico, and Nicaragua - countries to which he had already sent troops to meddle in internal political issues], for a universal dominion of right by such a concert of free peoples as shall bring peace and safety to all nations and make the world itself at last free.' When he finished his speech, most of the yahoos rose to their feet and cheered. Tears streamed down many jowly faces. At last, the United States was going to war! Two million people had already died in the war. For what reason, no one quite knew. Wilson had to resort to bombast and balderdash to try to explain it. But now the happy moment had come. Now, Americans would get to die too. Hallelujah! No one recalled the weekend's anniversary in the papers. Too bad. It makes us think of America's situation today. Are we not in Britain's shoes? Are we not facing our own new rival - China? Market cycles... and historical cycles... are like women [and here, dear reader, you may want to write this down in order to quote us correctly]... they are all the same and yet completely different. When prices are high, we know they must get down - somehow, someway, some day. When a nation is riding high... it too must someday sit lower in the saddle. For all things age. All things change. All things go away, in the end. But how and when they get where they are going is as varied, charming and mysterious as every woman we have ever met. Just something to think about, dear reader... .

Subject: Re: History will not repeat will it?? From: Setanta To: johnny5 Date Posted: Fri, Apr 08, 2005 at 04:57:33 (EDT) Email Address: Not Provided Message: Intruiging. History has proved, however, that the US was right to enter the war against the Axis. Would the US have be safer with Japanese hedgemony in the Pacific and Nazi hedgemony in Europe? It has to be remembered that Germany was not too far behind the US in developing the atomic bomb and all the Red Army tanks and troops could not have stopped it then. If history draws parallels then the US should start teaching its troops Chinese. Personally, being from a neutral country, I believe in the idea of the UN (founded precisely so the Great Powers never again march on eachother). If Bush stopped humiliating it and holding it in contempt, and in essence saying 'its my way or the highway' I think the UN would be more relevant in the real world today. At the moment its an object of ridicule and has no more power than a big charitable foundation. It should be more, it should be THE forum for discussing global matters.

Subject: Hated Chinese Cotton From: johnny5 To: johnny5 Date Posted: Thurs, Apr 07, 2005 at 16:48:13 (EDT) Email Address: johnny5@yahoo.com Message: http://www.siliconinvestor.com/readmsgs.aspx?subjectid=54696&msgnum=27090&batchsize=10&batchtype=Next West blocks China's cotton route BEIJING - Challenges loom over Chinese apparel exports as the United States and the European Union seem to be initiating steps to restrict this trade as demands from domestic producers get shriller. While the US government took the first step on Tuesday toward restricting imports of low-priced pants, shirts and underwear from China in response to pressure from its textile industry, the EU's executive commission is scheduled to present on Wednesday a framework for holding back the flood of Chinese textile imports. US trade officials said they would 'self-initiate' investigations to see whether to curb the runaway imports that have begun to gravely hurt the domestic industry. In a written statement, Commerce Secretary Carlos Gutierrez said the move is the 'first step' toward determining whether the US market is indeed being disrupted, and whether the disruption can be attributed to Chinese imports. Gutierrez said the Bush administration 'is committed to enforcing trade agreements and to providing assistance to the domestic textile and apparent industry, consistent with our international rights and obligations'. European Commission spokeswoman Francoise Le Bail said EU trade commissioner Peter Mandelson would unveil 'the way the safeguard clause could be activated' under WTO rules to protect the European textile industry from Chinese imports, but insiders said import blockades wouldn't be put up right away. European textile association Euratex has been lobbying with Brussels to use the temporary safeguard measures allowed under WTO rules as Chinese imports have surged since the beginning of the year. The EU had earlier assured China's textile firms that it would not follow Turkey's lead by imposing quotas on Chinese imports. Mandelson's spokeswoman, Claude Veron-Reville, had said such safeguards would only be used as a last resort. China's textile industry grew increasingly concerned that the EU might take such measures in light of the call from Euratex for action against China. There were reports that at a recent closed-door meeting, EU trade officials and politicians discussed whether Turkey's action against China should lead the EU to do likewise. Turkey decided in December to impose quotas on 42 categories of Chinese textile imports, just ahead of the lifting of global quotas. The US Commerce Department's push to cap Chinese textile imports was met with a sharp rebuke from the Chinese side. 'The United States has overprotectionist, irrational and unreasonable arrangements,' said Qin Gang, a spokesman for the Chinese Foreign Ministry. 'This is unfair,' he said, and added that to simply blame exporting countries, especially China, for the problems of the American textile industry is unreasonable. American consumer groups are equally dismayed. They believe new quotas will lead to higher prices, imposing a hidden tax on consumers. Textile groups and their allies in US Congress have been pressuring the Bush administration to slap emergency curbs on China, which, they say, will overrun the US market following the end of the decades-old quota system on December 31, 2004. The Chinese government agreed when it joined the WTO in 2001 to let the US and other countries impose 'safeguard' restrictions on its clothing and textile exports when they surge to 'market-disrupting levels'. That provision, which expires at the end of 2008, allows countries to limit the growth in imports from China to just 7.5% above the previous year. Textile quotas had seriously limited the trade. China, always a big exporter of trousers, was severely handicapped by the quota system. The US set China a quota of 5.5 million square meters, compared to 7.82 million for Bangladesh and 10.18 million for Vietnam. When the quota system ended, it was predicted that China would be the principal beneficiary of freer trade. Textile imports from China were expected to surge following the expiration of quotas controlling worldwide trade in textile and apparel products. China itself had warned that a rise was inevitable and even imposed export tariffs in a bid to address international concerns. But the increase in export volumes in the first three months of the year has proved too sharp for the West to ignore. Compared with the first quarter of 2004, US data for January through March 2005 shows a 1,521% jump in Chinese cotton trouser imports and a 1,258% jump for knit shirts. Overall textile and apparel imports from China in the first three months of the year totaled 2.86 billion square meters, up 62.5% year-on-year. China exported nearly US$1 billion of jeans, sheets, fabric and other textile goods to the US in February alone, compared with $424 million a year ago, according to Columbia's Global Trade Information Services Inc. The 125% increase in February follows a jump of 75% in January. Predictably, this flood of Chinese cloth is reflected in the job-loss figures. Some 381,300 textile and apparel industry jobs are estimated to have been lost in the US since January 2001, according to the American Manufacturers Trade Action Council, as 17 textile mills closed down in the first quarter itself. Since 1990, more than 1 million US jobs have been lost in the textile and apparel industries, including about 700,000 apparel jobs. One beneficiary from the latest Western hurdles to Chinese apparel could be India. The US and the EU are India's biggest markets for textile exports, but Chinese competition has severely tied down Indian exports in most product categories ever since the global textile trade was opened up. Though many leading Western labels have been outsourcing from India after the lifting of the quotas, the Indian industry is still struggling to find a foothold in the international market amid the deluge of Chinese products. (Asia Pulse/XIC/PTI) http://www.atimes.com/atimes/China/GD07Ad09.html

Subject: Impossible trade wars From: johnny5 To: All Date Posted: Thurs, Apr 07, 2005 at 15:44:30 (EDT) Email Address: johnny5@yahoo.com Message: Some people like noam chomsky do not TRUST what we read or are told or led to believe, they critically think for themselves and invest accordingly - contrary to the herd. This is like Warren no? He missed the bubble profits of 2000 but missed the bust too. Other people read the NY TIMES or watch Bill O'reilly and follow what the current pundits say to form mass thought in society. Soros follows this HERD mentality and invests accordingly - how did he do with the boom and bust in 2000? From what I read he did better than warren, squeezing more money from Mr. Market with his timing strategis on mass mentality than warren. Now Terri just last month you are saying things like IMPOSSIBLE when relating to trade wars with china - but if mass psychology changes - I predict you will react - this makes you a reactionary investor riding the wave - more like Soros I think - not an individual critical thinker that has little trust like noam chomsky - while me and pete were saying very negative things you kept saying IMPOSSIBLE and I can only think you believed that because mass psychology thought it was IMPOSSIBLE - this can be profitable as is with Soros - but you must understand the nature of the beast - don't get caught trying to wake up from the lemmings when they are pushing you over the cliff my friend. Snow says China should allow market to value currency - Thursday, April 7, 2005 5:43:06 PM http://www.afxpress.com WASHINGTON (AFX) - China should allow the free market to set the value of its yuan currency, and end its peg to the dollar, Treasury Secretary John Snow said during a congressional hearing Thursday. 'I'd like to see them move to a market system,' Snow told senators during a Senate Banking Committee hearing on government-sponsored housing enterprises Fannie Mae and Freddie Mac. Snow was responding to criticism from Sen. Charles Schumer, R-N.Y., over the Bush administration's handling of economic relations with China. Schumer and Rep. Lindsey Graham, R-S.C., introduced an amendment Wednesday to a State Department funding bill that would slap a 27.5% tariff on Chinese imports if China doesn't revalue its currency within 180 days. Snow said the U.S. trade deficit with China is 'far larger than we'd like to see it,' but argued that financial diplomacy with Beijing, not measures like Schumer's and Graham's, will prove effective. 'We're all waiting, Mr. Secretary,' Schumer responded. Meanwhile, Reps. Duncan Hunter, R-Calif., and Tim Ryan, D-Ohio, were scheduled to introduce legislation Thursday that supporters said will use existing trade laws, compliant with World Trade Organization rules, to address China's currency peg. Critics have argued Schumer's proposal violates WTO rules.

Subject: Fed not BEHIND the curve? From: johnny5 To: johnny5 Date Posted: Thurs, Apr 07, 2005 at 15:49:53 (EDT) Email Address: johnny5@yahoo.com Message: More on proactive versus reactive! Fed´s Santomero says Fed not behind the curve Thursday, April 7, 2005 6:24:04 PM http://www.afxpress.com Fed's Santomero says Fed not behind the curve WASHINGTON (AFX) -- The gradual pace of Fed tightening has not left the Fed behind the curve on inflation, said Anthony Santomero, president of the Philadelphia Federal Reserve Bank. Speaking to reporters after a speech on Thursday, Santomero said the Fed has to be vigilant against inflation as the U.S. economy moves into the fourth year of its expansion, but it is too early to say that inflationary risks have clearly shifted to the upside. The U.S. labor market is improving at a moderate pace. The spike in oil prices has slowed consumer spending, but has not altered his view for robust economic growth in 2005.

Subject: Pizza Inflation! BUMBER dude! From: johnny5 To: johnny5 Date Posted: Thurs, Apr 07, 2005 at 16:10:08 (EDT) Email Address: johnny5@yahoo.com Message: Oh CRAP! This hurts me and all the college kids - we just got A LOT POORER - INFLATION indeed! 10% RISE http://www.washingtonpost.com/wp-dyn/articles/A32846-2005Apr6.html At Your Door? A Dollar More By Caroline E. Mayer Washington Post Staff Writer Thursday, April 7, 2005; Page E01 Free pizza delivery may soon amount to pie in the sky. Next week, local Domino's Pizza stores will begin charging a $1 delivery fee for any order. There's no other way to slice the rising costs the chain has to pay for fuel, rent, insurance and food, especially cheese, the prices of which are 'at record highs,' said David Carraway, president of Team Washington Inc., which owns 59 Domino's stores in the Washington area. 'Everything is going up. It's not a decision we're happy with, but it's the reality of what we're dealing with,' Carraway said. He added that some rivals are already charging the fee. 'I wouldn't be surprised if our competitors are not all doing it shortly.' Pizza Hut spokeswoman Patty Sullivan said Washington area stores have been charging a delivery fee, averaging about 75 cents, for a few years. Local Papa John's stores are not. However, some of the franchises in other areas are imposing a $1 to $1.50 delivery fee. 'If high fuel prices continue, more markets, including Washington, might consider it,' said Papa John's spokesman Chris Sternberg. Nationwide, about 45 percent of all Domino's stores charge a delivery fee, according to company spokeswoman Holly Ryan. Carraway said the current competitive pizza market makes it impossible to cover costs by raising the price of the pizza. 'Everybody's got deals, everybody's trying to outdo each other,' and consumers follow the lowest prices, he said. One Domino's store in Silver Spring started charging the dollar delivery fee on Tuesday, ahead of schedule, Carraway said. Government employee William Eck first learned of the surcharge when he ordered his usual Tuesday special: two large cheese pizzas for the price of one. He said he was surprised and angry when he learned why his order would cost $12.50 instead of $11.50. 'Their promotion was always for free delivery. I guess it's not free anymore.' Carraway said it has been about 12 years since the chain promised free delivery, or a discount if the order wasn't delivered within 30 minutes. 'Some people still think we have that, but that's gone too,' he said. From now on, Eck said, when it comes to his regular pizza order, 'I will be picking it up.'

Subject: Imf says OIL shocked permanently! From: johnny5 To: johnny5 Date Posted: Thurs, Apr 07, 2005 at 17:05:06 (EDT) Email Address: johnny5@yahoo.com Message: My friends, where is the value? What will starving poor people value 10 years from now - or 20 years from now? What will rich fat people value 10 years from now or 20? http://news.ft.com/cms/s/a3b6a0c2-a792-11d9-9744-00000e2511c8.html IMF warns on risk of ‘permanent oil shock’ By Javier Blas in London Published: April 7 2005 20:02 | Last updated: April 7 2005 20:02 The world faces “a permanent oil shock” and will have to adjust to sustained high prices in the next two decades, the International Monetary Fund said on Thursday in the starkest official warning yet about the long-term outlook for energy supplies. Predicting surging demand from emerging countries and limited new supplies from outside the Organisation of the Petroleum Exporting Countries after 2010, Raghuram Rajan, IMF chief economist, said: “We should expect to live with high oil prices.” “Oil prices will continue to present a serious risk to the global economy,” he added. The IMF forecast in its World Economic Outlook that crude would cost $34 a barrel in 2010 in today's money and would rise to $39-$56 a barrel in 2030. The predicted prices are well above market and oil industry expectations. They are also much higher than the latest long-term forecast from the International Energy Agency, the oil watchdog, of real oil prices of $27 a barrel in 2010 and $34 a barrel in 2030. “The shock we see is a permanent shock that is going to continue... and countries need to adjust to that,” said David Robinson, deputy IMF chief economist. US warns of need for more Opec production Opec will need to increase production further to balance the oil market in the second half of the year, the US government said. The IMF called on emerging countries in Asia, which this year would account for 40 per cent of the increase in oil demand, to curb their fuel subsidies. Several countries in the region, including China, Indonesia and Malaysia, have recently increased petrol prices in an attempt to reduce consumption. The IMF based its forecast on a sharp rise in global oil demand, particularly from increased vehicle ownership in China, and non-Opec production reaching a plateau around 2010. It expects oil demand to grow at a yearly rate of 2.1m barrels a day above the 1.5m b/d the market considers sustainable to reach 138.5m b/d in 2030. Some analysts are sceptical about the IMF's demand and projections, pointing out that no other international energy body shares its view. But the IMF's report paints a gloomy picture for energy consumers: “With global dependence on oil production from Opec countries rising, much would depend on Opec supply response; most likely however, there would be growing upside risk to prices.” It estimates that the cartel, which controls 40 per cent of global oil production, would need to invest about $350bn to 2030 in new installations. The IMF warning came as the US Department of Energy on Thursday raised its oil price forecast in 2005 and 2006 to about $55 a barrel, up more than $6 from last month. US crude futures were flat in late afternoon trade on Thursday at $55 a barrel.

Subject: Soros-'belief alters facts' - dont cause worry! From: johnny5 To: All Date Posted: Thurs, Apr 07, 2005 at 15:10:19 (EDT) Email Address: johnny5@yahoo.com Message: http://www.siliconinvestor.com/readmsgs.aspx?subjectid=54696&msgnum=27039&batchsize=10&batchtype=Next Where Buffett seeks to buy $1 for 40 or 50 cents, Soros is happy to pay $1, or even more, for $1 when he can see a change coming that will drive that dollar up to $2 or $3. To Soros, our distorted perceptions are a factor in shaping events. As he puts it, 'what beliefs do is alter facts' in a process he calls reflexivity, which he outlined in his book The Alchemy of Finance. For some, like the trader Paul Tudor Jones, the book was 'revolutionary'; it clarified events 'that appeared so complex and so overwhelming,' as he wrote in the foreword. Through the book Soros also met Stanley Druckenmiller who sought him out after reading it, and eventually took over from Soros as manager of the Quantum Fund. To most others, however, the book was impenetrable, even unreadable, and few people grasped the idea of reflexivity Soros was attempting to convey. Indeed, as Soros wrote in the preface of the paperback edition, 'Judging by the public reaction...I have not been successful in demonstrating the significance of reflexivity. Only the first part of my argument - that the prevailing bias affects market prices - seems to have registered. The second part - that the prevailing bias can in certain circumstances also affect the so-called fundamentals and changes in market prices cause changes in market prices - seems to have gone unnoticed.' Changes in market prices cause changes in market prices? Sounds ridiculous. But it's not. To give just one example, as stock prices go up, investors feel wealthier and spend more money. Company sales and profits rise as a result. Wall Street analysts point to these 'improving fundamentals,' and urge investors to buy. That sends stocks up further, making investors even wealthier, so they spend even more. And so on it goes. This is what Soros calls a 'reflexive process' - a feedback loop: a change in stock prices has caused a change in company fundamentals which, in turn, justifies a further rise in stock prices. And so on. You have no doubt heard of this particular reflexive process. Academics have written about it; even the Federal Reserve has issued a paper on it. It's known as 'The Wealth Effect.' Reflexivity is a feedback loop: perceptions change facts; and facts change perceptions. As happened when the Thai baht collapsed in 1997. In July 1997 the Central Bank of Thailand let its currency float. The bank expected devaluation of around 20%; but by December the baht collapsed from 26 to the U.S. dollar to over 50, a fall of more than 50%. The bank had figured out that the baht was 'really worth' around 32 to the dollar. Which it may well have been according to theoretical models of currency valuation. What the bank failed to take into account was that floating the baht set in motion a self-reinforcing process of reflexivity that sent the currency into free-fall. Thailand was one of the 'Asian Tigers,' a country that was developing rapidly and was seen to be following in Japan's footsteps. Fixed by the government to the U.S. dollar, the Thai baht was considered a stable currency. So international bankers were happy to lend Thai companies billions of U.S. dollars. And the Thais were happy to borrow them because U.S. dollar interest rates were lower. When the currency collapsed, the value of the U.S. dollar debts companies had to repay suddenly exploded...when measured in baht. The fundamentals had changed. Seeing this, investors dumped their Thai stocks. As they exited, foreigners converted their baht into dollars and took them home. The baht crumbled some more. More and more Thai companies looked like they would never be able to repay their debts. Both Thais and foreigners kept selling. Thai companies cut back and sacked workers. Unemployment skyrocketed; workers had less to spend - and those who still had money to spend held onto it from fear of uncertainty. The Thai economy tanked...and the outlook for many large Thai companies, even those with no significant dollar debts, began to look more and more precarious. As the baht fell, the Thai economy imploded - and the baht fell some more. A change in market prices had caused a change in market prices. For Soros, reflexivity is the key to understanding the cycle of boom followed by bust. Indeed, he writes, 'A boom/bust process occurs only when market prices...influence the so-called fundamentals that are supposed to be reflected in market prices.' His method is to look for situations where 'Mr. Market's' perceptions diverge widely from the underlying reality. On those occasions when Soros can see a reflexive process taking hold of the market, he can be confident that the developing trend will continue for longer, and prices will move far higher (or lower) than most people using a standard analytical framework expect. Soros applies his philosophy to identify a market trend in its early stages and position himself before the crowd catches on. In 1969 a new financial vehicle, real estate investment trusts (REITs), attracted his attention. He wrote an analysis - widely circulated at the time - in which he predicted a 'Four Act' reflexive boom/bust process that would send these new securities sky-high - before they collapsed. Act I: As bank interest rates were high, REITs offered an attractive alternative to traditional sources of mortgage finance. As they caught on, Soros foresaw a rapid expansion of the number of REITs coming to market. Act II: Soros expected that the creation of new REITs, and expansion of existing ones would pour floods of new money into the mortgage market, causing a housing boom. That would, in turn, increase the profitability of REITs and send the price of their trust units skyrocketing. Act III: To quote from his report, 'The self-reinforcing process will continue until mortgage trusts have captured a significant part of the construction loan market.' As the housing boom slackened, real estate prices would fall, REITs would hold an increasing number of uncollectible mortgages - 'and the banks will panic and demand that their lines of credit be paid off.' Act IV: As REIT earnings fall, there would be a shakeout in the industry...a collapse. Since 'the shakeout is a long time away,' Soros advised there was plenty of time to profit from the boom part of the cycle. The only real danger he foresaw 'is that the self-reinforcing process [Act II] would not get under way at all.' The cycle unfolded just as Soros had expected, and he made handsome profits as the boom progressed. Having turned his attention to other things, over a year later after REITs had already begun to decline, he came across his original report and 'I decided to sell the group short more or less indiscriminately.' His fund took another million dollars in profits out of the market. Soros had applied reflexivity to make money on the way up and the way down. To some, Soros's method may appear similar to trend-following. But trend-followers (especially chartists) normally wait for a trend to be confirmed before investing. When the trend-followers pile in (as in 'Act II' of the REIT cycle) Soros is already there. Sometimes he would add to his positions as the trend-following behavior of the market increased the certainty of his convictions about the trend. But how do you know when the trend is coming to an end? The average trend-follower can never be sure. Some get nervous as their profits build, often bailing out on a bull market correction. Others wait until a change in trend is confirmed - which only happens when prices have passed their highs and the bear market is under way. But Soros's investment philosophy provides a framework for analyzing how events will unfold. So he can stay with the trend longer, and take far greater profits from it than most other investors. And, as in the REIT example, profit from both the boom and the bust. Soros's theory of reflexivity is his explanation for Mr. Market's manic-depressive mood swings. In Soros's hands it becomes a method for identifying when the mood of the market is about to change, for enabling him to 'read the mind of the market.' Regards, Mark Tier for The Daily Reckoning

Subject: Realism From: Terri To: johnny5 Date Posted: Fri, Apr 08, 2005 at 07:27:10 (EDT) Email Address: Not Provided Message: Again, fine considered realistic posts.

Subject: Re: Soros-'belief alters facts' From: Setanta To: johnny5 Date Posted: Fri, Apr 08, 2005 at 04:39:15 (EDT) Email Address: Not Provided Message: The great PK himself has a few choice words to say about Soro's idea of Reflexivity...however he does agree that Soros has some important points that should be listened to. Published a long time ago in the NYT. SORO'S PLEA SYNOPSIS: The strange case of George Soros, a speculator who hates speculation. Ponders his case for restriction, arguing that overall benefits are worth some inefficency. Recently I found myself in not one but two meetings that also included George Soros, and I was inspired to furious intellectual effort. You see, I'm convinced it's possible to construct a terrific palindrome centering on the famous investor's reversible last name. Unfortunately, the best I've come up with so far is an imaginary conversation wherein I ask the great man what to make of the gyrations of Japan's exchange rate, and he tells me it means we must introduce a unified global currency: 'Yen omen, O Soros?'; 'One money!' Of course, that's not what Soros is really saying. His actual message--expounded in a series of articles and speeches over the past two years, and soon to be restated in his forthcoming book, The Crisis of Global Capitalism--might be described as 'Stop me before I speculate again!' And considering the source--a man whose funds have attacked currencies around the world, from the British pound to the Hong Kong dollar--it's a message that needs to be taken seriously. I'm not necessarily suggesting you read Soros in the original. It's not that he writes like a businessman; it's that he writes like a Central European intellectual, which is far worse. Someone should tell him it doesn't help his case to dress up fairly simple ideas in pretentious philosophical language. In particular, many people have argued that financial markets tend toward boom-and-bust cycles, that investors tend to engage in herd behavior, and that financial systems are subject to self-justifying panics. But such observations are not enough for Soros: For him they must serve as illustrations of the general principle of 'reflexivity,' whichI take to mean that human perceptions both affect events and are themselves affected by them. Gosh, I never thought of that! But if reading Soros isn't exactly a pleasure, he is nonetheless saying something important--namely, that the rules of the game under which he and others like him have prospered are dangerous for society as a whole. This is not what you'd expect to hear from a speculator, or for that matter anyone in the financial world. The typical view from Wall Street or London's City is that left to its own devices, the global capital market will always reward economic virtue and punish only vice. As one Wall Street Journal op-ed writer enthused, 'Foreign-exchange markets are a continuing, minute-by-minute election in which everyone with wealth at stake, including residents of the country, gets to vote, an election in which the winners are those countries whose governments have the most pro-growth policies.' Accordingly, if these days national economies seem to be falling like dominoes, it must be their own fault--or that of the IMF, which many conservatives see as having a demonic ability to wreak economic havoc with very little actual money. (Has anyone noticed just how small a player the IMF really is? That $18 billion U.S. contribution to the IMF, which has finally been agreed upon after countless Administration appeals and conservative denunciations, is about the same size as the short position that Soros single-handedly took against the British pound in 1992--and little more than half the position Soros' Quantum Fund, Julian Robertson's Tiger Fund, and a few others took against Hong Kong last August.) Soros, however, believes that financial markets are 'inherently unstable,' that left unregulated they inevitably produce recurrent crises. And he should know. What would a defender of free capital markets say in response to Soros? True believers would doubtless be unshaken. Never mind who Soros is and what he's done, they would claim that people who worry about destabilizing speculation just don't understand how markets work. Others, however, would agree that financial markets are inherently unstable, but argue that this is a price worth paying, that the presumed huge returns from free markets outweigh the risks. And indeed that was the position I myself took a year and a half ago, when Soros and I staged a fundraising debate on global capitalism for the Council on Foreign Relations. (Yes, I was pro, he was anti.) But events since May 1997 have certainly reinforced his position, and led those of us who still believe in the extraordinary merits of free markets in goods, services, and long-term capital to search for ways to protect those merits from the destructive effects of destabilizing hot money flows. Rather oddly, I can't quite figure out what Soros himself thinks we should do. In general, for a businessman his approach seems peculiarly abstract and philosophical: He seems far more concerned with denouncing laissez-faire ideology than with proposing workable ways to regulate markets without strangling them. (Maybe we need a super-IMF, big enough to take on the Soroi of this world. Or maybe, horrors, we actually need to control capital movements.) But if Soros doesn't have the answer, at least he asks the right question. Next time somebody tells you that the global capital market is our friend, that only economies that deserve it get punished, tell him to tell it to George Soros.

Subject: Great and wonderful From: johnny5 To: Setanta Date Posted: Fri, Apr 08, 2005 at 07:38:36 (EDT) Email Address: johnny5@yahoo.com Message:

Subject: I Remember From: Terri To: Setanta Date Posted: Fri, Apr 08, 2005 at 05:15:36 (EDT) Email Address: Not Provided Message: Thank you, I had forgotten this.

Subject: Interesting Posts From: Emma To: johnny5 Date Posted: Thurs, Apr 07, 2005 at 20:45:05 (EDT) Email Address: Not Provided Message: Interesting posts. Thanks.

Subject: Re: Interesting Posts From: Terri To: Emma Date Posted: Thurs, Apr 07, 2005 at 21:40:15 (EDT) Email Address: Not Provided Message: Well done.

Subject: The pillar of our economy From: Pete Weis To: All Date Posted: Thurs, Apr 07, 2005 at 15:06:37 (EDT) Email Address: Not Provided Message: Real estate’s ‘dirty little secret’ ‘Appraisal inflation’ a worry for housing experts By Jane Wells Reporter CNBC Updated: 6:45 p.m. ET April 6, 2005 It is often referred to as “appraisal inflation” and it could be the dirty little secret of the housing industry. The practice — when real estate appraisers bend the numbers to satisfy clients and stay in business — is a growing problem, according to real estate experts. Appraisers say there is pressure on them to inflate home values, and there is concern that if people pay too much for their homes it could lead to more foreclosures if housing prices tumble. And banks could be left holding the bag. Data show the problem is widespread. A recent survey of 500 appraisers by the October Research Group, a provider of news and information to the real estate services industry, found that 55 percent of them personally feel pressured by sellers, agents, and even lenders to inflate home values by 10 percent. And one-third of the appraisers surveyed said they fear losing business if they don’t comply. Jonathan Miller, CEO of Miller Samuel, an appraisal company in Manhattan, said he thinks 75 percent of appraisals are inflated. And Miller thinks honest appraisers are leaving the business as a result. Congress recently introduced a bill to curb the appraiser issue. The Ney-Kanjorski bill would prohibit agents and other outsiders from pressuring appraisers through coercion, bribes or extortion. It would also force a physical inspection for higher-cost loans instead of just using computer appraisal software, which can be manipulated, and it would force a second appraisal of a property that has risen in value over the previous six months. However, Miller says the proposed bill does not address structural problems in the appraisal business, such as the fact that many lending institutions that hire appraisers profit from the outcome. The wall is eroding between the loan sales department and quality control, Miller contends, and no one is worried about potential defaults if the housing market takes a breather. So what if people start defaulting? “I don’t think there’s a general awareness or concern about that,” Miller said. “The sales function, the people who are paid on commission probably won’t be there when those problems come in the future.” The issue could evolve into the something similar to the savings-and-loan scandal of the late 1980s, Miller added, referring to the failed speculation and, in some cases, fraud that cost the U.S. taxpayer over $100 billion. In California, meanwhile, an investigation into title insurance — the protection you must buy to make sure there are no other claims to the property you plan to acquire — is underway. The state’s insurance commissioner is investigating alleged kickbacks by title insurance companies to realtors, lenders and builders.

Subject: Trust? They wouldn't lie would they? From: johnny5 To: Pete Weis Date Posted: Thurs, Apr 07, 2005 at 15:52:18 (EDT) Email Address: johnny5@yahoo.com Message: http://www.siliconinvestor.com/readmsg.aspx?msgid=21202124 'My mother-in-law is an Appraiser. About six months ago she was contacted by a 'trainee' who wanted her to sign off on his appraisals. She has a couple of these trainees underneath her, and she agreed. California law used to require that a person take a minimum number of appraisal classes before they could even be a trainee. However, they changed the rule a few months ago. That means that ANYONE can be an appraiser. They still have to get a fully liscensed appraiser to sign off on the appraisal, but the lax requirements are becoming scary. Now back to the story. She was contacted about one month ago by another fully liscensed appraiser. He told her that he had been hired to review one of her appraisals. (Common practice by banks when they are suspicious of the appraisal or just sometimes done randomly). She asked for the address so she could forward him the comps and other data she used to come to the appraisal. After looking through her appraisals, she told him he must be mistaken, she hadn't done an appraisal at that address. Long story short, the 'trainee' had cut and pasted her signature from another report into MULTIPLE appraisals. Most of these appraisals were ones that she told him NOT to take because there was no way to get value on them. Not to mention that he was doing commercial appraisals under her name and she's not even liscensed for them. What a mess. He has begged her not to file criminal charges, but the only way to clear her name is to at least file a police report and let them decide if they will bring charges. It's just so sad. She went to school and worked as a trainee for YEARS. Now some guy who just decided to be an appraiser a few months ago, with nothing to loose, has created a disaster for her. She has no idea how many he did under her name. Luckily, she was out of the country when some of them were done, so she should be able to prove that at least some of them are fraudulent. The worst part about it is the BROKER's KNOW. They have access to look up comps just like I do, and just like appraisers do. They are fully aware that 'certain appraisers' will give more value (And trust me they have ample work available to them). My mother-in-law has reported that the amounts people are expecting to get for their appraisal are getting MORE ridiculous and not less. She had a re-finance just the other day. The couple had bought a $250k house in the ghetto 3 months ago. They got some kind of a risky 6 month interest only loan and need to re-finance. They were expecting the house to appraise at $310k (More than 20% in 3 months?) The lender they are working with told my mother-in-law that the previous lender had 'assured' the clients it would be worth 25% more by the time they re-financed. This has become a joke.'

Subject: Of course it's hard to argue... From: Pete Weis To: johnny5 Date Posted: Thurs, Apr 07, 2005 at 22:21:34 (EDT) Email Address: Not Provided Message: that something isn't worth (at least at that moment) what someone is willing to pay for it. But it's the refinancing where there is no buyer that that's brings the most concern!

Subject: OT: The seven pillars of wisdom From: Pancho Villa To: Pete Weis Date Posted: Thurs, Apr 07, 2005 at 15:31:54 (EDT) Email Address: nma@hotmail.com Message: 'This is the exciting and highly literate story of the real Lawrence of Arabia, as written by Lawrence himself, who helped unify Arab factions against the occupying Turkish army, circa World War I. Lawrence has a novelist's eye for detail, a poet's command of the language, an adventurer's heart, a soldier's great story, and his memory and intellect are at least as good as all those. Lawrence describes the famous guerrilla raids, and train bombings you know from the movie, but also tells of the Arab people and politics with great penetration. Moreover, he is witty, always aware of the ethical tightrope that the English walked in the Middle East and always willing to include himself in his own withering insight.'

Subject: Re: OT: The seven pillars of wisdom From: Pete Weis To: Pancho Villa Date Posted: Thurs, Apr 07, 2005 at 22:26:59 (EDT) Email Address: Not Provided Message: If only we could go back to those simple train bombings.

Subject: Lawrence on Negative Thinking From: johnny5 To: Pancho Villa Date Posted: Thurs, Apr 07, 2005 at 20:11:57 (EDT) Email Address: johnny5@yahoo.com Message: Yes I have that on audiobook - what a great listen. http://www.imdb.com/title/tt0056172/quotes Prince Feisal: Young men make wars, and the virtues of war are the virtues of young men: courage, and hope for the future. Then old men make the peace, and the vices of peace are the vices of old men: mistrust and caution. Lawrence on the rise and fall of civilization: Prince Feisal: But you know, Lieutenant, in the Arab city of Cordoba were two miles of public lighting in the streets when London was a village? T.E. Lawrence: Yes, you were great. Prince Feisal: Nine centuries ago. T.E. Lawrence: Time to be great again, my lord. Lawrence on why Bush and Co can never bring peace to the desert: T.E. Lawrence: A thousand Arabs means a thousand knives, delivered anywhere day or night. It means a thousand camels. That means a thousand packs of high explosives and a thousand crack rifles. We can cross Arabia while jolly Turkey is still turning round, and smash his railways. And while he's mending them, I'll smash them somewhere else. In thirteen weeks, I can have Arabia in chaos.

Subject: Economics and Ecology in Africa From: Emma To: All Date Posted: Thurs, Apr 07, 2005 at 14:23:30 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/04/07/international/africa/07nairobi.html?8hpib Flower of Africa: A Curse That's Blowing in the Wind By MARC LACEY NAIROBI, Kenya - Surrounded by all the asphalt and car fumes of this overgrown African capital, hidden among the tin-roof shacks in the sprawling slums and the forested parklands, there are some rather beautiful blooms. In and around overpopulated Nairobi, one can spot the tiny purple and white flowers of the knotweed, or the bright yellow blooms of the blackjack weed or the elongated appendages of the devil's horsewhip. 'The beauty and almost infinite variety of our wildflowers is one of the greatest pleasures for the traveler in East Africa,' Teresa Sapieha wrote in her 1989 book 'Wayside Flowers of East Africa.' But this is a story of a different kind of flower, which also comes in many colors but lacks the beauty of the many varieties discovered in nature by Ms. Sapieha. All over Nairobi, and all over Africa, are ugly artificial blooms that mar the landscape and that environmentalists want plucked up and removed. These flowers are cheap, thin plastic bags that are tossed to the ground by consumers. This kind of litter has reached a critical mass in Kenya - clogging streams, choking animals and piling up into little mountains of disease. These bags are different from the ones that Westerners carry their groceries in from the neighborhood supermarket; the Kenyan bags are so thin they barely hold a few mangoes or a few pounds of corn meal without tearing. Their delicate nature makes reuse impossible and leads to their frequent introduction into nature, where experts say they tend to remain without breaking down for somewhere around 1,000 years. The bags are so pervasive in this part of the world that many have taken to calling them 'African flowers,' as if they were local varieties of roses or bougainvillea. 'You can't miss these bags,' said Clive Mutunga, an environmental economist in Kenya who is seeking to clean up the mess. 'It's gotten to the point where it's almost become our national flower.' Wangari Maathai, the assistant environmental minister in Kenya and 2004 Nobel Peace Prize winner, says the sacks provide a breeding place for malarial mosquitoes, helping spread one of the continent's major killers. 'I'm not saying don't use plastics at all,' Dr. Maathai said recently as she extolled the virtues of more homegrown bags, like those made of sisal or cotton, or the traditional baskets, which were what people used before plastic came along. A recent study by the National Environmental Management Authority and the Kenya Institute for Public Policy Research and Analysis estimated that more than 100 million light polythene bags, many of them thinner than 30 microns, are handed out each year in Kenyan supermarkets, which is more than 4,000 tons of the bags every month. The study recommended banning the thin bags, which are believed to make up most of the litter. Other bags, it said, should be taxed to provide a financial incentive for bag manufacturers to come up with more environmentally friendly alternatives. The tax could then go to support recycling efforts, which are not common in Africa, says the report, which was financed by the United Nations Environment Program. The report notes that there would be some job losses if Kenya outlawed the manufacture of plastic bags, which is a booming industry here that supplies all of East Africa. But it notes that other jobs would probably be created among cotton bag manufacturers. Nairobi's street children and others might also earn some income from picking up plastics if a recycling program was started. Kenya, which profits from the many tourists who come to witness its pristine landscape, is not the first African country to try to clean up its act. Rwanda recently banned plastic bags that are less than 100 microns thick and it took such a tough enforcement stand that the police would dump out the goods on the road if they found shoppers with them. 'The black plastic bag has disappeared from Kigali,' the United Nations Environment Program said, referring to the capital of Rwanda in a recent statement on the issue. South Africa has also imposed a ban on bags thinner than 30 microns, which are so flimsy that one's finger can easily pierce them. Other more durable bags are taxed by South Africa, which gives some of the revenue to a plastic bag recycling company. Somaliland, a breakaway state in northwestern Somalia, outlawed plastic bags as well, although passing the law has not appeared to put much of a dent in the problem there. In local parlance, the plastic bags there are called 'Hargeisa flowers' because they pop up everywhere in and around Hargeisa, the Somaliland capital. 'The bags have not only become an environmental problem, but also an eyesore,' Abdillahi Duale, Somaliland's information minister, recently told the United Nations News Service. Eliminating the bags is regarded primarily as a task that falls on shopkeepers. Nakumatt Holdings, one of Kenya's largest supermarkets, has said it backs the effort to clean up the country's landscape. But the problem lies as well with the consumers throwing them into the wind. Kenya is considering an antilittering campaign not unlike its other public service campaigns - encouraging people to use condoms, pay their taxes, drive safely and seek a woman's consent before sex. To reach the next generation of potential litterers, the United Nations Environmental Program has produced a children's book in which a little boy named Theo alerts all the grown-ups around his town to the menace of discarded plastic bags by collecting them and rolling them into a ball that soon grows bigger than he is.

Subject: A New Disposable Battery From: Emma To: All Date Posted: Thurs, Apr 07, 2005 at 14:20:41 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/04/07/technology/circuits/07pogue.html?8hpib=&pagewanted=all&position= Can a New Disposable Battery Change Your Life? Parts of It, Maybe By David Pogue THIS June, Panasonic will introduce Oxyride batteries: AA and AAA disposable batteries that the company calls 'the most significant developments in primary battery technology in 40 years.' According to Panasonic, these batteries last up to twice as long as premium alkaline batteries like Duracell Ultra ($5 for four), yet cost the same as regular alkalines ($4 for four). Astounded yet? Then get this: Oxyride batteries are also supposed to deliver more power. The result, the company says, is that battery-operated toothbrushes spin faster, flashlights shine brighter, camera flashes are quicker to recharge and music players produce richer sound. Play your cards right, in other words, and these batteries might just clean out your gutters, wash the car and do your taxes. Those are pretty fantastic claims, but Panasonic is certainly right about one thing: the time is right for some technical improvement in batteries. Technology has marched on in just about every other corner of modern life, but people still tiptoe nervously through birthday parties and weddings with their digital cameras, anxiously rationing shots so they'll have juice left for the big moment. No wonder, then, that in Japan, the Oxyride batteries have captured 10 percent of the battery market in the one year they've been available. In fact, Panasonic predicts that Oxyride will eventually wipe out alkalines just the way alkalines blew regular 'heavy-duty' batteries off the map. Skeptics, however, are surely entitled to scoff, especially at that part about brighter flashlights, faster fans and better-sounding music. Aren't these gizmos somehow voltage-controlled so that they shine, spin or play at a certain rate, regardless of the battery? Armed with a stopwatch, I spent several exceedingly boring days conducting battery-drain tests with identical pairs of flashlights, screwdrivers, cameras, hand-held fans and swimming bathtub fishies. (Note to the neighbors: You can call off the nice men in the white jackets. It was all in the name of science.) As it turns out, the power-boosting effect is no marketing concoction; it's real. In identical flashlights, Oxyrides produce an obviously wider, whiter circle of light than Duracell Ultras. You can immediately tell the difference in portable fans, too, because the Oxyride fan hums at a higher pitch, a musical step higher than the Duracell one. The Oxyrides even make power screwdrivers spin faster: 364 r.p.m., compared with 316 r.p.m. for the Duracell Ultras. Then there's that bit about Oxyrides making MP3 players and CD players produce richer, fuller sound. Panasonic cited a test in Japan in which 80 percent of the players in an orchestra said they preferred the sound from an Oxyride-powered music player. (Panasonic doesn't include sound-quality claims in its official marketing, but it does say it's investigating.) This one's a tougher call. In blind tests, most people couldn't tell any difference between a CD player with Oxyrides and one with regular alkalines. A few identified the Oxyrides as maybe being a bit richer-sounding, but said that the difference was awfully subtle. All participants confessed, though, that they were not members of a Japanese orchestra. Amazingly, then, Panasonic Oxyrides do deliver more power, for the same price as ordinary alkalines. To be precise, they deliver 1.7 volts, which is 13 percent more juice than the 1.5 volts of alkalines. (In both cases, the voltage diminishes as the batteries empty.) According to Panasonic, Oxyrides get their power not only from an improved chemical makeup, but also from a vacuum-assembly machine that packs more ingredients into the same space. But what about the primary claim, that Oxyrides last longer than alkalines? Here, the answer is more complicated. In rundown tests (put the batteries in, run nonstop till they're dead), Duracell Ultras, and even regular alkaline Duracells, actually beat the Oxyrides. In a krypton-bulb flashlight, the Oxyrides ran for two and a half hours; Duracell Ultras lasted 35 minutes longer. An Oxyride hand-held fan died after an hour; Duracell Ultras had another 25 minutes in them. And in a really cute swimming fish bathtub toy, the Oxyride fish gave up the ghost after 8.5 hours; a pair of ordinary alkalines kept finding Nemo for an amazing 25 hours, nearly three times as long. Now, battery companies generally hate it when well-meaning journalists conduct rundown tests, for a very good reason: nobody uses batteries that way. In the real world, people play, pause and put aside their electronics for days or weeks. Properly conducted battery tests, experts say, are repetitive, expensive and computer-controlled. A battery that's designed to last a long time under real-world conditions may not do well in rundown tests. ('We'd be delighted to help you design valid tests,' a battery company representative once told me. 'And we'll look forward to reading the results around Christmas.') And sure enough, when the flashlight test was repeated in a more realistic regimen - one hour on, followed by 30 minutes off for good behavior - the Oxyrides lasted 4 hours 14 minutes. The Duracells still won, but this time by only 10 minutes, and the light produced during the flashlight's final 20 minutes was so feeble it probably shouldn't count. (The Oxyrides tend to die more suddenly than alkalines.) Panasonic further protested that the Oxyrides were designed to shine in high-drain gadgets (cameras, L.E.D. flashlights, remote-control toys, portable televisions and photo flash units) and moderate-drain gizmos (Game Boys, CD and music players, electric razors), not in low-drain devices like flashlights, fans, radios, clocks, remote controls and bathtub fishies. (So out came the Game Boy and the L.E.D. flashlight, and in went the Oxyrides. Test results: pending. After three days, both of them are still running strong.) All of this brings us to the World Series of battery competitions: the digital camera test. These days, most digital cameras come with rectangular, proprietary rechargeable battery packs. But if your camera takes disposables, you're already aware of their pathetic battery-consumption record. The challenge: See how many shots a pair of AA's can take in a digital camera. The test: 50 consecutive shots, alternating flash and nonflash, followed by 10 minutes turned off so the batteries could rest. Then another 50 shots, and so on until 'Change the batteries' appears on the camera's screen. (I set the camera to capture low-resolution images, so they'd all fit without having to change or erase the memory card.) Because this isn't a constant-drain test, you'd expect the Oxyrides to win - and this time, they do. The final score: Regular alkalines, 354 shots; premium alkalines, 566; Panasonic Oxyrides, 844. That's not exactly twice the longevity of premium alkalines, as Panasonic promises (and as PC World magazine found in its own Oxyride battery tests). But it's 2.4 times the life of regular alkalines, for the same price. Now, even Panasonic admits that Oxyrides aren't the most economical, environmentally friendly, powerful batteries you can buy. That honor goes to rechargeable nickel-metal hydride (NiMH) batteries, which cost under $15 including charger. You can recharge NiMH batteries hundreds of times, and each charge lasts longer than Oxyride or any sort of alkaline. But NiMHs aren't widely available in stores, they lose their charge quickly on the shelf, and the recharging and swapping process requires planning and discipline. Alas, not everybody has the patience; the road to the abandoned-gadgets drawer is paved with good intentions. (Another Oxyride rival is AA disposable lithium batteries, offered by Energizer in a four-pack for about $23. Five times the power of standard alkalines, at six times the price. You do the math.) The bottom line: Oxyride batteries may not quite live up to Panasonic's enthusiastic claims in all kinds of gadgets in every situation. But penny for penny, they deliver more power and, in power-hungry gadgets like digital cameras, last a lot longer than alkalines. Don't look now, but the Energizer bunny may soon be squashed by the Panasonic elephant.

Subject: Re: A New Disposable Battery From: Pancho Villa To: Emma Date Posted: Fri, Apr 08, 2005 at 06:42:55 (EDT) Email Address: nma@hotmail.com Message: Hitachi, Toshiba Show Portable Fuel Cells Devices to power to PDAs, cell phones, and laptops could be available next year. Paul Kallender, IDG News Service Wednesday, October 06, 2004 CHIBA, JAPAN -- Hitachi and Toshiba this week unveiled new fuel cell prototypes for a range of applications that could be commercialized as early as next year. The prototypes on display at Ceatec Japan 2004 show that fuel cells could become a widely adopted supplementary power source to conventional lithium ion batteries, and could start replacing them in some applications after 2007, according to developers. As well as showing its prototype fuel cell for PDAs that it announced last December, Hitachi also unveiled a prototype laptop PC fuel cell and a fuel cell-based battery recharger for mobile phones, both of which will be available in 2006, according to the company. In addition, Hitachi will make a lithium ion battery replacement fuel cell that it will put on sale in 2007, Mitsugu Nakabaru, senior engineer of Hitachi's fuel cell promotion and development group, says. All of the prototypes use direct methanol fuel cell (DMFC) technology. The demonstration model PC fuel cell shown is designed to latch on the back of a laptop screen, and is about 10 inches wide, 8 inches long, and between .4 inches and .8 inches thick. This includes a cartridge containing methanol that is diluted to a 20 percent to 30 percent concentration to produce power in the fuel cell. Hitachi is not disclosing the exact specifications, but the demonstration model weighs less than 2.2 pounds, says Nakabaru. The prototype is designed to provide at least five hours of continuous operation for even the most power-hungry laptops while they are running multiple applications, Nakabaru says. 'Five hours, we think, is the minimum specification customers will accept, but we think it will provide five to seven hours at 10 watts for most laptops running the usual programs,' he says. The laptop version is nearly ready for commercialization, but Hitachi is working to improve specifications, including developing the fuel cell's capability to use higher concentrations of methanol up to 40 percent, Nakabaru says. The company declined to discuss potential prices. 'It's nearly ready,' he says. Hitachi's fuel cell for PDAs, which the company already announced, is on target for sale in the second half of 2005, Nakabaru said. That prototype fuel cell is a cartridge type around .4 inches in diameter and between 2.0 inches and 2.4 inches in length. Specifications for the commercial model 'are about the same,' he says. Going Mobile Both Hitachi and Toshiba are showing prototype fuel cell-based lithium-ion battery supplementary power sources for mobile phones designed for KDDI, Japan's number-two carrier. The number of major Japanese electronics companies that have announced fuel cell rechargers for this application currently stands at three. Last week, NTT DoCoMo and Fujitsu Laboratories said they developed a prototype DMFC technology recharger for commercialization in 2006. That version is a cradle-type design that uses a thumb-sized cartridge containing methanol at a concentration of 30 percent to provide an output of 5.4 volts at 700 milliamperes. The commercial version will be able to provide enough power to charge a lithium ion battery three times, to provide about 6-hours worth of continuous use, according to NTT DoCoMo. The Hitachi and Toshiba prototypes are stand-alone boxes with cords that plug into KDDI mobile phones. Both designs will be available before the end of March 2006, Youichi Iriuchijima, assistant manager of KDDI's IT development division, says. Hitachi's fuel cell recharger is smaller than Toshiba's, but Toshiba's design will provide power for longer, Iriuchijima says. The companies are not releasing details about size and weight, and the demonstration models were displayed under plastic. The Hitachi version uses 46 percent methanol concentration fuel to provide 700 milliwatts and 3.5 volts, that is capable of providing at least 5 hours of supplemental power when a lithium ion battery is exhausted, Iriuchijima says. The Toshiba prototype uses a 100 percent concentration methanol fuel that provides nearer 10 hours of power, he says. Power Hungry Devices Over the next few years, many of Japan's mobile phone makers will add power-hungry digital broadcast tuners to their mobile phone models. KDDI sees the fuel cell supplemental batteries as a useful way to reassure users that they will be able to watch TV on their mobile phones without worrying about the battery dying. 'When you are watching TV, and the battery is running out, you can plug these fuel cells in. That's what they are for,' Iriuchijima says. The fuel cells will be able to connect into all KDDI phone models, not just those made by Hitachi and Toshiba, he says. 'The Toshiba and Hitachi versions are for KDDI. Fujitsu's is for NTT DoCoMo. But we are encouraging other companies to join us,' Iriuchijima says. Like Fujitsu, Hitachi is working towards commercializing a fuel cell that will replace the lithium ion battery completely, and this will be commercially available in 2007, says Hitachi's Nakabaru. While Hitachi is not giving details about the battery version, the initial design will be between two and three times more bulky than conventional batteries, he says. 'It's going to take some time, and it's going to be a bit big,' he says. http://www.pcworld.com/news/article/0,aid,118080,00.asp

Subject: Rayovacs I-C3 technology From: johnny5 To: Emma Date Posted: Thurs, Apr 07, 2005 at 20:00:14 (EDT) Email Address: johnny5@yahoo.com Message: 'But NiMHs aren't widely available in stores, they lose their charge quickly on the shelf, and the recharging and swapping process requires planning and discipline. Alas, not everybody has the patience; the road to the abandoned-gadgets drawer is paved with good intentions. ' '(Another Oxyride rival is AA disposable lithium batteries, offered by Energizer in a four-pack for about $23. Five times the power of standard alkalines, at six times the price. You do the math.) ' Johnny5 has done the math, rayovacs new I-C3 batteries can stay fully charged while plugged into the charger - so no shelf life loss - they only take about 15 minutes to charge if fully drained unlike the older rechargeable batteries that took hours, and they power all of johnny's PDA's and MP3 players and Scanners and other such digital goodness and they are widely available in every k-mart, walmart, and radio shack that johnny5 has ever visited. http://www.rayovac.com/recharge/batteries.htm Rayovac's patent-pending I-C3 technology (In-Cell Charge Control) puts the control of the recharging into the battery, instead of the charger. This Nickel Metal Hydride (NiMH) technology offers fast, safe, reliable charging and provides you with power that lasts longer and is less expensive than constantly throwing away alkaline batteries.

Subject: Master of the Universe From: Emma To: All Date Posted: Thurs, Apr 07, 2005 at 10:51:24 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/04/07/opinion/07mcewan.html?pagewanted=all&position= Master of the Universe By IAN MCEWAN London WHEN a great writer dies - an unusual event, for this is a rare breed - we pay our respects by a visit to our bookshelves, library or bookshop; mourning and celebration merge honorably. It will be some time before we have the full measure of Saul Bellow's achievement, and there is no reason we should not start with a small thing, a phrase or sentence that has become part of our mental furniture, and a part of life's pleasures. After all, good readers, Nabokov advised his students, 'should notice and fondle details.' Bellow lovers often evoke a certain dog, barking forlornly in Bucharest during the long night of the Soviet domination of Romania. It is overheard by an American visitor, Dean Corde, the typically dreamy Bellovian hero of 'The Dean's December,' who imagines these sounds as a protest against the narrowness of canine understanding, and a plea: 'For God's sake, open the universe a little more!' We approve of that observation because we are, in a sense, that dog, and Saul Bellow, our master, heard us and obliged. In fact, the very freedom that Henry James claimed for the novelist in his essay 'The Art of Fiction' ('All life belongs to you') was generously embraced by Mr. Bellow; he set himself, and succeeding generations, free of the formal trappings of modernism, which by the mid-20th century had begun to seem a heavy constraint. He had no time for Virginia Woolf's assertion that in the modern novel character is dead. Mr. Bellow's world is as densely populated as Dickens's, but its citizens are neither caricatures nor grotesques. They sit in memory like people you could convince yourself you have met: the hopeless racketeer Lustgarten ('partly subtle, partly ill') in 'Mosby's Memoirs,' who brings financial ruin to his family by importing a Cadillac into postwar France; the excitable low-lifer, Cantabile, waving a gun in 'Humboldt's Gift' - in his agitation he suddenly needs to defecate, and forces his victim, Charlie Citrine ('a man of culture or intellectual attainments') into the stall with him. Citrine distracts himself with reflections on ape behavior while Cantabile 'crouched there with his hardened dagger brows.' And most vivid of all, for me at least, Moses Herzog, Mr. Bellow's most achieved dreamer, the least practical of men in an America of vigorous, material pursuits. In 'Herzog,' Mr. Bellow brought to perfection the art of fictional digression. When the hero goes to visit his lover, the lovely Ramona, he waits on the bed while she goes off to change into what Martin Amis would call her 'brothel wear.' In those moments Herzog reflects on the way the entire world presses in on him, and Mr. Bellow seems to set out a kind of manifesto, a ringing checklist of the challenges the novelist must confront, or the reality he must contain or describe. It also serves as a reader's guide to the raw material of Mr. Bellow's work. I came to know this passage by heart through re-reading, and borrowed it for the epigraph of a novel. It was a risk, because the pulse of this prose was likely to make my own sound puny. 'Well, for instance, what it means to be a man. In a city. In a century. In transition. In a mass. Transformed by science. Under organized power. Subject to tremendous controls. In a condition caused by mechanization. After the late failure of radical hopes. In a society that was no community and devalued the person. Owing to the multiplied power of numbers which made the self negligible. Which spent military billions against foreign enemies but would not pay for order at home. Which permitted savagery and barbarism in its own great cities. At the same time, the pressure of human millions who have discovered what concerted efforts and thoughts can do. As megatons of water shape organisms on the ocean floor. As tides polish stones. As winds hollow cliffs...' Mr. Bellow's city, of course, was Chicago, as vital to him, and as beautifully, teemingly evoked, as Joyce's Dublin; the novels are not simply set in the 20th century, they are about that century - its awesome transformations, its savagery, its new machines, the great battles of its thought systems, the resounding failure of totalitarian systems, the mixed blessings of the American way. These elements are not dealt with in abstract, but sifted through the vagaries of character, of an individual trying to figure where he stands in relation to the mass of which he is a part. And always, the past is pressing in, memories of childhood, the crowded streets and tenements, shared rooms, overbearing and eccentric relatives and neighbors - the immigrant poor, attending to the call to American identity. The American critic Lee Siegel wrote recently that every British writer with an intellectual or emotional connection to America wants to lay claim to Mr. Bellow, saying, 'He is their Plymouth Rock, or maybe their Rhodesia.' There is some truth to this. What is it we find in him that we cannot find here, amongst our own? I think what we admire is the generous inclusiveness of the work - not since the 19th century has a writer been able to render a whole society, without condescension, or self-conscious social anthropology. Seamlessly, Mr. Bellow can move between the poor and their mean streets, and the power elites of university and government, the privileged dreamer with the 'deep-sea thought.' His work is the embodiment of an American vision of plurality. In Britain we no longer seem able to write across the crass and subtle distortions of class - or rather, we can't do it gracefully, without seeming to strain or without caricature. Mr. Bellow appears larger, therefore, than any British writer can hope to be. Another reason: in a literary culture that has generally favored the whole scheme of a novel against the finely crafted sentence, we honor the musicality, the wit, the lovely beat of a good Bellovian line. An example, rightly favored by the critic James Wood, is the description of Behrens, the florist in the story 'Something to Remember Me By': 'Amid the flowers, he alone had no color - something like the price he paid for being human.' Another example, of special significance to me because I paid tribute to Bellow by making a variation on it: in 'Herzog,' we read of Gersbach with his wooden leg, 'bending and straightening gracefully like a gondolier.' It is not surprising then that some of the best celebrations of Mr. Bellow's writing have originated in Britain. Certain essays may already be on your shelves, and in this time of taking stock, it might be enlivening to reach for them. One of them is Martin Amis's magnificent advocacy of 'The Adventures of Augie March' as the definitive Great American Novel in the introduction to the Everyman edition; another is James Wood's introduction to Penguin's 'Collected Stories,' in which joy is a central element in his response to the work. Writers we admire and re-read are absorbed into the fine print of our consciousness, into the white noise of our thoughts, and in this sense, they can never die. Saul Bellow started publishing in the 1940's, and his work spreads across the century he helped to define. He also redefined the novel, broadened it, liberated it, made it warm with human sense and wit and grand purpose. Henry James once proposed an obvious but helpful truth: 'the deepest quality of a work of art will always be the quality of the mind of the producer.' We are saying farewell to a mind of unrivalled quality. He opened our universe a little more. We owe him everything.

Subject: Rocket Science? From: Pete Weis To: All Date Posted: Thurs, Apr 07, 2005 at 10:15:58 (EDT) Email Address: Not Provided Message: We have an economy which is foundationed on consumers to a higher degree than ever in history. We have consumers in greater debt than ever in history. We have a consumer primarily supported by a soaring housing market - not booming jobs numbers and rising wages relative to inflation. This is from Forbes: Fresh Pricks In Housing Bubble Dan Ackman, 03.02.05, 9:00 AM ET There is a sharp debate over whether there is a bubble in the U.S. housing market generally or in certain localities, or whether there is a bubble at all. But the past two days have brought fresh warnings that home prices are unsustainable. First, a new study by the National Association of Realtors shows that 23% of all homes purchased in 2004 were for investment, while another 13% were vacation homes. Traditionally, one of the bulwarks against a sharp decline in housing prices has been the fact (or belief) that most people live in their homes and would be unlikely to sell even if the market heads downward. But the same logic would not apply to investment homes or vacation homes. While there has long been anecdotal evidence that non-occupant buyers are fueling the rise in home prices, the NAR study claims to be the first to thoroughly analyze the phenomenon. The study, based on 2003 census data, says there are 43.8 million second homes in the U.S. While 6.6 million of these are vacation homes, far more, 37.2 million, are investment units. This compares with 72.1 million owner-occupied homes. About a quarter of last year's home sales were for investment homes, NAR says. Nearly 80% of investment buyers rent their homes. While an owner-occupant is unlikely to sell his or her home (except to buy a new one), for an investor, the decision to sell is much more purely economic: If rents can't sustain a mortgage, there is no point in owning an investment property, except for the hope that home prices will inevitably rise, as they have been. So far, there has been no problem. Since 2001, the median price of an investment home has risen 25.4%, from $118,000 to $146,900. (In most markets, the average price is much higher than the median.) But if prices start to fall or if mortgage rates start to rise, there could be a rush to sell and a crash. Otherwise, some investment buyers could find themselves unable to get renters at all, as rental vacancy rates are near historic highs. With many buyers putting down almost no cash, they could simply let their bank foreclose and walk away. Investment buyers could be made even more sensitive to interest rate increases than is normally the case. The reason is the increasing popularity of adjustable rate mortgages. According to the Mortgage Bankers Association, more than 32% of mortgages are now adjustable. The popularity of ARMs is on the rise even though the spread between the so-called teaser rate and the fixed rate on a standard 30-year mortgage has narrowed. An adjustable mortgage is most attractive to a borrower who figures he won't own the house for long. That could be a person who figures he will move to a different area or will soon be able to afford a better home. Or it may be a person who figures he'll unload the place to a greater fool. All these trends are playing out against a larger trend of double-digit price increases for the average new home nationally, and 20% or more price jumps in many markets, including some of the most populous markets in the Northeast, Southern California and Las Vegas. At the same time, the share prices of home builders like Toll Brothers (nyse: TOL - news - people ), Centex (nyse: CTX - news - people ), D.R. Horton (nyse: DHI - news - people ) and Pulte Homes (nyse: PHM - news - people ) are all up by 25% to 100% in the last six months. Top mortgage lenders Countrywide Financial (nyse: CFC - news - people ) and Bank of America (nyse: BAC - news - people ) have increased their lending by 40% and 31%, respectively, in a year. Most studies of housing markets are conducted by people with a vested interest in keeping spirits high. As a result, even those who issue warnings tend to mute their gloom. For instance, a study reported in yesterday's Los Angeles Times warns that Southern California home prices 'could be at or near a peak,' noting they are likely to level but are unlikely to fall by much. That study is by Christopher Cagan, an economist for First American, a title insurer. Cagan notes that since 1998, prices in Los Angeles-Long Beach, Orange County, Riverside-San Bernardino and San Diego have been climbing by about 20% to 40% above their long-term average annual growth rate of 3.2% to 6.2%. He notes that in the last downturn, from 1995 to 1997, prices dipped 10% to 25% below their 'historical averages.' Cagan is quoted as saying, 'We won't be seeing 20%, 25% or 30% appreciation rates anymore,' and he's allowing for a 5% decline. As with all bubbles, it's fun to ride up and scary to get off while the roller coaster is still climbing. But if prices have doubled in four years, unfueled by income gains of anything close to that level, what's to stop, say, a 30% or 50% drop?

Subject: Costs Lure Peop to India for Medical Car From: Emma To: All Date Posted: Thurs, Apr 07, 2005 at 09:55:40 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/04/07/business/worldbusiness/07health.html?pagewanted=all&position= Low Costs Lure Foreigners to India for Medical Care By SARITHA RAI BANGALORE, India - Until recently, Robert Beeney, a 64-year-old real estate consultant from San Francisco, lived in pain. But when he finally decided to do something about the discomfort, he spurned all the usual choices. His doctors advised that he get his hip joint replaced, which his insurer would pay for, but after doing some research on the Internet, he decided to get a different procedure - joint resurfacing - not covered by his insurance. And instead of going to a nearby hospital, he chose to go to India and paid $6,600, a fraction of the $25,000 he would have paid at home for the surgery. This winter, Mr. Beeney flew to Hyderabad, in southern India, and had the surgery at Apollo Hospital by a specialist trained in London, Dr. Vijay Bose. Two weeks later, Mr. Beeney said that he was walking around the Taj Mahal 'just like any other tourist.' Mr. Beeney's story is becoming increasingly common, as Europeans and Americans, looking for world-class treatments at prices a fourth or fifth of what they would be at home, are traveling to India. Modern hospitals, skilled doctors and advanced treatments are helping foreigners overcome some of their qualms about getting medical treatments in India. Even as politicians and workers' groups are opposing the corporate practice of outsourcing, Mr. Beeney and patients like him are literally outsourcing themselves - not only to India but also to Thailand, Singapore and other places - for all kinds of medical services from cosmetic to critical surgeries. About 150,000 foreigners visited India for medical treatments in the year ending in March 2004, the Confederation of Indian Industry, a leading industry group, said. That number was projected to rise by 15 percent each year for the next several years. The consulting firm McKinsey & Company, a management consultant based in New York, said foreign visitors would help Indian hospitals earn 100 billion rupees (about $2.3 billion) by 2012. 'Health is an emotional issue; it's not like buying a toy or a shirt made abroad,' said a health care analyst for McKinsey, Gautam Kumra, who is based in New Delhi. 'Nevertheless, you cannot deny the power of economics.' For some foreigners, like George Marshall, a 73-year-old violin restorer from Yorkshire, England, India's hospitals also offer speedier treatments. Last year, Mr. Marshall said that he started having trouble finishing a round of golf. An angiogram showed two blocked arteries in his heart. With the British National Health Service, Mr. Marshall would have had to wait three weeks to see a specialist, and six more months for coronary bypass surgery. 'At 73, I don't have the time to wait,' Mr. Marshall said. 'Six months could be the rest of my life.' Nor could he afford the £20,000 ($38,000) for surgery at a private hospital. After an Internet search and a chance meeting with a businessman who had gone to India for surgery, Mr. Marshall traveled to the Wockhardt Hospital in Bangalore in southern India last winter. His surgeon, Vivek Jawali, had trained at Great Ormond Street Hospital in London. The men chatted about British politics and Dr. Jawali gave Mr. Marshall his cellphone number and said that he was available 24 hours. A surprised Mr. Marshall said that in the British health system, 'you are just a number, but here you are a person.' Travel expenses included, the surgery cost him £4,500 ($8,400). While the number of patients from the West is still small in India, the trend is expected to grow as populations age and health costs balloon. In India, cardiac surgeries cost about one-fifth of what they would in the United States; orthopedic treatments cost about one-fourth as much and cataract surgeries are as low as one-tenth of their cost at American hospitals. Mr. Kumra, the McKinsey health consultant who also advises the auto industry, noted that a corporation like General Motors spends $5 billion on health care annually. 'When you buy a G.M. car, you are helping G.M. fund $2,000 or $3,000 towards health care costs of retired workers,' Mr. Kumra said. To curb spending, corporations are being forced to look at creative low-cost solutions. For instance, radiologists working for Wipro, a software and information technology company based in Bangalore, analyze X-rays and scans from United States hospitals for a fraction of the cost. A diagnostics firm, SRL Ranbaxy, based in New Delhi, tests blood serum and tissue samples from British hospitals. Health specialists say that sending patients to India for treatment is not as unthinkable as it was 20 years ago. 'India is well-positioned to expand into this area of outsourcing,' said John Lovelock, an analyst in Ontario on global industries for Gartner. 'India is equipped to provide long-term in-patient rehabilitation services, which are very labor intensive, require large facilities and are under serviced in North America,' he said. In the last four years, the Apollo Hospital chain, which has 18 hospitals throughout Asia, has treated 43,000 foreigners, mainly from nations in southern Asia and the Persian Gulf. Last year, 7 percent of its 5 billion rupees ($114.9 million) in revenue came from medical services provided to foreigners. Apollo's founder, Dr. Prathap C. Reddy, 73, a surgeon trained at Massachusetts General Hospital in Boston, said that health care in India had drastically changed from the time he returned to open his first hospital in 1983. 'Then, all rich Indians rushed overseas for medical help,' Dr. Reddy said. Now, he has 200 doctors on his staff who are qualified to work in the United States, and has many wealthy Indian expatriates as clients. Still, some hospitals in India are discovering that affordable costs and foreign-trained doctors may not be enough to make India a global health care destination. The country's dilapidated airports, garbage-strewn streets and overcrowded slums can put off even the hardiest foreigners. 'Some foreign patients arrived at the airport and took the next flight back,' said Dr. Reddy, who has been trying to persuade the local government in Chennai, formerly known as Madras, to clear a slum next to his hospital there. 'I can change the insides of my hospitals, but I cannot change the airports and roads,' Dr. Reddy said, The challenge, said Harpal Singh, chairman of Fortis Healthcare, a chain of hospitals based in New Delhi, is to get the world to understand that India is a complex country. Acknowledging that foreigners might feel more at home having surgery in sleek hospitals in Singapore or Thailand, which are competing to woo them, Mr. Singh said, 'We have to project that India is capable of delivering first-rate as well as shoddy work.' Fortis, part owned by the country's biggest drug firm, Ranbaxy Laboratories, has a chain of four hospitals in India and another six on the way. Indian hospitals are also working to ensure that they meet international standards. The Indian Healthcare Federation, a group of 50 hospitals led by Dr. Reddy, is developing accreditation standards for hospitals. One doctor in India held up as first rate is Dr. Naresh Trehan, a cardiac surgeon based in New Delhi and the executive director of Escorts Heart Institute and Research Center. Dr. Trehan, 58, who studied cardiac surgery at the New York University School of Medicine and worked there for a decade, returned to India in 1988 to open his own cardiac hospital in New Delhi. The hospital now conducts 4,000 heart surgeries a year with 0.8 percent mortality rates and 0.3 percent infection rates, on par with the best of the world's hospitals. Last October, Dr. Trehan performed surgery on Howard Staab, 53, an uninsured self-employed carpenter from Durham, N.C., to repair a leaking mitral heart valve. Mr. Staab paid $10,000 for his surgery, his round-trip fare to India and for a visit to the Taj Mahal. In the United States, his options included surgery costing $60,000 at Duke University Medical Center in Durham, N.C. To take advantage of patients like Mr. Staab, Indian hospitals are expanding. In the Gurgaon suburbs of New Delhi, Dr. Trehan is building a $250 million multispecialty hospital modeled after the Cleveland Clinic in Ohio. In the same neighborhood will be Fortis Healthcare's Medicity, a 43-acre hospital complex for foreign patients, which will have special immigration and travel counters and interpreters, with the idea of branding itself the Johns Hopkins Hospital of the East. 'We're gearing up, and the doors of Indian hospitals are wide open to the Western world,' Dr. Trehan said.

Subject: My relative on dialysis From: johnny5 To: Emma Date Posted: Thurs, Apr 07, 2005 at 19:40:02 (EDT) Email Address: johnny5@yahoo.com Message: Went to several doctors in florida for his kidneys - after determining he was too old to get on the kidney donor list here in America - he was told unofficially to go to india and he could buy some kidneys and the procedure for under 30K. But he couldn't get beyond all the moral issues of using young poor people for thier body parts for one, and for 2 the doctors telling him this never seemed to convince him that the procedure was a good invesment and would not fail - in the 3 dialysis clinics he has taken treatments in, everyone that has had the kidney replacement sugery had the kidneys fail within a year. He was shown literature to the contrary and that many peoples new kidneys did take, but he doesn't believe what he reads much - just what real people tell him about thier real life.

Subject: Central Park: Imagine From: Emma To: All Date Posted: Thurs, Apr 07, 2005 at 06:09:07 (EDT) Email Address: Not Provided Message: http://store1.yimg.com/I/palemale-store_1840_13265100 Hello, I am a Central Park screech owl who has just fledged 3 baby screech owls [screechlets?]. Imagine :)

Subject: That's the spirit Emma - how cute! From: johnny5 To: Emma Date Posted: Thurs, Apr 07, 2005 at 06:26:44 (EDT) Email Address: johnny5@yahoo.com Message:

Subject: Re: Central Park or Central Perk? From: Pancho Villa To: johnny5 Date Posted: Thurs, Apr 07, 2005 at 15:24:19 (EDT) Email Address: nma@hotmail.com Message:

Subject: Bond Values From: Terri To: All Date Posted: Thurs, Apr 07, 2005 at 04:42:34 (EDT) Email Address: Not Provided Message: Bond holders, international and domestic, ought to worry. We experienced an extended loss of value in bonds from 1972 to 1982. I have wondered whether this loss slowed investment and productivity growth in America for far longer. Another such period ought to be unthinkable.

Subject: Realism From: Terri To: Terri Date Posted: Thurs, Apr 07, 2005 at 09:00:54 (EDT) Email Address: Not Provided Message: The point of investing is always realism. That is how to be successful. Know how to judge where value is.

Subject: tell people to worry, you sink your investments From: johnny5 To: Terri Date Posted: Thurs, Apr 07, 2005 at 09:31:20 (EDT) Email Address: johnny5@yahoo.com Message: http://www.corporatefinance.mckinsey.com/_downloads/knowledge/MOF/2005_no15/MoF15_behavior_finance.pdf Don't make people worry, PLEASE

Subject: Ulcers not valuable From: johnny5 To: Terri Date Posted: Thurs, Apr 07, 2005 at 09:23:08 (EDT) Email Address: johnny5@yahoo.com Message: I read everywhere that trade sanction with china are on the way but you say that is impossible so I don't sweat it anymore and so what if it comes, do you really buy that much stuff made in china Terri? You got me to stop worrying dear Terri (big hug) and my ulcers went away now you say to worry again? Huh? Where is Value for you? Making my ulcers come back? Medical costs are going up - I can't afford more ulcer medicine. Reality is that money comes and goes, and in every life there is some trouble, but if you worry you make it double, so don't worry, be happy.

Subject: Ulcers are Bacterial Infections From: Terri To: johnny5 Date Posted: Thurs, Apr 07, 2005 at 09:50:19 (EDT) Email Address: Not Provided Message: Ulcers are not caused by worry, they are bacterial infections and cured by antibiotics :) But, there is no need to worry just to be knowledgeable and realistic.

Subject: What is worrying gonna achieve? From: johnny5 To: Terri Date Posted: Thurs, Apr 07, 2005 at 06:25:09 (EDT) Email Address: johnny5@yahoo.com Message: You are in the GNMA vanguard bond fund right - why worry - how does that stop what is coming? People are gonna need your optimism to get them through what is coming Terri, or they might jump off buildings, sing some bobby mcferrin. Dear Terri your gift is the joy in face of other's pain - share it - don't share worry.

Subject: Our Treasury Debt From: Terri To: All Date Posted: Thurs, Apr 07, 2005 at 04:31:29 (EDT) Email Address: Not Provided Message: The repeated comment that the debt we have to Social Security is a mere fiction is worrisome, but the suggestions go father to belittle the notion that all our treasurt debt is of no particular account for we can inflate and devalue our way past the debt. The comments come from alarming sources beginning with the President. Possibly no one really takes the comments seriously, for interest rate stay low, but I increasingly worry we trap ourselves in the language we use.

Subject: Bellow on Love, Art and Identity From: Emma To: All Date Posted: Wed, Apr 06, 2005 at 19:36:36 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/books/00/04/23/specials/bellow-onlove.html June 3, 1987 Bellow on Love, Art and Identity By MERVYN ROTHSTEIN In Saul Bellow's new novel, ''More Die of Heartbreak,'' a botanist is asked by a reporter about the problems of radiation levels, dioxin and harmful wastes. ''It's terribly serious, of course,'' the botanist says, ''but I think more people die of heartbreak than of radiation.'' ''I think that's true,'' Mr. Bellow said, sitting in the lobby of a quiet midtown hotel. Yet the botanist is ridiculed in the press for what he says, and in the novel Mr. Bellow presents the statement in a humorous way. ''Well, I learned from reading George Bernard Shaw years ago,'' he said, ''that you can get away with murder as long as you can make people laugh.'' ''One of the subjects of the book,'' he continued, ''is the difference between a fabricated person and a true person. All through the writing of this book I was reading a lot of Nietzsche, and he makes some curious statements. He says that in a free society people are more free to make themselves up. He says that in older, more stable societies people didn't mind being a part of the general plan of the society, that they were governed by some kind of architectural faith and that they took their proper places in life, sometimes as an inconspicuous part of the whole structure, but that in a modern society people are released from all such necessities, and he mentions America particularly. They make themselves up. They leave nature and go toward art, is the way Nietzsche puts it. Well, the art is often not very good. It starts out with the project of inventing yourself gloriously and it ends up with a kind of fizzing out of the whole impulse.'' 'Access to Your Own Soul' It all goes by a blueprint, Mr. Bellow said. ''For a while I was a devoted reader of Playboy. Not for sexual reasons - it didn't do much for me in that department - but you could see that Playboy existed in order to advise young people on the make how to dress, what sort of apartment to have, how to furnish, where to dine, how to make a salad dressing, how to get your hair cut, how to entertain, how to date. The magazine was a source of instruction to people who have come up very quickly and haven't had time to look into these matters, which they needed for a successful corporate career or just for getting by socially, or whatever. So they go by a lot of slogans, which have been inculcated into them, and what happens to the true person? Culture means having access to your own soul. That's a very old-fashioned notion, but I think a great many people understand it.'' The novel concerns the relationship between the botanist, Benn Crader, and his nephew, Kenneth, as well as their many problems with their wives, lovers and ex-lovers. It's clear in the book that Mr. Bellow feels that there are many difficulties in contemporary relations between men and women. ''At the beginning of modern times, women were promised love, as it were,'' he said. ''They were told, you're going to be free, you're going to be well, you're going to love and be loved, and this will help you to weather the difficulties of life. This is Rousseau's plan - these free societies based on enlightened principles were not going to work unless people were trained in love, educated for it. 'Wretchedness' ''And that was the whole subject of the novel for a couple of centuries, that people were in love, either faithful or unfaithful, and in the French novel I suppose adultery was the principal subject for a long time. And in America, as one should have expected, this was done on a big scale, through sentiment, romantic books, Tin Pan Alley, early movies and all the rest. Well, then there was a sort of feminine discovery that this was bunk, that you couldn't take it from your ma that if you're a good girl you're going to be lucky, Mr. Right will come along, you'll be happy, your husband will love you, you'll love him, you'll be a happy family. ''Suddenly this was snatched away, and it was replaced by the sexual revolution, which has a very different foundation - namely, that you were a creature, you were an animal, you had certain creaturely needs, sex was one of them, you have a right to gratify these for the sake of your health, your well-being, your complexion, your personality, or whatnot else. All right, so people gave this a fling. Well, no human being takes another human being all that seriously any more, and when you have that happening at the very core of a society, then you're looking at a lot of trouble, a great deal of wretchedness, because something in human nature demands a constancy of connection, emotional constancy. There's a secret voice in us which says, 'No, this is bad; this is wrong. I'm alone again, once more cast into outer darkness.' '' The Beleaguered Artist It is now a little more than 10 years since Mr. Bellow, who will be 72 years old next month, was awarded the Nobel Prize for Literature. How has it affected his career? ''First of all,'' he said, ''I didn't start out to be successful. I started out to write. I didn't start scribbling at the age of 16 to win a prize. I would have been satisfied with much less. I didn't invent America's celebrity machinery, either, and I stay away from it as much as I can. In between books I have nothing at all to do with it.'' Mr. Bellow said he writes ''because this is my path into life. I don't know what I am without it. It's inconceivable for me to picture myself without it. I don't have a full explanation for it, any more than birds do for bird song.'' The artist in our society, though, is beleaguered, he said. In the novel, Kenneth says that the humanities -poetry, philosophy, painting - are ''the nursery games of humankind, which had to be left behind when the age of science began. The humanities would be called upon to choose a wallpaper for the crypt, as the end drew near.'' The artist's role, Mr. Bellow said, is one of resistance to these denaturing forces. ''William Blake is a wonderful guide to this,'' he said. ''First of all, you only know the truth of a poet or an artist when your heart rises up and says, 'Yes, yes, that's it, that's true. What he says is true. I've known it all along, only now it's clear to me because he has said it.' And the imagination to Blake is a divine power, and man is divine himself, insofar as he participates, as he enjoys the use of this power. It brings about a strength of personal vision. Not everybody sees the same world. Some people, when they see the sun in the sky, see something resembling a gold coin. Others see a chorus of angels crying 'Holy, holy, holy.' And as you see, so you are. That is a grade of human character - it's connected to the quality of perception of the external world.'' ''When I wrote 'The Dean's December,' '' he said, ''I tried to say in that book that even the power to experience is taken from us by our lack of development in art, in culture, so that we don't know how to interpret experience. So if you ask people to explain why they are what they are, why they do what they do, they're on the moon when they try to explain it to you. I know that and you know that.'' But, Mr. Bellow said, there is still hope. ''Our humanity is in so many ways intact. It's absolutely impossible for it to be destroyed in just one phase of human development. How do we know that? Well, ordinary people can still see 'King Lear' and weep.''

Subject: Saul Bellow: On His Work and Himself From: Emma To: All Date Posted: Wed, Apr 06, 2005 at 19:32:43 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/books/00/04/23/specials/bellow-talk81.html December 13, 1981 A Talk With Saul Bellow: On His Work and Himself By MICHIKO KAKUTANI I sometimes enjoy saying that anybody's life can be encompassed in about 10 wonderful jokes. One of my favorites is about an American singer who makes his debut at La Scala. He sings his first aria to great applause. And the crowd calls 'Ancora, vita, vita.' He sings it a second time, and again they call for an encore. Then a third time and a fourth ... Finally, panting and exhausted, he asks, 'How many times must I sing this aria?' Then someone tells him, 'Until you get it right.' That's how it is with me - I always feel I haven't gotten it quite right, and so I go on singing.'' Saul Bellow tells this story with great relish. Sitting down in a black leather easy chair, he gazes out through the window of his high-rise apartment to the dark waters of Lake Michigan beyond, and throws his head back and laughs. His conversation, like his books, is at once colloquial and lofty, intellectual and passionate, filled with jokes heard on the Chicago streets and the high seriousness of Academe. The author himself bears a certain resemblance to his own heroes: earnest, elegantly dressed and deeply thoughtful, he too is ''a hungry observer'' of everything around him. At 66, Mr. Bellow has written nine novels - the latest, ''The Dean's December,'' will be published in January by Harper and Row - and created in his work a distinctive fictional world. It is a world animated by an acutely moral imagination and populated by assorted cranks, con men and fast-talking salesmen of reality who goad and challenge Mr. Bellow's now familiar heroes. Whether it is poor, putupon Moses Herzog or Eugene Henderson, that absurd seeker of higher qualities, or wise old Artur Sammler or Albert Corde in ''The Dean's December,'' they are men caught in the middle of a spiritual crisis, overwhelmed by the sheer ''muchness'' of the world and frightened by the stubborn fact of death. Rejecting both easy optimism and easy despair, they tend, like Corde, to wonder if their own problems are simply their share of ''the bigscale insanities of the 20th century.'' Like these characters who are continually searching for a way to apprehend reality, Mr. Bellow tends to regard fiction as a kind of tool for investigating the society around him; he sees the novelist as ''an imaginative historian, who is able to get closer to contemporary facts than social scientists possibly can.'' But while the madness of the modern world, manifested in everything from sexual profligacy to random violence, has always reverberated in his characters' lives - a phenomenon that became more pronounced in ''Mr. Sammler's Planet'' -specific public issues have remained largely in the background. With ''The Dean's December,'' such matters as oppression in Eastern Europe, the plight of the American ''underclass,'' student militancy and the deterioration of life in American cities are more directly addressed. What brought about this heightened focus on political and social issues? For one thing, Mr. Bellow says he realized after writing ''To Jerusalem and Back,'' an account of his 1975 trip to Israel, that ''it was as easy to write about great public matters as about private ones - all it required was more confidence and daring.'' The winning of the Nobel Prize in 1976 no doubt provided some of that necessary confidence, and he made plans to write a nonfiction book about Chicago. After making hundreds of pages of notes, however, he decided to abandon that approach and write a novel. ''I found a more congenial way to do it, my own way, developed over many decades,'' he says. ''But I think I've begun to write differently - I had never really attempted anything of this sort before, though I've been all my life an amateur student of history and politics. It became clear to me that no imagination whatsoever had been applied to the problems of demoralized cities. All the approaches have been technical, financial and bureaucratic, and no one has been able to take into account the sense of these lives.'' ''I thought I had to cut loose with this book,'' he goes on. ''It seems many of my contemporaries don't take many personal risks - they shoot fish in a barrel. They write about wounded adolescents - there's no problem there. Sexual adventures -there's no problem there. Wounded ethnicity. They appear occasionally to be bold, to challenge the powers that be, but they're generally pretty safe. I think I'm speaking out quite frankly about the deterioration of life in American cities (in this book), and I wouldn't be surprised if I drew some flack. But if you've told yourself all your life that you're a friend of the truth, there comes a time when you must put up or shut up. They're not going to be able to shrug this one off, though there are some very powerful shruggers around.'' By now, Mr. Bellow points out, he is somewhat accustomed to drawing flack - at least from certain quarters of the literary establishment. For all the honors he has received - a Pulitzer and three National Book Awards as well as the Nobel -he sees himself as going against the mainstream of contemporary literature. He has long rejected the fashionable nihilism of what he calls the ''wastelanders,'' those who believe - as he once put it in a 1966 speech -that it is ''enlightened to expose, to disenchant, to hate and to experience disgust.'' He is equally skeptical of willful estheticism. As far as Mr. Bellow is concerned, those writers who substitute analysis for imagination have estranged literature from the common world and removed one of its original and most important purposes: the raising of moral questions. Contemporary writers, he adds, are also easily tempted by the sensational, for they are faced with ''the Ancient Mariner problem'' - like Coleridge's seaman, ''they need something to buttonhole the wedding guests with, as they go from wedding to wedding or orgy to orgy; they need something that has the power to penetrate distraction.'' Such views, coupled with his attitudes toward more general social matters - most notably his skepticism about the 60's counterculture - have been delineated by Mr. Bellow in both his essays and his novels, and they have occasionally made for controversy. Touring universities in the 60's, Mr. Bellow was occasionally denounced by students during his lectures, and the critic Richard Poirier contended, in an essay written for Partisan Review, that ''Herzog'' and ''Mr. Sammler's Planet'' were ''efforts to test out, to substantiate, to vitalize, and ultimately to propagate a kind of cultural conservatism.'' It is an observation Mr. Bellow rejects. ''People who stick labels on you are in the gumming business,'' he says by way of reply. ''What good are these categories? They mean very little, especially when the people who apply them haven't had a new thought since they were undergraduates and now preside over a literary establishment that lectures to dentists and accountants who want to be filled in on the thrills. I think these are the reptiles of the literary establishment who are grazing on the last Mesozoic grasses of Romanticism. Americans in this respect are quite old-fashioned: they're quite willing to embrace stale European ideas - they should be on 10th Avenue where the rest of the old importers used to be. ''They think they know what writers should be and what writers should write, but who are these representatives who practice what Poirier preaches? They're, for the most part, spiritless, etiolated, and the liveliest of them are third-rate vaudevillians. Is this literary life? I'd rather inspect gas mains in Chicago.'' With their old-fashioned characters, their passion for big ideas and problems of the spirit, Mr. Bellow's own books clearly belong to a different tradition. The Old Testament, Shakespeare and the great 19th-century Russian novels - these were the books Bellow read as a boy, and these were the books which, in large measure, gave him a sense of what great literature ought to do. Indeed, his choice of vocation, he says, was animated by the traditional challenge ''to account for the mysterious circumstance of being.'' ''I don't think I was a very sophisticated person,'' he says, recalling his youth in Chicago as the son of an onion importer who had immigrated from Russia. ''Chicago is not a city that produces sophisticated people, but it was in Chicago where this child of Jewish immigrants got the idee fixe of becoming an American author, and he had to find a way to prove he wasn't hallucinated, that he could write English sentences and that he could hold the attention of a reader or two. In those days, the WASP establishment wouldn't listen till you established your credentials - there are people even now who don't.'' To establish his credentials, Mr. Bellow wrote two books that filled what he calls ''formal requirements'': ''Dangling Man,'' the story of a young Chicagoan awaiting induction into the war, was his B.A.; ''The Victim,'' a portrait of a journalist and his importunate, anti-Semitic alter ego, his Ph.D. Both these somber books won modest critical acclaim, but their author, who was living in Paris on a Guggenheim at the time, says he was already sinking ''into a depression by trying to do the wrong things.'' In a kind of manic reaction, he began another book, a book that he would write ''in a purple fever'' over the next three years. The book, of course, was the exuberantly picaresque ''Augie March.'' ''Augie March'' marked Mr. Bellow's discovery of his own voice. It was a supple voice, infused with the rhythms and idioms of Yiddish, a voice that was capable of articulating a moral vision and lofty philosophical speculation in the most colloquial of terms. ''I loosened up,'' Mr. Bellow recalls, ''and found I could flail my arms and express my impulses. I was unruly at first and didn't have things under control, but it was at least a kind of spontaneous event. It was my liberation.'' ''Augie March,'' Mr. Bellow said at the time, came easily -all he had to do ''was to be there with buckets to catch it'' - and it won the National Book Award in 1953. But, in retrospect, the experience was somewhat disconcerting as well, for it revealed to Mr. Bellow certain prejudices within the literary community that would last for many years. ''I began to discover,'' he says, ''that while I thought I was simply laying an offering on the altar like a faithful petitioner, other people thought I was trying to take over the church. It came at a strange point when I think the WASP establishment was losing confidence in itself, and it felt it was being challenged by Jews, blacks and ethnics, and some people were saying there was a Jewish mafia, and other people, who should have had more sense, spoke of - well, they didn't use the word conspiracy, but they saw it as an unwelcome eruption. I began to talk of Malamud, Roth and me as Hart, Shaffner & Marx, and there was a pathetic absurdity under it all - all we wanted was to add ourselves to the thriving enterprise we loved; no one wanted to take over. That's a motive worthy of the Mafia, and I don't think Hart, Shaffner & Marx were Mafiosi.' ''I think of myself as an American of Jewish heritage,'' he goes on. ''When most people call someone a 'Jewish writer,' it's a way of setting you aside. They don't talk about the powers of the 'Jewish writers' who wrote the Old Testament; they say to write novels you need to know something about manners, which is something you have to be raised in the South to know. I felt many writers (during the 50's and early 60's) treated their Jewish colleagues with unpardonable shabbiness, and anti-Semitism after the Holocaust is absolutely unforgivable.'' With the breakthrough in style achieved in ''Augie March,'' there also came a shift in tone. Whereas the first two books shared a certain depressive quality - underlined by the fact that their heroes did little to resolve the condition of their alienation - ''Augie March'' was a wildly extroverted work, ending with its hero looking forward to his next adventure. Later books such as ''Henderson, the Rain King'' and ''Herzog'' would go somewhat further: each ended with its protagonist taking the first step toward an affirmation of his life, and these books would also play, with greater facility, between what Mr. Bellow refers to as ''the two sides of my psyche'' -the brooding side and the exuberant. ''For many years,'' he explains, ''Mozart was a kind of idol to me - this rapturous singing for me that's always on the edge of sadness and melancholy and disappointment and heartbreak, but always ready for an outburst of the most delicious music. I found Mozart temperamentally so congenial. I'm not claiming the same range of talent, but I often feel an affinity with him.'' Certainly many of Mr. Bellow's characters have shared temperamental affinities with their author - a fact that Mr. Bellow acknowledges by quoting Alberto Moravia, who once told him, ''Every novel is some kind of higher autobiography.'' In ''The Dean's December,'' for instance, Albert Corde takes a trip to Bucharest to help his wife attend her dying mother - as Mr. Bellow himself did several years ago - and Corde shares, more or less, his creator's age, occupation and place of residence. Like many of Mr. Bellow's heroes, Corde is also something of a lapsed intellectual, who takes pride and pleasure in exercising his mind, but also worries about the inadequacy of all his theories. As Mr. Sammler puts it, ''Intellectual man had become an explaining creature. Fathers to children, wives to husbands, lecturers to listeners, colleagues to colleagues, doctors to patients, man to his own soul explained. ... For the most part, in one ear and out the other. The soul wanted what it wanted.'' Of course, Mr. Bellow himself has curiously ambivalent attitudes towards academia. He believes, on one hand, that ''it's in the university and only in the university that Americans can have a higher life,'' and yet he also contends that professors ''are so eager to live the life of society like everybody else that they're not always intellectually or spiritually as rigorous as they should be.'' By institutionalizing the avant-garde magazines and giving writers the security of tenure, he argues, universities effectively destroyed the independent literary culture that once existed in this country. Still, Mr. Bellow finds that an academic community provides him with people ''to talk to about the things that concern me most,'' and he has served, since 1964, on the prestigious Committee on Social Thought at the University of Chicago. His decision to leave New York and return to Chicago in the early 60's, he says, was motivated, in part, by what he saw as the increased politicization of writers in New York. When he first arrived in New York during the 40's, a ''young hick'' bent on ''going to the big town and taking it,'' a sense of community existed among writers associated with the Partisan Review. Mr. Bellow became friends with such writers and critics as Meyer Schapiro, Dwight Macdonald, Delmore Schwartz and Clement Greenberg - ''they were not always friendly friends, but they were always stimulating friends'' -and he enjoyed the ''open spirit of easy fraternization'' that animated their discussions. Politics, generally in the form of Marxism, tended to be mostly theoretical. ''Then,'' Mr. Bellow recalls, ''a new generation turned up -a lot of people out of Columbia University, a lot of students of Lionel Trilling, who got into enterprises like Commentary -and suddenly the whole atmosphere in New York became far more political than it had been before. With the Vietnam War and other issues, people became organized in camps, and while I was opposed to the war, I just refused to line up with the new groups. I didn't like it, and it seemed to me a good time to leave New York, because I'd been drawn there in the first place by my literary interests, and there seemed to be no room for an independent writer in New York anymore. It became harder to find people to talk to, and it was harder to stay out of the draft - you were always being solicited for this cause or that, always being drafted for one thing or another. ''People have said in their memoirs that I was guarded, cautious, career-oriented, but I don't think that's so - after all, there was nothing easier in New York during those days than the life of the extremist, and that's continued to be so. I was not comfortable with the extremist life, and so I thought I might as well go back to the undiluted U.S.A., go back to Chicago. It's vulgar but it's vital and it's more American, more representative.'' Indeed, Mr. Bellow finds that in Chicago he is able to keep up with his old high school friends, as well as a cross-section of society including contractors, lawyers, doctors, physicists, historians, policemen and retired social workers - some of whom surface in his fiction. ''You meet people,'' he says, ''They reveal or conceal themselves, and you read them or try. They struggle with their souls or don't. They either generate interest or not. It forms a picture for you. The people who interest me the most do concern themselves with the formation of a soul. The others are what Hollywood used to call the cast of thousands.'' When he is working on a book, Mr. Bellow spends his mornings at an electric typewriter, set up by a window overlooking Lake Michigan. After nine novels, the craft has been mastered, but the magical aspect of the art remains. Mr. Bellow, in fact, has spoken in the past of ''a primitive prompter or commentator within, who from earliest years has been advising us, telling us what the real world is'' - a commentator not unlike Henderson's little voice that constantly cries, ''I want, I want'' - and he attributes his best writing to this unconscious source. ''I think a writer is on track when the door of his native and deeper intuitions is open,'' he says. ''You write a sentence that doesn't come from that source and you can't build around it - it makes the page seem somehow false. You have a gyroscope within that tells you whether what you're doing is right or wrong. I've always felt a writer is something of a medium, and when something is really working, he has a certain clairvoyant power; he has a sense of what's going on. Whenever I've published a book that's received wide attention, I've heard from thousands of people around the world who have been thinking the same thing - as though I'd anticipated things. I didn't mean to, but I've learned one does.'' Since he won the Nobel Prize for Literature in 1976, of course, those letters from readers have increased, as have the demands on Mr. Bellow's time. He is asked to deliver speeches (he recently gave the celebrated Tanner lectures at Oxford) serve on committees and sign all mannner of petitions. As far as he is concerned, these responsibilities act as distractions from his true vocation. ''I could spend the rest of my life now functioning on committees,'' he says, ''standing up for all the right things and denouncing all the bad ones. What good this does your art, I leave to the expert guessers to guess at. I have yet to feel I've intimidated Brezhnev by signing protests.'' ''The Nobel changes things in different ways,'' he continues. ''For one thing, you feel that you have more authority, and if the Academy was mistaken in giving you the prize, you try to make the best of it, and recover your balance and your normal poise and not feel oppressed by the weight of this honor. I don't intend to let this laurel wreath of heavy metal sink me. I'm treading water very successfully, thank you. I know people like John Steinbeck thought it was the kiss of death, but I've decided to choose my own death kiss. No one's going to lay it on me.''

Subject: Taco Bell: A Side Order of Human Rights From: Emma To: All Date Posted: Wed, Apr 06, 2005 at 18:35:01 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/04/06/opinion/06schlosser.html?pagewanted=all&position= A Side Order of Human Rights By ERIC SCHLOSSER Monterey, Calif. — AND now a word of good news from the world of fast food. Last month, the Coalition of Immokalee Workers, a group that represents farm workers in southern Florida, announced that it was ending a four-year boycott of Taco Bell. The most remarkable thing about the announcement was the reason behind it: Taco Bell had acceded to all of the coalition's demands. At a time of declining union membership, failed organizing drives and public apathy about poverty, a group of immigrant tomato pickers had persuaded an enormous fast food company - Yum Brands, which in addition to Taco Bell owns KFC, Pizza Hut, A&W All American Food Restaurants and Long John Silver's - to increase the wages of migrant workers and impose a tough code of conduct on Florida tomato suppliers. 'Human rights are universal,' said Jonathan Blum, a senior vice president of Yum, adding that under Taco Bell's new labor rules 'indentured servitude by suppliers is strictly forbidden.' The need for a corporate edict against slavery in the United States reveals just how bad things have become for farm workers. But it also suggests that the fast food companies now sitting atop America's food system can prevent the sort of abuses that state and federal officials seem unwilling to address. Migrant farm workers have long been the nation's poorest group of workers. Although wages and working conditions greatly improved during the 1970's, thanks to the efforts of Cesar Chavez and the United Farm Workers, the rise of illegal immigration and anti-union sentiment later eroded those gains. In California, where more than half of America's fruits and vegetables are grown (and mainly picked by hand), the hourly wages of some farm workers adjusted for inflation have fallen by more than 50 percent since 1980. Today the majority of America's farm workers are illegal immigrants. They often live in run-down trailers, sheds, garages and motels, where a dozen or so may share a room. Their status as black market labor makes them fearful of being deported, wary of union organizers and vulnerable to exploitation. The typical migrant farm worker is a young Mexican male who earns less than $8,000 a year. The working conditions in the fields of Florida are especially bad. According to a recent study by the Urban Institute, perhaps 80 percent of the migrants in Florida are illegal immigrants. They are usually employed by labor contractors, who charge them for food, housing, transportation - and, on occasion, smuggling fees. These charges are often deducted from workers' paychecks, trapping migrants in debt. Since 1996, six cases of involuntary servitude have resulted in convictions in Florida; many others have probably gone undetected. In one of these cases, hundreds of farm workers were held captive by labor contractors based in La Belle and Immokalee, Fla., forced to work without pay and warned that their tongues would be cut off if they tried to escape. The Florida legislature has done little to help migrants. Agriculture is the state's second-largest industry, after tourism, and many legislators have close ties with leading growers. The Coalition of Immokalee Workers is one of the few organizations willing to fight for migrant workers in Florida. Founded in 1996 and based in the town of Immokalee, amid lush tomato fields and citrus groves, the group helped the United States Justice Department gain convictions in five of the six slavery cases. During the late 1990's members of the coalition learned that Taco Bell was a major purchaser of tomatoes grown in Immokalee, where the wages of migrants (adjusted for inflation) had fallen by as much as 60 percent during the previous two decades. The coalition asked the fast food chain to pressure its Florida suppliers, seeking a wage increase and guarantees that human rights would be respected. When Taco Bell failed to respond, the coalition started a nationwide boycott in April 2001, focusing its efforts at high schools and college campuses. 'Boot the Bell!' was the rallying cry, as students tried to close Taco Bells and block the opening of new ones. At first Taco Bell tried to ignore the protests and to deny responsibility for the behavior of its suppliers. 'We don't believe it's our place to get involved in another company's labor dispute,' Jonathan Blum, the Yum Brands executive, said in an interview with The New Yorker. Asked about the possible link between slavery in Florida and Taco Bell's food, Mr. Blum replied, 'It's heinous, but I don't think it has anything to do with us.' The company's attitude gradually changed as the boycott gained support not only from students, but also from the United Methodist Church, the Presbyterian Church (U.S.A.), the National Council of Churches, the Robert F. Kennedy Memorial Center for Human Rights and former President Jimmy Carter, among others. (Disclosure: I supported the boycott, too, and spoke out on behalf of the coalition.) With coalition members conducting hunger strikes and staging demonstrations in front of Taco Bell headquarters in Irvine, Calif., it seemed increasingly unwise for the nation's leading purveyor of Mexican food to be publicly linked with the exploitation of poor Mexicans. And the coalition's wage demand was by no means outrageous. It was asking for a pay raise of one penny for every pound of tomatoes picked - the first major wage increase in Immokalee since the late 1970's. As part of the agreement with the Coalition of Immokalee Workers last month, Taco Bell vowed to help 'improve working and pay conditions for farm workers in the Florida tomato fields.' It promised to give the penny per pound increase to its Florida suppliers, so that migrant wages could be raised by that amount. It invited the coalition to monitor the new labor policies. And it said it would reward those suppliers that treat farm workers well. The penny-per-pound supplement will nearly double the wages of migrants picking tomatoes for Taco Bell. And though there is some debate about the final cost to Yum Brands, the figure will most likely be a few hundred thousand dollars a year - not a huge sum for a fast food company with annual sales of about $9 billion worldwide. Over the past few years the fast food industry has introduced healthier foods in response to consumer demands. It has adopted tough animal welfare policies in the wake of criticism from animal rights activists. The Taco Bell agreement demonstrates, for the first time, an industry commitment to farm workers' rights in the United States. Only a small number of tomato pickers will enjoy a wage increase as a result of the Taco Bell deal, but it's a step on the right path. And what's the next step? Although farmers are often demonized in reports about migrant labor, it's important to point out that they are under tremendous pressure from the leading fast food chains to reduce costs. Food-service companies now purchase the majority of fresh produce in the United States - and farmers often believe that cutting wages is necessary to cut prices for their largest customers. Meaningful change, therefore, will have to come from the top. McDonald's seems an obvious target for the next boycott. It is one of the nation's leading purchasers of lettuce, tomatoes, apples and pickled cucumbers. It is far and away the industry giant. The failure of government to protect the weakest and most impoverished workers in the United States has left the job to corporations and consumers. Taco Bell deserves credit for acknowledging its responsibility on this issue. Now McDonald's, Burger King, Wendy's and Yum's other brands need to do the same.

Subject: My favorite fast food From: johnny5 To: Emma Date Posted: Wed, Apr 06, 2005 at 21:05:00 (EDT) Email Address: johnny5@yahoo.com Message: Great, now everyone go out and celebrate and reward thier good behavior and buy the johnny5 friday night special - 1 meximelt and 1 burrito supreme. Make sure you got a bottle of GASX handy too - hehe.

Subject: Japanese Real Estate Investment From: Emma To: All Date Posted: Wed, Apr 06, 2005 at 18:29:51 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/01/26/business/26prop.html?ei=5070&en=8a256311af61f658&ex=1113451200&pagewanted=all&position= Echoes of the 80's: Japanese Return to U.S. Market By TERRY PRISTIN Japanese investment in United States real estate soared in the 1980's, as companies and financial institutions poured nearly $300 billion into high-profile properties like Rockefeller Center in New York and the Pebble Beach Golf Club in California. But the value of many of these assets plunged by as much as 50 percent in the early 90's, and for more than a decade, the Japanese have been sellers rather than buyers. After a 15-year hiatus, however, Japanese capital is re-entering the United States market, but much more quietly and cautiously this time. 'They have begun to test the waters again,' said Bill Collins, who runs the capital markets group at Cassidy & Pinkard, a real estate services firm in Washington. For the first time in years, for example, Mitsui Fudosan, Japan's largest real estate company and the owner since 1986 of 1251 Avenue of the Americas, the former Exxon Building, is searching for other buildings to buy in the two most competitive markets in the United States, said Michael W. McMahon, a senior vice president. 'We're targeting Midtown Manhattan and Washington, D.C.,' he said. A survey released this month by the Association of Foreign Investors in Real Estate, a trade group, found that most of its members expect the Japanese to lag only Germans and Australians as the most active foreign buyers of United States property. 'We have seen more activity from Japan in the past six months than we have in the past six years,' said James A. Fetgatter, the trade group's chief executive. 'I have Nikkei Shimbun coming in to talk to me today,' he said, referring to the Japanese newspaper. 'I've never met anyone from Nikkei Shimbun before.' So far, much of this Japanese money has been used to buy shares in publicly traded companies, rather than individual buildings. In October 2003, it became legal in Japan to sell portfolios of shares in real estate investment trusts, allowing special funds to be marketed specifically to Japanese investors. Some of these funds buy shares only in REIT's based in the United States, which largely own property in this country, while other funds own a portfolio of REIT shares from various countries, including the United States. Since these funds were first sold, investment in them has steadily increased, reaching $4.6 billion last month. Although this sum is just a fraction of the total $300 billion invested in United States REIT's, real estate specialists say it is significant nonetheless. 'It's not a huge number, but it's an encouraging number,' said Michael R. Grupe, a senior vice president of the National Association of Real Estate Investment Trusts, a trade group. 'It's been a fairly even growth path.' Takayuki Kiura, the managing director of a new Tokyo office that Heitman, a Chicago-based company that manages capital on behalf of pension funds and other investors, opened just this month, estimates that two-thirds of the $4.6 billion is invested in United States REIT's, with the rest in REIT's in other countries. A treaty that went into effect on July 1 gives Japanese investors in United States REIT's the same tax status as American investors, enhancing the appeal of these funds, said Tony Edwards, the general counsel of the REIT trade group. Heitman is just one of several American companies that have teamed with Japanese financial institutions to create REIT funds that are marketed to investors in Japan. Heitman manages about $270 million worth of assets for three funds with Nomura Asset Management and a fourth with Sumitomo Trust Bank. AEW Capital Management, a Boston company whose clients are mainly institutions, has a similar relationship with Nissay. And LaSalle Investment Management, part of the real estate services company Jones Lang LaSalle, manages a global REIT fund for Nikko that is aimed at Japanese investors. The American companies say they are focusing on Japan because it has an aging population with a long tradition of accumulating savings and a need for current income that cannot be met by low-yielding government bonds. REIT's, which pool money from investors to buy property, are required to return 90 percent of their taxable income to their investors, which means that they usually offer higher yields than most other types of securities. The Japanese have their own real estate investment trusts, but the industry is still relatively new, with only about 15 so-called J-REIT's in existence. The average dividend is about 3.5 to 4 percent, compared with an average of 6 percent for American companies. 'Besides that,' Jeroen Beimer, an analyst for Global Property Research, a company in Amsterdam that provides data for financial institutions, wrote in an e-mail message, 'J-REIT's primarily invest in Tokyo offices and to a lesser extent retail, so the spread of the portfolio in sector and geographical terms is limited. Another reason is that the underlying Japanese real estate market has faced tough times in the past 10 years, with declining prices and rising vacancy rates. The confidence in the market is therefore not that high.' Mark A. Grinis, a partner in Ernst & Young's real estate practice who recently moved back to New York after spending seven years in Tokyo, said that given their experiences of the past decade, Japanese investors would logically find more transparent and liquid investments in real estate attractive. 'You have a menu of options today that you didn't have in the late 1980's,' he said. The new focus on Japan is part of a growing globalization of the REIT industry. Mr. Grupe of the REIT trade group said that publicly traded real estate companies can be found in about 20 countries. 'They come in all different forms,' he said. 'Many of these countries tend to use the moniker 'REIT' to refer to that particular sector, but not all.' This trend is providing investors with a way to further diversify their real estate portfolios, said Michael J. Acton, the director of research for AEW Capital Management. 'Every city has its own cycles,' he said. Although the downturn in the United States real estate cycle in the early 1990's caused painful losses for many Japanese investors and banks, the Japanese continue to have significant holdings in this country. Mitsubishi Estate, for example, lost control of Rockefeller Center itself, but the company, through its wholly owned Rockefeller Group, still owns 7.7 million square feet of space there, including the Time & Life Building at 1271 Avenue of the Americas. Early last year, the Association of Foreign Investors in Real Estate reported that Japan was the leading source of foreign investment in American real estate, with a 26 percent share, the latest figure available. But Mr. Fetgatter cautioned that 'any statistics about foreign investment are always sketchy' since the countries do their own reporting. Sumitomo Life Realty (N.Y.) Inc., a subsidiary of the large Japanese insurance company (and a separate company from Sumitomo Trust), has a relatively new business strategy for geographically diversifying its United States portfolio in the hope of lowering its risk, said Norio Morimoto, the company president. Sumitomo Life Realty formed a partnership with Hines, the Houston-based real estate company, to invest in prime office buildings. The Japanese company subsequently sold four buildings to the fund: 499 Park Avenue, 425 Lexington Avenue and 600 Lexington Avenue in Midtown Manhattan and 1200 19th Street in Washington. About one-quarter of the investors in the Hines-Sumisei U.S. Core Office Fund, which now owns four more buildings in Houston and San Francisco, are Japanese, said Charles N. Hazen, the president. But other Japanese real estate companies are once again seeking to compete for buildings directly. Mr. Collins said that starting about six months ago, a 'handful of seasoned real estate companies' began looking for buildings priced around $100 million. Woody Heller, who heads the capital transactions group at Studley, the brokerage firm, said: 'We haven't seen any high-profile purchase, but we're all beginning to have conversations with them. Whether they will be competitive is unclear in my mind.' Mr. McMahon, the Mitsui Fudosan America executive, said his company was not looking for trophy buildings but rather for those that have potential for improvement. He acknowledged that bidding for properties in Washington and Midtown Manhattan, is challenging. 'We don't know at this point whether we're going to be successful,' he said. In the last decade, Japanese investors have become more sophisticated about market cycles, Mr. Morimoto said. 'We learned a lot from the experience,' he said. 'The best strategy is to diversify the location and timing of the investment, and by doing that we could have diversified our risk.'

Subject: Thanks for the article Emma - mom has passed From: johnny5 To: Emma Date Posted: Thurs, Apr 07, 2005 at 19:51:10 (EDT) Email Address: johnny5@yahoo.com Message: Mom got this from her financial people today on the phoenix fund - so it looks like the japanese real estate plan is dead in the water for her: RE: 1031 exchange into japanese commercial Thanks for the interesting material. I am generally against investing in real estate unless you have some ability to manage it yourself or at a minimum 'keep an eye on it.' Back in the 80's brokerage firms were selling these limited partnerships all over the country. They had real pretty brochures and all, but most people had no idea where their money was invested. The Government of course changed the tax law and basicly destroyed the wealth that was being created in these programs. Many of them were created with tax benefits as a part of the success of the programs. The Government did their thing and hurt investors again just like they have done every time. So like I said in the first sentence of this email, you have to be able to control it, see it and be able to sell it if things don't work out as expected (dump it).

Subject: Local boys stiff west palm beachers From: johnny5 To: All Date Posted: Wed, Apr 06, 2005 at 18:29:24 (EDT) Email Address: johnny5@yahoo.com Message: These guys were local good ole boys, 9 years building thier business and clients, trusted by most rich miserly greedy west palm beachers - and lost it all shorting GOOG at 160 - but japanese real estate is a better bet isn't it? If you can ensure that if everything else goes south you still have your real estate holdings - that is worth something no? http://www.palmbeachpost.com/business/content/business/epaper/2005/04/02/a2f_klfinancial_0402.html KL investors' recovery prospects bleak By David Sedore Palm Beach Post Staff Writer Saturday, April 02, 2005 It's been more than a month since KL Financial closed its doors one step ahead of the law, but the outlook for the hedge funds' 250 investors hoping to recover their money hasn't changed. In a word, it's grim. Michael Tein, the attorney working with KL Financial's court-appointed receiver, Guy Lewis, told investors Friday that about $2.5 million has been recovered from various accounts. Considering that investors lost as much as $250 million, that number is 'extremely disappointing,' Tein said. 'Right now, we are not optimistic that number will change by any degree of magnitude,' Tein said. 'You're looking at pennies on the dollar that we have been able to locate.' Tein discussed the latest updates in the case with investors via conference call and promised to keep them informed as matters progress. KL Financial, which maintained offices in West Palm Beach, Irvine, Calif., and San Francisco, was a hedge fund that offered high-risk, high-reward investments to the well-to-do — including some of Palm Beach's wealthiest. The firm shut down in late February in the wake of a Securities and Exchange Commission probe. The SEC sued KL and its principals, including Won S. Lee of Riviera Beach and John Kim of Jupiter, alleging that the operation was a fraud. Lee is now in South Korea. A third principal, John Kim's brother Yung Kim, is also named in the suit and is believed to be in South Korea. A federal grand jury is now investigating KL Financial, and Tein said the receiver's office is cooperating with the probe and providing the FBI with KL documents. Also Friday, Tein told investors that the office is hoping accountants and lawyers who worked for KL will assist in locating assets. Tein said John Kim will be held to a promise to cooperate that he made in court. Kim is to meet with the receiver's staff later this month. One investor asked Tein if he had any feeling for how much investors eventually will be able to collect. 'I don't,' Tein said. 'It's simply too early to tell. The receiver is not overly optimistic that you're going to see any considerable part of your assets back.'

Subject: Illegals contribution to SS costing in other areas From: johnny5 To: All Date Posted: Wed, Apr 06, 2005 at 17:21:39 (EDT) Email Address: johnny5@yahoo.com Message: http://www.siliconinvestor.com/readmsg.aspx?msgid=21202153 http://www.cis.org/articles/2004/fiscalexec.html#Complex Social Security and Medicare. Although we find that the net effect of illegal households is negative at the federal level, the same is not true for Social Security and Medicare. We estimate that illegal households create a combined net benefit for these two programs in excess of $7 billion a year, accounting for about 4 percent of the total annual surplus in these two programs. However, they create a net deficit of $17.4 billion in the rest of the budget, for a total net loss of $10.4 billion. Nonetheless, their impact on Social Security and Medicare is unambiguously positive. Of course, if the Social Security totalization agreement with Mexico signed in June goes into effect, allowing illegals to collect Social Security, these calculations would change. http://www.cis.org/articles/2004/fiscalcoverage.html U.S. households headed by illegal aliens used $26.3 billion in government services during 2002 but paid only $16 billion in taxes, an annual cost to taxpayers of $10 billion, says a report issued yesterday by the Center for Immigration Studies (CIS). The report, based on U.S. Census Bureau data, also said if illegal aliens now in the country — estimated at between 8 million and 12 million — received amnesty, paid taxes and used services similar to households headed by legal immigrants, the estimated net deficit would increase from $10 billion to more than $29 billion. En español: http://www.siliconinvestor.com/readmsg.aspx?msgid=21202153 http://www.cis.org/articles/2004/fiscalexec.html#Complex Seguridad Social y Seguro de enfermedad. Aunque encontramos que el efecto neto de casas ilegales es negativo en el nivel federal, igual no es verdad para la Seguridad Social y Seguro de enfermedad. Estimamos que las casas ilegales crean una ventaja neta combinada para estos dos programas en el exceso de $7 mil millones al año, contabilidad para cerca de 4 por ciento del exceso anual total en estos dos programas. Sin embargo, crean un déficit neto de $17.4 mil millones en el resto del presupuesto, para una pérdida neta total de $10.4 mil millones. No obstante, su impacto en la Seguridad Social y Seguro de enfermedad es inequívoco positivo. Por supuesto, si el acuerdo del totalization de la Seguridad Social con México firmado en junio entra efecto, permitiendo que los illegals recojan la Seguridad Social, estos cálculos cambiarían. http://www.cis.org/articles/2004/fiscalcoverage.html Las casas de ESTADOS UNIDOS dirigieron por los extranjeros ilegales utilizaron $26.3 mil millones en servicios de gobierno durante 2002 pero pagaron solamente $16 mil millones en impuestos, un coste anual a los contribuyentes de $10 mil millones, dicen un informe publicado ayer por el centro para los estudios de la inmigración (CIS). El informe, basado en los datos de la oficina de censo de ESTADOS UNIDOS, también dichos si los extranjeros ilegales ahora en el país - estimado en entre 8 millón de y 12 millones - amnistía recibida, los impuestos pagados y los servicios usados similares a las casas dirigidas por los inmigrantes legales, el déficit neto estimado aumentarían a partir de $10 mil millones a más de $29 mil millones.

Subject: Reality in the Creation of Fiction From: Emma To: All Date Posted: Wed, Apr 06, 2005 at 12:44:00 (EDT) Email Address: Not Provided Message: February 11, 1962 http://www.nytimes.com/books/97/05/25/reviews/bellow-reality.html February 11, 1962 A Novelist-Critic Discusses the Role of Reality in the Creation of Fiction By SAUL BELLOW I have read somewhere that in the early days of the movies a miner in Alaska rushed at the screen to batter down the villain with his shovel. Probably he was drunk, but his action was significant nevertheless. This man had considered it a practical thing to travel thousands of miles into a frozen wilderness to dig for buried treasure. Money, land, furs, jewels, champagne, cigars, silk hats he must have accepted as legitimate objects of the imagination. Yet there was no place in his mind for this new sort of transaction. It must have seemed to him that if the fellow had taken the trouble to tie the kicking heroine to the tracks, he must mean business. His imagination could only conceive of real objects. Thus, with the self-same shovel he dug for gold and swung at shadows. Few people make this error in so primitive a form, but almost no one is altogether free from it. We understand, of course, that art does not copy experience but merely borrows it for its own peculiar purposes. Americans however do not find it always simple to maintain the distinction. For us the wonder of life is bound up with the literal fact, and our greatest ingenuity is devoted to the real; and this gives reality itself magical and even sacred properties and makes American realism very different from the European sort. With us the interest of the reader and often of the writer, too, is always escaping toward the fact. The non-factual imagination also returns to the fact. Ask a woman to describe her son, and she is likely to tell you with pride that he is 6 feet 2 or 3 inches and weighs 220 pounds, that his shoes are size 14 and that he eats four eggs at breakfast and two pounds of steak at a sitting. Her love in short, frequently takes a statistical form. Years ago, in Chicago, I used to listen to a Negro virtuoso, Facts-and-Figures Taylor, who entertained shouting crowds in Washington Park by reciting the statistics he had memorized in the Public Library. “You want to know what the steel industry exported in nineteen and twenty-one? You listen to this now.” “You tell ‘em, Facts-and-Figures. Give ‘em hell!” People who are not particularly friendly to art may be reconciled to it by factual interests, by descriptions of the stretching or priming of the canvas, the method of applying the paints or the dollar value of the picture. One thinks more kindly of a painting valued at $10,000, the original factory colors dripped from a six-inch brush, than of one which has not applied to the prevailing form of the imagination for consideration. The theatregoer may be pleased to learn that behind the living room represented on the stage are fully furnished bathrooms or kitchens that will never be seen but are there to give a reassuring sense of completeness of closure. The imitation will be absolutely genuine. Because we have a strong taste for the solid background, for documentation, for accuracy, for likeness, we are often confused about the borders between art and life, between social history and fiction, between gossip and satire, between the journalist’s news and the artist’s discovery. The demands, editorial and public, for certified realities in fiction sometimes appear barbarous to the writer. Why this terrible insistence on factual accuracy? “Our readers will want to know,” an editor will sometimes say, “whether your information is correct.” The research department will then make inquiries. How many stories does the Ansonia Hotel really have; and can one see its television antennae from the corner of West End Avenue and Seventy-second Street? What do drugstores charge for Librium? What sort of mustard is used at Nedick’s? Is it squeezed from a plastic bottle or applied with a wooden spoon? These cranky questions will be asked by readers, compulsively. Publishers know they must expect their errors to be detected. They will hear not only from the lunatic fringe and from pedants but from specialists, from scholars, from people with experience “in the field,” from protective organizations and public relations agencies, from people who have taken upon themselves the protection of the purity of facts. Archaeologists and historians are consulted by movie producers in the making of Roman spectaculars. As long as the chariots are faithful copies, the fire real Greek fire, it seems to make little difference that the dialogue makes you clutch your head, that the religious theme is trumped up with holy music and cunning lights. It presently becomes clear that the protagonist is not Ben-Hur, not Spartacus, but Knowhow Art based on simple illusion is art in one of its cruder forms, and it is this that Hollywood with its technical skills has brought to perfection. The realistic method made it possible to write with seriousness and dignity about the ordinary, common situations of life. In Balzac and Flaubert and the great Russian masters the realistic externals were intended to lead inward. I suppose one might say that now the two elements, the inward and the external, have come apart. In what we call the novel of sensibility the intent of the writer is to pull us into an all- sufficient consciousness which he, the writer, governs absolutely. In the realistic novel today the writer is satisfied with an art of externals. Either he assumes that by describing a man’s shoes he has told us all that we need to know about his soul, or he is more interested in the shoes than in the soul. Literalists who write to the editor are rather odd and amusing people who do not need to be taken too seriously, but the attitude of the writer himself toward externals is a serious matter. The facts may excite a writer deeply, and in America we have a poetry of fact--the details of labor in Walt Whitman, the knowledge of navigation in Mark Twain, the descriptions of process in Hemingway’s fishing stories. But in every case it is the writer’s excitement that counts. Without this excitement the facts are no more interesting than they would be in a manual of river navigation or a Sears, Roebuck catalogue. What is happening now is that the intrinsic excitement of the facts themselves has become intense, and the literary imagination must rival the power of the real. With us this rarely happens. The American desire for the real has created a journalistic sort of novel which has a thing excitement, a glamour of process; it specializes in information. It resembles the naturalistic novel of Zola and the social novel of Dreiser, but is without the theoretical interests of the first and is unlike the second in that it has no concern with justice and no view of fate. It merely satisfies the readers’ demand for knowledge. From this standpoint it may sometimes be called an improving or moral sort of book. However, it seldom has much independent human content, and it is more akin to popularized science or history than to the fiction of Balzac or Chekhov. It is not actively challenged by the “novel of sensibility.” The living heirs of Henry James and Virginia Woolf do not do very well, and I’m afraid that they largely deserve their neglect. They have receded altogether too far from externals, from observation, in their desire for mental independence and free sensibility. They give us very little information; and after we have visited them in their tree houses once or twice they lose their charm. The novel in America has taken two forms, neither satisfactory. Those writers who wish to meet the demand for information have perhaps been successful as social historians, but they have neglected the higher forms of the imagination. The novel of sensibility has failed to represent society and has become totally uninteresting. It seems hard for the American people to believe that anything can be more exciting than the times themselves and our common life. These modern facts perhaps have thrust imagined forms into the shadow. We are staggeringly rich in facts, in things, and perhaps like the nouveau riche of other ages we want our wealth faithfully reproduced by the artist. By now it is misleading to speak of the facts as if they were soluble, washable, disposable, knowable. The facts themselves are not what they once were and perhaps present themselves to the imagination of the artist in some new way. A. J. Liebling, in an uncommonly good article on Stephen Crane (The New Yorker, Aug. 5, 1961), writes, “We have seen in our time that the best writers as they mature become journalists--Sartre, Camus, Mauriac, Hemingway.” Are we to suppose therefore that the artistic imagination at its highest development must be drawn back into the world and its realities? Is the challenge of journalism higher than that of art itself in our time? Some of our novelists can scarcely help being better fact-bringers than artists. They are turning ground that has never been turned before--the Army, the laboratory, the modern corporation, the anarchic sexual life of “free spirits”: such phenomena in the raw state are not quickly assimilated into art. Moreover, it’s hard for writers to get on with their work if they are convinced that they owe a concrete debt to experience and cannot allow themselves the privilege of ranging freely through social classes and professional specialties. A certain pride in their own experience, perhaps a sense of the property rights of others in their experience, holds them back. The novelist, convinced that the novel is the result of his passionate will to suppose that he can know everything about the life of another human being, finds that he must get through the obstacles of the literal to come at his subject. Thus, he is prevented from doing the essential thing. Hard knowledge is demanded of him; to acquire this hard knowledge, he must at least temporarily transform himself into some sort of specialist. How then is the novelist to write about such questions as power--power which he has never experienced? Evidently he is asked to be reliable about the lower ranges of fact and is not expected to concern himself with the upper. He may be realistic but not about the things that matter, the arrangements that shape our destiny. In this smaller way to stick to the facts limits him to minor schemes of social history, to satire, to muckraking and leveling, or to the penny psychology of private worlds. To this sort of “objectivity” writers give all they’ve got. Strong on experience, they are much, much less strong on the truth. The greatest of the realists always believed that they owed a very special debt to truth. “The hero of my tale, whom I love with all the strength of my soul, whom I have tried to set forth in all his beauty, and who has always been, is, and always will be the most beautiful, is--the truth.” So wrote Tolstoy at the conclusion of “Sevastopol in May.” And Dostoevsky commenting on “Anna Karenina” tells us that he found the book at times very monotonous and “confined to a certain caste only” and that as long as it was merely a description of life in society it made no great claim to any deeper interest. Later, he says, “in the very center of that insolent and petty life there appeared a great and eternal living truth, at once illuminating everything. These petty, insignificant and deceitful beings suddenly became genuine and truthful people worthy of being called men.” That is, after all, what the novelist wants, isn’t it?

Subject: Incompetencia o mentira From: Pancho Villa To: All Date Posted: Wed, Apr 06, 2005 at 11:39:18 (EDT) Email Address: nma@hotmail.com Message: Incompetencia o mentira ¿QuÉ ES peor, la incompetencia o la mentira? Cuando se trata de un Gobierno, como el de Bush, que planteó una guerra preventiva contra Irak por unas armas de destrucción masiva que no existían, lo primero resulta casi más preocupante. Es lo que ha apuntado la comisión relativamente independiente que ha estudiado estos fallos de los servicios de inteligencia con una conclusión meridiana: estaban 'completamente equivocados' en casi todos sus juicios sobre el arsenal químico, bacteriológico y nuclear de Sadam Husein. Un año de trabajo ha producido escasos resultados por parte de ese órgano presidido por un juez retirado y un ex senador, incluidas 74 recomendaciones para mejorar la eficacia de los servicios de información. La Comisión del 11 -S ya vio fallos similares e hizo una labor mucho más meritoria. A falta del veredicto de la Comisión de Inteligencia del Senado, este último intento no ha encontrado manipulación o presiones políticas para que los servicios de inteligencia produjeran informes en la dirección que quería la Administración para justificar la invasión de Irak. Sin embargo, sí apunta que los servicios 'vendían' la información que a su juicio iba a interesar 'a sus clientes, o al menos a su cliente principal' (el presidente Bush). Ante lo que es, como poco, uno de los mayores fiascos de estos servicios en su historia, nadie asume la responsabilidad. El entonces director de la CÍA, George Tenet, ya dimitió en su día y el presidente, otorgó la Medalla Presidencial de la Libertad. Todos parecen lavarse las manos.(I cannot seem to lose the stains when I wash my hands?) Cabe preguntarse si esta incompetencia se ha mantenido, ahora que desde Washington se señala con el dedo a Irán y a Corea del Norte por sus programas de armas nucleares. La inteligencia estadounidense tardará en recuperar la credibilidad perdida en su país y en el resto del mundo. Si es que no se demuestra un día, en unos nuevos papeles del Pentágono, que algunos responsables políticos hicieron algo más que dejarse engañar por los servicios. Pues nada excluye que a la incompetencia confesa se sumara la mentira interesada. EL Pais, martes 5 de abril 2005

Subject: Am I the only Pkarchiver that cant read spanish? From: johnny5 To: Pancho Villa Date Posted: Wed, Apr 06, 2005 at 17:13:45 (EDT) Email Address: johnny5@yahoo.com Message: Pancho perhaps I have not been here long enough but what is with this posting of spanish articles that I cannot read? My mexican grandfather is probably rolling in his grave, but translation takes time and there is so little it seems. If you are trying to make the spanish community feel welcome I applaud your efforts to bring a new ethic group to the wealth of our community - however the St Pete times already beat you to the punch - hehe: http://www.siliconinvestor.com/readmsg.aspx?msgid=21197311 South Florida went from English only to Spanish only in less than 15 years. What happened? http://www.siliconinvestor.com/readmsg.aspx?msgid=21197370 What happened? Here is a good long read from the St Pete times on the influx of illegals when we let culture come in too fast to be absorbed quickly. You can read it in english or espanol - hehe! http://www.stpetetimes.com/2004/webspecials04/francisco/ Editor’s note You are reading history. This is the first story also published in Spanish by the St. Petersburg Times. In this special report, we examine Clear-water’s immigrant Mexican community, how and why it grew to nearly 20,000 and what changes have occurred both here in Clearwater and in Hidalgo. As we prepared this story, we knew it would be important for the Spanish speaking community to have the opportunity to read it. So we are publishing this project in both English and in Spanish. Last year I went to mexico to get a feel for the invaders - I did not like my trip for the most part and did not get a sense of brotherly love from these people when in thier native land. http://world.altavista.com/tr In English: Incompetencia or lie What IS worse, the incompetencia or the lie? When one is a Government, like the one of Bush, that raised a preventive war against Iraq by arms of massive destruction which they did not exist, first it is almost more worrisome. It is what it has pointed the relatively independent commission that has studied these failures of the intelligence services with a dazzling conclusion: they were ' completely equivocados' in almost all its judgments on the chemical, bacteriological and nuclear arsenal of Sadam Husein. A year of work has produced little results on the part of that organ presided over by a distant judge and an ex- senator, including 74 recommendations to improve the effectiveness of the information services. The Commission of the 11 - S already saw similar failures and made a work much more commendable. To lack of the verdict of the Commission of Intelligence of the Senate, this last attempt has not found political manipulation or pressures so that the intelligence services produced information in the direction that loved the Administration to justify the invasion of Iraq. Nevertheless, yes it aims that the services ' vendían' the information that in his opinion was going to interest ' its clients, or at least at his client principal' (president Bush). Before which it is, like little, one of the greater fiascos of these services in its history, nobody assumes the responsibility. The then director of BACKS WATER it, George Tenet, already resigned in his day and the president, granted the Presidential Medal of the Freedom. All seem to wash manos.(I cannot seem to lose the stains when I wash my hands) It is possible to ask itself if this incompetencia has stayed, now that from Washington is indicated with the finger to Iran and Korea of the North by his programs of nuclear weapons. American intelligence will take in recovering the lost credibility in its country and the rest of the world. If it is that a day is not demonstrated, in new papers of the Pentagon, that some political people in charge did something more than to let itself deceive by the services. Then nothing excludes that to the confesa incompetencia the interested lie was added. The Pais, Tuesday 5 of April 2005

Subject: Re: S...! From: Pancho Villa To: johnny5 Date Posted: Wed, Apr 06, 2005 at 17:32:16 (EDT) Email Address: nma@hotmail.com Message: (Shit!Clever Johnny5 unveiled my plan)Hat off to you dear Johnny5 ;)hehe

Subject: The Cisco Kid From: johnny5 To: Pancho Villa Date Posted: Wed, Apr 06, 2005 at 17:59:54 (EDT) Email Address: johnny5@yahoo.com Message: and Zorro were always favorites of mine and I seem to eat at taco bell almost daily, my grandfathers genes expressing themselves? Hehe - I just wish the mexicans in walmart would not feel so intimidated to talk to me while we fight over the ramen noodles and picante sauce. I was surprised to find out catherine zeta jones was Welsh and not latin http://www.visitwales.com/ Notice they have no spanish translation of thier website even though thier native daughter is often represented as such in the popular movies.

Subject: Re: The Cisco Kid From: Setanta To: johnny5 Date Posted: Thurs, Apr 07, 2005 at 09:22:34 (EDT) Email Address: Not Provided Message: isn't she of a welsh father and argentinian mother (or maybe vice versa!) the welsh and the spanish have a lot in common. they are both dark and swarthy (a slight generalisation i must agree!) and both use the ll in their language i.e. llueve for rain in spanish, llacrwydd for slackness in welsh. i'll be in cardiff in the next few weeks to a) watch the British and Irish Lions play Argentina in rugby before the Lions tour to New Zealand b) play against the Cardiff and Bristol offices in rugby. c) have one or two alcoholic beverages in line with the Lambay Rules for Rugby Tours.

Subject: Greenspan: beware huge mortgage risk From: Pancho Villa To: All Date Posted: Wed, Apr 06, 2005 at 11:08:43 (EDT) Email Address: nma@hotmail.com Message: Greenspan: beware huge mortgage risk Fed chairman says oversight alone won't reduce financial risks of government-sponsored enterprises. April 6, 2005: 10:08 AM EDT WASHINGTON (Reuters) - Federal Reserve Chairman Alan Greenspan Wednesday urged Congress to curb the rapid growth of Fannie Mae and Freddie Mac, saying this was vital to cut the risks the mortgage finance giants pose to the nation's financial system. Fannie Mae and its sister government-sponsored housing enterprise, Freddie Mac, do not lend directly to home buyers. Instead, they buy mortgages from lenders and repackage them as securities for sale to investors. They also hold some mortgages in their own portfolios. The companies together account for nearly half of total residential mortgage debt outstanding, with portfolios of some $1.5 trillion. Greenspan previously has proposed those portfolios be cut to $200 billion for each company. Financial woes at the two companies -- whose enormously complex accounting has been under fire from regulators -- could put huge pressure on the mortgage market. Fannie and Freddie already face the possibility of tougher supervision. Congress is due to weigh legislation that could give their regulator more power over the companies, including authority to approve any new products or programs they want to launch. But in his testimony prepared for the Senate Banking Committee, Greenspan said that stiffer regulation alone was not enough to ease -- and could actually worsen -- the risks the two government-sponsored enterprises (GSEs) pose. 'World-class regulation, by itself, may not be sufficient and, indeed, might even worsen the potential for systemic risk if market participants inferred from such regulation that the government would be more likely to back GSE debt in the event of financial stress,' Greenspan said. 'This is the heart of a dilemma in designing regulation for GSEs.' But he proposed a solution. 'We at the Federal Reserve believe this dilemma would be resolved by placing limits on the GSEs' portfolios of assets, perhaps as a share of single-family home mortgages outstanding or some other variation of such a ratio,' the Fed chief said. Fannie Mae ousted its long-time CEO Franklin Raines last December after regulators found accounting problems at the giant mortgage company. Shares of Fannie Mae (up $1.03 to $53.31, Research) and Freddie Mac (up $0.73 to $62.49, Research) both rose in morning New York Stock trading. http://money.cnn.com/2005/04/06/news/economy/fed_gse.reut/index.htm

Subject: Birth, Death and That Stuff in Between From: Emma To: All Date Posted: Wed, Apr 06, 2005 at 10:52:57 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/books/00/10/15/specials/bellow-connections.html May 13, 2000 Saul Bellow on Birth, Death and All That Stuff in Between By EDWARD ROTHSTEIN Sitting in the office that the art critic Harold Rosenberg once used (his poster of a beautiful Nautilus shell still hangs there), Saul Bellow is leaning back slightly, fingertips touching, pausing before beginning to speak. For a listener whose education was shaped in part by Augie March and Henderson and Mr. Sammler, Mr. Bellow's meditations can seem a creation of his characters' pungent imaginations. Now his surgically shaped phrases and dreamlike imagery make it sound as if he were reciting one of Herzog's letters to the famous dead. Tolstoy is the recipient of this one, or perhaps Mr. Bellow is addressing himself. In the office, whose fading light comes from the small Gothic leaded windows of the University of Chicago, Mr. Bellow asks what is to be made of Ivan Ilych's death. That was Tolstoy's project in his famous short story: to reveal how death, with all its ruthlessness, strips away the creaturely surface of life, as vain pleasures and social climbings give way to final things. But what, then, is a novelist to do? If material life is an illusion and a distraction, it is also where the writer dwells. The surface cannot be avoided; its sensuous transience is of the essence. The novelist honors it with meticulous description, straining to take note of the rush of human sensations. So doesn't the world-dwelling novelist resist the otherworldly insistence of the religious believer? Bellow's meditations returned to me while reading his new novel, ''Ravelstein,'' and not just because I was acquainted with the model for Ravelstein; he is, of course, the political philosopher Allan Bloom, who also taught seminars with Mr. Bellow in Chicago. Ivan Ilych is invoked in ''Ravelstein'' as well, for this too is a portrait of a man headed toward death. Ravelstein is a version of Ilych without the hypocrisy, possessing an almost rabid sensuality, a devotion to luxury, unsated erotic longings and nervously trembling fingers. Ravelstein relishes sensation and desire. ''A human soul devoid of longing,'' he suggests, ''was a soul deformed, deprived of its highest good, sick unto death.'' But what happens to these material tastes as death steals away his strength and mind? Ravelstein believes that ''nothing is more bourgeois than the fear of death'' and that nothing much exists after death. So the essence of things is to be found only in the material world, which, in Ravelstein's view, can lead to philosophic knowledge as well as to sensual pleasure. It is an answer that might have pleased Tolstoy the novelist but dismayed Tolstoy the Christian believer. Chick, the chronicler of Ravelstein's death, also relishes the texture of the material world, believing, in fact, that ''the heart of things is shown in the surface of those things.'' Chick is devoted to pictorial detail. Death, he says, is when the pictures come to an end, though he eventually wonders if there may be something to see after life's images fade. Such themes have often preoccupied Mr. Bellow, but Augie March, Henderson and Herzog test their desires against the wide world, wrestling against its bounds. Their ambition is American, their tragic sense, Jewish. Here possibilities have shrunk as the problems have grown: the world is the size of a man's soul. The desires are as great, but the natural limits greater. If death can strip away all surfaces and we are fated to live in death's shadow, then by what guidelines are we to live? How are we to shape our lives? ''The soul of another is a dark forest,'' says Ravelstein. There was a time when Mr. Bellow was called (along with Philip Roth and Bernard Malamud) an ''American Jewish novelist,'' a label he mocked as resembling a haberdashery, the writers as the Hart, Schaffner & Marx of literature. But the label also identified a temperament: the Jewish novelists of the 1950's and 60's were new inheritors of the American estate, intoxicated with its personalities and possibilities. Recently Mr. Roth was asked whether it was necessary for the main character of his 1997 novel ''American Pastoral,'' Swede Levov, to be Jewish. ''It was for me,'' he responded. It is through knowledge of the particular that the universal is perceived. But now, in this Bellow novel, and in Mr. Roth's new novel, ''The Human Stain,'' the particular is itself unreliable. Mr. Bellow wonders about the stability of the material world. Mr. Roth wonders about the stability of character and identity. Mr. Roth's alter mind, Nathan Zuckerman, like Mr. Bellow's Chick, is ailing and aging, trying to comprehend the life of a friend, Coleman Silk, after being shaken by his death.'' Mr. Roth's political canvas is large -- racial identity, the Vietnam War, political correctness -- but the focus is concentrated. How can a soul's dark forests be illuminated? Mr. Roth never forgets our animal being, the sensual habits and desires that are cloaked by our public selves. Still, what do we know of another or of ourselves? There is, of course, the public persona we put forward. (''Everyone Knows'' is the title of the first chapter.) But as Zuckerman learned in ''American Pastoral,'' interpreting appearances is an impossible task. He will always get it wrong, always misinterpret. However much he may be devoted to understanding the human, reality is always ready to ''slip a punch,'' showing that what was taken for surety is little more than illusion. ''The entanglement with life'' is never untangled. Silk presented himself as Jewish; but he was actually black. ''I don't know what to think about anything,'' Nathan concludes. Nothing is known because nothing can be. It is only in death, when all appearances are stripped away, that something is disclosed. It is after Levov's death that Nathan begins to learn the truth; it is after Silk's death that Nathan learns his secrets. Otherwise, appearances and identities are all we have. Mr. Bellow sees them as a code to be read; Mr. Roth sees them as a code to be misread. And both writers, in these late American Jewish novels, treat their fragile existence with melancholic tenderness.

Subject: Saul Bellow, Poet of Urban America's Men From: Emma To: All Date Posted: Wed, Apr 06, 2005 at 10:29:59 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/04/07/books/05appr.html Saul Bellow, Poet of Urban America's Dangling Men By MICHIKO KAKUTANI His voice was instantly recognizable and inimitably his own: at once highbrow and streetwise, lofty and intimate - a voice equally at home ruminating on the great social and political ideas of the day, and chronicling the 'daily monkeyshines' of 'the cheapies, the stingies, the hypochondriacs, the family bores, humanoids' and bar-stool comedians who populate his cacophonous world. Indeed, Saul Bellow managed brilliantly, in the words of Philip Roth, 'to close the gap between Thomas Mann and Damon Runyon.' In doing so, he captured a huge slice of American life: the human comedy as played out - often in that raucous, quintessentially American city of Chicago - in the backrooms, bedrooms, boardrooms and barrooms of the second half of the 20th century. Mr. Bellow once told a reporter that 'for many years, Mozart was a kind of idol to me - this rapturous singing for me that's always on the edge of sadness and melancholy and disappointment and heartbreak, but always ready for an outburst of the most delicious music.' And his own writing embraced the exuberant and the depressive, the rapturous and the dispiriting. There were extroverted, ebullient performances like 'The Adventures of Augie March' (1953) and 'Henderson the Rain King' (1959), which end with their heroes taking giant steps toward an affirmation of their lives, and crotchety, more claustrophobic volumes like 'Seize the Day' (1956) and 'Mr. Sammler's Planet' (1970), infused with gripes and diatribes and desperate pleas for help. The novels, however, rarely stayed put on one side of the fence or the other: a dark preoccupation with mortality threaded its way through the comedy of 'Humboldt's Gift' (1975), and the best-selling 'Herzog' (1964) managed to be tragic and comic, cerebral and earthy, meditative and manic all at the same time. These novels were less plot-driven works than portraits of men trying to figure out their place in the world, what it means, as Mr. Bellow wrote in 'Herzog': 'to be a man. In a city. In a century. In transition. In a mass. Transformed by science. Under organized power. Subject to tremendous controls. In a condition caused by mechanization. After the late failure of radical hopes.' Cutting back and forth in time, while draping every manner of philosophical digression upon the armature of his characters' lives, Mr. Bellow conjured both the busy mental life of his heroes - men who live, quite willfully, in their heads - and their daily, creaturely existence, their hectic encounters with tempestuous women, fast-talking pitchmen, professional jokesters, bumblers, bureaucrats and poseurs. In many of the novels, his heroes are besieged by an importunate alter ego, someone eager to goad them out of their spiritual ruts, push them out into the rough-and-tumble world. Intellectuals, men deep in 'the profundity game,' find themselves facing off against street-smart thugs and business smoothies; Europeans Jews, burdened with a tragic sense of history, meet their American brethren, who have ardently embraced their country's ethos of instant gratification. These Bellovian men, like their creator, tend to be first-class 'noticers' - hungry observers of the world around them. And they tend to be overwhelmed by the sheer muchness of that world, with its dizzying material and sexual temptations; its calamities and con games; its capacity to continually shock, astonish and confound. Their struggle, chronicled in novel after novel, is to balance the equation between immersion in that 'moronic inferno' and retreat into the pristine realm of the self: the first proffering the dangers of shallowness and distraction; the second, the perils of solipsism and isolation. Like Charlie Citrine in 'Humboldt's Gift,' Mr. Bellow's dangling men suspect that 'all this human nonsense' in the real world 'keeps us from the large truth.' But many, like Harry Trellman in 'The Actual,' also realize that their judgmental intellects can cut them off from love and from humanity. For all the awards Mr. Bellow received in the course of his career, he saw himself as going against the mainstream of contemporary literature, skeptical of the willful aestheticism and postmodern pyrotechnics that had become increasingly fashionable, and equally dismissive of the trendy nihilism evinced by writers he called 'the wastelanders,' those who believe, in his words, that it is 'enlightened to expose, to disenchant, to hate and to experience disgust.' He believed that literature should hew to one of its original purposes - the raising of moral questions - and his own writing remained firmly indebted to the works he had studied as a boy: the Old Testament, Shakespeare's plays and the great 19th-century Russian novels. In his most powerful work, Mr. Bellow was able to draw from many literary traditions - the European existentialists, the Russian moralists and brawny, red-blooded Americans like Melville and Dreiser - to create his own utterly distinctive fictional world. Many of his earlier fictions feature older characters, looking back on the receding vistas of their lives, and this tendency became even more pronounced later on: reminiscence becomes a modus operandi for his people, a means of self-inventory and sometimes a mea culpa. In recent books like 'Ravelstein' (2000) and 'The Actual' (1997), an awareness of mortality, that perennial preoccupation of the Bellovian hero, also moved to the forefront, an awareness, as the years scroll by, that one is entering the final stretch, 'a period of 'mature' acceptance, reconciliation, openhandedness, general amnesty.'

Subject: Saul Bellow, Poet of Urban America's Men From: Emma To: All Date Posted: Wed, Apr 06, 2005 at 10:29:35 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/04/07/books/05appr.html Saul Bellow, Poet of Urban America's Dangling Men By MICHIKO KAKUTANI His voice was instantly recognizable and inimitably his own: at once highbrow and streetwise, lofty and intimate - a voice equally at home ruminating on the great social and political ideas of the day, and chronicling the 'daily monkeyshines' of 'the cheapies, the stingies, the hypochondriacs, the family bores, humanoids' and bar-stool comedians who populate his cacophonous world. Indeed, Saul Bellow managed brilliantly, in the words of Philip Roth, 'to close the gap between Thomas Mann and Damon Runyon.' In doing so, he captured a huge slice of American life: the human comedy as played out - often in that raucous, quintessentially American city of Chicago - in the backrooms, bedrooms, boardrooms and barrooms of the second half of the 20th century. Mr. Bellow once told a reporter that 'for many years, Mozart was a kind of idol to me - this rapturous singing for me that's always on the edge of sadness and melancholy and disappointment and heartbreak, but always ready for an outburst of the most delicious music.' And his own writing embraced the exuberant and the depressive, the rapturous and the dispiriting. There were extroverted, ebullient performances like 'The Adventures of Augie March' (1953) and 'Henderson the Rain King' (1959), which end with their heroes taking giant steps toward an affirmation of their lives, and crotchety, more claustrophobic volumes like 'Seize the Day' (1956) and 'Mr. Sammler's Planet' (1970), infused with gripes and diatribes and desperate pleas for help. The novels, however, rarely stayed put on one side of the fence or the other: a dark preoccupation with mortality threaded its way through the comedy of 'Humboldt's Gift' (1975), and the best-selling 'Herzog' (1964) managed to be tragic and comic, cerebral and earthy, meditative and manic all at the same time. These novels were less plot-driven works than portraits of men trying to figure out their place in the world, what it means, as Mr. Bellow wrote in 'Herzog': 'to be a man. In a city. In a century. In transition. In a mass. Transformed by science. Under organized power. Subject to tremendous controls. In a condition caused by mechanization. After the late failure of radical hopes.' Cutting back and forth in time, while draping every manner of philosophical digression upon the armature of his characters' lives, Mr. Bellow conjured both the busy mental life of his heroes - men who live, quite willfully, in their heads - and their daily, creaturely existence, their hectic encounters with tempestuous women, fast-talking pitchmen, professional jokesters, bumblers, bureaucrats and poseurs. In many of the novels, his heroes are besieged by an importunate alter ego, someone eager to goad them out of their spiritual ruts, push them out into the rough-and-tumble world. Intellectuals, men deep in 'the profundity game,' find themselves facing off against street-smart thugs and business smoothies; Europeans Jews, burdened with a tragic sense of history, meet their American brethren, who have ardently embraced their country's ethos of instant gratification. These Bellovian men, like their creator, tend to be first-class 'noticers' - hungry observers of the world around them. And they tend to be overwhelmed by the sheer muchness of that world, with its dizzying material and sexual temptations; its calamities and con games; its capacity to continually shock, astonish and confound. Their struggle, chronicled in novel after novel, is to balance the equation between immersion in that 'moronic inferno' and retreat into the pristine realm of the self: the first proffering the dangers of shallowness and distraction; the second, the perils of solipsism and isolation. Like Charlie Citrine in 'Humboldt's Gift,' Mr. Bellow's dangling men suspect that 'all this human nonsense' in the real world 'keeps us from the large truth.' But many, like Harry Trellman in 'The Actual,' also realize that their judgmental intellects can cut them off from love and from humanity. For all the awards Mr. Bellow received in the course of his career, he saw himself as going against the mainstream of contemporary literature, skeptical of the willful aestheticism and postmodern pyrotechnics that had become increasingly fashionable, and equally dismissive of the trendy nihilism evinced by writers he called 'the wastelanders,' those who believe, in his words, that it is 'enlightened to expose, to disenchant, to hate and to experience disgust.' He believed that literature should hew to one of its original purposes - the raising of moral questions - and his own writing remained firmly indebted to the works he had studied as a boy: the Old Testament, Shakespeare's plays and the great 19th-century Russian novels. In his most powerful work, Mr. Bellow was able to draw from many literary traditions - the European existentialists, the Russian moralists and brawny, red-blooded Americans like Melville and Dreiser - to create his own utterly distinctive fictional world. Many of his earlier fictions feature older characters, looking back on the receding vistas of their lives, and this tendency became even more pronounced later on: reminiscence becomes a modus operandi for his people, a means of self-inventory and sometimes a mea culpa. In recent books like 'Ravelstein' (2000) and 'The Actual' (1997), an awareness of mortality, that perennial preoccupation of the Bellovian hero, also moved to the forefront, an awareness, as the years scroll by, that one is entering the final stretch, 'a period of 'mature' acceptance, reconciliation, openhandedness, general amnesty.'

Subject: Sorry From: Emma To: Emma Date Posted: Wed, Apr 06, 2005 at 10:30:49 (EDT) Email Address: Not Provided Message: Sorry for the double post.

Subject: Vangaurd didn't make the the top 10 - 10 yr list From: johnny5 To: All Date Posted: Wed, Apr 06, 2005 at 09:02:58 (EDT) Email Address: johnny5@yahoo.com Message: Who are these bridgeway and blackrock companies I have never heard of? http://www.usatoday.com/money/perfi/funds/2005-04-06-10yr-cht.htm 10 years' best, worst performers Winners Fund (type, see glossary) Total return1 10 yrs. 1st qtr. Bridgeway Ultra-Sm Co (SG) 829% -5.5% Calamos Growth A (XG) 653% -5.8% Bridgeway Aggr Inv 1 (XG) 650% 0.6% Alpine Eq US RE Y (RE) 582% 3.2% Bruce Fund (FX) 574% -4.2% BlackRock Aurora Inst (SC) 570% -3.3% Meridian Value Fund (MC) 550% -1.8% BlackRock Aurora IA (SC) 549% -3.3% BlackRock Gl Res IA (NR) 544% 14.3% CGM Tr Realty Fund (RE) 539% 0.6% Alpine Eq US RE B (RE) 520% 2.9% Vanguard Hlth Care Inv (H) 468% -0.1% Legg Mason Value Tr Inst (LC) 438% -5.7% Fidelity Sel Brokerage (FS) 423% -5.7% Managers I Fr Micro-Cp (SG) 413% -10.4% Wasatch Core Growth (SC) 406% -4.1% Baron Growth (SG) 401% 1.4% Keeley Small Cap Value (SC) 396% 0.2% Muhlenkamp Fund (XV) 395% -2.6% Fidelity Lw-Prcd Stk (MV) 394% -1.0% Fidelity New Millennium (XG) 394% -4.9% AIM Energy Inv (NR) 390% 17.8% DFA US Small Value II (SV) 387% -2.8% Neuberger Genesis Inv (SG) 383% 2.8% Salomon Bros Capital O (XV) 383% -0.6% DFA US Small Cap Value (SV) 382% -2.9% Fidelity Sel Enrgy Ser (NR) 381% 15.1% FPA Capital (MV) 381% 3.3% Vanguard Energy Inv (NR) 376% 14.5% Fidelity Sel Insurance (FS) 375% -3.1% Nich-App Inst I GO I 372% 3.6% Alger Inst MidCap Gr I (MG) 371% -2.6% Evergreen Special Vl A (SV) 371% 0.4% Eaton Vance Ww H{lcub}S{rcub}A (H) 369% -10.0% Weitz Value (XC) 369% -4.1% Morg Stan Inst US RE A (RE) 368% -5.6% H&W Small Cap Value I (SV) 366% -0.0% Janus Sm Cap Val Inst (SC) 366% -0.2% Weitz Partners Value (XC) 364% -3.9% Fidelity Exprt Mltnatl (XC) 363% -1.5% Mairs & Power Growth (XC) 362% -2.4% Fidelity Sel Defense (S) 361% 5.0% Legg Mason Spec Inv Inst (XC) 361% -5.2% Eaton Vance Grtr Ch C (CH) 6% 0.4% Centurion Mkt Neutrl C (FX) 5% 6.5% Putnam OTC Emerg Gro A (MG) 3% -2.9% Van Eck Intl Gold A (AU) 2% -4.6% Gabelli Mthrs Fund AAA (SE) 1% 0.2% J Hancock Intl A 1% -0.4% Seligman Gl Intl Gr A 1% -7.7% Losers Frontier Equity Fund (SC) -96% -11.1% American Heritage Fund (SE) -87% -16.7% Ameritor Investment (MC) -83% -27.3% Apex Mid Cap Gro (SG) -73% -27.9% US Glbl Gold Shares (AU) -62% -4.5% Comstock Cap Val A (SE) -60% -1.1% American Heritage Growth (XC) -51% -14.3% Rydex Ursa Fund Inv (SE) -50% 2.8% Commonwealth Japan (JA) -47% -1.9% American Growth D (LC) -41% -6.8% Midas Fund (AU) -39% -5.6% Ameritor Security Tr 1 (SC) -36% -11.4% Rydex Juno Fund Inv (FX) -35% -1.3% AllianBer All-Asia A (PC) -27% -2.3% DFA Japan Small Company (JA) -22% 7.6% Rydex Precious Metls Inv (AU) -18% -6.6% Morg Stan Pac Gro B (PC) -16% -0.9% Julius Baer Global Eq A -14% -1.3% Goldman Asia Gr A (XJ) -9% 1.4% Scudder Pac Optys S (XJ) -8% 0.6% Vanguard Pac Stk Inv (PC) -7% -1.8% PBHG Emerging Gro PBHG (SG) -6% -6.1% Midas Spec Equities (XC) -5% -5.4% T Rowe Price Int Japan (JA) -1% -0.2% J Hancock LgCp Gro A (LG) 0% -4.1% Avg. stock fund 165% -2.5% 1 — dividends, gains reinvested through March 31

Subject: Top selling funds of 2000 deep in red From: johnny5 To: johnny5 Date Posted: Wed, Apr 06, 2005 at 09:04:11 (EDT) Email Address: johnny5@yahoo.com Message: http://www.usatoday.com/money/perfi/funds/2005-04-05-bear-usat_x.htm Top-selling funds of 2000 deep in red By John Waggoner, USA TODAY Never have so few lost so much for so many. The average stock fund has eked out a 1% gain the past five years. But investors who poured money into the 50 hottest-selling funds five years ago are down an average 42% since March 2000, according to Lipper, the mutual fund trackers. Q1 MUTUAL FUND RESULTS How fund categories fared. The 75 largest funds. First quarter's best, worst performers. 12 months' best, worst. 5 years' best, worst. 10 years' best, worst. These aren't just a bunch of tiny Internet funds. Consider Fidelity Aggressive Growth, which had $23 billion in assets in March 2000. Investors poured $15.1 billion into the fund the 12 months before the S&P 500 peaked that month. A $10,000 investment then would be worth $2,697 now — a 73% loss. Other big top-sellers that have fared badly: Janus Worldwide, then a $13 billion fund, has fallen 45% the past five years; Nasdaq 100 Trust, then a $10 billion fund, has fallen 67%; Janus Global Technology, a $10 billion fund in March 2000, has plunged 73%. All told, investors put $228 billion into the 50 best-selling stock funds in the 12 months before the market peaked. Only two of them have shown a gain the past five years: American Funds New Perspectives, up 2.3%, and Vanguard Capital Opportunity, up 1.5%. Technology stocks were the main culprit. Consider: Investors poured $2 billion into PBHG Technology & Communications the 12 months before the bear market began. Its largest holding on March 31, 2000, was InfoSpace, which sold at a split-adjusted price of $727 a share. The Internet search company now sells for $41.03. The fund has fallen 86%. Although most funds encourage investors to hang in for the long term, long-suffering investors in some funds will have a long time to wait. An investor who bought Fidelity Aggressive Growth in March 2000, for example, will have to gain 271% just to break even. The 50 largest funds five years ago also have suffered above-average losses since 2000: They're down an average 15%. Fidelity Magellan, then the largest fund, has fallen 23%. Janus, then fourth-largest, is down 45%. Investors who fled laggard funds have reason to kick themselves, too. The 50 funds that saw the most money flee in the 12 months ending March 2000 have gained an average 21.4%. Looking at what people bought before the bear market gives you some idea of the suffering that investors have endured the past five years — especially those who came late to the bull market of the 1990s. Should you ignore the average performance figures for stock funds? No. But you should take them with a grain of salt, says Don Cassidy, research analyst for Lipper. 'A straight average can be misleading,' he says. For example, in figuring the average performance of all funds, the same weight is given to the record of the Vanguard 500 Index fund, the nation's largest stock fund, and the Ameritor fund, one of the smallest — and worst — funds.

Subject: Social Security From: Poyetas To: All Date Posted: Wed, Apr 06, 2005 at 08:54:40 (EDT) Email Address: Not Provided Message: The cost of reforming Social Security By Jonathan Berk Published: April 4 2005 20:16 | Last updated: April 4 2005 20:16 At the foundation of modern finance lies the Modigliani-Miller Theorem. Named after the two economists - Franco Modigliani and Merton Miller - who developed it in the late 1950s (and subsequently won the Nobel Prize for their contribution), the theorem states that the return of any investment cannot depend on how the investment is financed. Economists do not debate the validity of this theorem any more than physicists debate the validity of the second law of thermodynamics. You cannot magically increase the return of an investment by choosing a different way to finance it any more than you can build yourself a perpetual motion machine. To argue otherwise requires finding a way to make something out of nothing. The implication of the Modigliani-Miller theorem for US Social Security reform is that the total amount of future wealth available to fund retirement does not depend on how George W. Bush, the president, chooses to finance future retirement. That is, whether the government invests on future retirees' behalf (the current system) or people invest for themselves in personal security accounts (the proposed system) cannot affect the overall return on investment in the economy. - Financial Times

Subject: Re: Social Security Part II From: Pancho Villa To: Poyetas Date Posted: Wed, Apr 06, 2005 at 10:45:01 (EDT) Email Address: nma@hotmail.com Message: '...Of course, people might make different financing choices under a PSA system than the government makes for them in the Social Security System. But these choices do not affect the total amount of resources available to fund retirees. That depends on economic growth in the interim which, according to Messrs Modigliani (grazie per la tua risposta, RIP) and Miller, does not depend on how that growth is financed. So at the point of retirement the total amount of wealth available to fund that retirement is the same under either system. The difference is how this wealth is divided. And therein lies the rub. If people are allowed to make their own investment choices under a PSA system, some investors will invest responsibly and some will not. The net result is that some investors will have more money to retire on than others. In principle there is nothing wrong with this outcome - people make their own investment decisions so they should have to live with the consequences of those decisions. The problem arises only when we accept that the people will not be willing to live with the consequences of their investment choices. From both a moral and a political standpoint it is clear that society would never allow old people to starve. By 'starve' I do not mean just going without food. In the US the poverty level is well above subsistence. Even the poorest people still have a place to live, most receive some medical care, watch television, use transport and so on. That is, they live at about the level of a currently retired person who has no source of income other than Social Security. So under the proposed new system investors whose personal investments go so badly that their PSAs would only support them at a level below current Social Security supports would appeal for relief. And they would get it, not only for moral reasons but also because they are likely to be a sizeable voting minority. In effect, the PSA system allows individuals to keep their gains if their investments do well, but if their investments perform badly the government is on the hook to make up for the losses. In financial terms, under the PSA system the government would be giving away a valuable financial option for free. One would have thought legislators would be wary of giving away free options. The last time they did such a thing, it precipitated the savings and loan crisis; in a similar vein to investors in a PSA system, savings and loans institutions knew that if they made risky investments and the investments did well, they could keep the rewards, but if the investments did badly government insurance would repay their depositors. Apparently Mr Bush's father, who was president during the S&L crisis, did not pass on this lesson to his son. This administration appears to be on the verge of making the same mistake, except on a much larger scale. It is not hard to predict the effect of putting a PSA system in place. Because current levels of Social Security payments are effectively at the minimum level society is likely to tolerate, a PSA system would increase society's commitment to retired people. The extent of this increased commitment depends on how much risk people take on in their PSAs. The more risk they take the more valuable the guarantee (or equally, the more likely that the government has to step in) and thus the greater the wealth transfer to retirees. If the S&L experience is any guide, the size of the new commitment would be large - and, as in the lead-up to the S&L crisis, investors would react to these incentives by substantially increasing their risk exposure in order to take full advantage of the free option. There are many more retirees than there were savings and loans, so ultimately the cost of privatising Social Security is likely dwarf the cost of insuring savings and loans....' The writer is an associate professor of finance at the Haas School of Business, University of California, Berkeley, where he holds the chair in management philosophy and values

Subject: Tank tread From: johnny5 To: Pancho Villa Date Posted: Wed, Apr 06, 2005 at 16:18:57 (EDT) Email Address: johnny5@yahoo.com Message: 'From both a moral and a political standpoint it is clear that society would never allow old people to starve. By 'starve' I do not mean just going without food. ' I wonder what the war veterans a couple generations back thought of that as macarthur ran the tanks over them in washington DC? One of them being criticized by Patton - had saved his life in the battelfield years earlier. Pancho why are people so needy to believe things can never get ugly or horrible out in this rosy colored world? I met a hobo woman in texas who was starving because the churches and soup kitchens in arizona would not feed her anymore and she had to leave.

Subject: Who We May Be From: Emma To: All Date Posted: Wed, Apr 06, 2005 at 06:26:13 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/04/05/books/0406wire-bellow.html?hp=&pagewanted=all&position= [Saul] Bellow grew up reading the Old Testament, Shakespeare and the great 19th century Russian novelists, and always looked with respect to the masters, even as he tried to recast himself in the American idiom. A scholar as well as teacher, he read deeply and quoted widely, often referring to Henry James, Marcel Proust and Gustave Flaubert. While others were ready to proclaim the death of the novel, he continued to think of it as a vital form. 'I never tire of reading the master novelists,' he said. 'Can anything as vivid as the characters in their books be dead?' Once, with reference to Flaubert, he wrote, 'I think novelists who take the bitterest view of our modern condition make the most of the art of the novel,' and added, 'The writer's art appears to seek a compensation for the hopelessness or meanness of existence.'

Subject: Saul Bellow From: Emma To: All Date Posted: Wed, Apr 06, 2005 at 05:59:14 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/04/05/books/0406wire-bellow.html?hp=&pagewanted=all&position= Author Saul Bellow Dies at 89 By MEL GUSSOW and CHARLES McGRATH Saul Bellow, the Nobel laureate and self-proclaimed historian of society whose fictional heroes - and whose scathing, unrelenting and darkly comic examination of their struggle for meaning - gave new immediacy to the American novel in the second half of the 20th century, died today at his home in Brookline, Mass. He was 89. His death was announced by Walter Pozen, Mr. Bellow's lawyer and a longtime friend. 'I cannot exceed what I see,' Mr. Bellow once said. 'I am bound, in other words, as the historian is bound by the period he writes about, by the situation I live in.' But his was a history of a particular and idiosyncratic sort. The center of his fictional universe was Chicago, where he grew up and spent most of his life, and which he made into the first city of American letters. Many of his works are set there, and almost all of them have a Midwestern earthiness and brashness. Like their creator, Mr. Bellow's heroes were all head and all body both. They tended to be dreamers, questers or bookish intellectuals, but they lived in a lovingly depicted world of cranks, con men, fast-talking salesmen and wheeler-dealers. In works like 'The Adventures of Augie March,' his breakthrough novel in 1953, 'Henderson the Rain King' and 'Herzog,' Mr. Bellow laid a path for old-fashioned, supersized characters and equally big themes and ideas. As the English novelist Malcolm Bradbury said, 'His fame, literary, intellectual, moral, lay with his big books,' which were 'filled with their big, clever, flowing prose, and their big, more-than-life-size heroes - Augie Marches, Hendersons, Herzogs, Humboldts - who fought the battle for courage, intelligence, selfhood and a sense of human.' Mr. Bellow said that of all his characters, Eugene Henderson of 'Henderson the Rain King,' the quixotic violinist and pig farmer who vainly sought a higher truth and a moral purpose in life, was the one most like himself. But there were also elements of the author in the put-upon, twice-divorced but ever-hopeful Moses Herzog and in wise but embattled older figures like Artur Sammler of 'Mr. Sammler's Planet' and Albert Corde, the dean in 'The Dean's December.' They were all men trying to come to grips with what Corde called 'the big-scale insanities of the 20th century.' At the same time, some of his novellas and stories were regarded as more finely wrought. V.S. Pritchett said, 'I enjoy Saul Bellow in his spreading carnivals and wonder at his energy, but I still think he is finer in his shorter works.' Pritchett considered Mr. Bellow's 1947 book 'The Victim' 'the best novel to come out of America - or England - for a decade' and thought that 'Seize the Day,' another shorter book, was 'a small gray masterpiece.' All his work, long and short, was written in a distinctive, immediately recognizable style that blended high and low, colloquial and mandarin, wisecrack and aphorism, as in the introduction of the poet Humboldt at the beginning of 'Humboldt's Gift': 'He was a wonderful talker, a hectic nonstop monologist and improvisator, a champion detractor. To be loused up by Humboldt was really a kind of privilege. It was like being the subject of a two-nosed portrait by Picasso, or an eviscerated chicken by Soutine.' Mr. Bellow stuck to an individualistic path, and steered clear of cliques, fads and schools of writing. He was frequently lumped together with Philip Roth and Bernard Malamud as a Jewish-American writer, but he rejected the label, saying he had no wish to be part of the 'Hart, Schaffner & Marx' of American letters. In his younger days, he was loosely allied with the liberal and arty Partisan Review crowd, led by Philip Rahv and William Phillips, but he eventually broke with them saying, 'They want to cook their meals over Pater's hard gemlike flame and light their cigarettes at it.' He spoke his own mind, without regard for political correctness or fashion, and was often involved, at least at a literary distance, in fierce debates with feminists, black writers and postmodernists. Speaking about multiculturalism, he was once quoted as asking, 'Who is the Tolstoy of the Zulus? The Proust of the Papuans?' The remark caused a furor and was taken as proof, he said, ''that I was at best insensitive and at worst an elitist, a chauvinist, a reactionary and a racist - in a word, a monster.' He later said the controversy had been 'the result of misunderstanding that occurred (they always do occur) during an interview.' In his life as in his work, he was unpredictable. He was the most urban of writers and yet he spent much of his time at a farm in Vermont. He admired and befriended the Chicago machers - the deal-makers and real-estate men - and he dressed like one of them, in bespoke suits, Turnbull & Asser shirts and a Borsalino hat. He was a devoted, self-taught cook, as well as a gardener, a violinist and a sports fan. He was a great admirer of, among others, John Cheever, William Faulkner, Ralph Ellison (a close friend), Cormac McCarthy, Denis Johnson, Joyce Carol Oates and James Dickey. Mr. Bellow grew up reading the Old Testament, Shakespeare and the great 19th century Russian novelists, and always looked with respect to the masters, even as he tried to recast himself in the American idiom. A scholar as well as teacher, he read deeply and quoted widely, often referring to Henry James, Marcel Proust and Gustave Flaubert. While others were ready to proclaim the death of the novel, he continued to think of it as a vital form. 'I never tire of reading the master novelists,' he said. 'Can anything as vivid as the characters in their books be dead?' Once, with reference to Flaubert, he wrote, 'I think novelists who take the bitterest view of our modern condition make the most of the art of the novel,' and added, 'The writer's art appears to seek a compensation for the hopelessness or meanness of existence.' Saul Bellow was a kind of intellectual boulevardier, wearing a jaunty hat and a smile as he marched into literary battle. In spite of - or, perhaps, because of - his lofty position, he was criticized more than many of his peers. In reviews, his books were habitually weighed against one another. Was this one as full-bodied as 'Augie March'? Where was the Bellow of old? Norman Mailer said that 'Augie March,' Mr. Bellow's grand Bildungsroman, was unconvincing and overcooked; Elizabeth Hardwick thought that in 'Henderson,' he was trying too hard to be an important novelist. He was prickly about his reputation but also philosophical: 'Every time you're praised, there's a boot waiting for you. If you've been publishing books for 50 years or so, you're inured to misunderstanding and even abuse.' Years ago, when he was at the Breadloaf Writers Conference in Vermont, he spent a great deal of time with Robert Frost. 'I thought when I was his age,' he said, 'people would let me get away with murder, too. But I'm not allowed to get away with a thing.' Smiling, he vowed, 'My turn will come.' In a long and unusually productive career, Mr. Bellow dodged many of the snares that typically entangle American writers. He didn't drink much, and though he was analyzed four times, and even spent some time in an orgone box, his mental health was as robust as his physical health. His success came neither too early nor too late, and he took it more or less in stride. He never ran out of ideas and he never stopped writing. The Nobel Prize, which he won in 1976, was the cornerstone of a career that also included a Pulitzer Prize, three National Book Awards, a Presidential Medal and more honors than any other American writer. In contrast to some other winners, who were wary of the albatross of the Nobel, Mr. Bellow accepted it matter-of-factly. 'The child in me is delighted,' he said. 'The adult in me is skeptical.' He took the award, he said, 'on an even keel,' aware of 'the secret humiliation' that 'some of the very great writers of the century didn't get it.' This most American of writers was born in Lachine, Quebec, a poor immigrant suburb of Montreal. Named Solomon Bellow, his birthdate is listed as either June or July 10, 1915, though his lawyer, Mr. Pozen, said today that Mr. Bellow customarily celebrated in June. (Immigrant Jews at that time tended to be careless about the Christian calendar, and the records are inconclusive.) Mr. Bellow was the last of four children, but as he was always quick to point out, the first to be born in the New World. His parents emigrated from Russia two years before, though in Canada their luck was not much better. Solomon's father, Abram, failed at one enterprise after another. His mother, Liza, was deeply religious and wanted her youngest child, her favorite, to become either a rabbi or a concert violinist. But Mr. Bellow's fate was sealed, or so he later claimed, when at the age of 8 he spent six months in Ward H of the Royal Victoria Hospital, suffering from a respiratory infection and reading 'Uncle Tom's Cabin' and the funny papers. It was there, he said, that he discovered his sense of destiny - his certainty that he was 'meant for great things.' In 1924, when their son was 9, the Bellows moved to Chicago, where the family began to prosper a little as Abram picked up work in a bakery, delivering coal and even bootlegging. The family continued its old ways in the United States, and during his childhood, Saul was steeped in Jewish tradition, learning Hebrew and Yiddish. But eventually he rebelled against what he considered to be a 'suffocating orthodoxy,' and he found in Chicago not just a physical home but a spiritual one. Recalling his sense of discovery and of belonging, he later wrote, 'The children of Chicago bakers, tailors, peddlers, insurance agents, pressers, cutters, grocers, the sons of families on relief, were reading buckram-bound books from the public library and were in a state of enthusiasm, having found themselves on the shore of a novelistic land to which they really belonged, discovering their birthright...talking to one another about the mind, society, art, religion, epistemology, and doing all this in Chicago, of all places.' Eventually Chicago became for him what London was for Dickens and Dublin was for Joyce - the center of both his life and his work, and not just a place or a background but almost a character in its own right. He began writing in grammar school, alongside his childhood friend Sydney J. Harris, later a Chicago newspaper columnist: 'We would sit at the Harris's dining room table and write things to each other - any old thing.' His father was disapproving, and remained so for decades. 'You write and then you erase,' he said when Bellow was in his 20's. 'You call that a profession?' His mother was more supportive, but she died when he was 17, a tragedy that he found difficult to overcome. With her death and his father's remarriage, he said, 'I was turned loose - freed, in a sense: free but also stunned, like someone who survives an explosion but hasn't yet grasped what has happened.' He added, 'It was disabling for me for a couple of years.' In 1933, he began college at the University of Chicago, but two years later transferred to Northwestern, because it was cheaper. He had hoped to study literature but was put off by what he saw as the tweedy anti-Semitism of the English Department, and graduated in 1937 with honors in anthropology and sociology, subjects that were later to instill his novels. But he was still obsessed by fiction. While doing graduate work in anthropology at the University of Wisconsin, he found that 'every time I worked on my thesis, it turned out to be a story.' He added: 'I sometimes think the Depression was a great help. It was no use studying for any other profession.' After graduation, he participated in the W.P.A. Writers' Project in Chicago, preparing biographies of Midwestern novelists, and later joined the editorial department of the Encyclopedia Britannica, where he worked on Mortimer Adler's 'Great Books' series. He came to New York 'toward the end of the 30's, muddled in the head but keen to educate myself.' While living in Greenwich Village and trying writing fiction, aimlessly and with little success at first, he also reviewed books. When World War II began he was rejected by the Army because he had a hernia; he later joined the Merchant Marine and was in training when the atom bomb was dropped on Hiroshima. During his service, he finished writing 'Dangling Man,' about the alienation of a young Chicagoan waiting to be drafted. It was published in 1944, before the author was 30, and was followed by 'The Victim,' a novel about anti-Semitism that was written, he said, under the influence of Dostoyevsky. Mr. Bellow later called those novels his 'M.A. and PhD.' They were apprentice work, he believed, finely written but weak in plot and too much in thrall to European models. In 1948, financed by a Guggenheim fellowship, Mr. Bellow went to Paris where, walking the streets and thinking about his future, he had a kind of epiphany. He remembered a friend from his childhood named Chucky, 'a wild talker who was always announcing cheerfully that he had a super scheme,' and he began to wonder what a novel in Chucky's voice would sound like. 'The book just came to me,' he said later. 'All I had to do was be there with buckets to catch it.' The resulting novel, 'The Adventures of Augie March,' was published in 1953, and it became Mr. Bellow's breakthrough, his first best-seller and the book that firmly established him as a writer of consequence. The beginning of the novel was as striking and as unforgettable as the beginning of 'Huckleberry Finn,' and it announced a voice brand new in American fiction -, jazzy, brash exuberant, with accents that were both Yiddish and Whitmanian: 'I am an American, Chicago born - Chicago, that somber city - and go at things as I have taught myself, free-style, and will make the record in my own way: first to knock, first admitted; sometimes an innocent knock, sometimes a not so innocent.' 'Fiction is the higher autobiography,' Mr. Bellow once said, and in his subsequent novels, he often adapted facts from his own life and the lives of people he knew. Humboldt was a version of the poet Delmore Schwartz; Henderson was based on Chandler Chapman, a son of the writer John Jay Chapman; Gersbach, the cuckolder in 'Herzog,' was a Bard professor named Jack Ludwig, who did indeed seduce Mr. Bellow's wife at the time; and in one guise or another most of Bellow's many girlfriends all turned up. 'What a woman-filled life I always led,' says Charlie Citrine. Those are words that could have been echoed by the author himself - he had almost innumerable affairs and was married five times. His wives were Anita Goshkin, Alexandra Tsachacbasov, Susan Glassman, Alexandra Ionescu Tuleca and Janis Freedman. All of Mr. Bellow's marriages but his last ended in divorce. In addition to his wife, Janis, he is survived by three sons, Gregory, Adam and Daniel, a daughter, Naomi Rose, and six grandchildren. With 'Henderson the Rain King' in 1959, Mr. Bellow envisioned an even more ambitious canvas than that of 'Augie March,' with the story of an American millionaire who travels in Africa in search of regeneration. Mr. Bellow, who had never been to Africa, regarded that novel as a turning point. 'Augie March,' he said later, was a little unruly and out of control; with 'Henderson' he had full command of his creative powers. 'Henderson' was followed in 1964 by 'Herzog,' with the title character a Jewish Everyman who is cuckolded by his wife and his best friend. 'He is taken by an epistolary fit,' said the author, 'and writes grieving, biting, ironic and rambunctious letters not only to his friends and acquaintances, but also to the great men, the giants of thought, who formed his mind.' Looking back on the writing of that book, he said: 'Herzog' was just a brainstorm. One day I found myself writing letters - all over the place. Then it occurred to me that it was a very good idea for writing a book about the mental condition of the country and of its educated class.' The novel won a National Book Award. In contrast, that same year 'The Last Analysis'' (one of several plays by Mr. Bellow) opened on Broadway in a production starring Sam Levene, and was a quick failure. 'It started as a lark,' he said, 'but it ended as an ostrich.' With 'Mr. Sammler's Planet' in 1969, a novel about a survivor of the Holocaust living - and ruminating - in New York, Mr. Bellow won his third National Book Award. 'Humboldt's Gift,' in 1975, proved to be one of his greatest successes. In it, the protagonist, Charlie Citrine, a Pulitzer Prize- winning writer, has to come to terms with the death of his mentor, the poet Von Humboldt Fleischer. Life imitated art in this case, and 'Humboldt' won the Pulitzer Prize for fiction. The Nobel Prize for literature soon followed, with the Swedish academy citing his 'exuberant ideas, flashing irony, hilarious comedy and burning compassion,' and Mr. Bellow was now placed in a class with his American predecessors Ernest Hemingway and William Faulkner. 'After I won the Nobel Prize,' he said, 'I found myself thrust in the position of a public servant in the world of culture. I was supposed to seem benevolent and to pontificate and bless with my presence - elder statesman whether I liked it or not. The price you have to pay.' His first book following the Nobel was 'To Jerusalem and Back,' a nonfiction memoir about his trip to Israel. That was followed by 'The Dean's December,' a novel about the decay of the American city; the short-story collection 'Him with His Foot in His Mouth' and, in 1986, the novel 'More Die of Heartbreak.' From then on, through 'The Bellarosa Connection' and 'The Actual,' his books became shorter and shorter, a case of Mr. Bellow sending out what he called 'a briefer signal.' With 'Ravelstein' (in 2000), he returned to longer fiction. Inspired by the life of his close friend Allan Bloom, the author of 'The Closing of the American Mind,' the book dealt with a celebrated professor dying of AIDS. In his review in The New York Times Book Review, Jonathan Wilson said it was 'a great novel of that much-maligned item, American male friendship.' In 1993, after many years of living in Chicago and teaching at the University of Chicago, he left his adopted city. The reasons for his departure were complex. Several of his close Chicago friends had died, among them Allan Bloom, and Mr. Bellow said he 'got tired of passing the houses of my dead friends.' He was also upset by the ugly racial climate in Chicago at the time. A few people in the radical black community tried to spread a story that Jewish doctors were deliberately infecting black children with AIDS, and Mr. Bellow expressed his anger at this 'blood libel' in an article he wrote for The Chicago Tribune. He moved to Boston and, at the invitation of the chancellor, John Silber, began teaching at Boston University. Explaining why he continued to teach, even though he was one of the most financially successful of serious American novelists, he said: 'You're all alone when you're a writer. Sometimes you just feel you need a humanity bath. Even a ride on the subway will do that. But it's much more interesting to talk about books. After all, that's what life used to be for writers: they talk books, politics, history, America. Nothing has replaced that.' In 1994, while on a Caribbean vacation with his wife in St. Martin, Mr. Bellow became sick after eating a toxic fish and almost died - an incident that is also recounted in 'Ravelstein.' After a long recovery process, he returned to his writing, with 'By the St. Lawrence,' a story evoking a traumatic memory of his childhood. In 'It All Adds Up,' a 1994 collection of nonfiction pieces, Mr. Bellow looked back on his writings and, by inference, on his life. 'I can see now where I went wrong,' he said. 'The 'road not taken' was taken, taken a hundred times. By now I have gone many miles toward the promise of sleep, but I reach my destination blindingly wide awake. My state therefore is something like a state of insomniac illumination.' Throughout Mr. Bellow's life, his approach to his art was that of an alien newly arrived on earth: 'I've never seen the world before. Now I was seeing it, and it's a beautiful, marvelous gift. Enchanting reality! And when the end came, I was told by the cleverest people I knew that it would all vanish. I'm not absolutely convinced of that. If you asked me if I believed in life after death, I would say I was an agnostic. There are more things between heaven and earth, Horatio, etc.'

Subject: The Economy and Investing From: Terri To: All Date Posted: Tues, Apr 05, 2005 at 21:43:19 (EDT) Email Address: Not Provided Message: The prime economic problems for America are not market inefficiencies here and there, for that is always the nature of markets and can easily be resolved. Rather we have a serious government budget deficit, coupled with very low household savings. These combined problems are fiscal in nature and can not be dealt with adequately by monetary policy. The problem we have is finding intelligent ways to protect and increase assets through a period of such difficulty. I have no doubt that simple investment techniques, such as have been employed for decades, will allow this. Nor do I doubt the deficit problems can be solved.

Subject: National Index Returns From: Terri To: All Date Posted: Tues, Apr 05, 2005 at 20:40:30 (EDT) Email Address: Not Provided Message: http://www.msci.com/equity/index2.html National Index Returns [Dollars] 12/31/04 - 4/05/05 Australia 2.0 Canada 2.9 Denmark 7.6 France 1.1 Germany -3.1 Hong Kong -3.6 Japan -2.9 Netherlands 1.7 Norway 6.3 Sweden -2.0 Switzerland -1.8 UK 1.6

Subject: Lower risk investing with.... From: Pete Weis To: Terri Date Posted: Tues, Apr 05, 2005 at 21:56:59 (EDT) Email Address: Not Provided Message: decent returns is hard to find. It is very hard to beat Vanguard's funds when it comes low expense ratios and low overall costs. However, I'm not sure that Vanguard offers a fund which has a combination of uncorrelated investments providing low risk while focusing on what is going on in the global economy - falling dollar, rising demand for natural resources, etc. In fact there are very few of these kinds of funds. Johnny5 is recommending (or seems to be) Vanguard Precious Metals fund. This fund is perhaps the best precious metals fund out there with the best performance and as he points out low expenses. My wife and I have some investment in this fund. The truth - I'm speculating that the dollar will continue to fall for some time, the Fed is in a pickle and can not raise rates as much as it would like because of asset bubbles (real estate), the government has more obligations than tax revenue and will create money as necessary to meet obligations, and foreign demand for dollar assets will generally decline. Furthermore the 70's showed us that when the public gets exited about precious metals like gold it can run it skyward. I went back in time to the 70's and discovered that about 5% of total investment (stocks, bonds, commodities) ended up in the gold markets at the height of the craze. I believe that total worldwide investment in stocks and bonds is now about 60-70 trillion. Total cap for the precious metals market (including available bullion and mining stocks) is extremely tiny in comparison presently. Asians especially seem to be quite fond of precious metals and their purchasing power is growing while their paper currencies are not doing very well. So this is very much a speculative investment in a very volatile area. You have to stick to one's convictions and not let oneself become deterred regardless of the big swings. This is not for an investor who is not totally convinced and committed. Vanguard requires a minimum $10,000 investment for this fund. Another fund, Permanent Portfolio (PRPFX), is one of a very few funds which has made gains every year of the last 10 and is another of our investments and is conservative - not speculative. The following is an interview by Business Week with Michael Cuggino PRPFX fund manager. This fund has been in existance for more than 20 years. By the way I have no connection to this fund if I seem to be 'pushing' it. MARCH 8, 2005 INVESTING Q&A Balancing Assets for Lower Risks Michael Cuggino's Permanent Portfolio fund invests across a broad range, from gold and Swiss francs to T-bills and growth stocks With the numerous uncertainties in today's investing world, it pays to be defensive. Michael Cuggino, president and portfolio manager of the Permanent Portfolio Funds (PRPFX ), has a formula for just that: a fund invested in a variety of asset classes such as gold, Swiss francs, U.S. Treasury bills, and growth stocks -- designed so that if one type of investment is declining, another is rising to offset it, in hopes that the fund as a whole will increase in value. TWO PROMISING AREAS. By balancing assets to minimize risk, 'we take the prediction and forecasting game out of the equation,' says Cuggino. Because of the variety of its assets, no one benchmark gauges the the fund's performance, but Cuggino reports that in the year ended last Dec. 31, it returned 12.05%, vs. 10.85% for the Standard & Poor's 500-stock index and 1.24% for the T-bill index. On the stock front, Cuggino points to homebuilding and software as interesting sectors now. He cites homebuilder Ryland Group (RYL ) as an example of the kind of growth stocks he likes. Cuggino runs three other funds in addition to the Permanent Portfolio: the Permanent Treasury Bill Fund (PRTBX ), Permanent Aggressive Growth Fund (PAGRX ), and Permanent Versatile Bond Fund, which invests in high-grade corporate bonds. These were among the points Cuggino made in response to questions from the audience and BusinessWeek Online's Jack Dierdorff and June Kim during a BW Online investing chat presented Mar. 3 on America Online. Following are edited excerpts from this chat. AOL subscribers can find a full transcript at keyword: BW. Q: Michael, what's the big picture you see for the markets now? A: I think right now, there's uncertainty in multiple layers in the market -- not only equities but also fixed income, commodities, the bond market. If you look at equities, they're basically treading water, and the bond market, anticipating high rates, has not had much of a return. Gold is down a little bit for the year, commodities and energy prices are up a little bit. Government statistics on the economy are going in different directions, and corporate forecasts for 2005 are mixed. Q: So do you have anything in your portfolio that you think will do well, despite all the uncertainty? A: We do. Our strategy is based on the fact that the markets are uncertain as a general rule, and only investors who are able to embrace a high degree of risk, subject to forecasts and predictions, etc., should expose that core part of their portfolio to such predictions and speculative investing. What we do is take the prediction and forecasting game out of the equation by allowing investors to invest in an array of noncorrelated asset classes that should minimize the risks out there due to the economic and geopolitical events. So we try to produce growth by accepting a very low level of risk. The variety of assets we invest in -- gold and silver, Swiss francs, government bonds, aggressive growth stocks, and Treasury bonds -- are all material asset classes the investor needs to be exposed to at all times to provide for that appropriate diversification. Q: You mentioned noncorrelated asset classes. Could you give us some examples? A: Yes. Correlation is a term that describes the way assets react in relation to one another given a set of economic conditions and geopolitical situations. For example, some of the factors that cause an asset class like stocks to go up -- if they also cause another asset to go up -- that would be called a high correlation. Noncorrelation means they move in opposite directions. For example, the factors that cause a rise in equities may be the types of conditions that drive down the price of gold. By using noncorrelated assets for allocation, you're balancing yourself. Some of your assets are guaranteed to be increasing in value, while others may decrease. But the theory is that the outperformance should outweigh the underperformance. I mentioned gold and equities. Generally, gold is considered a noncorrelated asset class to dollar-based assets like stocks and bonds. Q: Are all the types of assets you listed included in your fund? A: Yes, they are. The Permanent Portfolio fund holds 20% in gold; 5% in silver; 10% in Swiss government bonds; 15% in real estate investment trusts and natural-resource and commodity stocks, things like energy, timber, raw land, gas and oil production, and commodity metals like nickel and copper; 15% in aggressive growth stocks; and 35% in U.S. Treasuries and high-grade corporate bonds. We believe an investor has to be exposed, regardless of market conditions, to these differing asset classes to be properly diversified. Q: And what about the fund's performance? A: Ah! Well, given the diversity of assets in the Permanent Portfolio Fund, it doesn't have a true benchmark. We typically measure it against the cost of money, represented by a short three-month Treasury-bill index or the consumer price index. Others have compared it to the S&P 500. That's an unfair comparison, given we're about a third invested in stocks. Be that as it may, we've compared favorably to all those indexes over a period of time. For the one-year period ending Dec. 31, 2004, we returned 12.05%, compared to the Treasury-bill index of 1.24% and the S&P 500 of 10.85%. For the three years, we returned 15.54%, vs. 1.34% for the Treasury-bill index and 3.53% for the S&P 500. For the five years, we returned 11.12%, vs. the Treasury-bill index of 2.80% and the S&P 500 of -2.32%. For the 10 years, 8.16% for us, 4% for the Treasury index, and 10.3% for the S&P 500. Q: You also invest in growth stocks. What's your stock-picking strategy for that asset class? A: We manage this part of the portfolio in the same fashion we manage our Aggressive Growth portfolio, which is an all-cap fully invested U.S. stock fund. We're looking to beat the broad market. We're diversified between 12 to 15 industry groups and have the ability to invest in companies of all capitalizations. What we're doing is looking for long-term winners. We'll first identify industries that we think are going to outperform the broad market. Within those, we look for companies we believe will outperform with good growth stories. New products and services, companies with strong and experienced management teams, strong balance sheets and operating models, companies with a history of bringing products from R&D to profitability -- all these characteristics are indicative of good long-term growth stories. We look to hold these stocks for long periods of time. Q: So, what are some of the top holdings among these growth stocks? A: A good example of our stock selection methodology would be Ryland Group. Ryland is a homebuilder based in Southern California. The homebuilding industry, despite gradually rising short-term rates, has been a hot sector over the last few years. Home buyers are still taking advantage of low rates by buying rather than renting. The sector has even been a good performer last year, when short-term rates went up. Longer-term rates didn't increase to that extent, though, so the homebuilding market remains strong. Ryland is a strong performer in a hot sector. They basically have consistent and ever-growing earnings. Their backlog remains very healthy. Their real estate contracts are in the right parts of the country -- Southwest, D.C., etc. Their management team has been around for quite a while and has exhibited a knack for not overpaying. They've demonstrated ability to increase their capacity at reasonable rates and deal out healthy dividends when the right prospects aren't out there. Q: Besides homebuilders, what other industry groups do you think will outperform the broad market? A: Another area that I think has been beaten down a little bit is computer software. For the most part, economic growth has been driven by consumer demand. Businesses are just beginning to spend more on capital improvements. Recently the jobs picture has gotten a little brighter. I expect an increase in info-tech spending as well, so a lot of the computer software stocks (which have been beaten down, though with good reason) are in a good position. We expect to see the software market experience pretty rapid growth. Q: To clarify, is Permanent Portfolio just one fund? You spoke as if Aggressive Growth were separate. A: The Permanent Portfolio family of funds is a collection of separate and unique funds. The Permanent Portfolio is our flagship fund -- that's the one we've been primarily talking about. We also have three other no-load portfolios. The Permanent Treasury Bill portfolio invests in short-term Treasuries. We also have an ultrahigh-grade corporate bond fund, the Permanent Versatile Bond Fund. Both of these funds are designed for fixed-income investors. The Treasury fund is managed like a money-market fund but has a variable price like a bond fund -- it does not maintain a dollar-per-share price. Our Versatile Bond fund goes out a little further -- it takes on a small additional degree of credit risk. The T-bill fund only goes out 90 days. The corporate bond fund can go out about two years. The final fund that I alluded to a little earlier, the Aggressive Growth Portfolio, maintains positions in a variety of industry groups and invests in any cap size. Q: What about crude oil prices? How do they affect your portfolio holdings? A: Well, we think exposure to energy and natural resources, including commodity metals, etc., is essential for investors. Clearly, we believe it's an area investors need to be in -- we've been invested there for a long time and hold several names in the energy sector. We hold ChevronTexaco (CVX ), we own BP (BP ), and we own Forest Oil (FST ), and smaller companies like them. High energy prices have implications in the economy, both favorable and nonfavorable. If you're an investor in commodity stocks in general, you've benefited from a worldwide mismatch of short supplies and increasing demand. This, combined with an accommodative Fed policy and a glut of dollars in the market, has caused commodity prices to boom, and they'll continue to remain high until these mismatches have been resolved. Clearly, we think it's an area to be in -- we own quite a few companies in all these areas. The negative implications, though, are that companies are having trouble passing along the higher costs of commodities to consumers. As long as these costs can be passed on, companies will do well. Oil companies spend more for a barrel of oil, but they still pass on the gasoline at a higher price. However, the auto industry, for example, cannot. The auto industry has higher material costs but cannot raise prices. The higher costs of components drive up the price of inventory, reducing cash flow and margins and ultimately reducing the margin. In the equity market, you want to find companies that are able to pass along these price increases with higher prices to consumers. Q: In what form do you invest in gold and silver? The metals themselves? Mining stocks? A: With respect to our gold and silver, we invest in gold bullion and coins, not the mining companies. We use gold and silver as part of an overall diversification strategy. It's important for investors to remember that [metals] stocks behave like stocks first. They have management teams, analysts, and others who may do things to move the business that could be independent of the movement of the metal. Q: Michael, for the typical long-term investor, what role do you think your defensive funds should play in a portfolio? How much weight? A: Well, again it goes back to expectations, acceptance of risk, etc. But I think all investors have that core part of their portfolio that they don't want to lose or expose to unnecessary risk, and need for a rainy day -- retirement, the kids' education, etc. I think this is a part of everyone's portfolio, to some degree. This chunk grows, but grows with low risk. I think our funds have application in just about everyone's portfolio. Many people use us as a core holding and scratch their speculative itch using other, more risky areas around this core. We've seen many people use this as their only investment, and we've seen it used in both taxable and tax-deferred accounts.

Subject: Interesting From: Terri To: Pete Weis Date Posted: Wed, Apr 06, 2005 at 19:34:48 (EDT) Email Address: Not Provided Message: Another fine post.

Subject: I am only in XOM From: johnny5 To: Pete Weis Date Posted: Wed, Apr 06, 2005 at 00:36:47 (EDT) Email Address: johnny5@yahoo.com Message: Most of this is academic for me and a way to make great friends like you and terri Pete. I hold XOM, I buy it through scottrade once a quarter to keep the trades to only 4 times a year and always keep about 10% of my money in cash for whatever. I used to own a lot of INTC, IBM and MSFT, but decided oil and XOM might outlast them 2 years ago. In the future I may switch to energy index funds or etf's to diversify away from ONE company, but I never expect to have my core holding outside of oil or the energy sector in my time horizon. The only sectors that may even interest me slightly in the next 10 years will be nanotech or biotech related and in the future I may buy index funds of those. I expect gold and oil both to go down and go up over the next 30 years which is my investment horizon, the direction is irrelevant to me. I expect in 30 years no matter with wars, trade restrictions, corporate corruption, government collapse, currency debasement - etc etc that oil and gold will have future VALUE but I have several currencies and stock certificates on my wall that have no value other than sentimental. My uncle is going to invest with a financial planner that will earn a 1% fee and will put him into a few index funds with lots of dividends through fidelity it seems - he also has a military pension. My father has a military pension and most of his wealth is in residential and commercial real estate in georgia and florida. My mother's wealth is in her west palm real estate that I am talking to her and her real estate attorney about 1031 exchanging into japanese commercial real estate. I live very miserly in an old trailer in west central florida and eat the dollar taco's at taco bell most days or sweet potatoes from the local market. I take greyhound when I travel which I try to do several times a year. Wireless technology has become so ubiquitous I am even considering going on the road full time and foregoing my trailer. An old friend sent me some emails last week about buying iraqi dinars because the president of his bank is buying them and telling him what a great investment next to western currencies they are and I sent him this http://www.millionbill.com/ and told him to tell this Nations Bank president to buy these too - that taco bell won't take either currency or the silver coins he begs me to buy when I get hungry for a taco. After several expletives sp? he got very emotional and bought more dinars - these are the types of people making up our world - emotions and behavior drive markets - often irrational and shortsighted - if ease is the real goal - warren has done a great job with berkshire no? Regardless, people will value energy and food even if they don't have currencies or governments - this is my thinking and how I invest. I keep a good selection of wines in my kitchen, money no object my dream would be to own a great vineyard with huge underground cellars in a nice part of france. I plan to go there in a few years and see how to accomplish that by the time I am 60.

Subject: Please Be Careful From: Terri To: johnny5 Date Posted: Wed, Apr 06, 2005 at 08:41:25 (EDT) Email Address: Not Provided Message: Forgive me, but the idea of selling a wonderful home to invest in a Cayman Islands Japanese real estate plan seems more risky than we might ever begin to suspect. Please please please be careful for yourself and your family. Diversify a bit. All your relative would need is Vanguard.

Subject: Mom is stubborn From: johnny5 To: Terri Date Posted: Wed, Apr 06, 2005 at 08:48:25 (EDT) Email Address: johnny5@yahoo.com Message: My family never listens to me Terri, I am the black sheep. If mom's real estate attorney and CPA doesn't think it is a good deal she won't do it, last time she talked to them they told her not to sell her west palm house that it will ALWAYS GO UP. It has went from 89K to 239K in just a few years now - doesn't feel right to me to stay in it, but what do I know - the real estate attorney and CPA are paid experts.

Subject: A Home is to Live In From: Terri To: johnny5 Date Posted: Wed, Apr 06, 2005 at 09:01:30 (EDT) Email Address: Not Provided Message: A home is to live in and deeply and truly enjoy always.

Subject: Property is For Building From: Terri To: Terri Date Posted: Wed, Apr 06, 2005 at 10:57:00 (EDT) Email Address: Not Provided Message: I would hold the property forever, and build on it and be forever grateful.

Subject: She likes to travel From: johnny5 To: Terri Date Posted: Wed, Apr 06, 2005 at 16:37:17 (EDT) Email Address: johnny5@yahoo.com Message: Sweet dear Terri, I do appreciate your interest - let us go further into the rabbit hole and see if you share the same convictions for I do value your insight: The property is in a pretty run down part of west palm now and only by the grace of god has not been blown away by a hurricane - which she has not insured against because with that added cost she would no longer make much profit after taxes, management fees and maintenance. Her tenant has stopped paying rent and she is having the tenant evicted - six months no rent and basically destroyed the house - holes in the walls, the roof, damage everywhere - the stove has been stolen - mom is definitely getting out of residential and going to commercial property if she stays in property at all - at the advice of her real estate attorney. The tenants will have less impact on commercial property then and it will probably survive a hurricane better if she buys in florida. But there is another goal Terri, having property in Japan would allow her to travel there and take it off her taxes as a real estate investor business expense - she did europe with hubby and usa with grandfather - but she always wanted to see tokyo and the military never provided. This would give her a way to save money on her asian journey. The real estate attorney recommended commercial, I am trying to get him to figure out with japanese commercial is better than american commercial - looking at graphs of commercial american versus commercial japanese - it does seem they are at the bottom of thier 20 year cycle and we are at the top - time to re-allocate no?

Subject: Re: She likes to travel From: Terri To: johnny5 Date Posted: Wed, Apr 06, 2005 at 17:37:34 (EDT) Email Address: Not Provided Message: This makes more sense, but the need may be to make sure a person can live a comfortable life in America initially. Then, a person has to figure out how to buy property thousands of miles away in a country in which English is not spoken. Then, even if property is well valued, how does a person buy intelligently?

Subject: Good questions From: johnny5 To: Terri Date Posted: Wed, Apr 06, 2005 at 18:10:51 (EDT) Email Address: johnny5@yahoo.com Message: 'but the need may be to make sure a person can live a comfortable life in America initially.' She has grown tired of her time here in the USA, she is not the spring chicken she once was and wants to travel before she grows too old for the journeys. She wanted to see Egypt too, but feels it is safe to travel to tokyo but not there. ' Then, a person has to figure out how to buy property thousands of miles away in a country in which English is not spoken.' She did this several times when she lived in germany and many other non english speaking parts of europe for 16 years. It's not so complicated to her I guess. She still has lots of pocket translation dictionaries that seemed to serve her well. ' Then, even if property is well valued, how does a person buy intelligently?' Ah there is the rub, is the Phoenix Fund some fly by night cayman islands offshore shell scam group that will milk her wealth dry and dissapear into the shadows of night as the LOCAL KL financial people did with 300 million in west palm beachers hedge fund money? Or are they jam up good people who are honest and ethical and have a safe strategy unliked shorting GOOG at 160? Like Munger and Buffet says - you got to find good PEOPLE and MANAGEMENT and invest in them and the value will come back to you 10 fold! So it all comes down too are these guys running the phoenix fund making smart low risk investments - can the be trusted - and is there lots of trasnparency and accountability?

Subject: Re: Good questions From: Terri To: johnny5 Date Posted: Wed, Apr 06, 2005 at 18:25:33 (EDT) Email Address: Not Provided Message: Well, she seems like a capable person. Will she be able to live comfortably here however no matter an international investment? How a Cayman Islands real estate venture is to be checked out is beyond me.

Subject: Re: A Home is to Live In From: johnny5 To: Terri Date Posted: Wed, Apr 06, 2005 at 09:35:20 (EDT) Email Address: johnny5@yahoo.com Message: You must not have read my previous posts here at PKarchive - mom has not lived in the house for many many years now - it is a RENTAL property in section 8 housing and in very bad shape from the last inspection report - not her house that she lives in. She lives in an old beatup RV and travels all over florida mostly now parking in walmart - she loves that life. Like the old saturday night live skit - the van down by the river with chris farley. Do you travel much Terri or does wanderlust never possess you and you want to plant roots? My family has always travelled - she travelled with her grandfather all over the USA working farms as a child and teenager - and then travelled with my dad all over the world in the army, she can't stand staying in one place for more than a few months.

Subject: Re: Lower risk investing with.... From: Terri To: Pete Weis Date Posted: Tues, Apr 05, 2005 at 22:08:24 (EDT) Email Address: Not Provided Message: The dollar will fall for some time, some time, though in zig zag pattern. I agree.

Subject: My investment in..... From: Pete Weis To: Terri Date Posted: Wed, Apr 06, 2005 at 10:59:05 (EDT) Email Address: Not Provided Message: precious metals is not a long term investment since I see it as more speculative than one based on fundamentals. The trick will be figuring when to get out. I like Permanent Portfolio for the longer term and I need to find more funds which are similar. I think, like Charles Munger seems to believe, that most stock index funds are too broad and therefore the mediocre to poor stocks in the index drag down the good ones especially in a bearish environment. With a falling dollar eroding mediocre gains or adding to losses of broad index funds, our retirements will erode with the dollar. While Johnny's strategy is riskier than many of the rest of us would want (including myself), he probably will do better than most of us who spread out the risk over the next 10-15 years, but that probability comes with the risk that XOM might become a target of terrorists, they're severely overstating proven reserves, or a very severe worldwide recession substantially reduces world consumption of oil, etc. etc. I think the latter is most possible. I think the older we get and the bigger the retirement piggy bank the more we think of diversity to protect what we have.

Subject: The deflation of Japan and Oil consumption From: johnny5 To: Pete Weis Date Posted: Wed, Apr 06, 2005 at 16:54:07 (EDT) Email Address: johnny5@yahoo.com Message: I know thier real estate went down 80%, also thier stock market went down to 25% of what it was, did thier consumption of oil go down in the same time frame and the same relation? You may pleasantly surprise me with data contrary to my beliefs. http://www.eia.doe.gov/emeu/cabs/japan.html ENERGY Japan lacks significant domestic sources of energy and must import substantial amounts of crude oil, natural gas, and other energy resources, including uranium for its nuclear power plants. In 2002, the country's dependence on fossil fuel imports for primary energy stood at more than 80%. Oil provided Japan with 49.7% of its total energy needs, coal 18.9%, nuclear power 13.7%, natural gas 12.7%, hydroelectric power 3.7%, and renewable sources 1.1%. About half of Japan's energy is used by industry and about one-fourth by transportation, with nearly all the rest used by the residential, agricultural, and service sectors. Japan's energy intensity (energy use per unit of GDP) is among the lowest in the developed world. OIL Japan contains almost no oil reserves of its own (59 million barrels of proven oil reserves), but it is the world's third largest oil consumer (after the United States and China). Japan consumed an estimated 5.57 million barrels per day (bbl/d) of oil in 2003, up from 5.30 million bbl/d in 2002. Part of the increase in oil consumption was attributable to the shutdown of a large number of nuclear power plants in 2003, which caused utilities to maximize use of oil-fired generating capacity. Most (75%-80%) of this oil came from OPEC, particularly Persian Gulf countries like the United Arab Emirates, Saudi Arabia, Kuwait, Qatar, and Iran. Japan has worked -- with relatively little success -- to diversify its oil import sources away from the Middle East. Until 1996, when Japan's oil consumption peaked at nearly 5.9 million bbl/d, Japanese oil consumption (and imports) had been growing steadily for years. From 1997 through 2002, Japan's oil consumption declined as its economic slump caused demand by industrial and other users to decline. With nuclear electricity generating capacity restored, Japan's oil demand is likely to dip slightly in 2004, despite relatively strong economic growth. So yes it seems their oil consumption went down, but no where NEAR the levels that thier demand for stocks or real estate fell or am I confused again?

Subject: Re: My investment in..... From: Terri To: Pete Weis Date Posted: Wed, Apr 06, 2005 at 12:09:03 (EDT) Email Address: Not Provided Message: Nicely stated as always. I am thoroughly impressed by the concept of Permanent Portfolio, but believe this is readily done in a more transparent way with a few funds at Vanguard. The guess is that precious metals trades at least with the market till it becomes clear how our balance of trade adjustment will play out.

Subject: Steadfastly Optimistic on Corporate Honesty? From: johnny5 To: All Date Posted: Tues, Apr 05, 2005 at 20:20:26 (EDT) Email Address: johnny5@yahoo.com Message: From mish on silicon investor http://www.corpwatch.org/article.php?id=12039 Bringing Business Back Ashore Buenos Aires issues world's first ban on offshore shell companies by By Lucy Komisar, Special to CorpWatch April 4th, 2005 In December of 2004, there was a horrific fire in a Buenos Aires disco called the Cromagnon Republic. Three rock fans shot off flares that set fire to the ceiling and engulfed the overcrowded discotheque in flames and smoke. In the rush to get out, 200 people were killed and 700 injured, most from trampling and smoke inhalation. The main entrance had been wired shut, and some of the emergency exits were locked, blocking escape. In the days that followed, thousands of the victims' parents and friends marched in the streets and demanded justice. A judge started proceedings for manslaughter and froze $20 million belonging to the 'owner,' Omar Chaban. However, investigators soon discovered that Chaban appeared in no official disco documents; he was just the 'administrator.' The legal owners of the property and the disco company were offshore shell corporations registered in the tax haven of Uruguay, the neighboring country. The listed 'owner' of the enterprise was a Uruguayan 'straw man' in his 70s who had no money. The tragedy gave political space to a deceptively unassuming lawyer named Ricardo Nissen, Inspector General of Justice for Buenos Aires, who is committed to fighting the system of tax haven shell companies that is the underbelly of illegal global finance. He told CorpWatch, 'We think the owner of the discotheque is a single owner who divided it into offshore companies.' In response, Nissen has taken a step that is the first of its kind, anywhere in the world. Six weeks after the deadly fire, he banned offshore shell companies from doing business in the capital district of Buenos Aires. The Inspector General's directives, issued in February and March, build on two resolutions he issued in 2003 and ban offshore companies that cannot prove they have real business activity in their places of registration. The new rules apply only to the capital district of Buenos Aires, the sphere of Nissen's authority. 'After the tragedy of Cromagnon,' Nissen says, 'It seemed that the legislation had to become stronger.' There are around three million shell companies in the world. The term 'shell' is used to mean front or 'mailbox' companies. They are also sometimes called International Business Corporations (IBCs) or Personal Investment Companies (PICs). They are set up with secret beneficiaries to own bank accounts or property, to effect phony transactions, to hide or launder funds, and to evade legal responsibility. Nissen's directive is a shot across the bow of the world financial system, which relies on offshore shell companies and bank accounts to move money seamlessly around the globe. But it is not an isolated act. Rather, it is one in a series of indications of the confidence of the new Argentine government, following their success in defying international financial institutions such as the International Monetary Fund (IMF). The New Argentina The current government of President Néstor Kirchner came to power in late 2001, after street protests against the IMF caused the previous government to collapse. It has since brought about a series of a small economic miracles -- including the reduction of unemployment from 20 percent to around 13 percent and lowering the poverty level nearly 10 points in the last three years by encouraging cooperatives and worker-owned factories. With the backing of the protestors, who blamed the high rates of poverty and unemployment on the strict debt repayment program imposed by the IMF and other major bank creditors, Kirchner refused to repay the country's crushing $81.8 billion debt owed to bond holders. When the lenders were forced to negotiate (with the added bonus of a rebounding economy that repudiated the IMF's policies) Kirchner struck an agreement that forced creditors holding $62.2 billion of the debt to write off about 70 percent of the value. Much of the debt that Argentina has been saddled with (around $155 billion in all) is the direct result of the offshore banking system. It began under the dictator General Videla, who came to power in 1978. A judicial inquiry by the Argentine Federal Court in 2000 showed that many of the loans granted to the nation at the time -- by banks like Citibank, Chase Manhattan Bank, Deutsche Bank and Hannover Bank -- were diverted directly to front-companies set up in offshore tax havens. Some of the money was simply stolen and some was spent on weapons. None could be paid back. Profiting Offshore There are offshore shell companies registered in as many as 70 jurisdictions around the world -- places such as Grand Cayman, the British Virgin Islands, Jersey (the Channel Islands), Liechtenstein, Luxembourg and Switzerland. They are used by corporate fraudsters and tax cheaters, dictators and corrupt officials, drug traffickers and other criminals. Enron Enron's use of offshore shells was essential to its fraud. It had almost 3,000 corporate subsidiaries and partnerships, a fourth of them registered offshore, including 692 in the Cayman Islands, 119 in the Turks and Caicos Islands, 43 in Mauritius, eight in Bermuda, six in Barbados, four in Puerto Rico, two in Hong Kong, two in Panama, and one each in Aruba, the British Virgin Islands, Guam, Guernsey, and Singapore. Regulatory authorities, investment analysts and stockholders couldn't readily know who the owners were, and couldn't see that partnerships were secretly owned by Enron managers or associates. They couldn't check the books to see if the offshore company was dealing with another insider-owned company which was siphoning off its wealth. Significant offshore deals involved Enron's biggest bankers, Citigroup and JP Morgan Chase, which set up offshore companies which they controlled, to serve as sham trading partners in order to allow Enron to disguise multi-million dollar loans as trades, thereby shifting billions of dollars of debt off its balance sheets. Tyco Tyco International CEO L. Dennis Kozlowski moved the company's registration to Bermuda, then went on to set up 115 subsidiaries in tax haven countries, including eight in the Bahamas, 17 in Barbados, 55 in Bermuda, and five in the Cayman Islands. Most of these companies had nothing to do with real business, but were shells used in accounting games to shield Tyco interest, dividends, royalties, and other income from U.S. taxes and to allow it to issue phony accounting reports that hid bad debts and misreported assets. Stock prices shot up, investors bought, Tyco executive made a bundle, and investors lost their shirts when the truth came out. Tyco's former top executives were charged with looting the company of $600 million. AIG AIG, the global insurance conglomerate, used offshore jurisdictions such as Barbados, Bermuda and Luxembourg to help the company move debt off its books, launder profits to evade U.S. taxes and hide insider connections in supposedly 'arms-length' deals. Goldman Sachs helped it set up Coral Re, an offshore Barbados reinsurance company, which AIG secretly owned, and when state insurance departments found out about it, AIG stonewalled and bullied the agencies into declining to take action against the company. AIG's luck changed when New York Attorney General Eliot Spitzer discovered some similar current cases. Worldcom Worldcom had ten tax haven subsidiaries, including four in Panama, three in Bermuda, and one in the Cayman Islands. It used these subsidiaries to manipulate financial results to hide expenses and inflate revenues in a $11 billion accounting fraud, the largest in US history, all aimed at protecting the company's share price and CEO Bernie Ebber's personal wealth. They consisted of $3.8 billion of operating expenses being incorrectly reflected as capital expenditure, which hugely inflated profits to deceive investors and the markets. These expenses were deliberately distributed across a host of accounts for capital expenses to escape detection. The scam also cheated the Internal Revenue Service of hundreds of millions of dollars, and the collapse of the company cost shareholders about $180 billion; this includes state pension funds --New York State lost $300 million, Michigan lost $116 million, and Florida $85-90 million. And 20,000 workers lost their jobs. Another large chunk of debt was acquired by the Carlos Menem government in the 1990s, which privatized government industries such as telecommunications and the airline industry, and sold them to companies who bought them with discounted debt bonds from the banks, paying fire-sale prices. At the same time, companies that borrowed money did not pay their own debts, and the corporate-friendly Menem government 'nationalized' the private debt. And, like the regime before it, the Menem government also stole billions, which it shipped to offshore secret accounts. Kirchner's refusal to play by the rules of creditors, who for years had turned a blind eye to the wholesale robbery of the government coffers, is a challenge to the international financial system. Ricardo Nissen's ban on offshore companies is a second, more direct challenge to the system. Nissen's Rules Nissen is a soft-spoken man who wears oval, rimless glasses and a mild expression. His demeanor is belied by his passion to end the offshore system. He explains that he arrived at this position after 25 years as a business lawyer. 'It always appeared that ghost companies bought a majority of the stocks in companies,' Nissen says, noting that many companies privatized during the Menem era of the 90s moved their registrations offshore. He started asking himself, 'Isn't it strange that a Barbados or Cayman Island company is the owner of a furniture store, a restaurant, or a kiosk that sells newspapers?' One of the most creative loopholes, Nissen explains, was the acto aislado ('isolated act'). In Buenos Aires, 15,000 properties in the name of offshore companies have taken advantage of a clause in the national law that allows foreign companies to come to Argentina without registering, if they are doing so in a single incidence. This loophole led to a proliferation of tiny, fake businesses. Even ex-President Menem once admitted to avoiding the potential taxes on his home because it was the official property of a company in a tax haven. 'I don't have anything; a company lends it to me,' he says. (Incidentally, Menem is also currently under investigation for illegally selling arms to Croatia and Ecuador in the early 1990s and stashing tens of millions of dollars in 'commissions' in offshore Swiss accounts.) Nissen has issued four regulations over the last two years in an effort to create a watertight system to prevent such offshore scams. First, he ordered that all foreign companies had to prove activities in their original country or in another part of the world (resolution 2/03), then he created another one that closed the 'acto aislado' loophole (resolution 8/03). Then, this February, he strengthened the first resolution with another (general resolution 2/05) by banning offshore companies that are not authorized to carry out economic activities in their countries of origin. Finally, in March of 2005, Nissen required that anonymous and limited-responsibility companies, whose stocks are not traded in the local stock market, must identify their shareholders. The last resolution is the most stringent - all companies seeking to do business in Buenos Aires must provide a name, address, and passport or identification number. They must also disclose the amount of their stocks. If intermediaries hold the stocks, companies must name the ultimate owners. If the company is registered in a territory deemed non-cooperative in dealing with money-laundering investigations by foreign law enforcement, then Argentine authorities are allowed to require even more information. As a result of the first two orders, Nissen says, the number of foreign companies registered in 2004 was a third of that of previous years. Meanwhile, enforcing the resolutions will be the most difficult aspect of his job to come. He describes one aspect of the process: 'We send inspectors into the street. They ring the bell and ask the porter, 'Who lives here?' He says 'family so-and-so.' We know this family sold property to an offshore company, but continues living there. It's a fraud. When you sell a property, you don't stay there. There were three properties in this house. In each one it was the same: 'We sold property to a Virgin Island company, but for a year the company lent it to me, my mother and my daughter-in-law.' What a generous company!' Today, Nissen has some other targets, such as the offshore subsidiaries of international banks, that come to Argentina. Then, he wants to end a tax-evasion scheme under which people create foundations that carry out commercial activities, but don't pay taxes because of their status as foundations. Others have taken up Nissen's example. Mario Cafiero, a deputy in the Argentine Congress and longtime critic of the way the offshore system has been used to facilitate tax evasion and balloon the national debt, is developing legislation to extend Nissen's orders to the entire country. Important Precedent or Bad for Business? David Spencer, a lawyer who writes about international tax regulation for 'The Journal of International Taxation,' says that legislature that takes on these issues, normally does so on an information-gathering level. Therefore, it's significant that Nissen attempts to actually regulate the activities of a company. Jack Blum, a lawyer and international expert on money-laundering, calls the efforts 'fabulous.' He says he's been 'making the same arguments for years.' Blum, who ran the Senate investigations on the BCCI Affair and Iran Contra, also hopes the U.S. will refuse recognize corporate shells. 'We don't owe anything to the countries that charter them,' he adds. Dean Baker, co-director of the Center for Economic and Policy Research, a liberal Washington think tank also agrees with the move, as it will pose a barrier to dishonest accounting. The use of shell companies, he says, 'disrupts capital markets; it makes it easier to have more dishonest practices across the board. I don't see why any country shouldn't adopt comparable legislation.' Even the most conservative economists, he feels, should advocate for a system that is 'simple and transparent.' Ted Truman of the Institute for International Economics and coauthor of 'Chasing Dirty Money,' says, 'In the context of Argentina, it is noteworthy because there is a huge history of tax evasion.' He adds that, 'In principle, it's a good idea. You should be able to track the owners of assets; that would help in the context of taxation and money laundering. It would be easier if it was common practice throughout the world.' 'In the U.S. context, it would be a little extreme,' says Dan Shaviro, a visiting scholar at the conservative American Enterprise Institute who sees the fact that the US economy is larger that Argentina's as an important factor. 'There are a lot of major companies incorporated in the Caymans,' he adds. 'I suspect, in the U.S., it would be politically unwise for people who want to restrict tax shelters to restrict it in this form. But it would be sensible to have a proposal to say 'if they fit the definition of a tax haven where we don't do business, they are treated as U.S. companies for federal income tax purposes.' Dan Mitchell of Washington's Heritage Foundation sees such restrictions as bad for big business. 'The Argentinians who don't want to pay confiscatory taxes are going to invest out of the country,' he says. He believes this is only natural, when a country has an economic system that's so 'oppressive.' In cases where there's criminal negligence, such as the Cromagnon fire case, Mitchell says, 'I assume somewhere there must be some sort of documentation of who the real owner is. That's the solution where there's criminal liability... [countries like] Uruguay would agree to share information.' But tax havens do not generally share information, so such getting documentation would be virtually impossible under the current system. The new rules don't appear to have roiled Argentine big business, at least not publicly. Andrea Canónica, spokesperson for the Argentine Management Association (Asociacion Empresaria Argentina), the nation's chief businessmen's organization, declined to make an official comment, saying, 'It's not a theme the association gives opinions about. We speak about things that affect the Argentine entrepreneur.' The news has forced some public figures to come out in support of offshore business. In the daily La Nación, one lawyer, from the firm owned by Martinez De Hoz Jr., son of the economic czar of the 1976-1983 Argentine dictatorship, described offshore companies as 'efficient' for investment. Nissen's resolutions have also elicited disapproval from the real estate agency, Cushman & Wakefield Semco, which specializes in dealing with foreign investment. The company manager told the newspaper that Nissen's orders were a symptom of 'legal insecurity.' Indeed, making tax evaders and money-launderers 'legally insecure' is just what Ricardo Nissen had in mind. Lucy Komisar is writing a book about offshore banks and corporate secrecy.

Subject: Ownership Society Mr. Bush? From: johnny5 To: All Date Posted: Tues, Apr 05, 2005 at 19:20:46 (EDT) Email Address: johnny5@yahoo.com Message: Bush to Back Curbs on Fannie, Freddie Tue Apr 5, 2005 11:41 AM ET WASHINGTON (Reuters) - The Bush administration will back curbs on mortgage portfolios held by home loan finance giants Fannie Mae (FNM.N: Quote, Profile, Research) and Freddie Mac (FRE.N: Quote, Profile, Research) to ward off potential risks to the U.S. financial system, a senior administration official said on Tuesday. 'We believe that our capital markets could adjust to a significant reduction in the presence of the housing GSEs (government-sponsored enterprises) as mortgage investors,' said the official, speaking on condition of anonymity. Both companies have rattled markets and regulators with multibillion-dollar accounting problems in recent years. Treasury Secretary John Snow is due to describe the administration's views on how to improve oversight of the companies on Thursday in congressional testimony. According to the official familiar with the proposal Snow will discuss Thursday, the Treasury secretary will tell Congress that the companies' regulator should have the ability to set minimum and risk-based capital standards, as well as the power to place a failed GSE in receivership if needed. He will say the lines of credit that government-sponsored enterprises enjoy should not be interpreted by the market as an 'implicit guarantee' that signals the federal government would back the companies' debt obligations. Rather, the official said, the administration would only seek to exercise the line of credit in the event that a GSE was in 'significant financial distress and needed the capital to emerge successfully through the receivership process.' Snow's testimony will come amid a hectic week of GSE-related events on Capitol Hill. On Tuesday, Republican leaders in the House Financial Services Committee will offer a bill to substantially stiffen oversight of Fannie, Freddie and the Federal Home Loan Banks. Later in the week, Federal Reserve Chairman Alan Greenspan will discuss GSEs at the Senate Banking Committee. Other Bush administration officials are also due to testify. According to the senior administration official, the White House remains troubled that Fannie and Freddie have not filed reliable financial statements with the U.S. Securities and Exchange Commission, the official said. The administration also believes that the Federal Home Loan Banks should be placed under the same regulator as Fannie and Freddie, but that the new regulatory regime should be structured to take into account the differences between the housing GSEs. --- --- --- --- --- --- --- --- --- --- --- --- --- --- -- All rights reserved. © Reuters 2005

Subject: Impossbile - China giving us the cold shoulder? From: johnny5 To: All Date Posted: Tues, Apr 05, 2005 at 19:17:52 (EDT) Email Address: johnny5@yahoo.com Message: Two top Chinese officials won´t attend G7/IMF meetings Tuesday, April 5, 2005 4:06:31 PM http://www.afxpress.com Two top Chinese officials won't attend G7/IMF meetings WASHINGTON (AFX) -- China's two senior economic policy makers will not be coming to Washington later this month to discuss the country's fixed exchange rate with U.S. Treasury officials and their G7 counterparts, U.S. and Chinese officials said Tuesday. China's central bank governor Zhou Xiaochuan and Finance Minister Jin Renqing won't attend the G7 meeting or the spring meeting of the IMF and World Bank. Deputy central bank governor Li Ruogu and vice finance minister Li Yong will instead represent China at the IMF meetings that take place over the weekend of April 16, according to a Chinese official.

Subject: Please help me understand Terri From: johnny5 To: All Date Posted: Tues, Apr 05, 2005 at 18:32:26 (EDT) Email Address: johnny5@yahoo.com Message: http://biz.yahoo.com/ap/050405/wall_street.html?.v=23 Associated Press Stocks End Up on Greenspan's Reassurance Tuesday April 5, 6:07 pm ET By Michael J. Martinez, AP Business Writer Stocks Close Higher As Greenspan Downplays Oil's Effect on Economy; Dow Ends Up 37, Nasdaq Up 8 NEW YORK (AP) -- Stocks got a lift from Federal Reserve Chairman Alan Greenspan Tuesday, rising modestly after he said the recent climb in oil prices was already curbing demand for crude. Oil futures dropped sharply on the news. Terri you state you are a 100% believer in the EMH, how ROBUST are our markets if the utterance of one japanese prime minister or one Alan Greenspan can have such HUGE effects on the global financial universe - not what these guys actually DO - but just WORDS they utter out of their mouth - that is an efficient robust market - not a jittery house of cards held together by scaredy cats? Huh? Make me understand how the people at this GREAT news site who are your government and financial representatives deserve the 100% trust you give them? http://www.newsoftheweird.com/archive/index.html Government in Action Public Servants in Action: (1) New Hampshire state Rep. Christopher Doyle, 26, was arrested in March and charged with slapping elections supervisor Gail Webster, 61, to the floor on election night after learning that he had lost his race for town selectman in Windham. (2) Shirley Martin, a member of the school board in West Orange, Texas, was convicted in February of disorderly conduct for threats against colleague Beth Wheeler. At a meeting, Martin had continued speaking after her colleagues had ruled her out of order, and subsequently Martin angrily told Wheeler, 'I'm going to stomp a mud hole in your ass.' [The Union Leader (Manchester, N.H.), 3-11-05, 3-18-05] [Beaumont Enterprise, 2-25-05] Despite state funding problems in health care and other areas, New York's Department of Transportation completed a $3.3 million beautification project in January in which intricately decorated 'flora and fauna' designs of bronze were inlaid in two 2,400-square-foot granite wall coverings whose purpose was merely to decorate an underpass below New York City's Brooklyn-Queens Expressway. According to the New York Sun, the walls are beside an off-ramp that's across a pedestrian-unfriendly street from a Burger King, and the site was selected primarily because it is at the intersection of the jurisdictions of three community boards (thus making possible a seemingly always-desirable joint petition for funds). [New York Sun, 1-10-05] The St. Petersburg Times, profiling retired pro basketball player Matt Geiger in February, described his $13 million, 28,000-square-foot, custom-built suburban mansion (whose 40 satellite-equipped TV sets include 18 wired together so he can play video games with his high school friends) and mentioned his 27 exotic animals that roam the grounds, earning him an unspecified 'tax break' (although he told the Times he loves animals and would have them anyway). [St. Petersburg Times, 2-27-05] According to a February Cox News Service dispatch from Mexico City, the government nearly killed its export market for the fabled mezcal, a liquor (similar to tequila) traditionally sold with a worm floating in the bottle. Bureaucrats had recently proposed to ban the worm because of its high fat content, even though as much as 70 percent of mezcal sales are based on the worm (with alleged sexual or hallucinatory powers), but changed their minds. [Seattle Post-Intelligencer-Cox News Service, 2-9-05] Surreality Tennessee state Sen. John Ford testified in a juvenile court hearing in January that his child support payments should be reduced, in accordance with a state law that he had introduced on behalf of fathers with many children. Ford owns two homes, lives part-time in one with his ex-wife and their three children (with another on the way), and lives part-time in the other with an ex-girlfriend and their two children. Hence, he said, he should have lesser payments to a third woman, who is the mother of his 10-year-old daughter. [Associated Press, 1-23-05] Least Competent Criminals In March, accused U.S. fugitive securities-swindler Frederick Gilliland, living on the lam in Canada, was tricked into coming back across the border, just for a free meal. A vengeful private investigator offered to buy Gilliland lunch at Brewster's in Point Roberts, Wash., and then alerted authorities, who intercepted the super-hungry Gilliland as he approached the restaurant. [Seattle Post-Intelligencer, 3-15-05]

Subject: Low Volatility From: Terri To: All Date Posted: Tues, Apr 05, 2005 at 17:22:35 (EDT) Email Address: Not Provided Message: What continues to be most nteresting about stock and bond markets here and abroad is the lack of volatility. Trading ranges are remarkably limited, sector by sector the ranges are minor. Also, despite a general nervousness markets have have held. REITs which might have been expected to be weak have given up only 7.5% of the gains of the last 5 years. The longer the stock market trades in a narrow range the less expensive it becomes as earnings rise. Again, long term bonds continue to hold.

Subject: What are the mexican military goals? From: johnny5 To: All Date Posted: Tues, Apr 05, 2005 at 15:14:38 (EDT) Email Address: johnny5@yahoo.com Message: http://www.newsmax.com/archives/ic/2005/3/31/134212.shtml Thursday, March 31, 2005 9:37 a.m. EST Mexican Military on Standby in Response to Minutemen Mexico's President Vicente Fox is preparing to respond militarily to a group of U.S volunteers who plan to patrol the U.S.-Mexican border starting tomorrow, positioning more than a thousand troops nearby, according to an Arizona TV station. 'The Mexican military is on standby,' reports NBC's Tucson affiliate KVOA. 'One unit has about a thousand soldiers. They're located just across the border.' Over the last week spokesmen for the border patrol volunteers, who dub themselves Minutemen, have said they will not attempt to detain Mexican illegals, but rather report them to the Border Patrol and track them till they're apprehended. Despite the assurances, Mexican officials met with the mayor of Douglas, Ariz., on Tuesday to discuss how they will handle potential violence, KVOA said. Last week President Fox warned at a Mexico City press conference: 'We totally reject the idea of these migrant-hunting groups. We will use the law, international law and even U.S. law to make sure these types of groups, which are a minority, will not have any opportunity to progress.' Huh? Legal US citizens trying to enforce the LEGAL laws of the USA by reporting ILLEGALS to the proper authorities to be challenged by mexico's military - my eyes are rolling with confusion!

Subject: Investing in Precious Metal Stocks From: Terri To: All Date Posted: Tues, Apr 05, 2005 at 12:21:22 (EDT) Email Address: Not Provided Message: The problem with investing in precious metals company stocks has been both trying to determine when the stocks are reasonably valued and trying to gauge a crisis move. Over extended periods of time precious metals stocks have performed poorly, but the stocks are wildly volatile and can move 25% to 50% in a few weeks time. Since I do not know how to find proper entry points, I have stayed away from the stocks, but since they have trailed other sector stocks I have never felt a need for precious metals. Generally, when the Fed is in a tightening cycle these stocks have done poorly but that is the past....

Subject: Vanguards decision to invest From: johnny5 To: Terri Date Posted: Tues, Apr 05, 2005 at 15:24:35 (EDT) Email Address: johnny5@yahoo.com Message: You rebalance stocks and bonds - but feel physical assets like precious metals should not be part of the theory? Over extended periods of time *say 200 years* the physical stuff has done quite well - the standard oil and webvan stock certificates I have on my wall don't have much value but that 80 year old gold watch from my grandfather sure does. I cannot understand why bogle would allow such a fund if he thought it not prudent to some part of his clients portfolio. http://flagship3.vanguard.com/VGApp/hnw/FundsPerformance?FundId=0053&FundIntExt=INT&DisplayBarChart=false It seems all you had to do was listen to Warren and not disregard his advice Terri, he said 2002 was the year to leave the dollar and he did so with his money, from the chart here at Vangaurd precious metals and mining, you would have done well to diversify into some precious metals starting 2002. Make it simple Terri, too complicated out there to try and outguess Warren - he says it's still a good idea to expect the dollar to drop more and now I read other currencies like the euro and yen might too - and now the Financial Times are recommending gold related assets as part of a good investment strategy.

Subject: Illegal Immigrants and Social Security From: Emma To: All Date Posted: Tues, Apr 05, 2005 at 10:48:23 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/04/05/business/05immigration.html?pagewanted=all&position= Illegal Immigrants Are Bolstering Social Security With Billions By EDUARDO PORTER STOCKTON, Calif. - Since illegally crossing the Mexican border into the United States six years ago, Ángel Martínez has done backbreaking work, harvesting asparagus, pruning grapevines and picking the ripe fruit. More recently, he has also washed trucks, often working as much as 70 hours a week, earning $8.50 to $12.75 an hour. Not surprisingly, Mr. Martínez, 28, has not given much thought to Social Security's long-term financial problems. But Mr. Martínez - who comes from the state of Oaxaca in southern Mexico and hiked for two days through the desert to enter the United States near Tecate, some 20 miles east of Tijuana - contributes more than most Americans to the solvency of the nation's public retirement system. Last year, Mr. Martínez paid about $2,000 toward Social Security and $450 for Medicare through payroll taxes withheld from his wages. Yet unlike most Americans, who will receive some form of a public pension in retirement and will be eligible for Medicare as soon as they turn 65, Mr. Martínez is not entitled to benefits. He belongs to a big club. As the debate over Social Security heats up, the estimated seven million or so illegal immigrant workers in the United States are now providing the system with a subsidy of as much as $7 billion a year. While it has been evident for years that illegal immigrants pay a variety of taxes, the extent of their contributions to Social Security is striking: the money added up to about 10 percent of last year's surplus - the difference between what the system currently receives in payroll taxes and what it doles out in pension benefits. Moreover, the money paid by illegal workers and their employers is factored into all the Social Security Administration's projections. Illegal immigration, Marcelo Suárez-Orozco, co-director of immigration studies at New York University, noted sardonically, could provide 'the fastest way to shore up the long-term finances of Social Security.' It is impossible to know exactly how many illegal immigrant workers pay taxes. But according to specialists, most of them do. Since 1986, when the Immigration Reform and Control Act set penalties for employers who knowingly hire illegal immigrants, most such workers have been forced to buy fake ID's to get a job. Currently available for about $150 on street corners in just about any immigrant neighborhood in California, a typical fake ID package includes a green card and a Social Security card. It provides cover for employers, who, if asked, can plausibly assert that they believe all their workers are legal. It also means that workers must be paid by the book - with payroll tax deductions. IRCA, as the immigration act is known, did little to deter employers from hiring illegal immigrants or to discourage them from working. But for Social Security's finances, it was a great piece of legislation. Starting in the late 1980's, the Social Security Administration received a flood of W-2 earnings reports with incorrect - sometimes simply fictitious - Social Security numbers. It stashed them in what it calls the 'earnings suspense file' in the hope that someday it would figure out whom they belonged to. The file has been mushrooming ever since: $189 billion worth of wages ended up recorded in the suspense file over the 1990's, two and a half times the amount of the 1980's. In the current decade, the file is growing, on average, by more than $50 billion a year, generating $6 billion to $7 billion in Social Security tax revenue and about $1.5 billion in Medicare taxes. In 2002 alone, the last year with figures released by the Social Security Administration, nine million W-2's with incorrect Social Security numbers landed in the suspense file, accounting for $56 billion in earnings, or about 1.5 percent of total reported wages. Social Security officials do not know what fraction of the suspense file corresponds to the earnings of illegal immigrants. But they suspect that the portion is significant. 'Our assumption is that about three-quarters of other-than-legal immigrants pay payroll taxes,' said Stephen C. Goss, Social Security's chief actuary, using the agency's term for illegal immigration. Other researchers say illegal immigrants are the main contributors to the suspense file. 'Illegal immigrants account for the vast majority of the suspense file,' said Nick Theodore, the director of the Center for Urban Economic Development at the University of Illinois at Chicago. 'Especially its growth over the 1990's, as more and more undocumented immigrants entered the work force.' Using data from the Census Bureau's current population survey, Steven Camarota, director of research at the Center for Immigration Studies, an advocacy group in Washington that favors more limits on immigration, estimated that 3.8 million households headed by illegal immigrants generated $6.4 billion in Social Security taxes in 2002. A comparative handful of former illegal immigrant workers who have obtained legal residence have been able to accredit their previous earnings to their new legal Social Security numbers. Mr. Camarota is among those opposed to granting a broad amnesty to illegal immigrants, arguing that, among other things, they might claim Social Security benefits and put further financial stress on the system. The mismatched W-2's fit like a glove on illegal immigrants' known geographic distribution and the patchwork of jobs they typically hold. An audit found that more than half of the 100 employers filing the most earnings reports with false Social Security numbers from 1997 through 2001 came from just three states: California, Texas and Illinois. According to an analysis by the Government Accountability Office, about 17 percent of the businesses with inaccurate W-2's were restaurants, 10 percent were construction companies and 7 percent were farm operations. Most immigration helps Social Security's finances, because new immigrants tend to be of working age and contribute more than they take from the system. A simulation by Social Security's actuaries found that if net immigration ran at 1.3 million a year instead of the 900,000 in their central assumption, the system's 75-year funding gap would narrow to 1.67 percent of total payroll, from 1.92 percent - savings that come out to half a trillion dollars, valued in today's money. Illegal immigrants help even more because they will never collect benefits. According to Mr. Goss, without the flow of payroll taxes from wages in the suspense file, the system's long-term funding hole over 75 years would be 10 percent deeper. Yet to immigrants, the lack of retirement benefits is just part of the package of hardship they took on when they decided to make the trek north. Tying vines in a vineyard some 30 miles north of Stockton, Florencio Tapia, 20, from Guerrero, along Mexico's Pacific coast, has no idea what the money being withheld from his paycheck is for. 'I haven't asked,' Mr. Tapia said. For illegal immigrants, Social Security numbers are simply a tool needed to work on this side of the border. Retirement does not enter the picture. 'There will be a moment when I won't be able to continue working,' Mr. Martínez acknowledges. 'But that's many years off.' Mario Avalos, a naturalized Nicaraguan immigrant who prepares income tax returns for many workers in the area, including immigrants without legal papers, observes that many older workers return home to Mexico. 'Among my clients,' he said, 'I can't recall anybody over 60 without papers.' No doubt most illegal immigrants would prefer to avoid Social Security altogether. As part of its efforts to properly assign the growing pile of unassigned wages, Social Security sends about 130,000 letters a year to employers with large numbers of mismatched pay statements. Though not an intended consequence of these so-called no-match letters, in many cases employers who get them dismiss the workers affected. Or the workers - fearing that immigration authorities might be on their trail - just leave. Last February, for instance, discrepancies in Social Security numbers put an end to the job of Minerva Ortega, 25, from Zacatecas, in northern Mexico, who worked in the cheese department at a warehouse for Mike Campbell & Associates, a distributor for Trader Joe's, a popular discount food retailer with a large operation in California. The company asked dozens of workers to prove that they had cleared up or were in the process of clearing up the 'discrepancy between the information on our payroll related to your employment and the S.S.A.'s records.' Most could not. Ms. Ortega said about 150 workers lost their jobs. In a statement, Mike Campbell said that it did not fire any of the workers, but Robert Camarena, a company official, acknowledged that many left. Ms. Ortega is now looking for work again. She does not want to go back to the fields, so she is holding out for a better-paid factory job. Whatever work she finds, though, she intends to go on the payroll with the same Social Security number she has now, a number that will not jibe with federal records. With this number, she will continue paying taxes. Last year she paid about $1,200 in Social Security taxes, matched by her employer, on an income of $19,000. She will never see the money again, she realizes, but at least she will have a job in the United States. 'I don't pay much attention,' Ms. Ortega said. 'I know I don't get any benefit.'

Subject: Re: Patrulla ciudadana en Arizona From: Pancho Villa To: Emma Date Posted: Wed, Apr 06, 2005 at 11:28:41 (EDT) Email Address: nma@hotmail.com Message: Patrulla ciudadana en Arizona Dos centenares de voluntarios se dan cita en la frontera para frenar a los indocumentados CARLOS RAMOS Los Ángeles Han llegado al suroeste de Arizona desde distintos rincones de Estados Unidos. Desde Bufalo, Nueva York, desde el condado de Orange en el sur de California, o de ahí cerca en la ciudad de Phoenix. Algunos fueron soldados o policías, otros son funcionarios, directores de periódicos o gente ya retirada. Todos dicen ser cien por cien americanos, patriotas hasta la médula y estar haciendo una labor necesaria en la que el Gobierno y los políticos de Washington han fallado. 'Al reunirnos aquí pacíficamente estamos expresando nuestro malestar con el Gobierno y los funcionarios locales, quienes tienen la obligación de hacer cumplir las leyes de inmigración, y que al no hacerlo han dejado la puerta abierta para un ataque terrorista', señaló James Gilchrist, de 56 años de edad y uno de los organizadores del llamado Proyecto Minutemen, o Patrulla Fronteriza Ciudadana. Gilchrist, un ex infante de marina residente en California, no terminaba de creer lo que ha sucedido en los últimos días en varios de los pueblos perdidos del desierto de Arizona que hacen frontera con México. Los más de doscientos voluntarios que logró reunir consiguieron tal atención de la prensa que el tema de la inmigración ilegal ha sido catapultado a las primeras planas de la discusión pública. No es la primera ocasión que Gilchrist y Chris Simcox —el otro líder del grupo y también de California— organizan voluntarios para patrullar la frontera. Es la primera vez, sin embargo, que tanta gente se apunta para, en efecto, patrullar por todo un mes. Según Simcox, que publica el periódico Tombstone Tumbleweed, en el pueblo de Tombstone, justo a unos pasos del borde fronterizo, hay cerca de mil voluntarios en lista de espera. 'No importa lo que cueste, así es como debería ser la seguridad interna', explicó Simcox, citado por el diario Los Angeles Times, durante una de sus rondas en vehículos todoterreno junto a un grupo de voluntarios por el llamado Corredor de Naco, la franja de unos 40 kilómetros en el sureste de Arizona escogida por los minutemen para el patrullaje. Por esta zona cruzan la frontera decenas de miles de inmigrantes, en su gran mayoría mexicanos. Según estimaciones de la propia Patrulla Fronteriza estadounidense, aunque cada año se detiene a cerca de un millón de inmigrantes frustrados, por lo menos otro medio millón logra entrar con éxito a Estados Unidos. El desierto de Arizona se ha convertido en el principal punto de cruce debido a que en sitios como California y Tejas el Gobierno ha construido barreras, vallas, y utilizado todo un aparataje tecnológico para detectar seres humanos que hace muy difícil cruzar. Lo de los voluntarios no es exclusivo de Arizona. El pasado noviembre los votantes aprobaron una ley mediante la cual se prohibe dar beneficios públicos (sanitarios, por ejemplo) a los inmigrantes indocumentados. Según los expertos, ambos fenómenos son debidos a la frustración del ciudadano común con lo que percibe como una crisis del sistema migratorio. 'Lo que el presidente Bush está haciendo en Irak es magnífico, pero en esto ha fallado', señaló Jack Treese, otro de los voluntarios. 'Si no se hace nada, pos inmigrantes] seguirán llegando', advierte. EL PAIS, martes 5 de abril de 2005

Subject: Citizens Patrol In Arizona From: johnny5 To: Pancho Villa Date Posted: Wed, Apr 06, 2005 at 15:59:23 (EDT) Email Address: johnny5@yahoo.com Message: In English: Citizen patrol in Arizona Two hundreds of volunteers meet in the border to restrain to the undocumented people CARLOS BRANCHES the Angels have arrived at the southwest of Arizona from different corners from the United States. From Bufalo, New York, from the county of Orange in the south of California, or there close in the city of Phoenix. Some were welded or police, others are newspaper civil employees, directors or people already retired. All claim to be one hundred American, patriotic percents until the marrow and to be making a work necessary in which the Government and the politicians of Washington have failed. ' When reuniting to us pacifically we are expressing our malaise with the local Government and civil employees here, who have the obligation to enforce the immigration laws, and who when not doing have left it to the door opened for an attack terroristá, he indicated James Gilchrist, of 56 years of age and one of the organizers of the call Project Minutemen, or Citizen Border Patrol. Gilchrist, an ex- infant of resident navy in California, did not finish thinking what it has in the last happened days in several of the lost towns of the desert of Arizona that make border with Mexico. More than two hundred volunteers than it managed to reunite obtained such attention of the press that the subject of illegal immigration has been catapult to the first flat ones of the public discussion. It is not the first occasion that Gilchrist and Chris Simcox - the other leader of the group and also of California organizes volunteers to patrol the border. It is the first time, nevertheless, that as much people score for, in effect, to patrol by everything a month. According to Simcox, that publishes the newspaper Tombstone Tumbleweed, in the town of Tombstone, right to passages of the border edge, he has near thousand volunteers in waiting list. ' it does not matter what costs, thus is as interná would have to be the security, explained Simcox, mentioned by the newspaper Los Angeles Times, during one of its rounds in vehicles todoterreno next to a group of volunteers by the Running call of Naco, the strip of about 40 kilometers in the Southeastern of Arizona chosen by minutemen them for the patrolling. By this zone they cross the border tens of thousands of immigrants, in its great majority Mexican. According to estimations of the own American Border Patrol, although every year stops to close of million immigrants frustrated, by except another means million manages to enter with success United States. The desert of Arizona has become the main point of crossing because in sites as Californian and Tejas the Government has constructed to barriers, fences, and used everything a technological aparataje to detect human beings that it does very difficult to cross. The one of the volunteers is not exclusive of Arizona. The past November the voters approved a law by means of which prohibe to occur to benefits public (sanitary, for example) to the undocumented immigrants. According to the experts, both phenomena must to the frustration of the common citizen with which it perceives like a crisis of the migratory system. ' What president Bush is doing in Iraq is magnificent, but in this there is falladó, indicated Jack Treese, another one of the volunteers. ' If nothing becomes, pos immigrants ] will follow llegandó, warns.

Subject: Re: Illegal Immigrants and Social Security From: johnny5 To: Emma Date Posted: Tues, Apr 05, 2005 at 14:58:07 (EDT) Email Address: johnny5@yahoo.com Message: 'Ms. Ortega is now looking for work again. She does not want to go back to the fields, so she is holding out for a better-paid factory job.' Just like the article of the seamstress in south america you posted Emma, they are going to starve standing in the welfare line because no one wants to do that hard back breaking FARM work. Someone has to do it, I did it for 12 years. America pawned it off to latino's - who are they to pawn it off too? Anyways when I went to mexico last year I met the dispatcher for a trucking company in texas, he was on the greyhound bus with me and I guess since he and I were the only 2 non mexicans on the bus he wanted to talk to me. His company had been specifically instructed by the local government officials in texas how they needed to hire many illegal mexican truck drivers for the company because the government needed people to pay social security who would never collect, and this brought this man to bitter contention with his company because several of his american friends were layed off and replaced with illegal mexican immigrants. So this is the policy of the government to serve me and you and other legal citizens of this country, throw us to the curb and give our jobs to illegal citizens so they can make SS WORK? Huh? This does not sit well with me at all.

Subject: Scewing the legal and illegals From: johnny5 To: johnny5 Date Posted: Tues, Apr 05, 2005 at 15:10:43 (EDT) Email Address: johnny5@yahoo.com Message: This does not serve current legals job or retirement needs, this also does not serve illegal retirement needs - basically the gubbment is getting a bunch of people to do work to cheat both us and them in the future - way to go US GUBBMENT. Niether me nor pedro is going to have much of a life beyond our working years. Retirement will be a word relinquished to the pages of history.

Subject: The Bond Market From: Terri To: All Date Posted: Tues, Apr 05, 2005 at 10:27:45 (EDT) Email Address: Not Provided Message: There is so little understanding of the bond market, and the market is so important for us. The bond market tells us the health of the economy, not the stock market, though stocks are revealing as well. The Federal reserve does not control interest rates, rather the Fed set a very short term bank lending rate as a guide to investors and investors do the rest. The Fed balances between fostering growth and limiting inflation, and for 25 years the Fed has been most successful at this balance. Growth has generally trended up and inflation trended down. There have been 3 recessions, the last 2 shallow and short lived. Crises have come and quickly been resolved. The bond market has returned over 9% a year to investors for 25 years. What is needed is to gain an appreciation of the bond market, a sense of how bond funds can add to a portfolio especially as our assets grow substantial, and how to properly use bond funds which have many advantages over individual bonds. Ask whether duration is known and understood, for that is critical in understanding bond funds and the way to gain confidence.

Subject: Transparent Investing From: Terri To: All Date Posted: Tues, Apr 05, 2005 at 06:29:57 (EDT) Email Address: Not Provided Message: Transparency is important in investing. We should be able to find what we are invested in at a glance. I am struck in this day of the Internet how difficult this can be with mutual fund families. Vanguard funds are transparent, and information on the Internet is readily available for each Vanguard mutual and exchange traded fund. This is a prime source of confidence.

Subject: Monetary Policy From: Terri To: All Date Posted: Tues, Apr 05, 2005 at 06:23:21 (EDT) Email Address: Not Provided Message: http://www.federalreserve.gov/boarddocs/speeches/2005/20050330/default.htm March 30, 2005 Implementing Monetary Policy Remarks by Governor Ben S. Bernanke Among the most important of my duties at the Federal Reserve is serving on the Federal Open Market Committee (FOMC), the body that makes U.S. monetary policy. Nineteen men and women--the seven members of the Board of Governors and the Presidents of the twelve Reserve Banks--gather in Washington eight times each year to participate in FOMC deliberations on the course of monetary policy.1 If necessary, the FOMC can also convene by conference call between regularly scheduled meetings. The FOMC's decisions are guided by the dual mandate given to the Federal Reserve by the Congress, which enjoins the Committee to use its powers to pursue both price stability and maximum sustainable employment. To achieve its mandated objectives, the FOMC must influence the course of the U.S. economy, helping it to grow rapidly enough to make full use of available resources but not so rapidly as to stoke inflation. How, specifically, does the Committee exert this influence? The person in the street might tell you that the Fed 'controls interest rates.' That statement is not literally accurate. In fact, the Fed has little or no direct influence over the interest rates that matter most for the economy, such as mortgage rates, corporate bond rates, or the rates on Treasury securities. Instead, the Fed affects these key rates, as well as the prices of financial assets such as stocks, only indirectly. Since many of you plan to work in the financial markets, I thought that you might find it interesting to hear some of the details of how U.S. monetary policy is actually implemented and how policy decisions affect asset prices and yields....

Subject: Re: Monetary Policy From: johnny5 To: Terri Date Posted: Tues, Apr 05, 2005 at 08:26:36 (EDT) Email Address: johnny5@yahoo.com Message: From the diehards board: 30. Mel, comments? mellindauer| 04-04-05 | 11:13 PM Hello Everyone: I'm not really sure what this all means, but I'll have to go on the assumption that it's not good for investors. It appeared that EE Bonds were finally going to do their thing and start outperforming I Bonds after years of underperforming them, and now they go and change the game. Anytime the government, as opposed to market forces, starts messing with interest rates and setting them 'administratively', that most likely won't be good for investors. We've seen what can happen to rates that are set arbitrarily by the government when we look at the steady downtrend in the I Bond fixed rate. It would appear that one would have to make individual decisions each time the rate is announced as to whether the announced rate makes sense for one to five years, considering the effect of the penalty. If so, then one could probably consider them to be nothing more than a CD. I certainly wouldn't recommend them for younger investors, because they can really only be considered to be a 20-year bond now, since the Treasury states that it can change the rate for the 10-year extended maturity, and that rate may not be competitive with other options. One certainly doesn't want to have to cash in bonds with lots of accumulated interest when they're in their prime earning years (read high tax bracket). While they still will retain the guaranteed minimum return of 3.5265%, in a rising interest rate environment, that really isn't much of a guarantee. All the other options they offer (tax-deferral, freedom from state and local taxes, and possible use for qualifying educational expenses) are also available with I Bonds, which offer inflation adjustments every six months. Which means that the I Bond fixed rate may well be reduced even further as inflation picks up, so the total yield on I Bonds isn't too far out of line with the EE Bonds with the new fixed rate. All in all, I'd probably buy EE Bonds prior to May, and if the new rates ever become more attractive, then sell the lower-yielding ones and buy the new ones, thereby locking in a high rate for 20-years. Basically, it's going to be very similar to buying CDs; you have to decide when's the best time to lock in the long-term (20-year) rate. Somehow I don't feel the average investor is going to benefit from this. However, perhaps those who stay on top of things (like the Diehards) may be able to pick their spots and lock in decent rates they're happy with for 20-years, just as we were able to lock in those 3.4 and 3.6% fixed rates on the I Bonds. We'll just have to wait and see how this plays out. Somehow I have a sinking feeling that this could also spell the end of I Bonds. Wish I had something a bit more encouraging or billiant to say, but I really don't at this point in time. Best regards to all, Mel

Subject: Market Summary From: Terri To: All Date Posted: Tues, Apr 05, 2005 at 06:18:35 (EDT) Email Address: Not Provided Message: The trend in the American stock market so far this year is a mildly negative bent, with value ahead of growth and large cap ahead of small cap. Mid cap value continues to be strongest. Energy, materials, utilities, and health care are the strongest sectors. Europe and the Pacific are midly negative in dollar terms. International value is stronger than growth. Long term bonds continue to be positive. GNMA issues are holding nicely. There is strikingly little volatility in stock and bonds.

Subject: biggest central bank heist in the history of the w From: johnny5 To: All Date Posted: Mon, Apr 04, 2005 at 23:07:37 (EDT) Email Address: johnny5@yahoo.com Message: http://321energy.com/editorials/benson/benson040405.html AMERICA’S TRIBUTE BENSON’S ECONOMIC & MARKET TRENDS Written and published by Richard Benson, www.sfgroup.org April 5th, 2005 The Asians remain shocked and in disbelief. Just when Japan, China, Taiwan and Hong Kong had accumulated enough dollars to buy oil to keep them warm for many winters, it’s all over. In broad daylight, the Americans and OPEC cheered as the price of oil popped up from $30 a barrel to over $50 a barrel. Indeed, this jump in the price of oil increases the world’s daily oil consumption bill of 84 million barrels a day to $4.2 billion, from $2.5 billion (or $1.5 Trillion a year from $900 billion). The world now has to shell out an additional $600 billion a year of “lucky bucks” to the oil producing countries just to stay in motion. That’s quite a tribute to pay! The bigger shock, however, is in the devaluation of dollar holdings of United States’ Treasury debt. The rise in oil prices guarantees that the value of the dollar will be pushed down even further and stay down! Now that China is the number 2 oil importer and Japan is number 3 – with the rest of Asia very thirsty for oil as well – you can understand why the Asians must find a way to protect themselves. The American strategy for using oil to finance our deficit is, of course, brilliant. Our elected officials knew that at some point those independent foreign central banks would start getting edgy about buying more dollars to pay for America’s war and deficits. (The $650 Billion trade deficit is threatening the dollar.) So, which central banks can America continue to use as the fall guys to buy the dollar? Why not the Gulf Oil states, but where would they get the dollars to buy U.S. Treasuries? Well, with the Chinese piling up dollars and growing like crazy, at some point the oil market had to tighten. It was only a matter of time before the Chinese would start bidding up the price of oil. The Asians, therefore, are hung out to dry when the price of oil rises because they have to spend more of their dollars on oil. As the price of oil goes up, extra money floods into the Gulf Oil Kingdoms. With our Secretary of Defense putting troops all over the ground in the Middle East, and those nimble aircraft carriers are near by and ready to deliver the “shock and awe of sudden democracy” to the Gulf Monarchs, it’s a sure bet that America’s OPEC buddies will stash their newly found Asian lucky bucks into good old American Treasury Notes. With such a simple policy to fund our deficit for another year, it’s no wonder America can get by without any brain power at the Treasury Department. In effect, America and our Gulf Arab allies just pulled off the biggest central bank heist in the history of the world. The price of oil just went up 60 percent or more, which really cuts down to size those $3.4 trillion of net foreign holdings of U.S. financial assets. As a loyal American, we would like to cheer our government’s deft move to pick the pockets of our trading and financing partners. Moreover, America gets the Arabs to fund a large share of our deficit, subsidize our interest rates, and help keep our taxes low for another year! Surely, I can afford to buy another gas-guzzling Sport Ute, get a rifle, and wave a flag! America is extracting Tribute on oil from the world. If the world wants Middle Eastern oil, they can pay for it through the Saudi branch of the United States Treasury. Why do the heads of Saudi Arabia, Kuwait, Abu Dhabi, Bahrain, Qatar, etc., hold dollars? Because they want to keep the money and the power! (The ruling family of Saudi Arabia controls 25 percent of the world oil reserves and is completely dependent on oil revenues for its survival. Tens of thousands of Saudi princes live off lavish royal stipends). Think of Arabia as a family firm. If the dollar goes down in value, the Saudi Royal Family still gets to personally keep hundreds of billions of dollars. But, if they don’t buy dollars, why would America keep them in power? It would simply not be in our interests to do so. Remember when Saddam Hussein talked about pricing Iraq’s oil in Euros? “Shock and Awe” quietly followed. This program of oil for dollars and dollars for the U.S. Treasury deficit is the simple tribute that we, as the Super Power, can expect. America is well paid for keeping the world’s supply of “black gold” safe and available to all. Unlike Vietnam – when America was trying to finance guns and butter – getting others to pay now for our guns, allows us to milk the oil out of the sand and turn it into butter! The next question will be how the Asians respond to a 60 percent hike in the price of oil? Please, stay tuned. Notice in the chart below there are some big, smart, anonymous dollar holders (such as hedge funds) located in the Caribbean. No one knows who they really are. Written and published by Richard Benson, www.sfgroup.org April 5th, 2005

Subject: $100 laptop makes many new young Pkarchivers From: johnny5 To: All Date Posted: Mon, Apr 04, 2005 at 22:39:27 (EDT) Email Address: johnny5@yahoo.com Message: It warms johnny5's heart that many children all over the world will soon be able to download 'short circuit' and tap into the matrix. http://laptop.media.mit.edu/ http://www.cnn.com/2005/TECH/ptech/04/04/hundred.dollar.laptops.ap/index.html (AP) -- In a rural Cambodian village where the homes lack electricity, the nighttime darkness is pierced by the glow from laptops that children bring from school. The students were equipped with notebook computers by a foundation run by MIT Media Lab founder Nicholas Negroponte and his wife Elaine. 'When the kids bring them home and open them up, it's the brightest light source in the home,' said Negroponte. 'Parents love it.' Negroponte and some MIT colleagues are hard at work on a project they hope will brighten the lives and prospects of hundreds of millions of developing world kids. It's a grand idea and a daunting challenge: to create rugged, Internet- and multimedia-capable laptop computers at a cost of $100 apiece. The laptops would be mass-produced in orders of no smaller than 1 million units and bought by governments, which would distribute them. Ambitious projects to bridge the digital divide in the developing world at low cost have had a shaky track record. Perhaps the best example is the Simputer, a $220 handheld device developed by Indian scientists in 2001 that only last year became available and isn't selling well. But Negroponte and MIT colleagues Joe Jacobson and Seymour Papert aren't deterred. For one, three corporate partners have committed an initial $2 million apiece to the initiative and pledged to serve as suppliers for the 'one laptop per child' project: Sunnyvale, California-based Advanced Micro Devices Inc., which will bring expertise in processors; 'Do No Evil' search engine king Google; and News Corp., Rupert Murdoch's media company with global satellite capabilities. The mission: to make laptops as ubiquitous as cell phones in technology-deprived regions. Negroponte's pitch: The cost of a laptop comes in far lower than a child's textbook expenses for the computer's lifespan. 'It's a way of having the children be the agents of change,' Negroponte told The Associated Press. 'They bring the device home, and then the parents look over their shoulder.' He thinks it's extremely important that individual children own laptops; it will ensure they'll be well-maintained. In design and function, Negroponte wants the $100 laptop to 'be so close to the current laptops as to be nearly indistinguishable,' but acknowledges that the machine will have a relatively slow processor and modest storage capacity paired with barebones software. The biggest challenge, he says, is designing a display that doesn't put the price out of reach or drain the battery too quickly. Details are still being worked out, but here's the MIT team's current recipe: Put the laptop on a software diet; use the freely distributed Linux operating system; design a battery capable of being recharged with a hand crank; and use newly developed 'electronic ink' or a novel rear-projected image display with a 12-inch screen. Then, give it Wi-Fi access, and add USB ports to hook up peripheral devices. Most importantly, take profits, sales costs and marketing expenses out of the picture. 'The technology challenge is real, and you need to make some breakthroughs, but most of the money is saved in other ways,' said Negroponte, who pitched the project in January at the World Economic Forum in Switzerland, the annual confab of global powerbrokers. Negroponte has also met with Chinese and Brazilian officials to discuss expected orders and production in those countries, which would create local jobs. Two prototypes have been built, and test units could be shipped by the middle of next year. The project would essentially be nonprofit, with about $90 covering hardware for each computer and an extra $10 for contingencies or a small profit margin depending on how each government's order is structured. Yet even if all those hurdles are surmounted, some question whether a $100 laptop project is the answer to bridging the global digital divide. 'Even if you give the laptops out for free, Internet access and even electricity are huge problems,' said Marc Einstein, an analyst with Pyramid Research Inc., a Cambridge-based telecommunications consulting firm. Negroponte and Co. have part of that solved, at least in theory: Out of the box, the $100 laptops will be able to communicate with one another using peer-to-peer mesh networking. That doesn't directly solve the Internet or electricity problem, though. Al Hammond, director for the nonprofit World Resources Institute's Digital Dividend project in Washington D.C., worries about customer support in poor, rural areas. 'The key is to create something affordable and sufficiently robust to protect against voltage surges, against dust, and against being dropped, and against all the perils of the Internet,' Hammond said. 'Those things are more important if the nearest computer tech is three villages away and you don't have an air-conditioned office to work in.' Like Hammond, Andy Carvin, director of the Newton-based nonprofit Digital Divide Network, applauds the project's goals, calling an extremely low-cost, durable laptop 'one of the holy grails of bridging the digital divide.' But he said increasingly sophisticated and versatile wireless handhelds may gain favor over laptops as the developing world's online tools of choice. 'That's not to suggest we should not have an inexpensive laptop,' Carvin said. 'They're parallel tracks, and it's probably a healthy competition to have both.' The digital divide remains vast: The technology research firm IDC examined 53 countries and determined that a household in Canada was 131 times more likely to own a personal computer than one in Indonesia - hardly the world's least tech-oriented country. The United States trailed Canada at No. 2 by that measure in rankings that examined computer use in countries that fall in the top third for advanced technology use. Negroponte says his promotion of the $100 laptop project at the World Economic Forum meeting has helped it gain momentum. 'People are now calling me saying, 'We'd like to participate, and not only can we participate, but we can do it cheaper, or we can create better performance in this laptop,'' he said. 'People are saying, 'My God, this is real.''

Subject: Systemic Risk in England? From: johnny5 To: All Date Posted: Mon, Apr 04, 2005 at 22:01:28 (EDT) Email Address: johnny5@yahoo.com Message: Debt juggling, the new middle-class addiction Rosie Millard owes £40,000 on her credit cards – being an Impoverished Professional has become a way of life, she says My husband and I decide to go and see the latest Woody Allen; as couples do, we have supper before the movie in a noodle bar. At the end of the meal we realise that between us we have no cash, and so have to pay with a credit card. “I’ve brought all the cards,” says my husband cheerfully, riffling through about nine pieces of plastic. “Trouble is, I can’t remember which ones are up to their limit.” Go to a cash machine? Forget it. Both our current accounts have been frozen. Welcome to the world of middle-class debt. Last week it was announced there are more credit cards than people in the UK (67m, to be precise), and that personal debt is so huge Britain is more indebted than Argentina. If interest rates go up, the experts warn, the effect on ordinary people could be like a “time bomb”. Credit card debt accounts for £2 billion and Britain has in total a £1 trillion debt mountain. In our case, the time bomb has just exploded. On paper, my husband and I are what is known in polite parlance as “comfortably off”. In reality, we have no money. Anything that comes into Chez Millard goes out pretty much immediately on debt repayment. That, and paying the nanny so we can both go out to work and earn more money. For more debt repayment. An Impoverished Professional, I call myself. And there are plenty of us out there. My voyage into debt started, as these things do, with an almost unnoticeable, but incremental, downward curve. After the wedding (paid for by my father), we bought a house. “Extend yourselves as much as you can,” advised our friends. This seemed a great idea, particularly when house prices in Hackney started to rocket. So we bought a big house and signed up for an endowment policy. A couple of years down the line, when we had two nippers in tow, the value of the house had gone up, a lot. We borrowed against the booming equity in our home and bought a couple of flats, which we let. Avid readers of The Sunday Times may know thus was created a penchant for buy to let, which can make you quite a nice income. On paper. After we had finished charging around Ikea and furnishing two flats, we had another baby (and each extra child necessitates a pay rise to the nanny). It was at this point, I believe, that the great invention of the £10,000 interest-free card arrived. Flyers advertising funkily desirable credit cards with amusing names such as Goldfish, Mint or Rainbow suddenly started dropping through the front door, flagging up the fabulous notion of six months’ interest-free cash. So we siphoned some of our overdrafts onto a card, or two. Actually, we signed up for four. Of course, we are not alone: nearly everyone I know is playing the plastic game; a senior news editor at the BBC has so many cards — each bearing a £10,000 millstone — that he has actually achieved circularity and is having to now take them out in his wife’s name. “We have completely reached our limit of debt and are awaiting money from remortgaging our house,” says Jessica, one of my girl friends. “The bank says we have ‘reached the end of our borrowing possibilities’.” Which just means they will have to find another pot to borrow from: because banks know that the state of the Impoverished Professional is not at all the same as the state of people who are really, desperately and incurably skint. Jessica admits her financial nadir is the result of a recent skiing holiday. “And it’s the price of me not working,” she says. Jessica, mother of three, is a former accountant and like a true Impoverished Professional, still operates as if she were coining it within the Square Mile. “I have no money but I still had a £190 haircut last week,” she says. Am I curtailing my lifestyle? Well, I have dramatically curbed my addiction to black cabs, but can’t live without a decent haircut every eight weeks, vaguely designery suits, Stila makeup and The New Yorker. As I say to my bank manager (whose mobile number is naturally on my direct dial), if you want to keep working, you have to keep looking the part. And the only way to do that is to put everything on the interest-free card and count the days until the period of grace is up. As each interest-free period draws to a close, my husband and I spend a flurried few days furiously washing debt from all the old cards and finding new ones to plonk it onto. We have to be very careful not to leave the sum even a week over the six-month limit, for fear of monumental amounts of interest repayments. To make our lives even more, well, lively, we recently had another baby, while at the top of the family, our eldest has started seriously campaigning for not only a dog, but riding lessons. “Thank God they’re not at private school,” says my husband, with feeling. In 2002, in the belief that to make money one needs to actually spend it, I decided to splash out on a fabulously chic flat in Paris. I now avoid answering any incoming call with the prefix 33, because I dread speaking to my French bank manager as my French mortgage is in almost permanent arrears. I am letting my flat to tourists — it’s just that there are never quite enough of them. And French bank managers are far less lenient than British ones. Indeed, the whole French attitude to debt is far stricter. Compared with our 67m credit cards there are only 2.8m swishing around in France, a country with a similar population. “Maybe we could have a fire sale,” says my husband gloomily. We look around our lovely house, into which we have just moved after the arrival of baby No 4. There is nothing to sell apart from our buy-to-let flats, and what is the point of buying them as an investment if you are going to sell them five years later? My mother, bless her, has given us the wherewithal to buy a new car. So we put our four-year-old Skoda for sale on the internet and hope we will make a couple of thou. Surprise, surprise, nobody wants it. Anyone who could use a new-ish family-size Skoda is presumably also in hock to small pieces of plastic from John Lewis, Sainsbury’s, Mint and Uncle Tom Cobbleigh. No wonder a consumer credit bill is going through parliament, which will mean stricter controls on lending. Is there hope? “Well, to get us out of this, one or both of our incomes has to rise dramatically,” says my dear spouse, who works for the BBC, which is about to get going with massive redundancies. So, not much hope from TV Centre, I fear. “Plus, we have to dramatically rein in our spending.” We start as we mean to go on. High tea with the kids. A night in with Doctor Who instead of a night out at the theatre. Bracing walks on Hampstead Heath. It’s fun, in a Shaker-style, Amish work-ethic sort of way. But habits are hard to break. By Thursday I find myself trundling around Mothercare, picking up clothes for the children, before chugging into Soho to watch a play and crack open a bottle of chablis over dinner. “Plunge into your savings,” someone says, but who has savings any more? There are people in our family with savings, but they are all under the age of eight. Apparently, the supermodel Caprice Bourret saves £7 out of every £10 that she earns. When I find this out, I feel like staying in bed all day. “Well, she doesn’t have children, does she,” says my husband reassuringly. At least we don’t run a shop; consumer spending is so down that many commercial enterprises are looking into a black hole that will be assuaged only when the debt-stricken populace gets on top of its finances and starts going shopping again. Which we will, we will. http://business.timesonline.co.uk/ printFriendly/0,,2020-525-1551813-9559,00.html

Subject: Re: Systemic Risk in England? From: Setanta To: johnny5 Date Posted: Tues, Apr 05, 2005 at 07:00:52 (EDT) Email Address: Not Provided Message: god.... while not nearly as bad, i was the same. i spent a year paying Eur1500 a month to clear all of my debts so i could be in the financial position to purchase a house. it was so hard that i said never again. my credit card is in my room, never to see light of day again! i also have given up drinking in the pub and cigarettes. i want to spend whatever pennies i have at the end of the month on important things and not Eur5 pints!

Subject: Vanguard Returns From: Terri To: All Date Posted: Mon, Apr 04, 2005 at 20:21:05 (EDT) Email Address: Not Provided Message: http://flagship5.vanguard.com/VGApp/hnw/FundsByName Vanguard Returns 12/31/04 to 4/04/05 S&P Index is -2.5 Large Cap Growth Index is -3.9 Large Cap Value Index is -0.8 Mid Cap Index is -0.7 Small Cap Index is -3.9 Small Cap Value Index is -3.4 Europe Index is -0.7 Pacific Index is -2.5 Energy is 16.2 Health Care is -0.7 REIT Index is -7.7 High Yield Corporate Bond Fund is -1.6 Long Term Corporate Bond Fund is 1.0

Subject: Sector Indexes From: Terri To: Terri Date Posted: Mon, Apr 04, 2005 at 20:21:52 (EDT) Email Address: Not Provided Message: http://flagship2.vanguard.com/VGApp/hnw/FundsVIPERByName Sector Indexes 12/31/04 - 4/04/05 Energy 19.4 Financials -7.3 Health Care -1.2 Info Tech -8.2 Materials 0.8 REITs -7.7 Telecoms -6.1 Utilities 5.0

Subject: Where is gold and precious metals Terri? From: johnny5 To: Terri Date Posted: Mon, Apr 04, 2005 at 20:44:29 (EDT) Email Address: johnny5@yahoo.com Message: I have read your updates for many months now - thanks bunches dear sweet Terri, but what of the yellow stuff? Vanguard has a fund no? How often do you re-allocate your assets? Are you still 80% in the Vanguard GSE bond fund and not in vangaurd stocks or precious metals? I am still mostly XOM with scottrade and trying to get my mom to 1031 her house in west palm to buy some other real estate - japanese commercial real estate maybe. My Uncle should be getting money back from Raymond James any day now on that annuity and has found a fee based financial planner that is going to put him into ishares DVY and a few other index funds through a fidelity account - I protested and tried to get him to read bogle and the four pillars of investment - but he is old and wants to watch WWF - he does not want to spend time learning about his world - some of the money he says he will put in vanguard, we shall see, I am still able to bend his ear between beers - HAHA.

Subject: Careful Careful From: Jennifer To: johnny5 Date Posted: Tues, Apr 05, 2005 at 11:44:07 (EDT) Email Address: Not Provided Message: Please be careful investing. How does a person here go about buying Japanese commercial real estate? What is wrong with living in a house you enjoy, no matter the market. Vanguard literature does not have to be studied intently by each investor. Call and talk to the representatives or a Vanguard advisor. A single fund such as Wellesley or Wellington or Balanced Index might be just right. The Vanguard GNMA Fund discussion was just for understanding as I recall, not for a particular percent of a portfolio. Please be careful investing.

Subject: Phoenix from the ashes Japanese Real Estate From: johnny5 To: Jennifer Date Posted: Tues, Apr 05, 2005 at 14:27:18 (EDT) Email Address: johnny5@yahoo.com Message: http://www.accutonehk.com/~phoenixasia/PARE_presentation.pdf What do you think of page 34 of this presentation sweet dear Jennifer?

Subject: Japanese Real Estate? From: Ari To: johnny5 Date Posted: Tues, Apr 05, 2005 at 17:30:40 (EDT) Email Address: Not Provided Message: The website will not open.

Subject: Working for me From: johnny5 To: Ari Date Posted: Tues, Apr 05, 2005 at 18:21:16 (EDT) Email Address: johnny5@yahoo.com Message: Do you have the right software installed to view it? I think you need adobe acrobat reader 6.0 or newer to view it - it just opened for me.

Subject: http://www.achamchen.com/phoenix_asia.htm From: johnny5 To: Ari Date Posted: Tues, Apr 05, 2005 at 18:19:13 (EDT) Email Address: johnny5@yahoo.com Message: http://www.achamchen.com/phoenix_asia.htm

Subject: Simple and Clear Thinking From: Jennifer To: johnny5 Date Posted: Mon, Apr 04, 2005 at 22:03:06 (EDT) Email Address: Not Provided Message: Think simply and clearly about investing. Vanguard has investment advisers.

Subject: Financial Times recommending Gold? From: johnny5 To: Jennifer Date Posted: Mon, Apr 04, 2005 at 22:05:47 (EDT) Email Address: johnny5@yahoo.com Message: http://www.siliconinvestor.com/readmsgs.aspx?subjectid=54034&msgnum=30047&batchsize=10&batchtype=Next From the Financial Times via Richard Russell's site. Fleck also commented tonight on this article. The FT has been anti-gold in the past. It appears they're changing their minds Cross-currents make currencies choppy Published: April 2 2005 03:00. We live in a world of currency weaklings. The dollar has the giant US trade deficit. But other big currencies have their troubles too. While most experts predicted the dollar to fall this year, it rose against the euro and the yen in the first quarter. The culprit: economic weakness in Europe and Japan, which weighs on interest rates. These contrary forces ensure that currencies are not a one-way bet. There is an important difference between them. Europe and Japan could solve their problems without a currency decline. Solving the US problem almost certainly requires the dollar to weaken further on a trade-weighted basis. But what is not 100 per cent certain is whether it needs to fall further against the euro and the yen to achieve this. The euro does not have much to recommend it, other than not being the dollar. The eurozone economy remains sluggish. The European Central Bank is waiting for European politicians to reform their economies. Germany apart, little progress has been made. Meanwhile, the markets have had to consider the weakening of the growth and stability pact and the possibility of a No vote in the French referendum on the European constitution. While most investors considered the pact to be flawed and few give two figs for the EU constitution, the sense that the authorities are not in control is alarming. Meanwhile, investors are still waiting for the Japanese economy to develop a self-sustaining recovery. Late last year, Japan again flirted with recession. While recent data have not all been bad (there was a rise in the purchasing managers' index this week), yesterday's Tankan survey shows sentiment to be weak. In so far as economic growth drives currency movements, the dollar looks a better bet. With expansion firmly entrenched, the Federal Reserve is in tightening mode. US short rates are now three-quarters of a percentage point above eurozone rates while Japanese rates remain around zero. The gap is expected to widen. The choppiness of the currency markets reflects investors being torn between three factors; the trade deficit (negative for the dollar) and growth and rate prospects (positive). In truth, there are good reasons for selling all three of the world's main currencies. But could they all fall? Yes, against either gold or the Chinese renminbi. In recent years, gold has been a useful hedge against the dollar, but not against the euro or yen. Meanwhile, the US, Japan and the EU would all like to see the renmimbi revalue, but so far the Chinese are not playing. Chinese exports create jobs, inflation remains moderate and Beijing has no desire to do anything that might expose the fragility of its banking system. Yet a token revaluation would do little to reduce the US deficit and would spur hot money inflows. The Chinese might echo the former US Treasury secretary who said: 'It's our currency. But it's your problem.' Russell Comment -- My one complaint with the Financial Times have been gold-haters. Thus, I was amazed to see the FT even hint that gold could be a substitute for paper 'junk' money. You see, even a newspaper can change!

Subject: Reconnecting Tax and Budget Policies From: Pancho Villa To: All Date Posted: Mon, Apr 04, 2005 at 19:17:56 (EDT) Email Address: nma@hotmail.com Message: Reconnecting Tax and Budget Policies by John S. Irons April 1, 2005 For decades, right-wing anti-government forces have waged a deliberate and largely successful attempt to separate perceptions of tax policy from the rest of the government's budget, including the deficit. However, the current budget debate in Congress shows with crystal clarity the tradeoff between additional tax cuts for the rich and reductions in vital domestic services. Congress wrapped up the first stage of budget work last week, with each chamber of Congress passing similar (but different) budget blueprints (see Sticking Points in the Budget). Over the next five years, the budgets call for tax changes which would reduce revenue by over $100 billion, as well as for cuts to domestic discretionary programs of over $200 billion. In addition, there are additional proposed cuts to Medicaid and other entitlement programs. Contrast the cost of just the tax cuts for dividends and capital gains—$23 billion over 10 years—with proposed cuts of up to $20 billion for Medicaid. Over half of the benefits from the dividend and capital gains tax rate reduction would go to those with incomes of over $1 million. Average taxpayers would hardly see any change, but those making more than $1 million would get, on average, a $35,000 cut.[1] On the spending side, the cuts to Medicaid will cost states billions in funding from the federal government and will threaten health benefits for the most vulnerable Americans.[2] The House and Senate will soon begin to attempt to work out the differences between the two budget versions, with the hope of finding something acceptable to both sides. However the details are worked out, it appears that the budget proposal will include both cuts to domestic services and investments, as well as tax changes that will reduce revenue. Each of the Congressional budgets, as well as the president's proposal, would also dramatically increase the deficit. Rhetoric versus reality For most Americans, it would seem natural to think that if we don't have the revenue base to fund vital domestic services and investments—like education for our kids, health care for our veterans, or support for the elderly—then these services will suffer. However, anti-government conservatives, knowing that these programs are popular, must find some way rhetorically to create the impression that revenue can be cut without causing any harm. How do they do this? By employing a handy three-part strategy: 1. Claim that tax rate reductions will spur the economy and actually increase revenue—so the government would have more revenue, not less; 2. Claim that there is plenty of waste, fraud, and abuse so that spending and taxes can be cut without harming anyone; 3. Claim that the government harms people anyway, so it needs to be cut. Laid out like this, it's easy to see the inconsistencies in the arguments; but no matter, they all seem to have the same implication: taxes should be cut. For the record, there is ample evidence that the old supply-side argument in claim #1 is theoretically possible, but empirically false. For claim #2, while there is inevitably some degree of 'waste, fraud and abuse' in the system, the right approach is to attack this directly by improving the efficiency of service provision, not by bluntly slashing funding. The contention in claim #3 is that the government gets in the way of national and individual success. However, there are many instances in which government has successfully stepped in to solve pressing national problems, to protect the most vulnerable, create economic opportunity, or to rebuild and invest in our communities. And the American public has embraced such efforts. The enduring success and popularity of the Social Security program is just one obvious example. The anti-government philosophy has been summed up in the bumper sticker version: 'It's your money, you should keep it.' But we need not accept the right wing's negative, pessimistic vision of what America can accomplish. Yes, indeed it is our money—every American pays some taxes—and we together decide what we can accomplish as a nation. If we want to spend it on education, scientific research, and the national highway system, or on national parks and health care for the elderly and low-income Americans, that should be our choice. And we should not be thwarted by a right-wing tax policy designed to starve the federal government of the revenue base needed to effectuate those choices. Those in Congress who support the current budget need to realize this and not stand in the way of progress. John S. Irons, Ph.D., is the director of tax and budget policy at the Center for American Progress. http://www.americanprogress.org/site/pp.asp?c=biJRJ8OVF&b=489159

Subject: Excellent Reading From: johnny5 To: Pancho Villa Date Posted: Mon, Apr 04, 2005 at 20:20:07 (EDT) Email Address: johnny5@yahoo.com Message: Wonderful, great great great, too bad the reds are sucking up thier coors watching the undertaker on WWE to understand they are being LIED too by thier fellow christian Bush.

Subject: American Brains a good asset? huh? From: johnny5 To: All Date Posted: Mon, Apr 04, 2005 at 18:16:52 (EDT) Email Address: johnny5@yahoo.com Message: http://www.siliconinvestor.com/readmsg.aspx?msgid=21197447 >>The US has never taken a real punch<< Marcos, we get invaded all the time. Especially by your compadres from México. But this time they've gone too far, with a direct assault on our top flight research and engineering jobs! It's really outrageous when a few poor undocumented immigrant high school kids can defeat our best college teams like this. The U.S. Commerce Department should slap on hefty tariffs anti-dumping penalties to compensate the affected Americans against this kind of totally unfair competition... ;) La Vida Robot: How four underdogs from the mean streets of Phoenix took on the best from M.I.T. in the national underwater bot championship. By Joshua DavisPage http://www.siliconinvestor.com/readmsg.aspx?msgid=21194564 P.S. Presidente Lula should hire these guys for his Brazilian sub project! ROFL

Subject: Impossible Trade problems?? From: johnny5 To: All Date Posted: Mon, Apr 04, 2005 at 17:19:35 (EDT) Email Address: johnny5@yahoo.com Message: U.S. Launches China Trade Investigation 04/04/2005 15:24 http://cnn.netscape.cnn.com/ns/news/story.jsp?id=2005040415240001833401&dt=20050404152400&w=... WASHINGTON (AP) - The United States will bring trade cases against China to determine whether quotas should be re-imposed to protect textile and clothing manufacturers against a surge in Chinese imports, the Bush administration said Monday. The decision represents a major victory for U.S. manufacturers, who had been pressing the administration to bring these cases on its own rather than waiting for the industry to petition the government for relief, a process that could take a longer period of time. ``The decision is the first step in a process to determine whether the U.S. market for these products is being disrupted and whether China is playing a role in that disruption,'' Commerce Secretary Carlos Gutierrez said in a statement announcing the action.

Subject: Japan and China From: Emma To: All Date Posted: Mon, Apr 04, 2005 at 14:50:29 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2004/02/17/business/worldbusiness/17yen.html?ei=5007&en=216dd8c2dd1a1f97&ex=1392354000&partner=USERLAND&pagewanted=all&position= Japanese Capital and Jobs Flowing to China By KEN BELSON HANGHAI - The qualms are gone. Now even Japan's pride and joy, its top-end electronics manufacturers, are coming to China. They are building immense new plants and research centers here to take advantage of abundant Chinese labor, doing nearly every kind of job their Japanese work force does. Cost pressures are driving them to forget old fears of having their best technology stolen or of harsh publicity at home from moving high-paying jobs out of the country. 'We hesitated in the past, but we cannot say that any more,' said Hiroyuki Mineta, chairman of the Pioneer Corporation's Shanghai subsidiary, as he stood on the factory floor where hundreds of Chinese workers were building 11 types of DVD recorders. 'We have to overcome our fear or we won't be able to survive in the market.' Unlike the first generation of Japanese factories in China, which cranked out routine products like washing machines, air-conditioners and stereos for sale mainly in China and neighboring countries, the Pioneer plant in the Comprehensive Industrial Development Zone, an hour's drive south of central Shanghai, assembles the company's most advanced consumer products and ships them to Europe, North America and even to Japan. In an office tower across the river from the city center in the Pudong new area, Hiroshi Matsuo of Sharp says that his company, too, is getting over its squeamishness. Like NEC, Toshiba and others, Sharp is actively recruiting Chinese engineers for its newly opened research and development laboratories here. For the moment, they will work only on goods intended for sale locally. Mr. Matsuo said that the company's Japanese engineers are still better at designing the main components that distinguish electronic products. But Sharp's Chinese engineers, who are paid only one-quarter of what Japanese make, are closing the talent gap. 'Our top management is afraid of exporting brain jobs to China,' Mr. Matsuo said. 'But comparing Chinese and Japanese engineers on a cost-performance basis, Chinese are superior. They are hungrier. Most Japanese are no longer hungry.' For a Japanese manager to say such a thing would have been unthinkable a few years ago. The Japanese electronics giants have for decades been national symbols of know-how and corporate might, with globally famous brands, well-paid work forces and sales in the billions. But with the bursting of the technology bubble and the commoditization of even many sophisticated digital products, companies from Sony and Matsushita on down find themselves under growing pressure from lower-cost rivals like Samsung in South Korea and Dell, which relies on contractors across Asia to build many of its products. To compete effectively, the Japanese companies say, they must cut costs and move even more production to China. Japan poured some $4.2 billion directly into factories and other operations in China in 2002, according to the Japan External Trade Organization, and the electronics industry accounted for more than 40 percent of manufacturers' capital. A new Japanese factory seems to open in China almost every week, while another closes at home, reshaping Japanese marquee industries. The pace is unlikely to slacken anytime soon, Japanese executives and industry experts say, not least because Japan has come relatively late to the overseas manufacturing trend. Counting all industries, Japanese companies now do about one-sixth of their manufacturing abroad, compared with 27 percent by American manufacturers. And China will remain the focus of such work, the experts say. This is particularly true of electronics, an industry where prices can fall rapidly and the pressure to cut costs is constant. Pioneer, for example, will build 28 percent of its products in China this year, up from 22 percent last year. 'Japanese manufacturers are only doing what's rational' by moving to China, said Masaki Yabuuchi, who tracks Japanese manufacturers in Asia for the external trade organization. The move into China is not coming just at the expense of factories and workers in Japan but also in Southeast Asia, where many Japanese manufacturers turned in the 1980's and early 90's during a more modest wave of foreign expansion. Matsushita, Japan's largest electronics maker, has said it intends to eliminate 40 percent of its production and sales subsidiaries in Southeast Asian countries by 2006, because costs there are higher than in China. 'It's only a question of time that production on a competitive scale will not be able to survive' in Southeast Asia, said Yukio Shohtoku, Matsushita's executive vice president for global operations. Matsushita will not abandon Southeast Asia, because keeping some factories there is a useful hedge against the risk of turmoil in China, Mr. Shohtoku said, and because it will need a continuing presence to meet estimated sales growth of 26 percent by 2006, to 660 billion yen - $6.26 billion at current exchange rates. But over the same period, Matsushita expects its sales in China to more than triple, to 1 trillion yen - almost $9.5 billion. As they rush into China, Matsushita and its rivals have shut down dozens of factories in Japan, pushed tens of thousands of workers to retire early, and cut back on the number of Japanese university graduates they recruit, reinforcing fears of a permanent loss of premium jobs. And since 1991, 2.5 million manufacturing jobs have disappeared in Japan, a decline of 25 percent. In the United States, where the exodus of manufacturing jobs is an old story, permissive labor laws and an entrepreneur-friendly financial system foster the creation of new businesses. But Japanese policy makers have been slow to loosen their tight grip on the economy, making the country one of the most expensive places in the world to do business. A heavy emphasis on preserving jobs rather than creating them has also stunted worker mobility. 'Germany and the U.S. have gone through the same thing already,'' said Tomoko Fujii, an economist at Nikko Citigroup. 'But they have created new industries to compensate. Job creation via deregulation is key.' The relationship between Japan and China, fraught as it is with historic antipathy and grievances, remains uneasy. Nationalist commentators and labor unions in Japan make China out to be a job-eating bogeyman; still, Japanese consumers are able to stretch their stagnant or falling incomes further because of cheap Chinese textiles, food products and other goods. The new factories that blue-chip brands like Hitachi and Fuji Film are opening in China make their Japanese parent companies that much better able to survive in the global marketplace. And China's rapidly growing and modernizing industries are big customers for Japanese steel, machinery and controls, providing a growing market for capital goods. In all, trade between China and Japan trade increased 34 percent in the first six months of 2003, to $60.4 billion, a record. Without its China trade, economists reckon, the Japanese economy might not have grown at all in 2002. Of the manufactured goods that China ships to Japan, about a third are made by Japanese companies and may not seem Chinese to this country's consumers. But increasingly, manufacturers with a distinct Chinese identity are making themselves felt in the Japanese marketplace. China's best-known electronics and appliance company, Haier, now sells washing machines and refrigerators in Japan, and has even rented one of the giant neon billboards in the Ginza, Tokyo's equivalent of Times Square, to promote its brand. 'I want to reach the hearts of Japan's consumers,' Yang Mianmian, Haier's president, told executives at a Ginza restaurant last August after the billboard was lighted up. Increasingly, they are doing so, giving Pioneer and other Japanese manufacturers even more reason to move operations to China. And if they do not cut production costs, the Japanese brands may price themselves even out of their home market. This possibility, however distant, is not lost on Mr. Mineta, who oversees 3,550 workers at the Pioneer plant here, which runs around the clock and has expanded more or less continually since it opened in 2001. Pioneer is hiring workers by the hundreds to fill jobs on the line that pay about $95 a month, above average for the region. Spread across the spotless factory floor, teams of employees in gray work smocks and pink hats do everything from soldering components and plugging in circuit boards to running quality-control tests and packing completed DVD players in boxes along with instruction manuals in French, German and other languages. In China, paying workers, most of them women, to do rote tasks like hunching over tiny chip assemblies and affixing pinhead-size pieces is cheaper than installing the industrial robots that would typically be used to do the same work in Japan. As Japanese manufacturers develop China as a market as well as a manufacturing site, many are setting up design centers too, and not just because Chinese engineers work cheap. 'We used to sell one kind of product, including in China,' Mr. Matsuo of Sharp said, but now the company has Chinese designers developing models to suit local tastes, requirements and budgets. 'If we sell conventional products' designed for Japan, he said, 'we can't compete with Chinese producers.' Japanese companies say the crucial technologies at the heart of most electronic goods continue to be developed in Japan, and then sent to the Chinese plants as a 'black box' for finished products to be built around. But to recoup their development investment, many Japanese companies are now licensing even core technologies to Chinese manufacturers, including direct competitors - a practice that Mr. Shohtoku of Matsushita and other executives acknowledge can be a double-edged sword. The interweaving of East Asia's two giants shows no sign of slowing. At the back of Pioneer's factory, Mr. Mineta takes visitors to the loading docks. From there, beyond the parking lot filled with hundreds of workers' bicycles, the view is of flat, mud-caked fields and a few rough-hewn huts that seem lost in time. For now, farmers still work that land, but Pioneer has an option to lease it and nearly double its production space. Though headquarters has not given a final go-ahead, Mr. Mineta said it was only a matter of time. 'We want to expand as quickly as possible,' he said.

Subject: Kenyan Village Set Against Poverty From: Emma To: All Date Posted: Mon, Apr 04, 2005 at 12:47:42 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/04/04/international/africa/04village.html?pagewanted=all&position= Kenyan Village Serves as Test Case in Fight on Poverty By MARC LACEY SAURI, Kenya - Patricia Awino Odera had her handmade hoe cocked over her head the other day, her face scrunched up into a scowl, sweat pouring from her brow, her labors the very image of futility. Then hope descended onto her cornfield. 'No, no, no, no!' cried Herine Okoth, an agricultural extension worker, as she marched over the freshly tilled land. 'Stop!' Ms. Odera, a frail-looking 54-year-old grandmother who had never had a day of schooling in her life, had thrown fertilizer in with her corn seeds and spaced her holes too closely, both of which would reduce the harvest she and her children would get. 'We agreed that you'd put the fertilizer in first, separate from the maize,' Ms. Okoth said. 'It's not so difficult. It's like this. Fertilizer first. Then cover it with some dirt. Then throw in the seeds. Then cover those. It's not hard at all.' This settlement in western Kenya, where Ms. Odera lives, has become a giant test tube, and Ms. Okoth's instruction is one part of that experiment. Eventually there will be 10 such test villages, scattered across the world's poorest continent. Led by Jeffrey Sachs, director of the Earth Institute of Columbia University, the project aims to fight poverty in all its aspects - from health and education to agriculture and energy in one focused area - to prove that conditions for millions of people like Ms. Odera and her neighbors can be improved in just five years. It is an important and uncertain gambit. If it fails, initiatives like that pushed recently by Prime Minister Tony Blair of Britain to greatly increase foreign aid to Africa may seem foolhardy. If a single village cannot be turned around with focused attention, how can whole communities and even countries be revitalized? The project led by Mr. Sachs grew out of the Millennium Development Goals, benchmarks created by the United Nations in 2000 aimed at prodding the world into reducing hunger and sickness by half, increasing school enrollment, and generally improving the lives of the poorest of the poor. Kofi Annan, the secretary general of the United Nations, appointed Mr. Sachs to oversee its poverty reduction efforts. But setting the millennium goals - and putting in place a deadline of 2015 for seeing them through - has so far not meant much to people like Ms. Odera. Today the projections for reaching those goals keep slipping further and further into the future. It is now estimated that many of those goals will be reached decades late. By then, Ms. Odera will be long gone. Her children may be dead, too. Her grandchildren, many of whom have already lost their parents to disease, will be well along in poverty-stricken lives of their own. That looming failure is what spurred Mr. Sachs and his colleagues to select a particular village with dismal social indicators - this one - where they would apply a more focused antipoverty strategy to prove that, with enough attention, the goals could be reached quicker than people think. Sauri's remoteness is one of the factors that has allowed poverty to get such a foothold here. It is a forgotten place in a country that has seen corruption devastate its national economy. Ms. Okoth, who interrupted Ms. Odera's planting, is one of dozens of experts working to make sure that this Millennium Village Project does not become another pie-in-the-sky effort. The researchers behind the program are keeping track of every penny they spend, trying to demonstrate that for a modest amount, somewhere around $110 per person, a village can be tugged out of poverty. They have tried to measure exactly how bad Sauri was at the start of the project last fall. Every home was surveyed to get an accurate portrait of the population. Blood tests were taken among a smaller group for a nutritional analysis, because many villagers eat only once a day, and show it. Blood will also be tested to determine how widespread the malaria parasite is, and then again later, to see whether the mosquito bed nets given to every villager help keep more people, especially children, alive. A new health clinic has gone up in Sauri. Villagers did the labor, and the project pitched in the sacks of cement, the sheets of tin and the white and blue paint. The Kenyan government must provide the drugs, one of many contributions required of the government to make the project fly. Before the arrival of the health clinic, villagers relied on the district hospital, which got its first government doctor recently as part of the project. It had been without one since 1994. At the hospital, there is an ambulance up on blocks; it has not moved for five years. The villagers will receive a free truck to share, which will double as an ambulance and a way for farmers to get their produce to market. Those gifts aside, the project is not aimed at bringing about prosperity by writing big checks. Nonetheless, the arrival of so many Westerners in a remote village inevitably brings big expectations among the locals. 'Projects come and go in this part of the world,' said Patrick Mutuo, a Kenyan soil scientist who is the project director. 'Some people participate in order to get a free lunch. They see the immediate benefits and not necessarily the long-term benefits. This project is not about free this and free that. The attitude of the people will ultimately determine whether it succeeds. People need to get involved and stay involved long after the experts go home.' Most of the aid in fact will come in the form of shared knowledge from some of the foremost experts in the world in subjects as varied as health, agriculture, energy and economics. Residents, project officials say, will lift themselves out of poverty. Pedro A. Sanchez, a top soil scientist at Columbia, is advising the people of Sauri on how to revive their badly damaged fields and how to plant trees as a way of fertilizing the soil for free. Officials estimate that villagers' dismal yields could double or triple as a result. Not all the new food the farmers produce will remain theirs. This project is devised to create a community spirit and so, in exchange for their free fertilizer and seeds, farmers had to agree to give 10 percent of their yields to local schools. The schools will then start a feeding program that will feed children at noontime and, the advisers hope, lure more of them, especially underrepresented girls, into class. The project also plans to bring electricity to Sauri by extending the power grid that came close to the villagers here, as part an old World Bank project, but never actually reached them. Researchers are also working to rehabilitate water pipes that were set up years ago in yet another development project that went awry. It is too early to say whether this effort goes the way of other failed ventures, such as the 'integrated rural development' approach that never took root in Africa in the 1970's, despite much talk of wiping out poverty. Although the project is just getting off the ground, organizers are already learning how much more complicated poverty reduction is the closer one gets to those mired in it. It is easy, for instance, to talk of the importance of bed nets. But how does one ensure that villagers use them and do not sell them in the market instead? Already, village leaders have persuaded one farmer not to sell his free fertilizer, as he had planned. Not least, tackling AIDS will be a challenge. Although an estimated one-fifth to one-third of the people here are H.I.V. positive, many fear the stigma if others find out they have the disease. How, then, does one treat those who have it? Ms. Odera herself was mulling whether to undergo an AIDS test. Some volunteers unaffiliated with the millennium project had come by the village to encourage more people to have their blood checked. The reward was a free bed net and a free paper visor to shield one's face from the sun. Ms. Okoth, who has seen poverty reduction efforts come and go in Kenya, was leaning toward taking the test. After all, she figured she could sell this net, and keep the other free one. 'We need to do what we can,' she said, 'or we'll always be poor.'

Subject: Bogle Dissapointed - where is the diversification? From: johnny5 To: Emma Date Posted: Mon, Apr 04, 2005 at 14:46:52 (EDT) Email Address: johnny5@yahoo.com Message: 'We agreed that you'd put the fertilizer in first, separate from the maize,' Ms. Okoth said. 'It's not so difficult. It's like this. Fertilizer first. Then cover it with some dirt. Then throw in the seeds. Then cover those. It's not hard at all.' Now I posted some jeff sachs stuff myself and highly regard the guy, but how many times do people have to screw up before you stop helping them? The hope is the woman will understand after being told numerous times why she can't throw the fertilizer in with the corn, but she was already told once and apparently didn't get it - why was that so hard for her to understand? Can you make me understand why she did not get what I consider very easy instructions Emma? I worked with a project in my old city to help the retirees get on the web, it succeded in some regards - failed in most, the reason it failed is because the local librarians and college professors and volunteers got tired of teaching the retirees over and over and over again the same concepts about basic computer use that they would NEVER grasp - after about a year most of the teachers of the classes felt frustration and despair that really broke their will to continue inputting energy. Their steadfast optimism turned into redundant frustration. Maybe they needed some terri's and emma's to keep steadfastly optimistic, but after 1 year of thier time and effort with no change they found other uses of their volunteer time that seemed more productive to them than on rehashing the same basic concepts over and over that were never gonna be grasped with any amount of time. Now to follow Kaplan and 'think tragically to avoid tragedy' I thought sachs was too SMART to throw all his eggs in one basket - for blair and the rest to lose public support if this one town does not succeed is DANGEROUS. Perhaps there will be a natural disaster in this one spot, or a military disaster, perhaps a biological one, some new disease or bacteria or plague that infects the people or crops just in this one place. Perhaps corrupt people will come in and burn the crops or steal the nets - there are SO MANY reasons not to put all the eggs in one basket - Terri preaches diversification - how have so many smart people failed with this fundamental? Human lives dying because warren won't come off the money are FAR TOO IMPORTANT to risk one ONE BASKET no?

Subject: The Dollar and the Euro From: Terri To: All Date Posted: Mon, Apr 04, 2005 at 12:23:12 (EDT) Email Address: Not Provided Message: Economic growth in Europe is declining. The decline of the dollar with regard to the Euro may have come to an end. A German warning that America must maintain healthy growth, which we would much prefer in any event, is surely a call to the European central bank to limit any further decline in the value of the dollar.

Subject: The Dollar and the Yen From: Terri To: Terri Date Posted: Mon, Apr 04, 2005 at 12:28:28 (EDT) Email Address: Not Provided Message: Similarly with Japan faltering, it is hard to imagine the Bank of Japan allowing much of an appreciation of the Yen against the dollar. Though the Bank of Japan has not been buying much American debt as our trade deficit with Japan grows, the dollar has held value against the Yen. The guess is that foreign currency traders are not willing to go against what they consider the intent for a stable dollar by the Bank of Japan.

Subject: ChevronTexaco Agrees to Acquire Unocal From: Emma To: All Date Posted: Mon, Apr 04, 2005 at 11:43:47 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/04/04/business/04cnd-deal.html ChevronTexaco Agrees to Acquire Unocal for $16.4 Billion By ANDREW ROSS SORKIN and CHRISTINE HAUSER Chevron Texaco will acquire Unocal, one of the largest independent oil companies, in a stock and cash transaction valued at approximately $18 billion, including net debt, the two companies said today. A takeover of Unocal, which is based in El Segundo, Calif., represents the biggest acquisition in the industry since the consolidation wave of the late 1990's, when Exxon bought Mobil for $80 billion and BP acquired Amoco for $48 billion. The Chevron Texaco-Unocal acquisition was announced today in a joint statement. Chevron Texaco said the acquisition was subject to approval by Unocal's shareholders and regulatory agencies. Chevron Texaco, the second-largest American oil company, said the deal would significantly enhance its position as a leading global energy provider. It would help it meet long term strategies including growth in core upstream areas and commercializing its undeveloped natural gas resource base, the ChevronTexaco chairman and chief executive officer, Dave O'Reilly, in the statement. 'It is an attractive transaction that provides value in both the near- and long-term,' Mr. O'Reilly said. The takeover negotiations came after months of speculation over which company would end up buying Unocal, the eighth-largest oil company in the United States. The interest generated by the sale comes at a time when global energy companies are flush with cash but short of fresh opportunities to develop new fields as many oil-rich areas of the world remain closed to foreign companies. At the same time, the world's 10 largest oil companies made over $100 billion in profit last year thanks to crude oil that averaged $41 a barrel in 2004. The boom is expected to grow this year. Futures in crude oil on the New York Mercantile Exchange set a record last week, rising above $57 a barrel. Acquiring Unocal would give the buyer a portfolio of attractive fields in Azerbaijan, Bangladesh, Thailand and Indonesia, as well as in the Gulf of Mexico, which are all expected to start producing this year. These projects, if successful, are expected to increase Unocal's production as much as 10 percent a year through 2010 - making it one of the industry's best performers. ChevronTexaco said in the statement that it expects oil-equivalent production from the combined portfolios during 2006 to average about 3 million barrels per day. Unocal's 1.75 billion barrels of oil-equivalent proved reserves would increase ChevronTexaco's reserve base as of the end of 2004 by about 15 percent, it said. Unocal was talking intensely last night with Chevron Texaco and another potential bidder, Eni of Italy, in a deal that executives involved in the discussions said could be worth about $17.4 billion. The executives said the board of Eni, ranked fourth in Europe, was meeting this morning in Italy to discuss the final details of the offer. CNOOC, a state-owned Chinese oil company, which had been part of the bidding, dropped out of the auction. Interest in Unocal started earlier this year when CNOOC first expressed interest in the company. That sparked a discreet bidding war that sent the company's shares soaring 49 percent since the beginning of the year, compared with a 20 percent gain on the Standard & Poor's 500-energy index. Its stock closed Friday at $64.35, up $2.66. Unocal has refocused its attention on exploration and production, particularly in North America and Asia, after selling its marketing and refining businesses in the United States. Chevron Texaco said the combination of the two companies will place it in the top tier of natural gas producers and marketers in the expanding and strategically important Asia Pacific region. Many analysts have long considered Unocal to be a candidate for a takeover. They said that it frustrated investors in recent years, repeatedly failing to meet its growth forecasts and also because of its knack for courting controversy. In 1998, Unocal was forced to abandon plans to build a gas pipeline through Afghanistan, which was then under the control of the Taliban, after the United States started bombing in an effort to destroy training camps of Osama bin Laden. Unocal was founded in 1890 as the Union Oil Company of California. It has about $3 billion of debt.

Subject: Flood of Chinese Textile Imports From: Emma To: All Date Posted: Mon, Apr 04, 2005 at 10:22:50 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/04/04/business/worldbusiness/04textiles.html Stream of Chinese Textile Imports Is Becoming a Flood By DAVID BARBOZA SHANGHAI - Imports of Chinese textile and apparel products into the United States soared in the first quarter, offering fresh evidence that the world's clothing trade is being drastically reshaped by the abolition of global quotas in January. The United States Commerce Department said Friday that in the first three months of the year, preliminary data showed that United States imports of textile and apparel products from China rose more than 63 percent from a year ago. In some crucial categories previously governed by the old system of country-by-country quotas, like underwear, cotton trousers and cotton knit shirts, the increases were even more stark - jumps of as much as 2,000 percent. The figures are certain to heighten trade tensions between the countries and also to renew calls for the United States government to place restrictions on some Chinese imports to protect American manufacturing jobs. The Bush administration said last week that it was closely monitoring textile and apparel imports from China to better assess the effect on the nation's textile and apparel industry. Trade relations between the two countries are already tense, partly because the United States trade deficit with China reached a record $162 billion last year, making it the largest trade imbalance ever recorded by the United States with a single country. European officials are also weighing some form of trade restriction to stem the equally large flood of Chinese textile and apparel imports into the European Union. In China, textile officials are trying to play down the significance of recent trade data, saying that it could be distorted because factories ramped up production early in the year out of fears that import restrictions could be put in place later in the year. 'Last year, when foreign buyers and Chinese producers made deals, the orders were mostly for half a year, different from before when the orders were always for a complete year,' Cao Xinyu, deputy director for the China Chamber of Commerce for Import and Export of Textiles, said in a telephone interview Friday. 'This was because foreign buyers as well as Chinese textile companies are uncertain about the future.' Trade specialists have long predicted that once quotas ended, China's efficient, low-cost manufacturing operations would dominate the world's $495 billion textile and apparel trade, wiping out manufacturing operations in the United States, Europe and elsewhere. Last year, Chinese textile and apparel imports into the United States were valued at about $17 billion, accounting for about 20 percent of all American clothing imports. Analysts are now predicting a surge in Chinese textile and apparel exports to the rest of the world that could wipe out production in some poorer countries, like Bangladesh and Cambodia. Some analysts believe Chinese imports could eventually account for as much as 70 percent of America's textile and apparel imports. Hoping to reposition themselves in this new world, American and European retailers and clothing makers have already begun buying a growing share of their textile and apparel goods directly from Chinese factories at reduced costs. Consumers in the West are beginning to see cheaper prices for some clothing like jeans and leather jackets. Many American and European apparel makers say they are also outsourcing to other poor countries just in case the United States or Europe place trade restrictions on China. But eventually, they say, China will dominate the clothing trade. 'We will always go to the least expensive place,' said Roger Williams, president of Warnaco Swimwear, a division of Warnaco, one of the world's biggest apparel makers. 'Once the issue of safeguards is settled, our comfort level will go up. There will be a shift to China over time.' The Commerce Department's statistics are the latest in a series of government data showing a shift already under way. Last week, the Chinese government also released figures showing that in the first two months of the year, its global textile and apparel exports rose 31 percent to nearly $14 billion, up from $10.5 billion in 2004. The bulk of those gains came from rising exports to the United States and Europe, which, in the first two months of the year have soared 56 percent over the same period in 2003, to $4.8 billion this year. Among the early losers in the textile trade so far are Mexico and several Central American nations, which have begun to see their share of textile and apparel trade with the United States eroded by China, according to Commerce Department figures. There are still about 665,000 textile and apparel manufacturing jobs in America, according to textile officials. But most specialists say they think those jobs are likely to vanish within a few years. Last week, the National Council of Textile Organizations said that 17,000 American jobs had already been lost this year after 11 textile and apparel plants were closed because they could not compete. Trade groups representing American workers want the federal government to step in because they think Chinese manufactures unfairly dominate the textile trade by using cheap labor and relying on government subsidies. 'These numbers are as bad as we feared,' said Cass Johnson, a spokesman for the National Council of Textile Organizations in Washington. 'The government needs to initiate safeguard action now or we could lose tens of thousands of jobs.'

Subject: Impossible! From: johnny5 To: Emma Date Posted: Mon, Apr 04, 2005 at 15:28:09 (EDT) Email Address: johnny5@yahoo.com Message: Trade groups want the government to step in? Huh? I was assured by a few on this list that trade wars with China are IMPOSSIBLE and ABSURD. That it's different this time. Didn't warren said a countries consumption is limited by their production - what do we make anymore? Debt?

Subject: Mapping System in China Blocked From: Emma To: Emma Date Posted: Mon, Apr 04, 2005 at 10:32:09 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/04/04/technology/04map.html U.S. Blocks Use of Mapping System in China By WAYNE ARNOLD The Australian mining company BHP Billiton said Friday that the United States Defense Department was blocking it from using an advanced mapping technology to search for mineral deposits in China. BHP Billiton has a license to use the so-called Falcon system, which was originally intended for use on United States nuclear submarines. BHP Billiton has been using the system around the world since 1999 to help find underground deposits of minerals from aluminum to zinc. But in a meeting this week with analysts in Australia, the head of BHP Billiton's business in China, Clinton Dines, said plans to use Falcon technology in China had been rejected by the United States Navy, according to a report published in The Australian, which was confirmed Friday by BHP Billiton in Melbourne. Under the terms of BHP Billiton's license to use Falcon, a spokeswoman for the company said, 'They can dictate where we can and can't use it.' A Pentagon spokeswoman in Washington, Lt. Col. Tracy O'Grady-Walsh, said Friday that the Falcon system was on a list of American munitions banned from export to China without a presidential waiver. The ban results from sanctions imposed after the Tiananmen Square massacre in 1989. The disclosure that Washington is seeking to block the export of geological survey technology to China comes as the United States is seeking to prevent Europe from lifting an arms embargo against China - something Chancellor Gerhard Schröder of Germany vowed anew on Thursday to do. Whether or not the Falcon technology could be used by Beijing for military purposes, its commercial potential for the country is clear. China is in the midst of an aggressive drive to secure raw materials for its fast-growing economy, including copper, iron ore and oil, risking territorial disputes with Japan and other neighbors in its quest. China's hunger for raw materials has also made it increasingly important to BHP Billiton. Sales to China account for 10 percent of BHP Billiton's total revenue. The Falcon technology was designed by Lockheed Martin as a navigation system for United States submarines to avoid undersea mountains. In the late 1980's, it was adapted for use by aircraft and used by the United States Air Force, reportedly to search for nuclear warheads. In the early 1990's, this system, called an airborne gravity gradiometer, was identified by BHP, which merged with the British company Billiton in 2001, as having potential uses for mining. By 1999, it had secured an exclusive license to use the system for exploration. The license for oil and gas exploration expires in October 2009, while a separate license for mineral exploration lapses in April 2010. When the company introduced the system in 2000, one BHP Billiton executive called Falcon 'the holy grail of the exploration industry,' enabling it to survey previously inaccessible areas. The system, which weighing about 1,000 pounds, is loaded onto light aircraft and flown over prospective mining areas. It produces colored maps indicating changes in the earth's density that can give geologists clues to the whereabouts of valuable ore bodies. BHP Billiton has used Falcon around Australia and Canada, as well as in South America and Africa. It also conducts survey flights for other companies around the world. 'It's very good at finding diamond pipes,' said Neil Goodwill, an analyst at Goldman Sachs JBWere in Melbourne. BHP Billiton has said Falcon helped it find potential diamond deposits at its Ekati mine in Canada, which produces roughly 4 percent of the world's diamond supply. BHP Billiton declined to say what it had intended to search for in China using Falcon. Analysts said most of China had been mined so extensively over the centuries that it was hard to imagine that any significant deposits could have been overlooked. Where Falcon may be useful, they said, was in the remote areas of western China, or in shallow coastal waters in the search for natural gas. Beijing is also eagerly searching for more efficient ways to exploit domestic coal deposits. 'They're moving first into oil, and then they're trying to go into gas as quickly as they can,' said Bob Broadfoot, managing director of the Political and Economic Risk Consultancy in Hong Kong, who counts BHP Billiton as a client. 'But ultimately they don't want to be dependent on this imported fuel, period.'

Subject: Vanguard is Security From: Terri To: All Date Posted: Mon, Apr 04, 2005 at 08:30:31 (EDT) Email Address: Not Provided Message: The millions of fortunate investors who have had accounts at Vanguard own thousands and thousands of international securities. The securities are our safety, and each account in turn is insured to millions of dollars. Investors do not own Vanguard shares, but international bonds and stocks. Holding shares in the American stock market as a whole, is the essence of stock market diversity. Many wonderful bond funds accounts at Vanguard are government insured in addition to privately insured. Vanguard investors deserve to be wonderfully optimistic. Still, there are always other companies. I however have mine. Vanguard is security.

Subject: Realism and Hope From: Terri To: Terri Date Posted: Mon, Apr 04, 2005 at 08:48:33 (EDT) Email Address: Not Provided Message: What I wish is that we may all in sharing ideas find ways to save and invest profitable and safely for our futures. I believe pessimism or cynicism can only harm me, so I try to think realistically and even hopefully.

Subject: Thank You All From: Terri To: Terri Date Posted: Mon, Apr 04, 2005 at 08:55:17 (EDT) Email Address: Not Provided Message: Thank you all for the wondeful exchanges of ideas. I learn each day because of you.

Subject: Japan's Slow Growth Problem From: Emma To: All Date Posted: Mon, Apr 04, 2005 at 07:58:16 (EDT) Email Address: Not Provided Message: The question about the problem of generating a sustained period of healthy economic growth in Japan is important for Japan and every other developed country. But, I have trouble thinking the problem lies in the work ethic of the Japanese. Americans work as hard and long as the Japanese, and far more hours than Europeans. Why should Japan be different than Australia or Canada or Sweden or France? Is the problem slow population growth? Is the problem rigid local economic structures? Is the problem as I suspect application of monetary and fiscal policy?

Subject: Crushing loss of wealth From: Pete Weis To: Emma Date Posted: Mon, Apr 04, 2005 at 10:10:45 (EDT) Email Address: Not Provided Message: There is really no mystery to why Japan is having trouble. At the end of 1989 the Nikkei closed at 38,915 and at the end of 2004, the Nikkei closed at 11,488 - a little over 70% drop. I have a chart here that shows Japanese residential real estate rising 110% between 1980 and 1991 with the steepest run-up between 1986 and 1991. It plateaus for about a year (a little less) and begins to decline giving up almost all the gains of the 80's - today residential housing in Japan sits at about where it was in 1980 ( a little higher but still dropping). Now imagine that you are Japanese and lived through this. You bought a house during the last 5 years of the run-up for $200,000 and now 18 years later it's worth $120,000 and the mortgage you are still paying off is $165,000. Furthermore, you had a life savings of $300,000 (the Japanese have been historically good savers) in 1988. You see the Nikkei soaring and you are convinced you are missing out on a chance to become rich like many of your fellow Japanese. So you don't want to be left behind and like millions of other Japanese you put most if not all that $300,000 in the a Nikkei index fund because you have been told this is a good way to spread out the risk. If you didn't put all of it in there at first, you do so over the next year or two because the Nikkei rises steeply for the next year and a half or so - you might become worth millions. By 1989 the $300,000 becomes $350,000 - but today that $350,000 is now worth only about $105,000. Now, as if to rub salt in the wounds, Japanese are losing jobs to their fellow Asians. And energy costs are further depleting profits and pocketbooks. There is only so much you can do with fiscal and monetary policies, as we're discovering with Japan. Think we've seen this before.

Subject: Re: Crushing loss of wealth From: Emma To: Pete Weis Date Posted: Mon, Apr 04, 2005 at 11:10:27 (EDT) Email Address: Not Provided Message: I do agree, but Japanese household saving is and has been almost entirely in bonds. There was always little household stock market investment. Little was lost in the stock market downturn. Also, Japan is highly energy efficient and energy costs have been well contained. Also, there is little unemployment in Japan. The problem of deflation is there, and property price deflation is a prime problem but Japan while hurting is hurting far less than might be the case were unemployment or energy prices or the stock market crash more harmful to households.

Subject: Re: Crushing loss of wealth From: Pete Weis To: Emma Date Posted: Mon, Apr 04, 2005 at 18:32:40 (EDT) Email Address: Not Provided Message: 'The Japanese are so good at keeping up appearances that few signs are ever evident of the series of recent recessions. But over the years, I have seen poor Mrs. Hirata's husband (the store's manager) open his doors around the clock and take the graveyard shift himself. The place started to stock tequila-sunrise cocktails in a can, and little bottles of wine. Soon even the Hiratas' two high-school-age sons were being pressed into service (unpaid, I'm sure).' This is part of your post entitled 'Keeping up appearances'. It seems to point to employment problems in Japan and echoes what I have read about employment in Japan. There certainly is more unemployment there now than there has been in a long time. In addition there is underemployment with fewer hours for many workers. Japan is much better than the US at conserving energy, nearly all of which it must import. However, you can only get so much out of conservation and when energy costs and raw material costs still rise because of higher worldwide demand for limited resources, then it begins to have a negative effect on one's economy no matter who it is. It is hard to believe with such a big run-up in the Nikkei that the Japanese themselves didn't participate very much. Do you have articles to show this? Not saying that you are wrong but it would seem very unusual for a nation's major stock index to go through the roof with little to no help from investors from that particular country. It's possible that foreign investors outside of Japan took nearly all the losses, but I have never heard or read that. Thanks Emma. I enjoy and find your postings very informative.

Subject: Re: Crushing loss of wealth From: James To: Emma Date Posted: Mon, Apr 04, 2005 at 16:32:49 (EDT) Email Address: Not Provided Message: I might be wrong here.... I believe Japan is experiencing slow growth due to steep competition from other Asian countries.Looking at the present moement in China , Corea , Taiwan and Malaysia. All the neighbouring countries are comming up . In term of goods production , neighbouring countries are practicing mass production and it is flooding the market with cheap stuff. I dont see any potential in the uprising of Japan's growth.

Subject: Roach and rebalancing From: johnny5 To: James Date Posted: Mon, Apr 04, 2005 at 17:47:54 (EDT) Email Address: johnny5@yahoo.com Message: Roach and other bears say there is still a VERY SIGNIFICANT rebalancing required before all this volatility is shaken off the west's back - but some people can't accept that jumping out of a big safe titanic is smart and jumping down into a little small life raft is the prudent thing to do in those shark infested waters - it does not make common sense to some people. WHy leave a nice big boat with food and dance halls and beds for a little raft in the freezing cold?

Subject: Greg Manikew critique From: poyetas To: All Date Posted: Mon, Apr 04, 2005 at 07:36:51 (EDT) Email Address: Not Provided Message: 'I would like them to answer the following question: Suppose that next week, the stock market falls by 50 percent, so dividend and earnings yields double. Would Baker, DeLong, and Krugman suddenly be in favor of President Bush’s proposal for Social Security reform?' -Greg Manikew Why does Manikew look for such a ridiculous assumption? The fact of the matter is that the stock market will not lose 50% of its value, 'cause if it did, the demands of Social Security would explode due to all the new unemployed, and with it, the cost of borrowing to pay for them under a privat-accounts system. Secondly we all know that if returns on stocks increase by 50%, it will not last if the GDP and thus demand continue to increase, eventually, in the long term, they will erode away and we will be back to the original 3% yield. How can an economist make such a comment?

Subject: Re: Greg Manikew critique From: Paul G. Brown To: poyetas Date Posted: Mon, Apr 04, 2005 at 11:33:08 (EDT) Email Address: Not Provided Message: Actually, I thought Mankiw's point wasn't that bad. Many of the responses we've come up with -- oh but it was just politics, etc -- work just as well as an argument on the other side. The Baker-DeLong-Krugman Analysis does rest one flank on the point that the historical 'Equity Premium' may not be as large looking ahead, and they take the historically high price/earnings ratio as empirical evidence in their favor (Sections IV and VII). Then having dispensed with the idea that future returns will approach historical results they do a mess-of-sums to show that slow growth produces lower returns, and therefore a) growth at the lower end of the SS Administration's estimates cannot b) be accompanied by economic growth sufficient to give private equity accounts significantly higher rates of return than what SS is currently counting on. Oh. And Social Security is not an unemployment program. Additional unemployed won't directly impact SS -- although the additional strain on the fiscal side would be telling. DeLong himself has made a similar point: that the combination of low growth and high returns might imply a 50% fall in equity prices (without any fall in earnings). FWIW, my own response is that I have always been attracted in principle to the idea of putting some portion of the SS trust fund into the equities market, and that a 50% fall in P/E would make a pretty good 'value' case. The problems are entirely practical: that much money hitting the market at once would push prices up, there would still be volatility (and the SS trust fund as an index is not the plan the Bushies are proposing), and the trump card -- this administration can barely be trusted to find their pants each morning so I do not want them in charge of such a large, complex and vital an undertaking. The other response is to point out that Mankiw's response essentially buys the entire Baker-DeLong-Krugman argument. That is, Mankiw seems to accept that the only way to marry the administration's low growth / high return scenerio is to assume the equity price adjustment he described. And if that does happen, selling SS privatization to the US public will be politically very, very hard..

Subject: Political will dominates economic reality From: johnny5 To: Paul G. Brown Date Posted: Mon, Apr 04, 2005 at 15:33:00 (EDT) Email Address: johnny5@yahoo.com Message: Starve the beast for the benefit of the people! Huh? ' this administration can barely be trusted to find their pants each morning so I do not want them in charge of such a large, complex and vital an undertaking. ' You underestimate the ENEMY my friend, he has the congressional, the judicial, the military, the executive, the hearts and minds, yet you call him stupid and not being able to find his pants - hmmm - very stupid to have the might while you complain he is an idiot - I wonder while Hitler took over if the academia comaplained what an inconsequential idiot he was or while the smarties in russia were murdered did they complain what a fool stalin was?? Huh? http://www.siliconinvestor.com/readmsgs.aspx?subjectid=51347&msgnum=28721&batchsize=10&batchtype=Next Yes, I posted Paul Krugman's interesting article when it was published in the New York Times. He points out that many prominent supply-side supporters did not see any sound economic basis in the theory - as indeed there is none. But for the groupies further down the food chain in the supply-side cult - supply-side 'economics' was gospel truth. You may even qualify as an example of this. Irving Kristol, in his role as co-editor of The Public Interest, was arguably the single most important proponent of supply-side economics. But years later, he suggested that he himself wasn't all that persuaded by the doctrine: ''I was not certain of its economic merits but quickly saw its political possibilities.'' Writing in 1995, he explained that his real aim was to shrink the government and that tax cuts were a means to that end: ''The task, as I saw it, was to create a new majority, which evidently would mean a conservative majority, which came to mean, in turn, a Republican majority -- so political effectiveness was the priority, not the accounting deficiencies of government.'' In effect, what Kristol said in 1995 was that he and his associates set out to deceive the American public. They sold tax cuts on the pretense that they would be painless, when they themselves believed that it would be necessary to slash public spending in order to make room for those cuts.

Subject: Re: Political will dominates economic reality From: Poyetas To: johnny5 Date Posted: Mon, Apr 04, 2005 at 16:56:24 (EDT) Email Address: Not Provided Message: OK, If you have been working for say 10-15 years and suddenly you lose your job either do to accident or get laid off 'cause the company goes under. Can you still get covered by social security or can you only qualify after a certain age? Thanx..

Subject: Spies like us From: johnny5 To: Poyetas Date Posted: Mon, Apr 04, 2005 at 17:45:23 (EDT) Email Address: johnny5@yahoo.com Message: Great movie with chevy chase and dan akroyd - the general in the movie says he will blow up the world with nukes to preserve the american way of life - HUH? Starve the beast to save the people Huh? I worked at IBM for a few years, not the 40 quarters required for SS, I saw good smart OLDER people get laid off in 1995 just before their 20 year retirement, they bitched to me how they had wasted 18 years of thier life for NOTHING! I saw 2 buildings over at the IBM complex in RTP, NC there were all these indians working and being trained by IBM for 5 bucks an hour - I was making 25. They were as smart as me and my mates. My bank of america friend who was head honcho at one of the branches said SS dead for you Johnny5, india, china, gonna take your job and do it better for cheaper and just like IBM sold out these good long term hard working BLUE boys the US gubbment will SELL YOU OUT too - this was 1995, I quit from disgust how the older workers got the SHAFT at IBM and vowed to make sure that would not happen to me. I moved to clearwater, rented a place owned by an IBM manager in Tampa, she told me she would help me get on at IBM tampa in good 80K a year plus position after we talked awhile - I said no thanks - I know the future there. 2 months after moving in she told me they had laid her off and sent the job to india - BWAHAHA! Optimistic people never cease to amaze me my friend - I want you to watch the SCARY MOVIE series of comedies - in one part of one of those movies a knife welding psychopath is slashing this prom queen left and right and chops her head off and she looks at him and says is that all you got - I am really scared and then dies the next breath - reminds me of the manager at IBM that lost her job 2 months after trying to get me to buy into her psychosis.

Subject: Complete Social Security Coverage From: Emma To: Poyetas Date Posted: Mon, Apr 04, 2005 at 17:03:04 (EDT) Email Address: Not Provided Message: Complete Social Security coverage begins with 40 quarters of work. The collection ages however are 62 or 65 or 69 depending on your choice. Disability coverage is at any age. Survivor coverage is for children.

Subject: Re: Greg Myopia vs. Paul Hyperopia From: Pancho Villa To: Paul G. Brown Date Posted: Mon, Apr 04, 2005 at 14:28:51 (EDT) Email Address: nma@hotmail.com Message: 'Here is one scenario that seems plausible. With the rest of the world, such as China and India, growing so rapidly, U.S. companies will increasingly find profitable opportunities abroad. At the same time, foreigners will increasingly invest in U.S. companies, which will be among the driving forces behind global growth. Under this scenario, an incresing share of the earnings of U.S. corporations could come from abroad, without any obvious implications for the U.S. current account.'

Subject: FDI? From: johnny5 To: Pancho Villa Date Posted: Mon, Apr 04, 2005 at 14:51:35 (EDT) Email Address: johnny5@yahoo.com Message: You have read the recent posts how America is LOSING FDI - not gaining it right? If you are in AMERICA you have already lost 40% of the value of your wealth in the decline of the dollar and more if you were invested march 2000 in stocks - how so many have already lost so much and twiddle thier thumbs about steadfast optimism amazes me. http://hardware.slashdot.org/article.pl?sid=05/04/03/1851241&tid=215&tid=137 Chinese Huawei Takes on U.S. Telecom Market Posted by timothy on Sunday April 03, @02:49PM from the thattawei dept. ChipGuy writes 'With funds on loan from the Chinese government, Chinese equipment giant, Huawei is undercutting big rivals like Cisco and Nortel, and is using money to buy its way into the U.S. market. Overseas in Europe and Asia it already has become a major force. There are parallels with auto industry and home appliances. It took a little while before prices became a determining factor and shifted growth away from North American vendors. Telecom will go through the same curve. Huawei is curently selling EVDO phones for about $130 and WCDMA phones about $250 which is about 30% than everyone else on the market. Huawei's agenda is pretty clear - get business and sales at any cost. And that means bad news for already struggling telecom industry.'

Subject: Preserving Social Security From: Emma To: poyetas Date Posted: Mon, Apr 04, 2005 at 08:33:26 (EDT) Email Address: Not Provided Message: Greg Manikw wishes to end Social Securit, while DeLong and Krugman and Baker wish to preserve the system. The value of stocks is not the problem, the problem is reducing benefits for private accounts and so in effect ending Social Security. Thank you for the comment.

Subject: Preserving Social Security [cont.] From: Emma To: Emma Date Posted: Mon, Apr 04, 2005 at 14:58:58 (EDT) Email Address: Not Provided Message: There is every reaosn to have Social Security administrators invest part of the surplus revenue in a total stock market index of non-voting shares. But, what the privatizers wish is to end Social Security not to strengthen the program.

Subject: Politics From: johnny5 To: poyetas Date Posted: Mon, Apr 04, 2005 at 07:51:41 (EDT) Email Address: johnny5@yahoo.com Message: U must understand, it has already been posted several times - people do not live in economic reality if it does not advance the political reality - learn the pecking order and these 'conundrums' won't confuse you so and you can live stress free in this crazy world.

Subject: Re: Politics From: poyetas To: johnny5 Date Posted: Tues, Apr 05, 2005 at 09:18:16 (EDT) Email Address: Not Provided Message: Yes Johnny, Economics is only a tool of policy makers, but until now, I see no better tool. I guess the point is that privatising makes no dollars and no sense. Just a quick response to the concept that social security is not unemployment security, I would argue that for anyone working over 10 years, its the same thing. Unemployed professionals are essentially adding to the coming social security deficit because their contributions cannot be invested today, and they will definetely be collecting (assuming they've put in their 40 quarters). If the stock market crashed imagine how much revenue would be lost due to the massive loss in jobs.

Subject: Relative costs From: Setanta To: All Date Posted: Mon, Apr 04, 2005 at 06:32:44 (EDT) Email Address: Not Provided Message: Will someone who actually knows, please tell me how crude oil can be taken from many hundreds of feet beneath the sea bed or from the sands of Saudi Arabia; transported over the seas in vast and expensive tankers, refined into various products, of which petrol is one; how that petrol can be shipped in huge tanker lorries to the petrol station where I will purchase it from a pump which must have cost a lot of money to install; how so many people from oil rig workers to sailors to petrol pump attendants can be paid a living wage; and how the government can take more than 50 per cent of the price in tax and it still costs half as much per litre as a bottle of water of dubious provenance?

Subject: Dog Water From: johnny5 To: Setanta Date Posted: Tues, Apr 05, 2005 at 19:02:33 (EDT) Email Address: johnny5@yahoo.com Message: http://www.newsoftheweird.com/archive/nw050327.html LEAD STORY Sales of bottled water for dogs (with prices similar to that for people) are growing, according to a March Wall Street Journal report, spurred not only by sudden concern about vitamin deficiency but apparent certainty among some owners that their pets find tap water disagreeable and thus are dangerously at risk of dehydration. Of course, veterinarians cited by the Journal are puzzled by this recent rejection of municipal water and suggest it might be a food-bowl-smell problem rather than a new dog generation's preference for fine beverages. (Also, some vets believe dogs prefer the cooler temperature of, say, toilet-bowl water to that of food-bowl water.) [Wall Street Journal, 3-11-05]

Subject: Re: Relative costs From: jimsum To: Setanta Date Posted: Mon, Apr 04, 2005 at 22:48:34 (EDT) Email Address: jim.summers@rogers.com Message: You can't compare a nicely packaged and expensively refrigerated bottle of water to a bulk-served generic product. In most places you pump your own gas and even swipe your own credit card. If you are filling your own container, you can get water for $.50 a gallon in grocery stores; not to mention drinking for free at public fountains! The low price of gas shows the returns-to-scale of buying in volume. If you are going to buy your water in expensive little bottles, one at a time, you're going to pay for the privilege.

Subject: Re: Relative costs From: Emma To: Setanta Date Posted: Mon, Apr 04, 2005 at 11:45:08 (EDT) Email Address: Not Provided Message: How would you answer such a question, for I cannot?

Subject: Caution While Always Investing From: Terri To: All Date Posted: Mon, Apr 04, 2005 at 06:25:25 (EDT) Email Address: Not Provided Message: The need in investing going forward will be how to be sufficiently cautious while always being invested. Diversity and understanding value, sector offerings, and always understanding bond funds will be critical. I find people seldom understand bond funds, and this includes analysts.

Subject: Understanding Investing From: Terri To: All Date Posted: Mon, Apr 04, 2005 at 06:14:56 (EDT) Email Address: Not Provided Message: http://flagship5.vanguard.com/VGApp/hnw/FundsByName What I try to do is study and understand what all the possible Vanguard choices are from the mutual funds offered to the brokerage choices of exchange traded indexes and individual stocks and bonds. The teaching materials at Vanguard have proven superb. Also, Vanguard has been completely investor oriented in making sure fund managers perform well. I am quite grateful. Right now, I am continuing how to further find investment value and protect a portfolio in a challenging economic climate that may well grow more difficult. However, I feel completely secure with the traditional value approach I am forever learning to use.

Subject: Vanguard Exchange Traded Indexes From: Terri To: Terri Date Posted: Mon, Apr 04, 2005 at 06:18:00 (EDT) Email Address: Not Provided Message: http://flagship2.vanguard.com/VGApp/hnw/FundsVIPERByName The exchange traded indexes add to Vanguard's other index and managed fund choices. Notice how simple the website is to use, and the ease of information.

Subject: Vanguard From: Terri To: All Date Posted: Mon, Apr 04, 2005 at 06:00:03 (EDT) Email Address: Not Provided Message: Vanguard has been my family's investment company for more than 25 years. We have never found a reason to be less than pleased and grateful for the quality of funds, choices, easy access to detailed information, service, cost, security... When other company's are suggested, I generally find getting simple information about the alternate company a serious problem. Vanguard has been the conscience of the industry. I have never even thought of switching. The company has advertised appropriately for decades, and should continue to do so for continued beneficial growth.

Subject: My Investment House From: Jennifer To: Terri Date Posted: Mon, Apr 04, 2005 at 09:51:58 (EDT) Email Address: Not Provided Message: Negative thinking I truly believe is harmful. We must be realistic, and Vanguard is simply terrific. I too love Vanguard.

Subject: Arthur Anderson From: johnny5 To: Terri Date Posted: Mon, Apr 04, 2005 at 07:30:36 (EDT) Email Address: johnny5@yahoo.com Message: Remember what Kaplan said about negative thinking being your best friend and helping you avoid bad things - my dad used arthur anderson in his company, trusted them completely, well what happened to them? They had a 100 year history of trust no? Eternal Vigilance, sacred cows sometimes need slaughter - hehe. Bogle seems to have been a great influence in his company, but things change. Stockgate may even make vanguard funds go down.

Subject: RIP Pope John Paul II From: Setanta To: All Date Posted: Mon, Apr 04, 2005 at 05:27:30 (EDT) Email Address: Not Provided Message: As Pope John Paul II carries his cross into eternity it is time to examine the footprints he left. Comment from BBC on Sat 2 April 2005. The world is worse off from losing this great man. He was the champion of the poor, of the oppressed and of the dignity of the human spirit. While I did not agree with some of his pronouncements on marriage, gays and birth control I applaud the strength of conviction he displayed and the strength of his faith that he was doing the right thing. His influence in the fall of the totalitarian regimes in Eastern Europe in the 1980's cannot be forgotten. I express my sadness at his departure from this mortal coil but am glad that the suffering he beared with such dignity has ended. Godspeed Karol...

Subject: With Love From: Terri To: Setanta Date Posted: Mon, Apr 04, 2005 at 06:01:05 (EDT) Email Address: Not Provided Message: With love.

Subject: Re: With Love From: Poyetas To: Terri Date Posted: Mon, Apr 04, 2005 at 07:46:13 (EDT) Email Address: Not Provided Message: In Northern Germany people were celebrating the death of the Pope. Its sickening to think of a party celebrating the death of someone, I am a removed Catholic and I believe the late Pope was a good and honest man. Nevertheless it does mark an important moment for the church. It needs a serious case of philosophical reevaluation. The entire institution is still stuck in the stone ages and I am of the belief that as long as they continue to support an anti-contraception stance, they are only helping to increase the extermination of our species.

Subject: Vangaurd Advertising on local AM radio now From: johnny5 To: All Date Posted: Sun, Apr 03, 2005 at 22:39:53 (EDT) Email Address: johnny5@yahoo.com Message: What is up Terri? I thought Bogle always said they don't have expensive marketing fees and that made them good and cheap - but today I hear Vangaurd advertising on the local AM talk radio station in the clearwater area for clients - I have never heard them advertise before.

Subject: Help stamp out aids so Johnny5 can have free love From: johnny5 To: All Date Posted: Sun, Apr 03, 2005 at 22:21:10 (EDT) Email Address: johnny5@yahoo.com Message: like in the 60's without death hanging over him - peace brother.... Warren singlehandedly could take care of most of this, but 12 million a year in donations won't cut it. http://www.project-syndicate.org/commentaries/commentary_text.php4?id=1902&lang=1&m=series The Time is Now to Fight Disease by Mabel van Oranje and Zackie Achmat It is possible for a child born just ten years from now to live in a world where AIDS, tuberculosis and malaria are on the wane. But this can only happen with considerable investment. Now. Otherwise, today’s grim picture will only get worse. Each day, these diseases kill 16,000 people—devastating entire communities and plummeting countries deeper into poverty. Upping the ante could turn the tables. Recent successes in Brazil against AIDS, in Mozambique against malaria, and in China against TB, show what can be achieved on a global scale with more resources. There are new ways of directing aid to where it is most needed. A key instrument is the Global Fund to Fight AIDS, TB and Malaria. Created in 2002 as a partnership between governments and civil society, the Global Fund is unique in the way it aims to deliver assistance. Driven by real needs on the ground, projects are designed and implemented by recipients, and its procedures and operations are transparent. Of late there has been much talk about intensifying efforts to eradicate poverty. Ahead of the G8 summit in Scotland in July, a coalition of non-governmental organizations has launched the “Global Call to Action Against Poverty,” and the UK host has made Africa a top priority. Building on this momentum, the campaigns for debt relief, trade reform, and increasing aid to poor countries have gained traction. Yet, while pledges to increase development assistance have soared, short-term funding is woefully inadequate. Any strategy for raising living standards must include urgent measures that address AIDS, TB and malaria. Stemming the spread of this deadly trio of diseases is the linchpin in the global fight against poverty. Unchecked, these diseases not only sap the strength of national economies, but jeopardize peace and security. Teachers and nurses are dying; police and security forces are being hard hit, and 14 million children have already been orphaned by AIDS. We now risk failing to meet the Millennium Development GOAL, set out by the United Nations, of reversing the spread of AIDS, TB and malaria by 2015. This failure will make remote any hope of reaching the other Millennium goals in the fight against poverty. A comprehensive response to AIDS, TB and malaria is needed. Acting now means less spending in the long run. Investments in effective prevention, treatment and research in 2005 and 2006 will save millions of lives, lessen the socio-economic impact of the diseases in poorer countries, and remove the need for increased spending on these chronic crises in the future. The Global Fund plays an important role in this funding environment, providing approximately 66% of all current external funds in the fight against TB, 45% in the fight against malaria, and 20% of all external support to combat HIV/AIDS. Since the Global Fund was founded three years ago, it has built an impressive track record: approving 310 grants totaling $3.1 billion in 127 countries and disbursing $920 million since 2002. Despite the scope of its mission, it has a minimal bureaucracy, which allows for a flexible response to changing needs. The Global Fund is not perfect; as with all new organizations, it is experiencing growing pains. Yet, issues such as procurement policies, trade-offs between efficiency and ownership, and the balance between government and non-governmental organizations as implementing partners are being addressed through the Fund’s open and inclusive governance systems. If the Fund is to live up to its potential it will need $2.3 billion to continue its work effectively in 2005. The first of two replenishment conferences for the Global Fund is taking place this week in Stockholm, with the aim of securing financial pledges to cover grant commitments in 2006-2007, as well as to fill the gap for this year. Donors have long preached the importance of a funding vehicle such as the Global Fund—one that is needs-driven, relies on local input, and promotes donor coordination. They now have a chance to make good on their word. With many battles ahead in the fight against AIDS, TB and malaria, it would be a disgrace if this opportunity is squandered. Zackie Achmat is Chairperson of the Treatment Action Campaign (South Africa) and Mabel van Oranje is Director for EU Affairs of the Open Society Institute.

Subject: Japan: Keeping Up Appearances From: Emma To: All Date Posted: Sun, Apr 03, 2005 at 21:49:14 (EDT) Email Address: Not Provided Message: An interesting passage: http://www.nytimes.com/2005/04/03/magazine/03EAT.html?pagewanted=all&position= Eat, Memory: Our Lady of Lawson By PICO IYER ... The Japanese are so good at keeping up appearances that few signs are ever evident of the series of recent recessions. But over the years, I have seen poor Mrs. Hirata's husband (the store's manager) open his doors around the clock and take the graveyard shift himself. The place started to stock tequila-sunrise cocktails in a can, and little bottles of wine. Soon even the Hiratas' two high-school-age sons were being pressed into service (unpaid, I'm sure).

Subject: What Has Happened to Japan? From: Emma To: Emma Date Posted: Sun, Apr 03, 2005 at 22:00:50 (EDT) Email Address: Not Provided Message: What has happened to Japan? How has economic growth been so poor for so long given the education and technical proficiency and innovation that is Japan? What has happened?

Subject: Asset boom & bust plus.... From: Pete Weis To: Emma Date Posted: Sun, Apr 03, 2005 at 22:47:44 (EDT) Email Address: Not Provided Message: competition from cheaper Asian labor markets have sapped the spending ability of the Japanese middle-class which was riding high in the 80's. If it wasn't for the US consumer things would be much worse in Japan. The US consumer has thus far given Japan a long, slow, soft landing. But tougher times for Japan are ahead as the support from US consumers begins to wane. Who will provide a soft landing for America and Europe?

Subject: Multi Generational 100 year mortgages From: johnny5 To: Emma Date Posted: Sun, Apr 03, 2005 at 22:33:11 (EDT) Email Address: johnny5@yahoo.com Message: http://www.siliconinvestor.com/readmsgs.aspx?subjectid=54034&msgnum=29963&batchsize=10&batchtype=Next BUT didnt bernanke say in that famous heliocopter speech that the fed did and could once again monetise bonds? is this not, unless im mistaken, equivilent to the fed printing money (not credit) to buy its own credit (treasury bonds). Pray tell, how does this then end in deflation? In theory they COULD. In practice it will not happen. Hyperinflation would bail out debtors (the mass public) at the expense of creditors (banks, financial institutions, and the wealthy). In other words, it is an unloaded gun. Finally, even IF they did try there is no guarantee of success. Japan tried for 18 years to defeat deflation with masive public spending on totally useless projects. All it got them was as federal debt of 300% of GDP and still no inflation. True but they do have a good infrastructure now where some say the US has a need for road and bridge repair and aged water and sewer systems repair here. As i recall, some Japanese buyers were using 100 year, multi-generation mortgages (i.e. father and son both signed on.)

Subject: Labor Shortage in China From: Terri To: All Date Posted: Sun, Apr 03, 2005 at 19:47:49 (EDT) Email Address: Not Provided Message: The New York Times article on a labor shortage in China strikes me as especially interesting. There is a sense in the midst of limited job creation that work is intrinsically limited, but it is economic policy of short and long term consequences that should allow for an ever expanding job market. Then, are we stimulating job creation properly and preparing a well educated imaginative work force with policy?

Subject: Liquidity Concerns? Bernanke 2 save us all. From: johnny5 To: All Date Posted: Sun, Apr 03, 2005 at 18:59:58 (EDT) Email Address: johnny5@yahoo.com Message: http://www.siliconinvestor.com/readmsgs.aspx?subjectid=54034&msgnum=29938&batchsize=10&batchtype=Next That's great. Bob Hoye understands the situation clearly. A view which is quite atypical today. Expanded credit should never be counted as an increase in the 'money supply' as the Fed does. It is merely an increase in monetary velocity. This has long been known. Henry Thornton, in his 1802 book, 'An Enquiry into the Nature and Effects of the Paper Credit of Great Britain' correctly described an increase in credit issued as an increase in the velocity of circulation of existing money, not an increase in money as monetarists mistakenly claim. Monetarist economists like Ben Bernanke and Milton Friedman believe the problems created by excessive credit issuance and fiat money creation can be solved with an even greater expansion of credit and fiat money issuance. The futility of this concept can be quickly grasped, even by small children. http://www.siliconinvestor.com/readmsg.aspx?msgid=21194261 Once the animal spirits and strong prices come out of the speculations, then the 'margin clerks' take over, and credit expansion subsides. However, when the Bubble credit expansion is still on going, then I feel the changes at the margin in Fed 'liquidity' and rates, strongly influences speculative behavior by encouraging or signaling more leveraging. What I see at present is a little different for this cycle, in that Fed injections and accommodation have changed at the margins from frantic to normal. That's why I focus on that. You can see that there are plenty of takers for the injections that are made available, as Fed funds and T-bill rates quickly move to higher levels after each rate increase. Every TIO and repo offering has an abundance of bidders. It still has the look of considerable demand for new credit (no pushing on a string yet), although from a less accommodative Fed. The thirst for leveraged speculations still appears amazingly strong, even if returns are a lot more choppy of late. You can see it in the stock market daily, as the Pig Men try to ramp one sector, see it fade, then do it again somewhere else.

Subject: It's a Flat World, After All From: Emma To: All Date Posted: Sun, Apr 03, 2005 at 18:17:36 (EDT) Email Address: Not Provided Message: Excerpt: http://www.nytimes.com/2005/04/03/magazine/03DOMINANCE.html?pagewanted=all&position= It's a Flat World, After All By THOMAS L. FRIEDMAN In 1492 Christopher Columbus set sail for India, going west. He had the Nina, the Pinta and the Santa Maria. He never did find India, but he called the people he met ''Indians'' and came home and reported to his king and queen: ''The world is round.'' I set off for India 512 years later. I knew just which direction I was going. I went east. I had Lufthansa business class, and I came home and reported only to my wife and only in a whisper: ''The world is flat.'' And therein lies a tale of technology and geoeconomics that is fundamentally reshaping our lives -- much, much more quickly than many people realize. It all happened while we were sleeping, or rather while we were focused on 9/11, the dot-com bust and Enron -- which even prompted some to wonder whether globalization was over. Actually, just the opposite was true, which is why it's time to wake up and prepare ourselves for this flat world, because others already are, and there is no time to waste. I wish I could say I saw it all coming. Alas, I encountered the flattening of the world quite by accident. It was in late February of last year, and I was visiting the Indian high-tech capital, Bangalore, working on a documentary for the Discovery Times channel about outsourcing. In short order, I interviewed Indian entrepreneurs who wanted to prepare my taxes from Bangalore, read my X-rays from Bangalore, trace my lost luggage from Bangalore and write my new software from Bangalore....

Subject: He will be on Booktv on May 1 From: johnny5 To: Emma Date Posted: Mon, Apr 04, 2005 at 03:03:33 (EDT) Email Address: johnny5@yahoo.com Message: Live Sunday May 1, Noon Eastern - In depth on Booktv with Mr. Friedman will take your calls. http://www.booktv.org/ cspan2

Subject: It's a Flat World, After All - 1 From: Emma To: Emma Date Posted: Sun, Apr 03, 2005 at 18:36:11 (EDT) Email Address: Not Provided Message: It is this convergence -- of new players, on a new playing field, developing new processes for horizontal collaboration -- that I believe is the most important force shaping global economics and politics in the early 21st century. Sure, not all three billion can collaborate and compete. In fact, for most people the world is not yet flat at all. But even if we're talking about only 10 percent, that's 300 million people -- about twice the size of the American work force. And be advised: the Indians and Chinese are not racing us to the bottom. They are racing us to the top. What China's leaders really want is that the next generation of underwear and airplane wings not just be ''made in China'' but also be ''designed in China.'' And that is where things are heading. So in 30 years we will have gone from ''sold in China'' to ''made in China'' to ''designed in China'' to ''dreamed up in China'' -- or from China as collaborator with the worldwide manufacturers on nothing to China as a low-cost, high-quality, hyperefficient collaborator with worldwide manufacturers on everything. Ditto India. Said Craig Barrett, the C.E.O. of Intel, ''You don't bring three billion people into the world economy overnight without huge consequences, especially from three societies'' -- like India, China and Russia -- ''with rich educational heritages.''

Subject: Materials and Energy From: Terri To: All Date Posted: Sun, Apr 03, 2005 at 17:03:26 (EDT) Email Address: Not Provided Message: Well, a fine time to have owned energy and materials companies or rather the indexes. Interestingly though materials have only recently fared well in price terms. The preferred long term investment has been energy these 20 years. In 1980, energy companies made up more than 20% of the S&P. Now, energy is about 8%. The impact of rising energy prices is less, given the economic mix we have, but not pleasing. The materials mix for the S&P has gone from 13% to 4% from 1980 to now.

Subject: Resource Prices From: Terri To: All Date Posted: Sun, Apr 03, 2005 at 16:59:48 (EDT) Email Address: Not Provided Message: Some years ago, an engineering professor told me he was quite convinced resource commodity prices would not again rise to the real prices of 1980. Technology would allow supply to stay beyond demand. Well, I will flag him down and remind him of our talk and find whether his position has changed. I simply wonder.

Subject: Real Estate versus Commodities From: johnny5 To: Terri Date Posted: Sun, Apr 03, 2005 at 19:14:22 (EDT) Email Address: johnny5@yahoo.com Message: http://www.siliconinvestor.com/readmsg.aspx?msgid=21193848 ...Recent memory aside, home prices do not climb much faster than inflation over time. There is a sound economic reason for this – homes can be built out of materials that are highly correlated to inflation. Even the cost of labor used to build a home is closely tied to inflation. Home prices are capped at a slim margin over the cost of building a new home, and the cost of building a home tends to move with commodity prices and labor costs. This is not to say fortunes can’t be made in real estate - notably with coastal homes that are in limited supply or from buying in an out-of-favor neighborhood before it becomes popular. But for many, homes are the ultimate commodity investment - it works mostly because so much money is plowed into it (divert 30% of your income each month into anything and it will be worth a small fortune someday). The reason we recommend real estate in general as an asset class over real commodities is that real estate can be rented for income, and income producing ability (now or in the future) is the true definition of an investment over a mere speculation like hoarding copper. Investors often look to real estate when stocks let them down. The last true real estate bubble in America took place in the early to mid 1920s – the great Florida land grab. What really kicked off the rampant speculation by individuals was a sour stock market. From peak to trough in 1919 to 1920, the Dow suffered a 47% drop – one of the fastest and most furious in history. Early gains made by speculators in Florida’s development led to wild stories of easy riches that sucked in more and more money – into dumber and dumber investments (sound like the tech boom to anyone?). Before long, hucksters were selling underwater land as the next multimillion dollar hotel location to greedy investors looking to flip their way to instant wealth. The expression, “If you believe that, I’ve got some swampland in Florida for you” lives on to this day. Investors also like leverage. Borrowing makes the relatively low risk world or real estate investing as exciting as . . . well, tech stocks. Today it is not uncommon for someone with very average credit and only a moderately stable income to plunk down $25,000 on a $500,000 home. If the home climbs 20% to $600,000 (which it has been doing for years now, so why should it stop...) the investor turns $25,000 down into $125,000 safely. Try doing that in stocks! On the other hand, somebody who borrows $475,000 (to buy a $500,000 house that cost $300,000 a few years ago, and could be worth that much again) could lose his job and be unable to make the payments—that will climb if interest rates go up. It’s pretty hard to turn $25,000 into a negative $175,000 with stocks. A recent real estate broker’s guidebook on New York and Florida (that looks like a stock analyst’s report) noted some startling price trends: 2-4 family townhouses in Brooklyn were up 174%, studios in New York City up 20%, lofts up 35%. More startling was the time frame of the big returns: 1 year. Everyone is so sure that real estate will continue to move onward and upward that the cost of buying a home is now at record highs in relation to the cost of renting the same property. In some hot markets it costs just 50% or less of what it would cost per month to buy to simply rent. It is entirely possible that an investor would do better renting the house they want to buy, and parking the difference each month in an index fund – at least for shorter periods of time of 1 – 7 years. More sobering is the thought that the relationship between renting and buying could become exaggerated quickly if rates rise (which increases the costs of home buying) or if rents fall (which could happen in a recession). Suddenly homes may not be just 25% overpriced, but perhaps 40%. Is 25% overpriced a bubble? It is when the average home only has about 50% equity on the books. In other words, if homes fell 50% in price, there would be no equity left in residential real estate, and the outstanding mortgage debt would exceed the market value of the property. This is startling because homes are now our greatest asset. Today, total household wealth is higher than ever, largely because appreciating home prices have made up for any losses in stocks. Saying that only some regional markets are overpriced is like saying only some stocks were overpriced in the 2000 stock bubble. Therefore, buying – even on margin – is safe. Florida, New York, California, New Jersey, Massachusetts, Connecticut, and Las Vegas represent more than 50% of the total market cap of all U.S. property, so it’s hard to say the bubble is only localized. Exxon Mobil (XOM) wasn’t overpriced in 2000, but Cisco (CSCO) was. Brokers used to let customers buy stocks on up to 90% margin because stocks were a sure thing. After the crash of ’29 people realized the error in their logic. Maybe real estate won’t crash. Maybe prices will just stay at the current levels until fundamentals catch up. Maybe we’ll never learn the risks of 5% down. Let’s hope so – an economy partially fueled by home equity loans can’t take a bear market in home prices. Better if we think a bear market in real estate is something that doesn’t exist.

Subject: Re: Resource Prices From: James To: Terri Date Posted: Sun, Apr 03, 2005 at 17:41:15 (EDT) Email Address: Not Provided Message: Yeap i read that somewhere years ago. However i would disagree with the article looking at our present situation. I would say resources are scarce and limited. We are consuming it exponentially proportional to the population. Undeniably technology improves from each year but the efficiency is uncomparable to the avaialable natural resources and the cost of the implementation is not cheap. I would have to conclude the engineering professor do not really understand economics.

Subject: Growth in demand From: johnny5 To: James Date Posted: Sun, Apr 03, 2005 at 19:03:02 (EDT) Email Address: johnny5@yahoo.com Message: Do our resources grow faster than the demands placed on them? There is only so much MATTER to get ahold of quickly and cheaply, but human populations have skyrocketed the past 50 years - there are only so many bentley's and California seaside mansions to go around.

Subject: Canadian Grunt slams White West on Cspn2 From: johnny5 To: All Date Posted: Sun, Apr 03, 2005 at 15:27:31 (EDT) Email Address: johnny5@yahoo.com Message: This guy SLAMS rich western whitey pretty hard - he is VERY critical of why we let 800,000 die so tragically. 03:02 pm 0:44 (est.) Speech Shake Hands with the Devil: Rwanda Barnes & Noble Booksellers Romeo A. Dallaire , Canada Speech Shake Hands with the Devil: Rwanda Barnes & Noble Booksellers New York, New York (United States) ID: 184312 - 01/19/2005 - 0:44 - $29.95 Dallaire, Romeo A., Special Adviser, Canada Lt. General Dallaire (Ret.) talked about his book Shake Hands with the Devil: The Failure of Humanity in Rwanda, Carroll and Graf. He was the Force Commander of the United Nations Assistance Mission for Rwanda. While in his U.N. post in Rwanda in 1994, Lt. Gen. Dallaire and his limited number of troops witnessed the killing of more than 800,000 Rwandans in a period of a little over three months. The author talks about the under-equipped army he had with him and about how he had originally requested 5,000 troops in order to ensure order during the elections and oversee the safe return of Tutsi refugees. Upon returning to his native Canada, Lt. Gen. Dallaire served in various posts including assistant deputy minister in the Canadian Ministry of Defence. He also spent a great deal of time battling post-traumatic stress disorder and spoke openly about these battles. Following his remarks he answered questions from the audience.

Subject: In Depth with Robert Kaplan - Negative thinking From: johnny5 To: All Date Posted: Sun, Apr 03, 2005 at 14:53:50 (EDT) Email Address: johnny5@yahoo.com Message: http://inside.c-spanarchives.org:8080/cspan/cspan.csp?command=dprogram&record=137771832 He said you have to think tragically to avoid trajedy - steadfast optimism won't cut it. He specifically attributes this attitude to the Iraq War - we thought in worst case scenario of the initial war - so it went well, but we were far too optimistic of the exit strategy and that is why we are stuck.

Subject: On again tonight at midnight From: johnny5 To: johnny5 Date Posted: Sun, Apr 03, 2005 at 15:38:38 (EDT) Email Address: johnny5@yahoo.com Message: He had some interesting things to say about history and what happens with increases in the gap of rich and poor and how that will apply today. Will post more later.

Subject: New Yrok City Real Esate Prices From: Jennifer To: All Date Posted: Sun, Apr 03, 2005 at 13:52:42 (EDT) Email Address: Not Provided Message: That New York City is attracting foreign buyers of real estate is a promising sign that there may be no large decrease in real estate prices from here as opposed to level prices for a period of time. I wonder how real estate prices are holding in London or Paris?

Subject: A.I.G.: Whiter Shade of Enron From: Emma To: All Date Posted: Sun, Apr 03, 2005 at 11:02:09 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/04/03/business/yourmoney/03gret.html A.I.G.: Whiter Shade of Enron By Gretchen Morgenson THE American International Group is no Enron. Of that we can be sure. A.I.G., after all, is a real company with global operations, generating genuine profits from a variety of financial enterprises. As companies go, Enron was all smoke and mirrors; A.I.G. is substance. Moreover, until five minutes ago, A.I.G. was run by Maurice R. Greenberg, a brilliant man who was both visionary and micromanager, a far cry from the know-nothing that Ken Lay, Enron's former chief executive, claims to be, now that his trial looms. There are, however, some disturbing similarities between A.I.G. and Enron: Asleep-at-the-switch auditors. Secretive off-balance-sheet entities that should have been included on the company's financial statements but weren't. A management team willing to try any number of accounting tricks to make the company's results appear better than they actually were. And one more likeness: As A.I.G.'s shares have plummeted, the financial position of one of the company's insurance subsidiaries has taken a big hit. Enron, remember, had ownership stakes in off-the-books entities in which its shares were pledged as collateral. As long as the company's stock remained above a certain level, those pledges were fine. But when the shares started to slide, Enron had to cough up more collateral to shore up those interests. The unwinding was ugly, and the need to shore up the entities hastened the company's demise. Unlike Enron, the situation at A.I.G. is not remotely as dire. But the ownership stake by its subsidiary, the American Life Insurance Company, illustrates the problems that can result when a company has too much of its capital tied to its parent company's stock price. American Life is a life and health insurance subsidiary based in Delaware that has operated since 1921. The company, which writes insurance solely overseas, is A.I.G.'s sixth-largest stockholder. According to state regulatory filings, at the end of 2004 American Life's capital structure included a net position of 61 million A.I.G. shares. That stake was worth $3.9 billion then; American Life's surplus at the end of last year was $4.2 billion. Back then, the A.I.G. shares held by its subsidiary were valued at approximately $63.50 each. But now A.I.G. shares are trading at $50.95, down 19.8 percent. American Life's stockholding in its parent company has declined by $750 million. As a result, so have its capital and surplus. After taxes, assuming a 35 percent rate, American Life's surplus has fallen by about $500 million on a mark-to-market basis. That drop is the equivalent of 12 percent of its surplus. The problem is that regulators could decide that American Life Insurance's capital base needs to be shored up, and they could ask A.I.G. to replenish the money lost in the company's shares in recent days. That is extra pressure that A.I.G. does not need when it is facing credit downgrades, executive turnover and market turmoil. State insurance filings also indicate that American Life holds large equity stakes in private A.I.G. subsidiaries. Among its biggest stakes are those in AIG Financial Assurance Japan, AIG Life Ireland Ltd., Amplico Life, First American-Polish Life Insurance and Reinsurance Company S.A., and Unibanco Seguros S.A. Because these are private companies, American Life does not have to value the stakes at market prices. But if the continuing investigation into A.I.G.'s accounting results in restatements at any of these entities, the equity stakes held in them by American Life could decline. For now, Delaware insurance regulators are monitoring the situation at American Life. Michael L. Vild, the state's deputy insurance commissioner, said: 'Its reserve and other regulatory oversight is done in the countries in which it does business. But we do monitor its financial solvency. If the erosion in the value of A.I.G. stock has an effect on the company's overall solvency, we'll take whatever steps are necessary.' The steps could include requiring an infusion of capital to the subsidiary or requiring it to change its underwriting standards. A spokesman for A.I.G. did not return a phone call seeking comment. At the moment, the A.I.G. stock held by American Life is not included in the parent company's 2.64 billion shares outstanding. Instead, the shares are held in its treasury. Regulators, or for that matter the A.I.G. board, might also rethink the soundness of allowing American Life to tie up so much capital in the parent company's stock. If so, the shares could be liquidated, increasing A.I.G.'s share count by 2 percent. The decline in A.I.G.'s stock could be temporary, of course. A rebound could bring American Life's surplus back to previous levels. But the unfortunate fact remains: The aftershocks from the A.I.G. tremor are not likely to stop anytime soon.

Subject: In Any Language, Manhattan's Hot From: Emma To: All Date Posted: Sun, Apr 03, 2005 at 10:17:53 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/04/03/realestate/03cov.html?pagewanted=all&position= In Any Language, Manhattan's Hot By TERI KARUSH ROGERS The dollar is hyperventilating, mortgage rates are still attractively low and international buyers - drawn by outsized real estate gains as well as the city's burnished image of livability - are barreling straight for Manhattan. But it's not exactly a takeover. Yet. 'I find it slightly exaggerated that everyone's jumping across the ocean with their wallets open,' said Patricia Warburg Cliff, a senior vice president and director of European sales at the Corcoran Group. 'Everybody thinks Manhattan is going to be taken over by them. It isn't really that everybody from Europe is on a direct flight to New York. But yes, there is a lot more of this than a year or two ago. In terms of actual buyers, maybe 10 to 15 percent more.' Remarkably little data exists to quantify the trend. According to HomeBridge Mortgage Bankers in New York, which specializes in mega-jumbo mortgages, about 25 percent more loans are going to international buyers so far this year, with pieds-à-terre gaining ground and straight investments holding steadier. Whatever its exact dimensions, the wave of interest from overseas has cast a decidedly lopsided shadow over the map of Manhattan real estate. It is shaped as much by the practical constraints imposed on a noncitizen (condo not co-op, move-in not fixer-upper) as well as the preconceptions of buyers who may have experienced New York primarily from the berths of their Midtown hotel rooms, in the pages of celebrity publications or through 'Sex and the City' syndications. Foreigners' abridged views of New York play out most noticeably in their choice of neighborhood. Many consider the Upper East and Upper West Sides little more than becalmed back lots too divorced from the city's commerce and entertainment, with the areas' schools and playgrounds of little value to someone in residence only a couple of months a year. Midtown, on the other hand, is hot. 'I really liked the 50's and 60's the best,' said Helen Cannon-Brookes, an Australian empty-nester who, along with her husband, Michael, recently settled - pending approval of the condo board - on a 33rd-floor two-bedroom pied-à-terre at Trump World Tower at 845 United Nations Plaza, in the upper 40's. They found the apartment with the help of Holly S. Hunt, an agent at Halstead Property. The blocks in Midtown East 'had more of a city feel about them,' she said. 'You could go around the corner for a cappuccino. Once you got into the 70's, I found that it's more one residential block after another.' Another fan of Midtown is Daniel Amouyal, 63, a French citizen working with his agent, Charlie Attias of Corcoran, to buy four to six apartments in the Orion, a condominium development under construction at 350 West 42nd Street. The 60-story luxury building in Hell's Kitchen - where apartments range from $435,000 to $490,000 for an alcove studio and start at $1.65 million for a three-bedroom - will share a block with the Port Authority Bus Terminal. Mr. Amouyal plans to combine two or more of the units into a three-bedroom pied-à-terre for himself, his wife, Martine, and three teenagers, and for possible use as off-campus housing if his children attend college here. The other apartments will be rented out as investments. In a recent conversation from his home in Tahiti, Mr. Amouyal, a building contractor, said that along with the cheaper-than-uptown preconstruction price point, he viewed the building's proximity to the bus terminal and Times Square as an asset along with its central Manhattan location. He said he was confident that the building would appreciate at the same rate as other properties around the city. But other overseas buyers are attuned to the nuances of status conveyed by a particular building or neighborhood. For this group, 'the address speaks louder than the space,' said Rowena Villaruel, an agent with Prudential Douglas Elliman Real Estate. Denied entrance into the many co-op buildings lining Central Park West and Fifth Avenue, the status-conscious international buyer is likely to stalk the white-hot 59th Street corridor. With bookends on the west of the Time Warner Center and on the east of One Beacon Court, a perfume-counter sneeze from Bloomingdale's, the area includes Central Park South and teems with full-service condominiums, iconic views of the park and recognizable addresses. 'Central Park South is a city in itself,' said Marcos G. Cohen, a senior vice president at Douglas Elliman. With last year's opening of the shops at Time Warner Center, 'everything you need is there.' Mark Menendes, a 32-year-old investor from Madrid, is buying a part-time residence at Trump International Hotel and Tower, at Columbus Circle. 'I'm buying location, location, location,' he said.

Subject: In Any Language, Manhattan's Hot - 1 From: Emma To: Emma Date Posted: Sun, Apr 03, 2005 at 10:18:43 (EDT) Email Address: Not Provided Message: Mr. Menendes found the one-bedroom, 700-square-foot furnished unit last September with the help of Douglas Russell, a vice president and director at Brown Harris Stevens, paying in the mid-$600,000's for the privilege of living in the apartment up to six months a year. The rest of the time, the abode will be made available as a hotel room. The proceeds, which Mr. Menendes estimates at 5 percent to 6 percent return per year, will accrue toward the apartment's carrying costs. Mr. Menendes added that he expects the dollar to regain its standing against the euro. 'I know that it will end up reversing itself,' he said. 'When it gets to one-one, I'll make 30 percent appreciation.' Some foreign buyers have enthusiastically embraced the marketers' notion that Central Park South is more a state of mind than a street. Garry Burke, an Irish businessman in his late-40's, said he is considering an investment in Windsor Park, formerly known as the Windsor Hotel, at 100 West 58th Street, a block south of Central Park. Preconstruction prices in the building range from $1,500 to $1,800 a square foot, according to Mr. Burke's agent, Max Dobens of Douglas Elliman. Calling the building 'very attractive because of its location between the Essex House and the Plaza,' Mr. Burke added: 'It's on the park, near restaurants, close to the museums. It's got pretty much everything going for it in terms of what's going on around it.' Other international apartment hunters echo his sentiments. For the first time since the residences at Time Warner Center went on the market in the fall of 2001, the number of overseas buyers equaled domestic buyers in 2004, according to Susan M. deFranca, president of Related Residential Sales. The redevelopers of the Plaza Hotel are preparing for a similar wave. 'We have a long list of Europeans, South Americans and Australians who want to get into the Plaza,' said Barbara Evans-Butler, a vice president at the real estate brokerage firm Stribling & Associates, which is marketing the Plaza redevelopment. 'A lot of people, especially 40 and over, want some of that Old World charm but also all the services and amenities.' That may be true for some foreign buyers, but plenty of others - surrounded by Old World charm all their lives - eschew it on the shores of the New World. 'I'm a very contemporary person when it comes to decoration and so on, and I was really depressed in Paris with those old buildings,' said Carola Weisz, 56, an Argentine who seven years ago moved to New York by way of Paris. She and her husband, Claudio, 58, bought a new condominium with the help of Beverly H. Feingold, a vice president at Halstead. Sometimes, the presence or absence of bold-faced names can influence others in their choice of dwelling. 'Overseas, they read the tabloids or the glamour magazines,' said Jacky Teplitzky, an executive vice president at Douglas Elliman whose clients include many South Americans. She said that a wealthy male socialite told her: 'I cannot tell you the areas but I'll tell you the buildings where I want to live. Where Nicole Kidman lives, where Beyoncé just bought an apartment, Penélope Cruz, Ricky Martin.' Ms. Teplitzky said she answered: 'Well, you just mentioned four people who bought in four different areas. Kidman bought in the Meier building in the meatpacking district, Cruz at the Chelsea Mercantile, Beyoncé at Beacon Court, Ricky Martin at Time Warner.' She showed her client each building, Ms. Teplitsky said, and he is now assessing whether the meatpacking district's trendiness may prove ephemeral, especially measured against the established neighborhood encompassing Time Warner Center and One Beacon Court. Besides Midtown and the 59th Street corridor, downtown is said to be the third major magnet for international buyers. Among them are the usual suspects, 20- to 30-something buyers without children who 'want that whole New York story, either a loft or something in the West Village,' said Trina Cooper, an agent at Corcoran, whose youngish clients hail from France, England and Ireland. But increasingly, another demographic is gravitating below 14th Street. 'You expect young people to be interested in downtown,' said Ms. Evans-Butler of Stribling. 'For me it's really quite interesting to see people in their 50's who want to be downtown not so much because of nightlife but because of culture life and because it's the new New York.' She added: 'People who used to wear suits all their lives, they want to come into New York and do all the culture things and have the lifestyle that is more 21st-century downtown. And so you had them buying into things like Richard Meier buildings, completely different from anything you would have in Europe.' Of course, there's good-different, and there's bad-different. For overseas buyers navigating the already treacherous terrain of Manhattan's real estate, certain distinctions fall into the latter category. One of the first and hardest lessons swallowed by international shoppers is that co-ops, which make up around two-thirds of the available housing stock, are effectively off limits. Boards turn a notoriously dour eye on applications bearing the slightest whiff of investment-related intent. They also tend to balk at liquid assets located overseas and will not allow investments to be made in a corporate name, as many foreign buyers prefer to do for financial and privacy reasons. 'The difference between co-ops and condos is the big, big, big issue,' Ms. Feingold of Halstead said. With co-ops out of the picture, condos are seeing a glut of foreigners. 'We just sold the Lumière on West 53rd between Eighth and Ninth,' said Michael Shvo, president of the Shvo Group, which markets and sells luxury condominium developments. 'We probably sold 30 to 35 percent to foreigners. It was 0 to 5 percent a year and a half ago.' The developers he works with are taking notice. 'The main thing we're doing to accommodate them is concierge service,' Mr. Shvo said, explaining that talks are in the works to hire an international concierge service in developments at 20 Pine Street, Bryant Park Tower and another slated for 19th Street and 10th Avenue in Chelsea. A concierge would make restaurant reservations, book airline tickets, stock refrigerators and hire baby sitters, among other services desired by part-time foreign residents. In addition, some of the apartments are being tweaked to convey the feel of a hotel suite. 'We're really trying to give people an experience that even though it's their home, they're away on vacation,' Mr. Shvo said. Some bathrooms will have bidets, he said, and kitchens will feature a more minimalist, European approach, employing discreetly sized appliances and other finishes that 'make it not pop out so much as a kitchen but more as a piece of furniture.' He added that in the Chelsea building, an effort is under way to put studio apartments next door to one-bedrooms, to enable easy combinations and endear the units to international buyers accustomed to reserving adjoining suites in a hotel. Pricey apartments are often paired with pricey common charges, which can be a shock to the equilibrium of the international buyer. Carrying charges in Europe are around $300 a month, said Ms. Cliff of Corcoran. 'Here they're $3,000 a month. If you're only using an apartment three months in a year, that's a big chunk of carrying charges.' Nancy Candib, a vice president at Brown Harris Stevens, said, 'They have to be very wealthy where it doesn't matter and they appreciate the services, or buy a town house, or go to Chelsea and downtown where a lot of the condos don't have doormen and charges can be much less.' Pure investors - those seeking income from tenants - can usually cover the carrying charges with rental income. Others, like Mr. Menendes of Madrid, are turning to the condo-hotel. Overseas buyers also report being surprised by the bad condition of some of the apartments they view. 'You see apartments which are really in terrible, terrible, terrible shape,' said Ms. Weisz, the Argentine who relocated to New York seven years ago. 'A very important issue if you are a newcomer to no matter where is that you find an apartment where you can really move in.' And then there's the cultural quicksand of negotiation. 'In no other place in the world does anybody want to know anything but is the bank going to give you a mortgage and are you willing to pay my price,' said Ms. Feingold of Halstead. 'They're used to negotiating more than we are as a culture,' said Hall F. Willkie, president of Brown Harris Stevens. In a market where low ball equals foul ball, 'they learn very quickly they've got to pay up,' he said. As for bidding wars, while foreigners are said to be more willing to participate than in years past, 'You're talking about second residences, and sometimes people don't want to fight for second residences,' said Mr. Cohen of Douglas Elliman. 'It's a luxury they can afford to wait for.' Or not. 'It's always a new chapter in a foreigner's life to have an apartment here,' he observed. 'Sometimes they come out of divorce. Sometimes they are widows. In some countries in South America, a woman over 45 is done. New York is very receptive, especially to middle age, especially for romance.' He added: 'It's the best place in the world for finding romance and finding a second chance in life.'

Subject: My Big Fat C.E.O. Paycheck From: Emma To: All Date Posted: Sun, Apr 03, 2005 at 09:39:50 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/04/03/business/yourmoney/03pay.html?pagewanted=all&position= My Big Fat C.E.O. Paycheck By CLAUDIA H. DEUTSCH THE spectacle of once-respected corporate titans doing perp walks - Martha Stewart, Bernard J. Ebbers, Richard M. Scrushy, the list seems endless - has pretty well tarnished the title of chief executive. But it has done little, it seems, to scratch the gilt from the corner office. In fact, the boss enjoyed a hefty raise last year. The chief executives at 179 large companies that had filed proxies by last Tuesday - and had not changed leaders since last year - were paid about $9.84 million, on average, up 12 percent from 2003, according to Pearl Meyer & Partners, the compensation consultants. Surely, chief executives must have done something spectacular to justify all that, right? Well, that's not so clear. The link between rising pay and performance remained muddy - at best. Profits and stock prices are up, but at many companies they seem to reflect an improving economy rather than managerial expertise. Regardless, the better numbers set off sizable incentive payouts for bosses. With investors still smarting from the bursting of the tech bubble, the swift rebound in executive pay is touching some nerves. 'The disconnect between pay and performance keeps getting worse,' said Christianna Wood, senior investment officer for global equity at Calpers, the California pension fund. 'Investors were really mad when pay did not come down during the three-year bear market, and we are not happy now, when companies reward executives when the stock goes up $2.' Even when companies reported modest increases in executive pay, it was often because they shifted from stock options, which are listed as compensation as soon as they are doled out, to outright stock grants to be paid - and accounted for - down the road. Of course, corporations have been wrestling for decades with ways to link pay to performance, with little success. In the 1980's, they tried tying cash bonuses to rising sales or earnings, only to find that the payouts encouraged executives to make decisions that yielded short-term results - and, often, longer-term disasters. In the 1990's, companies tried stock options, figuring that they would be the best way to tie the executives' fortunes to those of shareholders. Instead, they prompted some managers to time decisions to pump up the stock just when their options vested. Bonuses and options at Tyco and Enron, for example, did little to prevent widespread accounting frauds at either company. The secret to linking pay to performance remains elusive. Net income at Eli Lilly fell 29 percent and its return to shareholders dropped 17 percent last year, but its chief executive, Sidney Taurel, saw his pay go up 41 percent, to $12.5 million. Similarly, Sanmina-SCI, the electronics contract manufacturer, has lost money in each of the last three years, and its shareholders' total return fell 27 percent last year, but the pay of its chief executive, Jure Sola, jumped to $15 million from $1.2 million in 2003. SOME paychecks remained robust even if at first blush they looked reduced. Net income at Merck fell 15 percent last year, and total shareholder return dropped 28 percent. The summary compensation tables in the proxy show the pay of the chief executive, Raymond V. Gilmartin, dropping 39 percent, to $5.9 million from $9.6 million. But Mr. Gilmartin may find it easy to recoup the perceived loss. He got far fewer options last year, but he is participating in a new long-term performance plan that will give him $2.7 million worth of shares next year if he meets earnings targets - and double that amount if he exceeds them by a set amount. He gets the shares even if the stock price does not rise by a dime. And the payments won't show up until the 2007 proxy. Conversely, Apple Computer had a stellar 2004, yet Steven P. Jobs, its chief executive, was paid exactly $1 for his efforts. Why? Apple paid him in advance - in 2003, it gave him $75 million worth of stock. Shareholders are not giving up on tying pay to performance. But now they seem less focused on how executives are paid and more concerned about exactly what they do to earn it. 'It's easy to manipulate stock price. It's even easier to manipulate earnings,' said Paul Hodgson, a senior research associate at the Corporate Library, an investment research firm specializing in corporate governance. He, like others, is pressing companies to set pay based on measures that are harder to fudge, like return on capital employed.

Subject: Dateline about to DESTROY the SEC From: johnny5 To: Emma Date Posted: Sun, Apr 03, 2005 at 12:14:08 (EDT) Email Address: johnny5@yahoo.com Message: http://www.siliconinvestor.com/readmsg.aspx?msgid=21190775 Author: Kirk Discussion: Stockgate - Naked Shorting Scandal Date: March 29, 2005 7:37 AM Subject: Dateline to Air Stockgate Segment April 10th . Mar 28, 2005 - FINALLY! - Dateline to Air Stockgate Segment April 10th by Mark Faulk http://www.faulkingtruth.com/Articles/Investing101/1022.html After over a year of promises, postponements, and delays, Dateline finally confirmed today that they will air their report on the stock market scandal on Sunday, April 10th, at 7 pm ET. The segment, dealing with the scandal dubbed 'Stockgate', has long been anticipated by advocates pushing for reform in the stock market, and was first confirmed by The Faulking Truth last June. This is an excerpt from that article: 'It's been called the biggest financial scandal in the history of the world, with incurred losses estimated by some experts at well over $1 trillion dollars. It's a scandal that involves over 1,200 offshore hedge funds, over 150 US brokers, and has already bankrupted over 7,000 US companies in the past six years. According to many of the lawsuits filed to date, the crooks include terrorist groups and organized crime syndicates. Sources say that this scandal, which involves an intricate system of selling electronic counterfeit shares of stock in an effort to destroy the market value of small publically traded companies by utilizing a method known as 'naked short selling', will eventually implicate almost every major broker in America, all of the governing bodies that oversee trading, and will extend into Canada and Europe.' Sources at the time told us that the Dateline story contained information that would 'blow the roof off of this scandal', and that Dateline had already filmed over 100 hours of explosive footage, with interviews from class action attorneys John O'Quinn (of the Houston law firm of O’Quinn, Laminack and Pirtle), and Wes Christian (of Christian, Smith, Wukoson and Jewell), who along with the law firm of Heard, Robins, Cloud, Lubel & Greenwood, who are representing clients in dozens of lawsuits filed against the SEC, the DTCC, and several of the country's largest brokerage firms. 'What's Up With The SEC?' Since that time, we have learned that officials from both the SEC and DTCC have been interviewed by Dateline, and numerous other recent developments have (at long last) triggered a frenzy of media coverage over the past few weeks. In addition to that, ads have been taken out in several major newspapers, and the roles of hedge funds, who specialize in shorting stocks, have been brought into question in other fraudulent schemes as well. In fact, in an ad in today's op-ed section of the New York Times (March 28, 2005), in an editorial entitled 'What's Up With The SEC?' the conservative Washington Legal Foundation ( http://www.wlf.org/ ), blasts the SEC for 'sitting on several complaints of misconduct filed by the Washington Legal Foundation, and supported by the U.S. Chamber of Commerce, detailing examples of questionable stock manipulation by short sellers and class action attorneys'. According to WLF Chairman Daniel J. Popeo, in one case, information about a class action lawsuit was leaked to short sellers who, in turn, made a huge profit by shorting the stock before the information was made public. Popeo also claims that 'in other cases, short sellers and trial lawyers dish dirt about a targeted company to financial reporters, analysts, and regulators, and the damaging news sends the stock price plummeting, thereby forcing the company to settle. Short sellers then reap the profit when the stock drops.' 'If I Only Had a Hedge Fund' In a related development today, the New York Times online edition ran an article about the incredible proliferation of hedge funds today entitled 'If I Only Had a Hedge Fund', in which they said that the number of hedge funds created since 1999 has increased by 209%, with 1,406 new hedge funds introduced in 2004 alone. A recent study released by Credit Suisse Boston said that hedge funds now account for half of all stock market activity, and that they now manage a staggering $1 trillion in funds. Why are managers tripping over each other to start new hedge funds? Because instead of the small fixed percentage that they get by managing traditional funds (sometimes as low as 1%), they instead 1% plus 20% of any profit the hedge fund generates, which has made many of the hedge fund managers instant multi-millionaires. In fact, according to a survey in Institutional Investor magazine, the 25 highest paid hedge fund managers earned an average of $250 million in 2003. To read the New York Times article, go to: http://www.nytimes.com/auth/login?URI=http://www.nytimes.com/2005/03/27/business/yourmoney/27hedge.h... With those kinds of profits to be made, it is any wonder that the SEC, the DTCC, brokers, and hedge fund managers have begun to circle the wagons? Every time a share trades hands, every one of them gets a piece of the action. Even legitimate hedge funds, those who don't engage in naked short selling, profit when their corrupt counterparts drive down the price of stocks through illegal naked short selling. And the SEC, NASD, and DTCC take their cut for every share that is bought and sold, whether that share is real or counterfeit. If the SEC needs a smoking gun, they need only to take a close look at Global Links Corp (OTCBB: GLKCE), where one investor recently bought 100% of the issued stock AND another investor bought 15% of the same stock, only to watch hundreds of millions of phantom shares continue to be bought and sold. While the SEC has ignored this curious case, Congress hasn't. Senator Robert Bennett cited the Global Links story (as first reported by Financial Wire) on March 9th when he grilled SEC Chairman William Donaldson about the naked short selling scandal, 'this article just last Friday in a national publication indicates that people are still selling short shares that they don't have and clearly are never gonna acquire.' This stock is merely a microcosm of the larger problem that pervades the stock market system, and serves to illustrate how pervasive the fraud really is. It is vitally important that the Dateline story gets the attention it deserves. We can only hope that their report tells the real story of this scandal, and that Congress and the major media will join us in our mission to, at long last, restore trust and credibility to our stock markets, so that honest investors can once again invest their hard-earned money and have a chance to achieve the American Dream. To contact members of the US Senate Committee on Banking, Housing, and Urban Affairs, go here and click on the members' names: http://banking.senate.gov/index.cfm?FuseAction=Information.Membership To contact members of the Senate Finance Committee, go here and click on the members' names: http://finance.senate.gov/sitepages/committee.htm Sign the petition at http://www.investigatethesec.com

Subject: Who does the SEC protect? From: johnny5 To: johnny5 Date Posted: Sun, Apr 03, 2005 at 12:15:15 (EDT) Email Address: johnny5@yahoo.com Message: http://www.siliconinvestor.com/readmsg.aspx?msgid=21186046&srchtxt=DATELINE STOCKGATE TODAY- SEC Admits to Fraud and Enacts Scheme to Cover-Up – March 30, 2005 - An online newspaper reporting the issues of Securities Fraud David Patch In the April 2005 publication of Euromoney, the Magazine places it focus squarely on the issue of naked shorting. In three separate articles, European authors Helen Avery and Peter Koh attempt to dig into the US Financial Market scandal to uncover what “Stockgate” is truly about. Their efforts only raise greater doubts about the SEC’s objectivity to this issue. Case in point. In June 2004 when the SEC released Regulation SHO they imposed a clause that seemed bizarre. They put a clause in the language that ultimately “grandfathered” all prior open fails from mandatory closeout provisions. If the fails represented illegal trading that was not to be corrected by this reform. Questioned about this clause by the authors, SEC Asst. Director of Market Regulation James Brigagliano had this to say, “We were concerned about generating volatility where there were large pre-existing open positions, and we wanted to start afresh with new regulation, not re-write history” Lets analyze this statement. Since the inception of SHO in January, many stocks have seen huge volatility unseen prior to January 7, 2005 when the first threshold lists were released. Unlike volatility created due to upward buying pressures we have seen volatility swings of 20% or more in “bear raid” like selling tactics. So while upside volatility and short selling profitability has been protected, longs shareholders continue to be abused by the manipulation that has abused them in the past. I guess the SEC underestimated the integrity of the markets. The volatility we see on these stocks, unparallel to the rest of the markets, should certainly be cause for concern. Mr. Brigagliano also references the existence of “large pre-existing open positions”. I gather Mr. Brigagliano, speaking for the SEC, never considered that those large open positions might be impacting the markets in these stocks? How exactly a large open position is created and how it may not be good for the markets appears to be puzzling to the Asst. Director. Ironically, the Securities Act of 1934 states unequivocally that settlement fails are in fact harmful to the markets and investors. I would almost suggest the Division of Market Regulation may benefit from taking a day and reading the Securities Act once again. What also must be considered regarding Regulation SHO is that the SEC allowed six months for the industry to prepare for the compliance to the new rules. Rules by the way that mimicked pre-existing SRO rules in place. So I guess the statement of “start fresh” by Mr. Brigagliano meant with respect to recording failures since the rules themselves are actually old. Logically, if these fails were legitimate in the first place six months would be more than ample time to cover the large open positions in these securities. Any that exists after the six months are problem trades that need immediate attention, as there are no legal grounds for fails to persist for six months. Not even with exemptions. The Congressional agenda of the SEC is to protect all investors. Instead of Investor protection the SEC pardoned the open positions from being closed any time soon. They must have some VERY LARGE open positions to justify such a policy as it goes against every theory of investor protection according to the Securities Act of 1934 (Section 17A). Mr. Brigagliano followed up his justifications by saying 'When you look at some of the complaints from issuers, you have to ask yourself is naked shorting really the problem here? Some of these companies have had serious financial and regulatory issues that may have been the cause for their stock price falling.' Unfortunately this tact of “blame the issuer” only works if there is no large open position on the issuer’s stock. It is an easy out for the SEC to look at a company’s financials and justify a stock valuation because of it. Unfortunately it is not the SEC’s role to review a company’s financials; their role is to make sure the trading on the security has taken place in a legal manner. If there are large open positions, regardless of the financial qualifications of the issuer, the fails must be evaluated for manipulation. Manipulating a financially troubled company is no more legal than manipulating General Electric I don’t think. Maybe I should quiz Mr. Brigagliano on this. I am sure he has a rational justification to pull out of the SEC Q & A handbook. Ultimately the markets are what will dictate stock valuations assuming the markets are traded fairly. Again, case in point. In September of 2004 Mr. Brigagliano directed a response to an inquiry by Senator Paul Sarbanes about possible naked shorting abuses. The Senator was specific in his request to the SEC even providing e-mail evidence by Broker/Dealers and the Canadian Depository discussing their inability to settle the trades of a particular “complaining issuer”. The response from Mr. Brigagliano was simple. The April 2003 Broker/Dealer e-mail acknowledgements of large open positions were to be attributed to a June 2004 corporate action taken by the company. No my dates are not messed up, Mr. Brigagliano tried to blame the fails on a corporate action that happened 14 months after the e-mails were written. The SEC never did officially review the cause for the fails as they continue placing all the blame on the issuer. As for those fails, they were acknowledged to be real by the Wall Street firms themselves. Those were the “Red Flag” e-mails the SEC promised not to ignore in prior Senate Hearings. Apparently Mr. Brigagliano was sleeping in his office during those hearings and missed the Chairman’s promises not to ignore them again. So let’s take Mr. Brigagliano to task even further, as he apparently wants to represent the SEC’s position here. In a December 13, 2004 Bear Stearns Conference Call the General Counsel had this to say about Regulation SHO. “To give you that brief introduction in Reg SHO, the history how we got to where we are today. For the past several years we have been hearing from many different regulators regarding their concerns about the increase in the level of fails that they are seeing. They believe, and they have stated on numerous occasions, that one of the primary causes of the high level of fails was that various participants in the short sale process, prime brokers, executing brokers, clients, were not following already established rules.” By this statement the SEC has not only been aware that the large open positions have existed for years, they acknowledge that these large open positions were conducted under trading practices that were not in sync with established laws. Regulators were so brash as to tell firms they were in violation yet did nothing about it. By protecting these large open positions with Regulation SHO the SEC was in fact protecting the fraudulent actions of the markets. How exactly do the regulators expect credibility over those they regulate if they acknowledge securities fraud yet take no action? Are these the open positions James Brigagliano was defending? Finally, before I let Mr. Brigagliano off the hook we can review a report that came out of a visiting economic scholar at the SEC. The report by visiting University of New Mexico Professor Leslie Boni was referenced as a key document used in the determination of Regulation SHO guidelines. The report by the professor claims that the large open positions are in fact Strategic Fails created by Wall Street for economic purposes. When compliance ran up against margins, margins won and the professor laid it all out for the SEC. The SEC conducts their own study, determines one of the causes for the fails in the system are financially driven to benefit Wall Street Institutions and the SEC elects to protect these fails. Are these the actions of an Agency looking out for the best interests of the investor? Volatility in forcing an Industry correction to be in compliance would be a bad thing Jimmie? Okay, so enough with Mr. Brigagliano and his ill-equipped comments. Let’s step over to another SEC Market Regulation Attorney and see how we can analyze her comments. Again in one of the three Euromoney articles released, the issue as to why the SEC does not publish the fail positions in the reported threshold companies was asked of the SEC. In response, “Susan Petersen, a special counsel in the SEC's division of market regulation, says that it does not make public the exact amount of fails-to-deliver, as it would potentially have negative effects on investors and broker/dealers by revealing trading strategies.” Ms. Petersen clearly appears confused over who it is the agency is supposed to protect. Investors and Broker/Dealers have no rights to trading strategies if they are the ones generating the excessive fails. To generate a fail means you are not trading real shares and thus trading counterfeit stocks. The only possible trading strategy in this case would be to manipulate the stock with excess supply beyond reasonable and legal means. Is that the strategy the SEC is protecting? For the record, market makers are given an exemption to conduct bona fide market making but if they are the ones generating “large open positions” I would beg to differ on this being bona fide market making strategies. These exemptions provided to market makers are intended to be short term and to knock down the stock volatility created due to sudden spikes in liquidity. For their positions to grow to the point of large open positions and extended for large durations of time would mean that temporary volatility is no longer the trading strategy of the investing public. If there is that much buying volume that requires large amounts of naked shorting to diffuse growth, the demand is dictating a new stock valuation level is required and does not require excessive market making corrections. It is clear by the comments of Ms. Petersen that the negative effects of the long investors are not the primary concern of the SEC. The SEC is more concerned about the protection of those market participants that have created this alternate market by trading counterfeit securities to manipulate valuations. Dare I say – Hedge Funds? Who else has enough financial leverage in the markets and political leverage in Washington to trade counterfeit shares in excessive of what exists and is available and never be forced to deliver? To review the actions of the SEC with regards to naked shorting, the SEC has done the equivalent of erasing the past of all research analysts’ conflicts, all past mutual fund late trading activities, and all prior IPO allocations issues. On those acts of fraud the SEC did not grandfather in the past and start fresh as Mr. Brigagliano put it, they fined Wall Street tens of billions of dollars. They did so because it was right even if it was only a fraction of what was lost. In this case the stakes are higher, premiums will be paid and investor losses would be restored. Not at a fraction of the cost but at full value. The SEC is afraid of imposing such penalties upon Wall Street and thus grandfathered in their fraud. The ultimate question at the end of the day is simple. What was the SEC thinking in trying to cover-up the fraud of illegal and abusive naked shorting? They have admitted it exists with every reference made to large open positions. With decades of complaints, an environment of public distrust, and dozens of present state and federal lawsuits pending did the SEC really think the data would never be disclosed? The arrogance exposed by these SEC officials in the Euromoney articles continues to highlight the denial the SEC is in. They really still hold down the belief that Wall Street will monitor and correct itself. Guess again. For a full expose on the illegal practice watch NBC’s DATELINE Sunday April 10, 2005 @ 7:00 EST. Decide for yourself what side of the fence the SEC calls their home. For more on this issue please visit the Host site at www.investigatethesec.com . Copyright 2005

Subject: My Big Fat C.E.O. Paycheck - 1 From: Emma To: Emma Date Posted: Sun, Apr 03, 2005 at 09:40:52 (EDT) Email Address: Not Provided Message: Directors, meanwhile, are spending more time scrutinizing auditor reports and management strategies, looking for just such fudging. And for that, they've been rewarded. Pearl Meyer's data show that average total compensation of directors at 200 large companies probably topped $200,000, up from an average of $176,000 the previous year. 'Directors are meeting more often, so their meeting fees are up,' said Jannice L. Koors, a Pearl Meyer managing director, 'and there's clearly a sense that the liability they face, both personally and professionally, has increased, and thus warrants more pay.' Inflated pay for deflated performance has become ever more rankling to shareholders, many of whom are still scrambling to recoup the losses they suffered after the stock market imploded in 2000. Few begrudge Daniel A. Carp, the chief executive of a newly revitalized Eastman Kodak, his $2,172,988 bonus this year, which brought his total compensation to about $4.4 million. But they are likely to squawk about the rich pay package - $7 million in salary and bonus, 5 million options and nearly $27 million worth of restricted stock - that Blockbuster awarded to John F. Antioco, its chief executive. After all, Blockbuster lost $1.25 billion last year. Pay inflation will not end soon because companies are afraid to lose talent, said Ira Kay, who runs the executive pay practice at the consulting firm Watson Wyatt Worldwide. Still, companies are rethinking the different pieces that make up a pay package. Many, for example, are reigning in common safety nets for chief executives - like contractual promises of huge severance if the company is acquired, or even if the C.E.O. is fired for incompetence. They are also increasingly trying to link pay packages - most specifically, the size of bonuses, or the conditions attached to the vesting of restricted shares - to actual corporate performance, particularly total return to shareholders. 'Finally, companies are focusing on the performance part of the pay-for-performance equation,' Ms. Koors said. Examples are easy to find. When net income at Aramark, a food services company, slid 13 percent, total pay for Joseph Neubauer, its chairman and chief executive, fell 20 percent - and his bonus shrank 47 percent. When net income at Unisys, the computer maker, plunged 85 percent last year, Lawrence A. Weinbach, then its C.E.O., got no bonus and saw his overall pay drop by 17 percent. An even starker example is the arrangement for John R. Alm, who became chief executive of Coca-Cola Enterprises, the soft-drink bottler, in January 2004. His contract stipulates that he will lose all his restricted stock if he is no longer at the company when his shares vest in five years. More significantly, he will forfeit all the shares if the stock price has not climbed 10 percent at vesting time, and he will lose half of them if it has not increased by 20 percent. Still, many shareholders are not satisfied. Reviewing C.E.O.'s pay - and how company boards' compensation committees set it - is at the top of the to-do list for many institutional investors and shareholder activist groups, now that they have succeeded in making companies more forthcoming about revenue, profits and other financial results. 'Whether compensation committees are effectively linking pay to performance is now a major corporate governance concern,' said Martha L. Carter, a senior vice president of Institutional Shareholder Services, which advises big investors. Only one concern - the proliferation of stock options - has abated. A new regulatory requirement to expense options, combined with a sluggish stock market that made many of them valueless in 2000 through 2003, has caused a stampede away from options. Several compensation consultants say they expect that options will soon represent less than 30 percent of total compensation, down from more than 60 percent today. Not all alternatives are being warmly received. Shareholders decry plans that do not use 'hard' measures of performance, such as total return to shareholders. For example, few are applauding Microsoft's two-year-old decision to grant restricted stock on the basis of customer satisfaction and market share, or Disney's plan to tie compensation to performance against the Standard & Poor's 500 index. Shareholders do want companies to adopt 'claw back' provisions that force executives to repay bonuses paid for results that later must be restated, a situation that has kept Qwest, for one, in the news this year. They are also resisting rich change-of-control clauses that provide windfalls to any C.E.O. whose company is acquired, even if that chief gets a high-ranking job at the new company. The $95 million or so that James M. Kilts will probably receive as a result of selling Gillette to Procter & Gamble is raising ire even among those who laud his performance as Gillette's leader. They also decry 'pay for failure' contracts that heap riches on dismissed chiefs. Carlton S. Fiorina, for instance, left Hewlett-Packard with a severance package that included $14 million in pay, a $7.38 million bonus and $21.1 million in additional compensation from restricted stock holdings and pension payments.

Subject: Gordon Gecko on compensation From: johnny5 To: Emma Date Posted: Sun, Apr 03, 2005 at 12:28:46 (EDT) Email Address: johnny5@yahoo.com Message: 'Directors, meanwhile, are spending more time scrutinizing auditor reports and management strategies, looking for just such fudging. And for that, they've been rewarded. Pearl Meyer's data show that average total compensation of directors at 200 large companies probably topped $200,000, up from an average of $176,000 the previous year.' ....Well, ladies and gentlemen, we're not here to indulge in fantasy, but in political and economic reality. America -- America has become a second-rate power. Its trade deficit and its fiscal deficit are at nightmare proportions. .... Gekko: Teldar Paper, Mr. Cromwell, Teldar Paper has 33 different vice presidents, each earning over 200 thousand dollars a year. Now, I have spent the last two months analyzing what all these guys do, and I still can't figure it out. One thing I do know is that our paper company lost 110 million dollars last year, and I'll bet that half of that was spent in all the paperwork going back and forth between all these vice presidents.

Subject: Connections From: johnny5 To: johnny5 Date Posted: Sun, Apr 03, 2005 at 12:31:25 (EDT) Email Address: johnny5@yahoo.com Message: Oliver Stone a prophet? http://www.americanrhetoric.com/MovieSpeeches/moviespeechwallstreet.html

Subject: My Big Fat C.E.O. Paycheck - 2 From: Emma To: Emma Date Posted: Sun, Apr 03, 2005 at 09:41:12 (EDT) Email Address: Not Provided Message: Shareholders complain about how difficult it is for outsiders to glean such things as the tax implications of deferring executive compensation or the worth of supplemental retirement plans and other forms of 'stealth compensation' that do not readily leap off the proxy. 'The way the proxies are now, you can't really figure out how anyone, even Carly, got paid,' Ms. Wood of Calpers said, referring to Ms. Fiorina. Ms. Carter of Institutional Shareholder Services concurred. 'Companies have simply got to do a better job of disclosing total pay packages, and how they play out in different scenarios, such as the C.E.O. being fired or the company being acquired,' she said. In January, for the first time, institutional shareholders, led by Calpers, invited top compensation consultants to a meeting in New York to discuss their concerns - and to persuade the consultants that they were part of the problem. A TOP complaint was that the consultants feed data to compensation committees piecemeal, reporting what other companies are offering in supplementary pensions one day, the trend on bonuses a few days later, the value of stock options a week after that. The directors, in turn, set the different components of their own chief executive's pay package in equally disjointed fashion. Consultants acknowledge the problem, and larger firms have begun to add up total compensation, both for peer-group companies and for the client's proposed pay package. 'They used to only ask us for information about direct pay, because they got data about benefits and perks from others,' said Pearl Meyer, chairwoman of Pearl Meyer & Partners. 'But compensation committees are now taking a more holistic approach to executive pay, so we are now giving them all of the information.' Governance experts say the full board increasingly wants a better handle on compensation committee deliberations. Many directors fear that they will all be held accountable for egregious pay packages. 'The Dick Grasso situation has made a lot of directors more cognizant of the need to get the total picture, see how all the pieces - the base salary, restricted stock, options, perks, retirement benefits - add up,' said Eleanor Bloxham, president of the Corporate Governance Alliance, a consulting firm in Westerville, Ohio. She was referring, of course, to the brouhaha that arose when directors at the New York Stock Exchange said they were ignorant of the full extent of the pay package they had approved for the exchange's former chairman, Richard A. Grasso. Several companies are voluntarily disclosing much more pay information to their shareholders. These companies have replaced what Ms. Koors called 'the standard proxy boilerplate' - a statement that pay was set competitively - with fuller descriptions of how boards derived the packages they awarded. The proxy for Becton Dickinson, for example, included a summary table that laid out the value of total compensation. Honeywell's proxy listed the value of perks like legal fees and personal use of corporate planes and cars. Siebel Systems has promised investors that next year it will begin disclosing the operational and stock-price hurdles that management must scale for restricted shares to vest. 'The companies know that new disclosure rules are coming, so they want an 'attaboy' from shareholders for being ahead of the curve and doing it voluntarily,' Ms. Koors said. Slowly but steadily, companies are responding to shareholders' clamor for pay packages to reward long-term thinking, too. This year's proxies show that companies increasingly insist that executives and directors hold about five times their pay in stock, thus making it harder for them to cash in on any short-term lift in the company's fortunes. Cardinal Health, for the first time, is requiring its chief executive to hold shares equal in value to five times his salary, and its directors to hold the equivalent in shares of four times their annual retainer. Cendant this year increased its ownership rule for its chief executive to six times salary, from five. 'Companies are basically saying to their chiefs, 'We want to keep you on the hook, to make sure that you are not benefiting from a short-term gain that is not sustainable,' ' Ms. Koors said. EXECUTIVES who do not lead the company down a profitable path may find it harder to develop other ways to cash in. Thomas J. Neff, the chairman of American operations at the executive recruiting firm Spencer Stuart, says he has seen a move away from grants of restricted shares that automatically vest after three or five years. In their place, companies are giving shares that vest only if the company hits preset goals for book value, total return or other measures the board deems crucial to success. Mr. Neff says that fewer companies are agreeing to automatically vest all options or restricted shares if the chief leaves and that many now offer one or two years of compensation, maximum, upon departure, a sharp drop from the three to five years of pay that used to be routine. 'Boards are no longer routinely letting the C.E.O.'s lawyer draft the contract,' he said. Several companies have clearly learned from past mistakes. The contract of L. Dennis Kozlowski at Tyco International called for an immediate payout of about $135 million if he was dismissed, and a retainer of $3.4 million annually for the rest of his life. His voluntary resignation released Tyco from the terms of the agreement, but directors clearly are cognizant of how expensive fulfilling the contract terms could have been. Tyco's new severance policy limits compensation to twice the executive's base salary and bonuses at the time of termination. In a merger or change-of-control situation, departing executives would receive up to 2.99 times their base salary and bonus. And Tyco now awards stock options that are priced higher than the share price on the day of issue. Directors are less likely to clamp down on the pay of newly recruited bosses. Consider the package for C. John Wilder in his first year as the TXU Corporation's chief executive: $1 million in salary, a $16 million bonus and $37 million in long-term incentives. Newcomers have boards at a negotiating disadvantage, compensation experts say. Because they took a gamble by switching jobs, most successfully insist on either a hefty sign-on bonus in cash and stock, or a soft landing - that is, rich severance - in case they fail. Both eventualities get shareholders' dander up, but experts say the boards have little choice. 'You need to supercharge the offer,' Mr. Neff said, 'to create an incentive for a person to come in.'

Subject: Do Taxes Thwart Growth? Prove It From: Emma To: All Date Posted: Sun, Apr 03, 2005 at 09:32:05 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/04/03/business/yourmoney/03view.html Do Taxes Thwart Growth? Prove It By ANNA BERNASEK TAX reform, like a second marriage, is the triumph of hope over experience. The United States has just gone through the most sweeping tax cuts since the 1980's, but hardly anybody is satisfied. President Bush contends that we need still-lower taxes in order to prosper. Alan Greenspan, the Federal Reserve chairman, is suggesting a radical shift to a consumption tax. And the Republican Party has taken aim at the entire tax system. At the heart of such antitax sentiment is this belief: Taxes are bad for the economy. And who would disagree, especially as April 15 nears? There's just one problem, though. Despite the widespread notion that taxes harm the economy, no one has actually been able to back that up. It's not that taxes have no effect; they are a major part of the American economic system and affect planning and behavior in many ways. Taxes influence who wins and who loses in a competitive society. But over all, there is surprisingly little evidence that tax rates are an important factor in determining the nation's economic prosperity. In theory, the issue seems simple enough. According to basic economic principles, a tax can have a negative effect on behavior by reducing the incentive to do whatever is taxed. Impose a tax on wages, and people may decide to work less. That's the theory, anyway. In practice, how many Americans will work less if their taxes rise? With mortgage bills, college tuition and car payments looming, who can afford to work less? Relatively few have the option of cutting back without risking the loss of their jobs. So just because taxes can discourage productive behavior doesn't mean that they do. Too many other factors are involved - like social pressures, financial needs and a job market that isn't entirely flexible. And then there's the evidence. Over the last 30 years, economists have undertaken hundreds of studies to determine whether taxes hurt the economy. So far, they've turned up little to convict taxes of the charge. After reviewing the literature on the topic in 1993, two economists, William Easterly of New York University and Sergio Rebelo of Northwestern, concluded in a joint paper that 'the evidence that tax rates matter for growth is disturbingly fragile.' A leading tax specialist today, Joel B. Slemrod of the University of Michigan, would agree. He notes that in the 20th century, a rising tax burden in the United States and other developed countries went hand in hand with rising prosperity. In the book 'Taxing Ourselves: A Citizen's Guide to the Debate Over Taxes,' Professor Slemrod and Jon Bakija examine the relationship between the marginal income tax rate - the rate imposed on additional income in a progressive tax system - and productivity. After all, if you reduce the rate of taxation on income, people should work harder. But the opposite turned out to be true. Looking at the data from 1950 to 2002, the authors found that periods of strong productivity growth actually occurred when the top tax rates were the highest. And they showed that, on average, high-tax countries are the most affluent countries. That is not to suggest that high tax rates lead to growth. No economist will make that case, although many will say that some things financed by taxes, like education, research, health and infrastructure projects, can contribute to growth. But it does call into question why, if taxes are so bad for growth, their effect doesn't show up more prominently. Researchers have tried different approaches to answer this question. Instead of taking a macro view, they have examined the impact of individual taxes on the labor supply, saving and investment. But even in isolated cases, the evidence that taxes discourage growth can be thin. One important area of economic activity that does seem fairly responsive to tax rates is business investment. Some of that responsiveness may have more to do with changes in the timing of decisions than in shifts in the level of investment over the long haul. Consider the recent accelerated depreciation allowance. Economists noted a short-term uptick in spending in affected categories, but companies will ultimately need to see an increase in customer demand to continue investing. In the case of individual savings and work, economists are closer to a consensus. After study of the tax cuts of the Reagan years, most economists agree that taxes don't play a big part in how hard Americans work. While the study of savings is less precise, large effects from tax incentives haven't been measured. That's worth recalling when considering proposals like a flat tax or a consumption tax. With so much energy focused on minimizing rates, it's important to keep in mind that taxes are not antithetical to prosperity. None of this should suggest that change is unnecessary. Current tax laws have real problems, including unreasonable complexity. But reform based on a notion that taxes are bad for the economy is just that: a notion not backed by strong evidence. And the costs of ignoring experience in favor of hope can be high: mounting deficits, decaying infrastructure, inadequate investment in public education and research. So the next time that some proponent of tax reform promises king-size economic benefits, there's reason to be skeptical. Like a second marriage, a new tax system can't work miracles.

Subject: Cato Institute Vehemetly Disagrees From: johnny5 To: Emma Date Posted: Sun, Apr 03, 2005 at 11:59:27 (EDT) Email Address: johnny5@yahoo.com Message: I side with CATO - after reading another post of yours Emma how africans would welcome white racist rule rather than starve to death - read this: http://64.233.161.104/search?q=cache:iGOkW6IxQdQJ:www.cato.org/pubs/journal/cjv14n2-7.html cato fall of rome&hl=en HOW EXCESSIVE GOVERNMENT KILLED ANCIENT ROME Bruce Bartlett Beginning with the third century B.C. Roman economic policy started to contrast more and more sharply with that in the Hellenistic world, especially Egypt. In Greece and Egypt economic policy had gradually become highly regimented, depriving individuals of the freedom to pursue personal profit in production or trade, crushing them under a heavy burden of oppressive taxation, and forcing workers into vast collectives where they were little better than bees in a great hive. The later Hellenistic period was also one of almost constant warfare, which, together with rampant piracy, closed the seas to trade. The result, predictably, was stagnation. Stagnation bred weakness in the states of the Mediterranean, which partially explains the ease with which Rome was able to steadily expand its reach beginning in the 3rd century B.C. By the first century B.C., Rome was the undisputed master of the Mediterranean. However, peace did not follow Rome's victory, for civil wars sapped its strength. Free-Market Policies under Augustus Following the murder of Caesar in 44 B.C., his adopted son Octavian finally brought an end to internal strife with his defeat of Mark Antony in the battle of Actium in 31 B.C. Octavian's victory was due in no small part to his championing of Roman economic freedom against the Oriental despotism of Egypt represented by Antony, who had fled to Egypt and married Cleopatra in 36 B.C. As Oertel (1934: 386) put it, 'The victory of Augustus and of the West meant . . . a repulse of the tendencies towards State capitalism and State socialism which might have come to fruition . . . had Antony and Cleopatra been victorious.' The long years of war, however, had taken a heavy toll on the Roman economy. Steep taxes and requisitions of supplies by the army, as well as rampant inflation and the closing of trade routes, severely depressed economic growth. Above all, businessmen and traders craved peace and stability in order to rebuild their wealth. Increasingly, they came to believe that peace and stability could only be maintained if political power were centralized in one man. This man was Octavian, who took the name Augustus and became the first emperor of Rome in 27 B.C., serving until 14 A.D. Although the establishment of the Roman principate represented a diminution of political freedom, it led to an expansion of economic freedom. [1] Augustus clearly favored private enterprise, private property, and free trade (Oertel 1934: 386; Walbank 1969: 23). The burden of taxation was significantly lifted by the abolition of tax farming and the regularization of taxation (Rostovtzeff 1957: 48). Peace brought a revival of trade and commerce, further encouraged by Roman investments in good roads and harbors. Except for modest customs duties (estimated at 5 percent), free trade ruled throughout the Empire. It was, in Michael Rostovtzeff's words, a period of 'almost complete freedom for trade and of splendid opportunities for private initiative' (Rostovtzeff 1957: 54). Tiberius, Rome's second emperor (14-37 A.D.), extended the policies of Augustus well into the first century A.D. It was his strong desire to encourage growth and establish a solid middle class (bourgeoisie), which he saw as the backbone of the Empire. Oertel (1939: 232) describes the situation: The first century of our era witnessed a definitely high level of economic prosperity, made possible by exceptionally favorable conditions. Within the framework of the Empire, embracing vast territories in which peace was established and communications were secure, it was possible for a bourgeoisie to come into being whose chief interests were economic, which maintained a form of economy resting on the old city culture and characterized by individualism and private enterprise, and which reaped all the benefits inherent in such a system. The State deliberately encouraged this activity of the bourgeoisie, both directly through government protection and its liberal economic policy, which guaranteed freedom of action and an organic growth on the lines of 'laissez faire, laissez aller,' and directly through measures encouraging economic activity. Of course, economic freedom was not universal. Egypt, which was the personal property of the Roman emperor, largely retained its socialist economic system (Rostovtzeff 1929, Milne 1927). However, even here some liberalization did occur. Banking was deregulated, leading to the creation of many private banks (Westermann 1930: 52). Some land was privatized and the state monopolies were weakened, thus giving encouragement to private enterprise even though the economy remained largely nationalized. [2] Food Subsidies The reason why Egypt retained its special economic system and was not allowed to share in the general economic freedom of the Roman Empire is that it was the main source of Rome's grain supply. Maintenance of this supply was critical to Rome's survival, especially due to the policy of distributing free grain (later bread) to all Rome's citizens which began in 58 B.C. By the time of Augustus, this dole was providing free food for some 200,000 Romans. The emperor paid the cost of this dole out of his own pocket, as well as the cost of games for entertainment, principally from his personal holdings in Egypt. The preservation of uninterrupted grain flows from Egypt to Rome was, therefore, a major task for all Roman emperors and an important base of their power (Rostovtzeff 1957: 145). The free grain policy evolved gradually over a long period of time and went through periodic adjustment. [3] The genesis of this practice dates from Gaius Gracchus, who in 123 B.C. established the policy that all citizens of Rome were entitled to buy a monthly ration of corn at a fixed price. The purpose was not so much to provide a subsidy as to smooth out the seasonal fluctuations in the price of corn by allowing people to pay the same price throughout the year. Under the dictatorship of Sulla, the grain distributions were ended in approximately 90 B.C. By 73 B.C., however, the state was once again providing corn to the citizens of Rome at the same price. In 58 B.C., Clodius abolished the charge and began distributing the grain for free. The result was a sharp increase in the influx of rural poor into Rome, as well as the freeing of many slaves so that they too would qualify for the dole. By the time of Julius Caesar, some 320,000 people were receiving free grain, a number Caesar cut down to about 150,000, probably by being more careful about checking proof of citizenship rather than by restricting traditional eligibility. [4] Under Augustus, the number of people eligible for free grain increased again to 320,000. In 5 B.C., however, Augustus began restricting the distribution. Eventually the number of people receiving grain stabilized at about 200,000. Apparently, this was an absolute limit and corn distribution was henceforth limited to those with a ticket entitling them to grain. Although subsequent emperors would occasionally extend eligibility for grain to particular groups, such as Nero's inclusion of the Praetorian guard in 65 A.D., the overall number of people receiving grain remained basically fixed. The distribution of free grain in Rome remained in effect until the end of the Empire, although baked bread replaced corn in the 3rd century. Under Septimius Severus (193-211 A.D.) free oil was also distributed. Subsequent emperors added, on occasion, free pork and wine. Eventually, other cities of the Empire also began providing similar benefits, including Constantinople, Alexandria, and Antioch (Jones 1986: 696-97). Nevertheless, despite the free grain policy, the vast bulk of Rome's grain supply was distributed through the free market. There are two main reasons for this. First, the allotment of free grain was insufficient to live on. Second, grain was available only to adult male Roman citizens, thus excluding the large number of women, children, slaves, foreigners, and other non-citizens living in Rome. Government officials were also excluded from the dole for the most part. Consequently, there remained a large private market for grain which was supplied by independent traders (Casson 1980). Taxation in the Republic and Early Empire The expansion of the dole is an important reason for the rise of Roman taxes. In the earliest days of the Republic Rome's taxes were quite modest, consisting mainly of a wealth tax on all forms of property, including land, houses, slaves, animals, money and personal effects. The basic rate was just .01 percent, although occasionally rising to .03 percent. It was assessed principally to pay the army during war. In fact, afterwards the tax was often rebated (Jones 1974: 161). It was levied directly on individuals, who were counted at periodic censuses. As Rome expanded after the unification of Italy in 272 B.C., so did Roman taxes. In the provinces, however, the main form of tax was a tithe levied on communities, rather than directly on individuals. [5] This was partly because censuses were seldom conducted, thus making direct taxation impossible, and also because it was easier to administer. Local communities would decide for themselves how to divide up the tax burden among their citizens (Goffart 1974: 11). Tax farmers were often utilized to collect provincial taxes. They would pay in advance for the right to collect taxes in particular areas. Every few years these rights were put out to bid, thus capturing for the Roman treasury any increase in taxable capacity. In effect, tax farmers were loaning money to the state in advance of tax collections. They also had the responsibility of converting provincial taxes, which were often collected in-kind, into hard cash. [6] Thus the collections by tax farmers had to provide sufficient revenues to repay their advance to the state plus enough to cover the opportunity cost of the funds (i.e., interest), the transactions cost of converting collections into cash, and a profit as well. In fact, tax farming was quite profitable and was a major investment vehicle for wealthy citizens of Rome (Levi 1988: 71-94). Augustus ended tax farming, however, due to complaints from the provinces. Interestingly, their protests not only had to do with excessive assessments by the tax farmers, as one would expect, but were also due to the fact that the provinces were becoming deeply indebted. A.H.M. Jones (1968: 11) describes the problems with tax farmers: Oppression and extortion began very early in the provinces and reached fantastic proportions in the later republic. Most governors were primarily interested in acquiring military glory and in making money during their year in office, and the companies which farmed the taxes expected to make ample profits. There was usually collusion between the governor and the tax contractors and the senate was too far away to exercise any effective control over either. The other great abuse of the provinces was extensive moneylending at exorbitant rates of interest to the provincial communities, which could not raise enough ready cash to satisfy both the exorbitant demands of the tax contractors and the blackmail levied by the governors. As a result of such abuses, tax farming was replaced by direct taxation early in the Empire (Hammond 1946: 85). The provinces now paid a wealth tax of about 1 percent and a flat poll or head tax on each adult. This obviously required regular censuses in order to count the taxable population and assess taxable property. It also led to a major shift in the basis of taxation (Jones 1974: 164-66). Under the tax farmers, taxation was largely based on current income. Consequently, the yield varied according to economic and climactic conditions. Since tax farmers had only a limited time to collect the revenue to which they were entitled, they obviously had to concentrate on collecting such revenue where it was most easily available. Because assets such as land were difficult to convert into cash, this meant that income necessarily was the basic base of taxation. And since tax farmers were essentially bidding against a community's income potential, this meant that a large portion of any increase in income accrued to the tax farmers. By contrast, the Augustinian system was far less progressive. The shift to flat assessments based on wealth and population both regularized the yield of the tax system and greatly reduced its 'progressivity.' This is because any growth in taxable capacity led to higher taxes under the tax farming system, while under the Augustinian system communities were only liable for a fixed payment. Thus any increase in income accrued entirely to the people and did not have to be shared with Rome. Individuals knew in advance the exact amount of their tax bill and that any income over and above that amount was entirely theirs. This was obviously a great incentive to produce, since the marginal tax rate above the tax assessment was zero. In economic terms, one can say that there was virtually no excess burden (Musgrave 1959: 140-59). Of course, to the extent that higher incomes increased wealth, some of this gain would be captured through reassessments. But in the short run, the tax system was very pro-growth. The Rise and Fall of Economic Growth Rome's pro-growth policies, including the creation of a large common market encompassing the entire Mediterranean, a stable currency, and moderate taxes, had a positive impact on trade. Keith Hopkins finds empirical support for this proposition by noting the sharp increase in the number of known shipwrecks dating from the late Republic and early Empire as compared to earlier periods (Hopkins 1980: 105-06). The increase in trade led to an increase in shipping, thus increasing the likelihood that any surviving wrecks would date from this period. Rostovtzeff (1957: 172) indicates that 'commerce, and especially foreign and inter-provincial maritime commerce, provided the main sources of wealth in the Roman Empire.' Hopkins (1980: 106-12) also notes that there was a sharp increase in the Roman money supply which accompanied the expansion of trade. He further notes that this expansion of the money supply did not lead to higher prices. Interest rates also fell to the lowest levels in Roman history in the early part of Augustus's reign (Homer 1977: 53). This strongly suggests that the supply of goods and services grew roughly in line with the increase in the money supply. There was probably also an increase in the demand for cash balances to pay taxes and rents, which would further explain why the increased money supply was non-inflationary. During the early Empire revenues were so abundant that the state was able to undertake a massive public works program. Augustus repaired all the roads of Italy and Rome, restored the temples and built many new ones, and built many aqueducts, baths and other public buildings. Tiberius, however, cut back on the building program and hoarded large sums of cash. This led to a financial crisis in 33 A.D. in which there was a severe shortage of money. This shortage may have been triggered by a usury law which had not been applied for some years but was again enforced by the courts at this time (Frank 1935). The shortage of money and the curtailment of state expenditures led to a sharp downturn in economic activity which was only relieved when the state made large loans at zero interest in order to provide liquidity (Thornton and Thornton 1990). [7] Under Claudius (41-54 A.D.) the Roman Empire added its last major territory with the conquest of Britain. Not long thereafter, under Trajan (98-117 A.D.), the Empire achieved its greatest geographic expansion. Consequently, the state would no longer receive additional revenue from provincial tribute and any increase in revenues would now have to come from within the Empire itself. Although Rostovtzeff (1957: 91) credits the Julio-Claudian emperors with maintaining the Augustinian policy of laissez faire, the demand for revenue was already beginning to undermine the strength of the Roman economy. An example of this from the time of Caligula (37-41 A.D.) is recorded by Philo (20 B.C-50 A.D.): Not long ago a certain man who had been appointed a collector of taxes in our country, when some of those who appeared to owe such tribute fled out of poverty, from a fear of intolerable punishment if they remained without paying, carried off their wives, and their children, and their parents, and their whole families by force, beating and insulting them, and heaping every kind of contumely and ill treatment upon them, to make them either give information as to where the fugitives had concealed themselves, or pay the money instead of them, though they could not do either the one thing or the other; in the first place, because they did not know where they were, and secondly, because they were in still greater poverty than the men who had fled [Yonge 1993: 610]. Inflation and Taxation As early as the rule of Nero (54-68 A.D.) there is evidence that the demand for revenue led to debasement of the coinage. Revenue was needed to pay the increasing costs of defense and a growing bureaucracy. However, rather than raise taxes, Nero and subsequent emperors preferred to debase the currency by reducing the precious metal content of coins. This was, of course, a form of taxation; in this case, a tax on cash balances (Bailey 1956). Throughout most of the Empire, the basic units of Roman coinage were the gold aureus, the silver denarius, and the copper or bronze sesterce. [8] The aureus was minted at 40-42 to the pound, the denarius at 84 to the pound, and a sesterce was equivalent to one-quarter of a denarius. Twenty-five denarii equaled one aureus and the denarius was considered the basic coin and unit of account. The aureus did not circulate widely. Consequently, debasement was mainly limited to the denarius. Nero reduced the silver content of the denarius to 90 percent and slightly reduced the size of the aureus in order to maintain the 25 to 1 ratio. Trajan (98-117 A.D.) reduced the silver content to 85 percent, but was able to maintain the ratio because of a large influx of gold. In fact, some historians suggest that he deliberately devalued the denarius precisely in order to maintain the historic ratio. Debasement continued under the reign of Marcus Aurelius (161-180 A.D.), who reduced the silver content of the denarius to 75 percent, further reduced by Septimius Severus to 50 percent. By the middle of the third century A.D., the denarius had a silver content of just 5 percent. Interestingly, the continual debasements did not improve the Empire's fiscal position. This is because of Gresham's Law ('bad money drives out good'). People would hoard older, high silver content coins and pay their taxes in those with the least silver. Thus the government's 'real' revenues may have actually fallen. As Aurelio Bernardi explains: At the beginning the debasement proved undoubtedly profitable for the state. Nevertheless, in the course of years, this expedient was abused and the [fn2]century of inflation which had been thus brought about was greatly to the disadvantage of the State's finances. Prices were rising too rapidly and it became impossible to count on an immediate proportional increase in the fiscal revenue, because of the rigidity of the apparatus of tax collection. [9] At first, the government could raise additional revenue from the sale of state property. Later, more unscrupulous emperors like Domitian (81-96 A.D.) would use trumped-up charges to confiscate the assets of the wealthy. They would also invent excuses to demand tribute from the provinces and the wealthy. Such tribute, called the aurum corinarium, was nominally voluntary and paid in gold to commemorate special occasions, such as the accession of a new emperor or a great military victory. Caracalla (198-217 A.D.) often reported such dubious 'victories' as a way of raising revenue. Rostovtzeff (1957: 417) calls these levies 'pure robbery.' Although taxes on ordinary Romans were not raised, citizenship was greatly expanded in order to bring more people into the tax net. Taxes on the wealthy, however, were sharply increased, especially those on inheritances and manumissions (freeing of slaves). Occasionally, the tax burden would be moderated by a cancellation of back taxes or other measures. One such occasion occurred under the brief reign of Pertinax (193 A.D.), who replaced the rapacious Commodus (A.D. 176-192). As Edward Gibbon (1932: 88) tells us: Though every measure of injustice and extortion had been adopted, which could collect the property of the subject into the coffers of the prince; the rapaciousness of Commodus had been so very inadequate to his extravagance, that, upon his death, no more than eight thousand pounds were found in the exhausted treasury, to defray the current expenses of government, and to discharge the pressing demand of a liberal donative, which the new emperor had been obliged to promise to the Praetorian guards. Yet under these distressed circumstances, Pertinax had the generous firmness to remit all the oppressive taxes invented by Commodus, and to cancel all the unjust claims of the treasury; declaring in a decree to the senate, 'that he was better satisfied to administer a poor republic with innocence, than to acquire riches by the ways of tyranny and dishonor.' State Socialism Unfortunately, Pertinax was an exception. Most emperors continued the policies of debasement and increasingly heavy taxes, levied mainly on the wealthy. The war against wealth was not simply due to purely fiscal requirements, but was also part of a conscious policy of exterminating the Senatorial class, which had ruled Rome since ancient times, in order to eliminate any potential rivals to the emperor. Increasingly, emperors came to believe that the army was the sole source of power and they concentrated their efforts on sustaining the army at all cost. As the private wealth of the Empire was gradually confiscated or taxed away, driven away or hidden, economic growth slowed to a virtual standstill. Moreover, once the wealthy were no longer able to pay the state's bills, the burden inexorably fell onto the lower classes, so that average people suffered as well from the deteriorating economic conditions. In Rostovtzeff's words, 'The heavier the pressure of the state on the upper classes, the more intolerable became the condition of the lower' (Rostovtzeff 1957: 430). At this point, in the third century A.D., the money economy completely broke down. Yet the military demands of the state remained high. Rome's borders were under continual pressure from Germanic tribes in the North and from the Persians in the East. Moreover, it was now explicitly understood by everyone that the emperor's power and position depended entirely on the support of the army. Thus, the army's needs required satisfaction above all else, regardless of the consequences to the private economy. With the collapse of the money economy, the normal system of taxation also broke down. This forced the state to directly appropriate whatever resources it needed wherever they could be found. Food and cattle, for example, were requisitioned directly from farmers. Other producers were similarly liable for whatever the army might need. The result, of course, was chaos, dubbed 'permanent terrorism' by Rostovtzeff (1957: 449). Eventually, the state was forced to compel individuals to continue working and producing. The result was a system in which individuals were forced to work at their given place of employment and remain in the same occupation, with little freedom to move or change jobs. Farmers were tied to the land, as were their children, and similar demands were made on all other workers, producers, and artisans as well. Even soldiers were required to remain soldiers for life, and their sons compelled to follow them. The remaining members of the upper classes were pressed into providing municipal services, such as tax collection, without pay. And should tax collections fall short of the state's demands, they were required to make up the difference themselves. This led to further efforts to hide whatever wealth remained in the Empire, especially among those who still found ways of becoming rich. Ordinarily, they would have celebrated their new-found wealth; now they made every effort to appear as poor as everyone else, lest they become responsible for providing municipal services out of their own pocket. The steady encroachment of the state into the intimate workings of the economy also eroded growth. The result was increasing feudalization of the economy and a total breakdown of the division of labor. People fled to the countryside and took up subsistence farming or attached themselves to the estates of the wealthy, which operated as much as possible as closed systems, providing for all their own needs and not engaging in trade at all. Meanwhile, much land was abandoned and remained fallow or fell into the hands of the state, whose mismanagement generally led to a decline in production. Emperor Diocletian's Reforms By the end of the third century, Rome had clearly reached a crisis. The state could no longer obtain sufficient resources even through compulsion and was forced to rely ever more heavily on debasement of the currency to raise revenue. By the reign of Claudius II Gothicus (268-270 A.D.) the silver content of the denarius was down to just .02 percent (Michell 1947: 2). As a consequence, prices skyrocketed. A measure of Egyptian wheat, for example, which sold for seven to eight drachmaes in the second century now cost 120,000 drachmaes. This suggests an inflation of 15,000 percent during the third century (Rostovtzeff 1957: 471). Finally, the very survival of the state was at stake. At this point, the Emperor Diocletian (284-305 A.D.) took action. He attempted to stop the inflation with a far-reaching system of price controls on all services and commodities. [10] These controls were justified by Diocletian's belief that the inflation was due mainly to speculation and hoarding, rather than debasement of the currency. As he stated in the preamble to his edict of 301 A.D.: For who is so hard and so devoid of human feeling that he cannot, or rather has not perceived, that in the commerce carried on in the markets or involved in the daily life of cities immoderate prices are so widespread that the unbridled passion for gain is lessened neither by abundant supplies nor by fruitful years; so that without a doubt men who are busied in these affairs constantly plan to control the very winds and weather from the movements of the stars, and, evil that they are, they cannot endure the watering of the fertile fields by the rains from above which bring the hope of future harvests, since they reckon it their own loss if abundance comes through the moderation of the weather [Jones 1970: 310]. Despite the fact that the death penalty applied to violations of the price controls, they were a total failure. Lactantius (1984: 11), a contemporary of Diocletian's, tells us that much blood was shed over 'small and cheap items' and that goods disappeared from sale. Yet, 'the rise in price got much worse.' Finally, 'after many had met their deaths, sheer necessity led to the repeal of the law.' Diocletian's other reforms, however, were more successful. The cornerstone of Diocletian's economic policy was to turn the existing ad hoc policy of requisitions to obtain resources for the state into a regular system. [11] Since money was worthless, the new system was based on collecting taxes in the form of actual goods and services, but regularized into a budget so that the state knew exactly what it needed and taxpayers knew exactly how much they had to pay. Careful calculations were made of precisely how much grain, cloth, oil, weapons or other goods were necessary to sustain a single Roman soldier. Thus, working backwards from the state's military requirements, a calculation was made for the total amount of goods and services the state would need in a given year. On the other side of the coin, it was also necessary to calculate what the taxpayers were able to provide in terms of the necessary goods and services. This required a massive census, not only of people but of resources, especially cultivated land. Land was graded according to its productivity. As Lactantius (1984: 37) put it, 'Fields were measured out clod by clod, vines and trees were counted, every kind of animal was registered, and note taken of every member of the population.' Taxable capacity was measured in terms of the caput, which stood for a single man, his family, his land and what they could produce. [12] The state's needs were measured in terms of the annona, which represented the cost of maintaining a single soldier for a year. With these two measures calculated in precision, it was now possible to have a real budget and tax system based entirely on actual goods and services. Assessments were made and resources collected, transported and stored for state use. Although an army on the move might still requisition goods or services when needed, the overall result of Diocletian's reform was generally positive. Taxpayers at least knew in advance what they were required to pay, rather than suffer from ad hoc confiscations. Also, the tax burden was spread more widely, instead of simply falling on the unlucky, thus lowering the burden for many Romans. At the same time, with the improved availability of resources, the state could now better plan and conduct its military operations. In order to maintain this system where people were tied to their land, home, jobs, and places of employment, Diocletian transformed the previous ad hoc practice. Workers were organized into guilds and businesses into corporations called collegia. Both became de facto organs of the state, controlling and directing their members to work and produce for the state. The Fall of Rome Constantine (308-37 A.D.) continued Diocletian's policies of regimenting the economy, by tying workers and their descendants even more tightly to the land or their place of employment (Jones 1958). For example, in 332 he issued the following order: Any person in whose possession a tenant that belongs to another is found not only shall restore the aforesaid tenant to his place of origin but also shall assume the capitation tax for this man for the time that he was with him. Tenants also who meditate flight may be bound with chains and reduced to a servile condition, so that by virtue of a servile condemnation they shall be compelled to fulfill the duties that befit free men [Jones 1970: 312]. Despite such efforts, land continued to be abandoned and trade, for the most part, ceased (Rostovtzeff 1926). Industry moved to the provinces, basically leaving Rome as an economic empty shell; still in receipt of taxes, grain and other goods produced in the provinces, but producing nothing itself. The mob of Rome and the palace favorites produced nothing, yet continually demanded more, leading to an intolerable tax burden on the productive classes. [13] In the fifty years after Diocletian the Roman tax burden roughly doubled, making it impossible for small farmers to live on their production (Bernardi 1970: 55). [14] This is what led to the final breakdown of the economy (Jones 1959). As Lactantius (1984: 13) put it: The number of recipients began to exceed the number of contributors by so much that, with farmers' resources exhausted by the enormous size of the requisitions, fields became deserted and cultivated land was turned into forest. Although Constantine made an effort to restore the currency, subsequent emperors resumed the debasement, resulting in renewed price inflation (West 1951). Apparently, Emperor Julian (360-63 A.D.) also refused to believe that the inflation was due to debasement, but rather was caused by merchants hoarding their stores. To prove his point, he sent his own grain reserves into the market at Antioch. According to Gibbon (1932: 801), The consequences might have been foreseen, and were soon felt. The Imperial wheat was purchased by the rich merchants; the proprietors of land or of corn withheld from the city the accustomed supply; and the small quantities that appeared in the market were secretly sold at an advanced and illegal price. Although he had been warned that his policies would not lower prices, but rather would exacerbate the shortage, Julian nevertheless continued to believe that his policy worked, and blamed complaints of its failure on the ingratitude of the people (Downey 1951). In other respects, however, Julian was more enlightened. In the area of tax policy, he showed sensitivity and perception. He understood that the main reason for the state's fiscal problem was the excessive burden of taxation, which fell unequally on the population. The wealthy effectively were able to evade taxation through legal and illegal measures, such as bribery. By contrast, the ordinary citizen was helpless against the demands of the increasingly brutal tax collectors. Previous measures to ease the tax burden, however, were ineffective because they only relieved the wealthy. Constantine, for example, had sought to ease the burden by reducing the number of tax units--caputs--for which a given district was responsible. In practice, this meant that only the wealthy had any reduction in their taxes. Julian, however, by cutting the tax rate, ensured that his tax reduction was realized by all the people. He also sought to broaden the tax base by abolishing some of the tax exemptions which many groups, especially the wealthy, had been granted by previous emperors (Bernardi 1970: 59, 66). Nevertheless, the revenues of the state remained inadequate to maintain the national defense. This led to further tax increases, such as the increase in the sales tax from 1 percent to 4.5 percent in 444 A.D. (Bernardi 1970: 75). However, state revenues continued to shrink, as taxpayers invested increasing amounts of time, effort and money in tax evasion schemes. Thus even as tax rates rose, tax revenues fell, hastening the decline of the Roman state (Bernardi 1970: 81-3). In short, taxpayers evaded taxation by withdrawing from society altogether. Large, powerful landowners, able to avoid taxation through legal or illegal means, began to organize small communities around them. Small landowners, crushed into bankruptcy by the heavy burden of taxation, threw themselves at the mercy of the large landowners, signing on as tenants or even as slaves. (Slaves, of course, paid no taxes.) The latter phenomenon was so widespread and so injurious to the state's revenues, in fact, that in 368 A.D. Emperor Valens declared it illegal to renounce one's liberty in order to place oneself under the protection of a great landlord (Bernardi 1970: 49). In the end, there was no money left to pay the army, build forts or ships, or protect the frontier. The barbarian invasions, which were the final blow to the Roman state in the fifth century, were simply the culmination of three centuries of deterioration in the fiscal capacity of the state to defend itself. Indeed, many Romans welcomed the barbarians as saviors from the onerous tax burden. [15] Although the fall of Rome appears as a cataclysmic event in history, for the bulk of Roman citizens it had little impact on their way of life. As Henri Pirenne (1939: 33-62) has pointed out, once the invaders effectively had displaced the Roman government they settled into governing themselves. At this point, they no longer had any incentive to pillage, but rather sought to provide peace and stability in the areas they controlled. After all, the wealthier their subjects the greater their taxpaying capacity. In conclusion, the fall of Rome was fundamentally due to economic deterioration resulting from excessive taxation, inflation, and over-regulation. Higher and higher taxes failed to raise additional revenues because wealthier taxpayers could evade such taxes while the middle class--and its taxpaying capacity--were exterminated. 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The Cato Journal is published in the spring/summer, fall, and winter by the Cato Institute, 1000 Massachusetts Ave., NW, Washington, D.C. 20001-5403. The Views expressed by the authors of the articles are their own and are not attributable to the editor, editorial board, or the Cato Institute. Printed copies of the Cato Journal may be ordered by calling 1-800-767-1241. Back issues are also available on the Cato Institute Web site: http://www.cato.org. Email comments or suggestions to webmaster@cato.org.

Subject: Re: Cato Institute Vehemetly Confused From: Paul G. Brown To: johnny5 Date Posted: Sun, Apr 03, 2005 at 16:03:47 (EDT) Email Address: Not Provided Message: I've read this. At length. In some detail. Shorter Bartlett: a) The Empirium ran up huge debts as it tried to maintain both games at home and a standing army on the frontier. b) The way the Empirium managed the debt at first was to 'print more money' (coinage debasement). Consequently, rampant inflation. (Bartlet suggests that this happened once. Actually it happened many times.) c) There was a period of 'reform' (What Bartlet doesn't explain is that there were several periods of reform -- under Aurelius before and Constantine after.) under Diocletian (r.284-305) and it was another hundred and seventy-odd years before the 'fall of Rome'. During that time the Empire split into Eastern (Byzantium) and Western parts, and the Eastern half was to endure, ruinous tax policies and all, for another thousand years. d) The 'fall of Rome' had many causes. Economic missmanagement was one of them. But the population of the empire had been declining for multiple reasons -- plague (5,000 Romans a day at some stages), smallpox, emmigration to the provinces -- for hundreds of years (Augustus passed anti-contraception and anti-abortion laws three hundred years prior) and by the time it ceased to be a capital Rome had a few tens of thousands of inhabitants. Besides - the structure of the economy and the nature of law and governance in Roman times was so alien as to be almost unrecognizable to us today. Bartlet's piece makes interesting reading but I'm not sure what relevance it has for contemporary policy. Many of the features of the Roman tax system -- confiscatory taxation on peasants and small landholders, 'regulation' which prevented the movement of labor and capital -- were present during the more than 1000 years during which feudalism held sway in Europe, and that was a period of remarkable social and political stability (although life was nasty, brutal and short). So it's not scholarship, this piece by Bartlet. It's mythologizing: making up a simple story to explain something inherently quite complex, and doing so in a way that satisfies some psychological or ideological need.

Subject: Small minds From: johnny5 To: Paul G. Brown Date Posted: Sun, Apr 03, 2005 at 18:51:33 (EDT) Email Address: johnny5@yahoo.com Message: Very good points, I agree with the contention that many people need to whittle down this complex world to something simple and manageable but that is often wrong for the devil is always the details no one sees. Surely all the dismal scientists are guilty of this same problem - when do we reach the limits of human capability of managing complexity?

Subject: China Has a Labor Shortage From: Emma To: All Date Posted: Sun, Apr 03, 2005 at 09:27:59 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/04/03/international/asia/03china.html?pagewanted=all&position= Help Wanted: China Finds Itself With a Labor Shortage By JIM YARDLEY and DAVID BARBOZA NINGXIANG, China - The pipeline that pours young, eager workers into China's manufacturing juggernaut begins in the country's interior at vocational schools like Hunan Top Software. So it is here in Ningxiang, a 10-hour drive from the factories on the southern coast, that clues can be found to a problem once thought inconceivable: The world's most populous nation, which has powered its stunning economic rise with a cheap and supposedly bottomless pool of migrant labor, is experiencing shortages of about two million workers in Guangdong and Fujian, the two provinces at the heart of China's export-driven economy. For Wu Dongshan, the job placement coordinator at Hunan Top, the most obvious sign of change is that factory recruiters now come to him, a reversal from three years ago, when he would make the long drive to Guangdong with busloads of students desperate for work. 'We were begging the factories to hire our students,' Mr. Wu said. 'We had too many students and not enough jobs.' No one thinks China is running out of workers. But young migrant workers coveted by factories are gaining bargaining power and many are choosing to leave the low pay and often miserable conditions in Guangdong. In a nondemocratic China, it is the equivalent of 'voting with their feet.' March is one of the most important hiring months for China's factories, yet some analysts believe that the current shortfalls are the beginning of a long-term trend that is already bringing wage pressures and could eventually erode China's position as the world's dominant low-cost producer. 'It's not the end of the great China manufacturing story,' said Jonathan Anderson, the chief Asia-Pacific economist for UBS. 'But you're no longer going to be talking about China having labor so radically cheap that it will capture all the investment flows. This is an opening for Vietnam, it's an opening for India and Cambodia.' The shift, which experts say will happen gradually, began last year and is a result of two decades of strict family planning, which has made China one of the most rapidly aging countries in the world. 'The number of people in the labor force is going to be going down for the next 15 years,' said Dali Yang, a professor of political science at the University of Chicago. 'This is a shift in demographics that is really good, not just for salaries but for work conditions.' China remains a country where migrant workers are routinely exploited. But after a decade of stagnant wages, these workers are showing more willingness to demand their rights. Last year, factory workers rioted and held strikes in Guangdong. Other workers just left. They can do that because economic growth in other regions has created increasing competition for workers. Many are leaving Guangdong for the rival Yangtze River Delta region near Shanghai, where many factories offer higher salaries. Others are starting to find work in larger cities in interior provinces. Some are simply returning to the farm. 'If we go to work in Guangdong, we work hard all year round but we can't save much money,' said Tang Xiaoliang, a migrant worker who toiled in Guangdong factories but has returned to his village near Hunan Top. 'The pay is too low. Whoever pays higher, I will go there.' The choices made by workers like Mr. Tang can influence the world's global trading network, because every decision about factory building, jobs and wages in China can alter the price of a toy at Toys R Us or socks at Wal-Mart. Here in Ningxiang, a growing city in Hunan Province, workers began migrating south to Guangdong and the surrounding Pearl River Delta for jobs in the 1980's. At the Hunan Top Software vocational school, a recruiter from one of Guangdong's biggest electronics plants visited in December and signed 197 students up for jobs. But right now, it is unclear how many will go. For many of the teenage students, who start working as young as 16, migrating to Guangdong often begins as a great adventure, a chance for farmers' children to see the outside world. But students like Ruan Xihua, 17, have not decided if they will take the promised job. Ms. Ruan is a tiny, cheery young woman whose parents were among the first generation of migrant workers to go to Guangdong in the 1980's. 'They told me it was pretty hard,' she said. 'They told me they wanted me to study hard.' Ms. Ruan is also an only child who says she wants to find work closer to home in case she needs to care for her parents. 'Most of these families have only one child because of family planning,' Mr. Wu said. 'They don't want their child to be far away from home.'

Subject: China Has a Labor Shortage - 1 From: Emma To: Emma Date Posted: Sun, Apr 03, 2005 at 09:28:22 (EDT) Email Address: Not Provided Message: That is one reason that Hunan's fast-growing provincial capital, Changsha, is beginning to siphon some workers back from Guangdong. Zu Xian, 22, quit a factory job in Guangdong because the high cost of living prevented her from saving money. She now matches her old factory wage by selling cosmetics at a new shopping mall in Changsha, a job that allows her far more free time and far less stress. 'Many people come back,' she said. 'They had stayed for too long and didn't have a better future. It's boring work. And there is not time to study or improve yourself.' Changsha is far from the only urban center competing with Guangdong for labor. Many workers are going to the booming Yangtze River Delta region, a hotbed of entrepreneurship powered by thousands of textile, electronics, software and automobile manufacturers. Economists say the Yangtze Delta region, which encompasses coastal Jiangsu and Zhejiang Provinces, as well as Shanghai, is already beginning to rival Guangdong and the Pearl River Delta for manufacturing supremacy in China. Factory life can be bleak in the Yangtze Delta, but many manufacturers are raising pay and improving conditions. At Zhongce Rubber, one of China's largest tire makers with about 5,000 employees, the company has begun construction of a new factory building. It will have free or subsidized food and housing for workers. The company also has raised the average worker's salary to $150 a month - above what most factories pay before overtime in Guangdong. 'Our company is doing very well, so we have to pay better,' said Jiang Sheng Nian, a manager. 'We feel that increasing salaries are inevitable.' Guo Ren, a rosy-cheeked 21-year-old woman from rural Anhui Province who now works at the tire company, first worked in an electronics factory in the city of Dongguan, in Guangdong. She earned about $50 a month, making chips that operate computer mouses, and lived in cramped dorms with strict curfews because of rising crime rates. 'I left Dongguan because it wasn't very safe and the living standards were not high,' said Ms. Guo, who now earns close to $150 a month doing odd jobs at Zhongce. Despite its problems, Guangdong is still a manufacturing powerhouse. In Guangdong and Fujian, the combined shortfall represents about 10 percent of the total migrant work force in those provinces. Even so, the local authorities are taking action. Officials in different Guangdong cities, as well as the adjacent special economic zone of Shenzhen, are competing with one another to raise their local minimum wage. In early March, Shenzhen announced that it would raise its minimum to $83 a month from $74. Factory operators, who have been experiencing worker shortages for more than six months, are also worried. Some withheld wages from migrant workers who went home for the Lunar New Year holiday in an effort to ensure they returned by March. In early March at the Sanhe Employment Center, a job fair in the manufacturing city of Baoan, billboards were filled with leaflets advertising thousands of openings at local factories. 'Some companies can't find workers for days,' said Li Biyang, a recruiter at the job fair, who said smaller factories faced the worst problems. 'Many small factories have bad management and bad working conditions. They aren't attentive to workers.' But many of the larger factories are scarcely better. Sheng Kehua, 22, plans to quit her job at a sprawling electronics factory in Baoan at the end of March. She works six days a week, 11 hours a day and earns, with overtime, about $118 a month. She lives in company dorm with 13 other workers. 'The boss always says we will try to work on that,' Ms. Sheng said of requests for improvements. 'But every time, nothing happens.' Factories covet young, female workers like Ms. Sheng because they are considered better at assembly line work and more docile than young men. In the past, these workers were largely cut off from the outside world, but now they use text messages or e-mail to check with friends at other factories about wages and treatment. 'I checked the Internet and learned that the pay level in Shanghai is better than here,' Ms. Sheng said. Of the 30 workers who arrived with her three years ago, only 7 or 8 remain at the factory. Zhao Weinan, who heads an association of Taiwanese-owned manufacturers in Dongguan, said factories once were very picky, setting age limits for new hires and often prohibiting workers from being married. 'In the old days, a company would just put a poster up, and you needed security to stop people from pouring in,' Mr. Zhao said. 'Now, you can post 100 notices and not find enough people.' He said Guangdong manufacturers operated on thin profit margins and could not raise salaries too high. 'If you raise salary, you raise production costs,' he said. And if wages keep rising, he said, some companies could face a fate familiar to many manufacturers in the United States - they would have to move to a country with cheaper workers.

Subject: Re: China Has a Labor Shortage - 1 From: johnny5 To: Emma Date Posted: Sun, Apr 03, 2005 at 11:50:33 (EDT) Email Address: johnny5@yahoo.com Message: 'Some are simply returning to the farm.' I don't think they suffer they same cultural pressure that farm work is a sign of failure like here in the states - why is that Emma? 'Zu Xian, 22, quit a factory job in Guangdong because the high cost of living prevented her from saving money.' Haha, doesn't she have credit cards and sucker men to borrow from like my sister? Visa and mastercard have a huge untapped market over there don't they? 'In the past, these workers were largely cut off from the outside world, but now they use text messages or e-mail to check with friends at other factories about wages and treatment.' Yes the internet, the great equalizer of the downtrodden - this article seems mostly about young women being abused and exploited and now wanting better pay and easier work - where is china going to find the surplus cheap labor? Africa?

Subject: Liquidity From: Terri To: All Date Posted: Sun, Apr 03, 2005 at 09:25:46 (EDT) Email Address: Not Provided Message: Since America happily left the gold standard and fixed exchange rates there has been complaint on complaint from fringe analysts about liquidity. Too much liquidity, too many dollars. All we have to do is take away all the dollars in the world and my we will be happy. Absurd. The bond market has always told us when there is too much liquidity, and the bond market is telling us there is reasonable liquidity and contained long term inflation. The liquidity mongers would have a depression with the limits they would have on money supply. There are economic problems, but these problems do not include too much liquidity forever. Inflation has declined for 25 years.

Subject: Long term liquidity & Inflation From: Pete Weis To: Terri Date Posted: Sun, Apr 03, 2005 at 13:57:29 (EDT) Email Address: Not Provided Message: It's one thing to provide short term liquidity to overcome minor economic downturns. But when you lower rates and loosen lending practices for extended periods of time after a large imbalance between income and debt has already accrued you are merely posponing the inevitable. This is partly what happened in the 20's - lending requirements were loosened and rates were lowered to induce borrowing in an effort to fill the gap of inadequate wage increases. However, now that we are totally free of the gold standard there is no limitation on the creation of money. So it's possible we could have an inflationary depression instead of the deflationary one similar to that of the 30's. I think Argentina is a good example of this. However, Argentina has been able to improve its situation with the help of the rest of the world. They experienced super inflation and a steeply declining economy with high unemployment. Since we represent so much of the world's consumption, if and when things begin to unravel we will drag down other major world economies. There will be no one to help us or them out of our mutual predicament. Already Japan, with the lowest rates in the world, and Germany have declining economies. I think the basic premise here is that 'you can't get something for nothing'. If you are going to pump liquidity for long periods of time you are going to get inflation and as we are finding out - you will create asset bubbles which will make it difficult to reverse course (a trap). Our economy is not based on the paper and electronic money we create, it is based on jobs and wages supported by the goods and services we produce and provide. That is what our dollar represents and increasing the number of dollars out there, as we are finding out, does not change the underlying fundamentals. I'm not saying we should necessarily go back on the gold standard or that monetary stimulus doesn't have its place. I'm just saying that we are discovering, IMO, that monetary stimulus has its limitations. Presently monetary stimulus in the US is driving heated (maybe overheated, especially in China's case) economies like China and India. This is helping to drive oil, natural gas and raw materials costs higher nad higher. There is no way that this will not lead to significant inflation in the near term. In my view, we are headed for a deep, prolonged recession - call it a depression if you will. Whether it becomes an inflationary or deflationary recession/depression depends on the actions of our Fed and our government. Either way it will result in higher worldwide unemployment and dropping asset values and higher interest rates to keep inflation from going supernova. The following article from the Financial Times provides support to the inflation-is-very-much-on-the-way view: Bank warns of ‘1970s’ oil prices >By Kevin Morrison >Published: March 31 2005 21:47 | Last updated: March 31 2005 21:47 >> Oil markets have entered a ‘super-spike’ period that could see 1970s-style price surges as high as $105 a barrel, Goldman Sachs has forecast. The warning comes as high commodity prices force investment banks to keep raising their price forecasts for oil, gas and metals to lofty heights. With the balance of supply and demand extremely tight, some analysts have pencilled in a wide range of potentially high prices levels to reflect the risk of an unexpected threat to oil production or surge in demand. The escalation in forecasts has been reminiscent of the ratcheting up of price targets for telecommunications, media and internet stocks in the dotcom boom. But Goldman Sachs has gone further than many of its rivals. It said in a report yesterday that oil markets had entered a period of super-spikes as spare capacity throughout the energy supply chain was limited and new production capacity would take a long time to complete. “Only a sharp sustained increase in energy commodity prices will meaningfully reduce energy consumption and recreate the kind of spare cushion that existed through much of the 1980s and 1990s,” the investment bank’s oil team said. The bank raised its super-spike trading band for West Texas Intermediate (WTI) crude to $50-$105 a barrel from $50-$80 previously. Goldman Sachs also raised its annual average price forecasts for the WTI crude futures contract traded on the New York Mercantile Exchange to $50 and $55 for 2005 and 2006 respectively, from $41 and $40 perviously. This forecast pulls Goldman Sachs closer to the Energy Information Administration, the statistical arm of the US energy department and PFC Energy, the Washington-based energy consultants, which are both predicting WTI to average close to $50 until the end of next year. So far this year, the front-month WTI contract on Nymex has averaged about $50 a barrel. May Nymex WTI gained $1.41 to $55.35 a barrel yesterday. Goldman Sachs said the current oil market environment looked more like that seen in the 1970s – when oil prices spiked dramatically following the Arab oil embargo to Western consumers in 1973 in reaction to the Israel-Egypt war, and again in 1979/1980, after the Islamic revolution in Iran, which was followed by the Iran-Iraq war and led to sharp falls in Iranian and Iraqi oil output. Goldman also raised its forecast for US natural gas prices. Meanwhile, Merrill Lynch raised its price forecasts for copper, aluminium, nickel and zinc over the next three years. “Current low metal inventories combined with still robust demand and delays to start-up of new supply have improved our view of the medium term fundamentals,” Merrill Lynch said.

Subject: Re: Long term liquidity & Inflation From: Terri To: Pete Weis Date Posted: Sun, Apr 03, 2005 at 14:58:19 (EDT) Email Address: Not Provided Message: Permanent Portfolio is quite interesting and useful, and gives me more of a model to work from in difficult times. The investment objective makes sense, and should continue to allow for success.

Subject: Re: Liquidity From: johnny5 To: Terri Date Posted: Sun, Apr 03, 2005 at 13:37:19 (EDT) Email Address: johnny5@yahoo.com Message: Is the Housing Market Going to Crash? by Fred Cederholm Cheap money and refinancing have fueled an unparalleled boom/inflation of real estate prices across the nation. Most gains have been cashed out via the equity loans that have provided a supplemental 'income' for households to keep this economy spending. It’s the costly S&L tragedy all over again. I’ve been thinking about real estate, equity, liquidity, CMO’s, GSE’s, and bubbles. Home ownership was a central component of the American dream. It was the foundation of community, security, accomplishment, and family. However... all that has been eclipsed because 'renting' from lenders is NOT ownership. You see, real estate has evolved from being more than home and hearth and a family’s largest single asset. It is now viewed as THE hot investment vehicle (an 'equity cow,' if you will) to be tapped as an evergreen source of collateral/cash. When that Italian monk invented double-entry bookkeeping (with debits equaling credits), assets equaled liabilities plus/ minus equity. If assets exceed liabilities, equity is positive and can be used to secure more credit. In simpler times, loans were financed by deposits. Lending more required liquidity--an ongoing flow of new/additional money. In the post-WWII era, the Federal Reserve functioned as a broker, matching institutions having excess deposits with institutions having excess demand for loans. There were also the Savings and Loans, which specialized in real estate lending. To improve things, the 1970’s/1980’s saw a deregulation/blurring of financial service. However...when the cost of funds suddenly rose to exceed the 'locked in' longer-term rates on loans, we saw the death of the Savings and Loan industry and a slew of major bank failures to boot. Read on. To accelerate the lending cycle, and to spread the interest rate differential risk, we saw the birth of the real estate investment derivatives called CMO’s--collateralized mortgage obligations. To get a fresh supply of cash to fund more credit, the lenders pooled the mortgage loans and sold them to investment bankers who in-turn packaged and resold them to investors. The dollars were huge, and so were the fees. Uncle $ugar entered the game by authorizing the creation of the GSE’s (Government Sponsored Enterprises) called Fannie Mae and Freddie Mac. Back in the 1970s and 1980s, the cost of funds suddenly rose to exceed the 'locked in' longer-term rates on loans. That's when we saw the death of the Savings and Loan industry and a slew of major bank failures to boot. See a parallel here? The process accelerated, with more loans being packaged and sold (and repackaged and resold) in a manner not unlike publicly traded stocks and bonds. These CMO’s were seen as safe investments since their value was 'derived' from underlying mortgages that were collateralized by the real property itself. These were snapped up and traded by pension funds, insurance companies and banks as well as by corporations and wealthy individuals--domestic and foreign. Refinancing became common. (It’s 10 PM; do you know where your mortgage is tonight?) Fannie and Freddie had the extra advantage of a multi-TRILLION dollar line of credit from the US Treasury. There is the 'perception' that their CMO’s are as good as US Treasury securities themselves, even though they do NOT have the 'full faith and credit of the US Government' behind them. (SOURCE: US Code, Title 12 - Banks and Banking, Chapter 46 - GSE’s, Section 4503 - Protection of Taxpayers against Liability). As interest rates rose in the 1990’s to challenge the 'irrational exuberance' of a dot-com stock bubble run amok, all markets dropped. (You can’t blame this only on the 9/11 attacks, as the market indexes were headed south well before the terrorists hit.) We then saw the PPT (Plunge Protection Team, AKA the Fed) cut rates to practically zero to swing the pendulum back again. However...the cheaper interest rates 'compounded' by an investing public mourning the 'loss' of their paper stock fortunes focused attention on homes and real estate. The Fed now lost control of the money creation process and this next bubble was on its way. These past two Februarys saw Chairman Greenspan beseeching Congress to rein in both Fannie and Freddie. Cheap money and refinancing fueled an unparalleled boom/inflation of real estate prices across the nation. It would be one thing if the so-called paper equity gains stayed in the property for the occupants. However...most gains were cashed out via the equity loans that provided a supplemental 'income' for households to keep this economy spending! It’s the costly S&L tragedy all over again--only bigger; the characters may be different, but I fear the plot and outcome are the same. I’m Fred Cederholm and I’ve been thinking. You should be thinking, too. Copyright 2005 Fred Cederholm. All rights reserved. Fred Cederholm is a CPA/CFE, a forensic accountant, and writer who contributes the column 'TH*NK*NG' to The Weekly Observer in Creston, (Ogle County) Illinois. He is a graduate of the University of Illinois (B.A., M.A. and M.A.S.). He can be reached at asklet@rochelle.net. http://www.baltimorechronicle.com/033105Cederholm.shtml

Subject: Absurdity! From: johnny5 To: Terri Date Posted: Sun, Apr 03, 2005 at 13:24:49 (EDT) Email Address: johnny5@yahoo.com Message: I hear you use words like impossible, absurd, 100% certain - your steadfast optimism and absolute positions frighten me sometimes Terri. http://www.howestreet.com/story.php?ArticleId=1088 HOYE: The carry trade has been around since at least 1720. It is usually described as borrowing short and lending long (I call it the BSLL factor). And there is a compulsion in any speculative boom to borrow short and lend out long. Either to buy junk bonds or the stock market or whatever. The symptom of that is the flattening yield curve. And the game is over when the yield curve reverses to steepening. Elsewhere: HOYE: Oh yes. January’s sharp drop in the stock market and widening credit spreads suggests a sudden loss of liquidity. The concept of liquidity is badly abused. For example, in the summer of 2000, the street was fully bullish because there was so much liquidity to buy the stock market. They didn’t grasp the importance that it was stock prices rising that permitted all speculators to leverage up their positions. But that is borrowed money. That isn’t liquidity. While an asset price is going up it gives the appearance of liquidity and then when that asset price heads down, all of a sudden liquidity disappears. So that is what we are dealing with now. And in different part of the interview: HOYE: Well, I think the market will disappoint even the most ambitious of today’s central bankers. And the thing to understand is that unless they go to a pure paper inflation—which would require them to chew through the whole credit market—that would provoke such an uproar that it would force them to quit it. So here we are: it’s a credit inflation, which depends on margin. As long as the prices are going up, everything is fine and it doesn’t matter that short rates are going up. The cost of money doesn’t matter if you know you can double your money every six months. And once the contraction starts, I suggest that it overwhelms the ability of the Fed to pursue its portion of credit creation. I’m not saying that the Fed is going to suddenly tighten. No bloody way—not willingly! But the whole system is going to tighten as all the leveraged “liquidity” disappears. TAYLOR: Because the private sector or the economics don’t allow it to generate returns any longer. So, out of economic necessities, start to turn their non essential items into cash and repay debts? HOYE: As prices start going down, it gives undeniable power to the margin clerks. And their job description is vastly different to that of your typical central banker. TAYLOR: The margin clerks and I would guess it also will involve the fractional reserve banking system overall? HOYE: Yes. TAYLOR: Let me understand. As prices drop, the loan officers and margin clerks at brokerage houses and in banks begin to worry that their clients won’t be able to repay their loans, so they ask for more and more margin—which then triggers further liquidation because people have to sell non essential items to raise cash to meet margin requirements. That then results in a collapse in the value of less liquid assets relative to cash and the ultimate liquidity, namely gold? HOYE: That’s happened many times but, at the top, the street ardently believes that “this time it’s different.” TAYLOR: But the argument is that the Fed can always expand the money supply, as Ben Bernanke suggested when he said if need be, the Fed could use its magnificent digital technology to create as much money as was needed to escape deflation. He even said we could drop money from helicopters if need be! HOYE: That’s credit, not money. It’s a misnomer to call M-1, M-2, and M-3 money. And so once the prices of the assets being speculated turn down, then the margin clerk takes over. TAYLOR: One of the economic dynamics I talk frequently about in my letter, but which is almost never talked about in the mainstream press, is the almost exponential growth in debt compared to income, as measured by GDP and that in fact economic returns are simp ly not sufficient to generate enough cash to service the debt. And when the debt can’t be paid the loans are called by as you say, the margin clerks and then the debt repudiation process gets underway. HOYE: That is what happened in every bubble. Credit is taken on because of soaring asset prices. As the prices stop going up, you are left with the debt. That kills the ability to promote any story. As we have seen in so many promotions, so long as the trend is up the street will believe the most preposterous of touts.

Subject: For you my dear Homeowners - big HUG! From: johnny5 To: All Date Posted: Sun, Apr 03, 2005 at 04:41:40 (EDT) Email Address: johnny5@yahoo.com Message: www.christianmortgageusa.com When you can't count on Greenspan to make you feel safe - God himself will back your house. Where's the snakes I am ready to dance!! BWAHAHA! What in the heck? I got this in my email - BWAHAHAHA! I can't stop laughing!!! http://www.horizonsnet.org/sermons/sm27.html 'For this reason I say to you, do not be anxious for your life, as to what you shall eat, or what you shall drink; nor for your body, as to what you shall put on. Is not life more than food, and the body than clothing? Look at the birds of the air, that they do not sow, neither do they reap, nor gather into barns, and yet your heavenly Father feeds them. Are you not worth much more than they? And which of you by being anxious can add a single cubit to his life's span? And why are you anxious about clothing? Observe how the lilies of the field grow; they do not toil nor do they spin, yet I say to you that even Solomon in all his glory did not clothe himself like one of these. But if God so arrays the grass of the field, which is alive today and tomorrow is thrown into the furnace, will He not much more do so for you, O men of little faith? Do not be anxious then, saying, 'What shall we eat?' or 'What shall we drink?' or 'With what shall we clothe ourselves?' For all these things the Gentiles eagerly seek; for your heavenly Father knows that you need all these things. But seek first His kingdom and His righteousness; and all these things shall be added to you. Therefore do not be anxious for tomorrow; for tomorrow will care for itself. Each day has enough trouble of its own.' -(Matthew 6:25-34)

Subject: Pennies from Heaven Bernanke From: johnny5 To: All Date Posted: Sun, Apr 03, 2005 at 00:08:28 (EST) Email Address: johnny5@yahoo.com Message: http://www.whitehouse.gov/news/releases/2005/04/20050401-7.html April 1, 2005 Personnel Announcement President George W. Bush today announced his intention to nominate three individuals, designate two individuals, and appoint fourteen individuals to serve in his Administration: The President intends to nominate Ben S. Bernanke, of New Jersey, to be a Member of the Council of Economic Advisers. Upon confirmation, the President will also designate him Chairman. Dr. Bernanke currently serves on the Federal Reserve System's Board of Governors. In addition, he also serves as Professor of Economics and Public Affairs at Princeton University, a position he has held for twenty years. Dr. Bernanke previously taught at Stanford University, New York University, and Massachusetts Institute of Technology. He earned his bachelor's degree from Harvard University and his Ph.D. from Massachusetts Institute of Technology. April FOOLS! Oh wait, this is no joke - copter money man is 4 real!

Subject: Re: Pennies from Heaven Bernanke From: David E.. To: johnny5 Date Posted: Sun, Apr 03, 2005 at 03:57:55 (EDT) Email Address: Not Provided Message: They need a heavy hitter to back up Snow on the SS pitching. We will find out soon if he is a trick pony.

Subject: Our next Fed Chairman From: Pete Weis To: johnny5 Date Posted: Sun, Apr 03, 2005 at 01:43:27 (EST) Email Address: Not Provided Message: He would not have accepted the philly fed governorship if he didn't think it would possibly lead to the Fed Chairmanship. He wouldn't have been appointed by this administration to the philly post unless they had been considering him for the Fed Chair. He fits in rather well with the conservative and this administration's views regarding a lack of concern about the erosion of the middle-class and rising personal debt. He's a proponent of Milton Friedman's money supply ideas which counter Keynsian demand side theories. He may not be a believer in supply-side-reduce-the-tax on-the-wealthy, but he's pretty quiet about it if he opposes it. Perhaps he'll strongly recommend changes in fiscal policy, in his new position, between now and Greenspan's retirement - or will he?

Subject: $280 trillion - how much more can they pimp? From: johnny5 To: Pete Weis Date Posted: Sun, Apr 03, 2005 at 04:48:47 (EDT) Email Address: johnny5@yahoo.com Message: http://www.siliconinvestor.com/readmsg.aspx?msgid=21193164 'except in our case I expect a derivative meltdown somewhere' http://www.contraryinvestor.com/mo.htm As you may recall, 1979 can be characterized as a period where there was no structured finance market. There was no derivatives market. My how times have changed. Could anyone even have imagined in 1979 that in 25 short years the US banking system singularly would be exposed to almost $88 trillion in notional value of derivatives contracts? http://www.bis.org/publ/qtrpdf/r_qt0503.pdf In the last quarter of 2004 the combined value of trading in interest rate, stock index and currency contracts on organised exchanges fell by 3%, to $279 trillion. What did it take for LTCM to go BOOM? http://www.financialpolicy.org/dscprimer.htm As an indication of the dangers they pose, it is worthwhile recalling a shortened list of recent disasters. Long-Term Capital Management collapsed with $1.4 trillion in derivatives on their books. Sumitomo Bank in Japan used derivatives their manipulation of the global copper market for years prior to 1996. Barings bank, one of the oldest in Europe, was quickly brought to bankruptcy by over a billion dollars in losses from derivatives trading. Both the Mexican financial crisis in 1994 and the East Asian financial crisis of 1997 were exacerbated by the use of derivatives to take large positions on the exchange rate. Most recently, the collapse of a major commodity derivatives dealer Enron Corporation has lead to the largest bankruptcy in U.S. history. The first public interest concerns posed by derivatives comes from the leverage they provide to both hedgers and speculators. Derivatives transactions allow investors to take a large price position in the market while committing only a small amount of capital – thus the use of their capital is leveraged. Derivatives traded in over-the-counter markets have no margin or collateral requirements, and the industry standard has shown to be deeply flawed by recent failures. Leverage makes it cheaper for hedgers to hedge, but it also makes it cheaper to speculate. Instead of buying $1 million of Treasury bonds or $1 million of stock, an investor can buy futures contracts on $1 million of the bonds or stocks with only a few thousand dollars of capital committed as margin (the capital commitment is even smaller in the over-the-counter derivatives markets). The returns from holding the stocks or bonds will be the same as holding the futures on the stocks or bonds. This allows an investor to earn a much higher rate of return on their capital by taking on a much larger amount of risk. Taking on these greater risks raises the likelihood that an investor, even a major financial institution, suffers large losses. If they suffer large losses, then they are threatened with bankruptcy. If they go bankrupt, then the people, banks and other institutions that invested in them or lent money to them will face losses and in turn might face bankruptcy themselves. This spreading of the losses and failures gives rise to systemic risk, and it is an economy wide problem that is made worse by leverage and leveraging instruments such as derivatives. When people suffer damages, even though they were not counterparties or did any business with a failed investor or financial institution, then individual incentives and rules of caveat emptor are not sufficient to protect the public good. In this case, prudential regulation is needed – not to protect fools from themselves, but to protect others from the fools. Another public interest concern involves transparency. Some derivatives are traded on formal futures and options exchanges which are closely regulated. Other derivatives are traded over-the-counter in markets that are almost entirely unregulated. In these non-transparent markets there is very little information provided by either the private market participants or collected by government regulators. Prices and other trading information in these markets is not readily available as is the case with futures and options exchanges. Instead that information is hoarded by each of the market participants. While standard theories of financial markets agree that more transparent markets are more efficient, it requires a public entity to require information be reported and disseminated to the market. As a result of this lack of information in over-the-counter markets, it substantially reduces the ability of the government and other market participants to anticipate and possibly preempt building market pressures, major market failures, or manipulation efforts. Yet another danger involves the use of derivatives to evade, avoid, dodge or out-flank financial market regulations designed to improve economic stability. In the cases of this decade’s financial crises in Mexico and East Asian, the financial institutions in those countries used derivatives to out-flank financial regulations limiting those institutions exposure to foreign exchange risk. Derivatives can also be used to avoid taxation and manipulate accounting rules my restructuring the flow of payments so that earning are reported in one period instead of another. In sum, the enormous derivatives markets are both useful and dangerous. Current method of regulating these markets is not adequate to assure that the markets are safe and sound and that disruptions from these markets do not spill-over into the broader economy. Now if $1.4 trillion of LTCM derivatives blowing up almost sunk us - how much do you think is going to blow up out of the roughly $280 trillion out there right now? 1% 5% 50%? Let's say only 5% blow up - what then?

Subject: China's Currency Peg Against the Dollar From: Terri To: All Date Posted: Sat, Apr 02, 2005 at 21:34:03 (EST) Email Address: Not Provided Message: China will come, may have already come, to view the dollar peg as inherently and needlessly destabilizing. I think we will find China moving to a peg against several currencies. What China's leaders are after is an infrastructure and advanced industrial base that increasingly insulates her from dependence on specific technology laden imports. I suspect she is feeling this is sufficiently accomplished. There is no need to monopolize production of textiles and such.

Subject: Floating currencies From: johnny5 To: Terri Date Posted: Sat, Apr 02, 2005 at 23:50:41 (EST) Email Address: johnny5@yahoo.com Message: As has been posted before, lack of freely floating currency is what several speculate helped save china in 97, also after watching the Argentina speech on C-span today the author of that book said thier currency peg and tax collection issues were major contributors to thier collapse and default. China has us by the chain - we DESPERATELY need for them to let their currency rise. The peg was a fatal part of argentinian demise - but it can't happen here can it?

Subject: Another Meaning of Debt From: Emma To: All Date Posted: Sat, Apr 02, 2005 at 18:49:56 (EST) Email Address: Not Provided Message: Another consequence of debt is that soon there will be a reversal of the historical pattern of more investment income coming to America than going abroad. Again, there will soon be an added balance of payments burden of a flow of income to international investors that is greater than the flow to American investors.

Subject: Re: Another Meaning of Debt From: johnny5 To: Emma Date Posted: Sat, Apr 02, 2005 at 21:17:25 (EST) Email Address: johnny5@yahoo.com Message: http://www.siliconinvestor.com/readmsg.aspx?msgid=21171958 China overtakes US as top investment destination Foreign investment in the United States, traditionally the largest recipient of such money, plunged by 53 percent last year to reach US$30 billion http://tokyo.usembassy.gov/e/p/tp-20040629-31.html China Overtakes U.S. as Largest Investment Recipient, OECD Says China became the largest recipient of foreign direct investment (FDI) in 2003, surpassing the United States, which has previously enjoyed the biggest inflows of FDI, according to a new report. In a June 28 news release announcing the publication of the report on worldwide FDI, the Organization for Economic Cooperation and Development (OECD) said China attracted $53 billion in 2003 compared to $40 billion for the U.S. economy. The United States registered the largest fall of FDI inflows among OECD countries with the 2003 level 44 percent below the 2002 level and 76 percent below that in 2001, according to the report

Subject: A Debt Surprise From: Emma To: Emma Date Posted: Sat, Apr 02, 2005 at 19:42:25 (EST) Email Address: Not Provided Message: Again, if I understand no matter interest rates the more we borrow the more we will of course owe and this has finally countered the high paying investments we made through several decades from 1945 on. The more I say this to myself the sadder it becomes. Well, I knew what to expect, yet I am surprised.

Subject: Before the Fall of the Dollar From: Emma To: All Date Posted: Sat, Apr 02, 2005 at 18:46:31 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/04/02/opinion/02sat1.html?ex=1113109200&en=97ed6a7b8a14e245&ei=5070 Before the Fall The recent rally of the United States dollar notwithstanding, the greenback has nowhere to go but down. But the Bush administration is betting that foreign investors will continue to invest huge sums in this depreciating currency. How huge? Last month, the government reported that the United States' deficit in international transactions, mainly trade, reached an unprecedented $666 billion in 2004, a 24 percent increase from the 2003 level and, at 5.7 percent of the economy, about two to three times what most economists consider sustainable. The administration expects foreigners, mainly Asian central bankers, to keep plugging the trade gap because buying American securities increases their exports. It is also assuming that foreign central banks won't risk the losses in their dollar reserves that would occur if they started shunning dollar-based investments. In brief, the United States is betting that it's too big - in other countries' eyes - to fail. The dollar's current uptick is just a breather in its overall downward trajectory. It's due largely to the United States' higher interest rates, which lure foreign investors away from euros and into dollar-based investments. But what will happen when the Federal Reserve stops raising rates? Here's a hint: When one Federal Reserve governor suggested recently that rates might peak at a lower level than analysts expected, the dollar promptly slid. The dollar also drew some of its recent momentum from a government report last month that showed the United States attracted $91.5 billion in net foreign capital in January, easily covering that month's near-record trade deficit, $58.3 billion. That allayed concerns, at least temporarily, about the United States' continued ability to finance its debt on favorable terms. But hedge funds were responsible for much of January's investment, and that clouds the picture. In general, private investment - as opposed to investment by foreign governments - is an encouraging sign because private investors seek out the best opportunities, while foreign governments often pour money in simply to prop up the dollar. But hedge funds are different; they are often short-term investors that can move out of dollars as quickly as they move in. Given the unreliability of those inflows, and the enormous borrowing needs of the United States, the country will be dependent on foreign government lenders for a long time. That's a precarious position. To close its trade gap, which must be financed by foreigners, and its budget gap, most of which is covered by foreign investors, the United States will need to attract a projected $1 trillion in 2005 alone - an unprecedented sum. At the same time, however, the Bush administration is relying on a cheap dollar to correct the nation's trade imbalance. So far, the trade deficit has only grown, even as the dollar has fallen. A further decline this year of about 20 percent would probably be needed to begin to have a real impact. There is gathering evidence that foreign central bankers are seeking to avoid the losses that future dollar investments seem to threaten. Recently, financial markets have been unsettled by comments from Japan, South Korea, India and Russia about diversifying away from dollars. And this week, a tough-talking China vowed not to allow its economic decisions to be dictated by any other country, a statement that was a rebuff to the United States. If the world's central bankers accumulate fewer dollars, the result would be an unrelenting American need to borrow in the face of an ever weaker dollar - a recipe for higher interest rates and higher prices. The economic repercussions could unfold gradually, resulting in a long, slow decline in living standards. Or there could be a quick unraveling, with the hallmarks of an uncontrolled fiscal crisis. Or the pain could fall somewhere in between. If foreign reluctance to buy Treasury bonds pushed up long-term interest rates, mortgage rates would follow. If the economy is in a housing bubble, as many analysts believe, higher mortgage rates would pop it, with dire results for homeowners' balance sheets and the overall health of the economy. The dollar is heading down, no matter what. To mitigate the potential harm, the administration and Congress should deliver on budget discipline - far beyond the lip service that's been offered so far - to limit the amounts the United States needs to attract in loans and pay in interest. The administration should also try to forge cooperation among America's trading partners to manage the dollar's decline. Unfortunately, government leaders aren't poised to do either of those things, though action, not attitude, is what the country needs.

Subject: Pentagon Redirects Its Research Dollars From: Emma To: All Date Posted: Sat, Apr 02, 2005 at 16:33:06 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/04/02/technology/02darpa.html?pagewanted=all&position= Pentagon Redirects Its Research Dollars By JOHN MARKOFF SAN FRANCISCO - The Defense Advanced Research Projects Agency at the Pentagon - which has long underwritten open-ended 'blue sky' research by the nation's best computer scientists - is sharply cutting such spending at universities, researchers say, in favor of financing more classified work and narrowly defined projects that promise a more immediate payoff. Hundreds of research projects supported by the agency, known as Darpa, have paid off handsomely in recent decades, leading not only to new weapons, but to commercial technologies from the personal computer to the Internet. The agency has devoted hundreds of millions of dollars to basic software research, too, including work that led to such recent advances as the Web search technologies that Google and others have introduced. The shift away from basic research is alarming many leading computer scientists and electrical engineers, who warn that there will be long-term consequences for the nation's economy. They are accusing the Pentagon of reining in an agency that has played a crucial role in fostering America's lead in computer and communications technologies. 'I'm worried and depressed,' said David Patterson, a computer scientist at the University of California, Berkeley who is president of the Association of Computing Machinery, an industry and academic trade group. 'I think there will be great technologies that won't be there down the road when we need them.' University researchers, usually reluctant to speak out, have started quietly challenging the agency's new approach. They assert that Darpa has shifted a lot more work in recent years to military contractors, adopted a focus on short-term projects while cutting support for basic research, classified formerly open projects as secret and placed new restrictions on sharing information. This week, in responding to a query from the staff of the Senate Armed Services Committee, Darpa officials acknowledged for the first time a shift in focus. They revealed that within a relatively steady budget for computer science research that rose slightly from $546 million in 2001 to $583 million last year, the portion going to university researchers has fallen from $214 million to $123 million. The agency cited a number of reasons for the decline: increased reliance on corporate research; a need for more classified projects since 9/11; Congress's decision to end controversial projects like Total Information Awareness because of privacy fears; and the shift of some basic research to advanced weapons systems development. In Silicon Valley, executives are also starting to worry about the consequences of Darpa's stinting on basic research in computer science. 'This has been a phenomenal system for harnessing intellectual horsepower for the country,' said David L. Tennenhouse, a former Darpa official who is now director of research for Intel. 'We should be careful how we tinker with it.' University scientists assert that the changes go even further than what Darpa has disclosed. As financing has dipped, the remaining research grants come with yet more restrictions, they say, often tightly linked to specific 'deliverables' that discourage exploration and serendipitous discoveries. Many grants also limit the use of graduate students to those who hold American citizenship, a rule that hits hard in computer science, where many researchers are foreign. The shift at Darpa has been noted not just by those researchers directly involved in computing technologies, but by those in other fields supported by the agency. 'I can see they are after deliverables, but the unfortunate thing is that basic research gets squeezed out in the process,' said Wolfgang Porod, director of the Center for Nano Science and Technology at the University of Notre Dame. The concerns are highlighted in a report on the state of the nation's cybersecurity that was released with little fanfare in March by the President's Information Technology Advisory Committee. Darpa has long focused on long-term basic research projects with time horizons that exceed five years, the report notes, but by last year, very little of Darpa's financing was being directed toward fundamental research in the field. 'Virtually every aspect of information technology upon which we rely today bears the stamp of federally sponsored university research,' said Ed Lazowska, a computer scientist at the University of Washington and co-chairman of the advisory panel. 'The federal government is walking away from this role, killing the goose that laid the golden egg.' As a result of the new restrictions, a number of computer scientists said they had chosen not to work with Darpa any longer. Last year, the agency offered to support research by Leonard Kleinrock, a computer scientist at the University of California, Los Angeles who was one of the small group of researchers who developed the Arpanet, the 1960's predecessor to today's Internet. Dr. Kleinrock said that he decided that he was not interested in the project when he learned that the agency was insisting that he employ only graduate assistants with American citizenship. Darpa officials, who declined repeated requests for interviews, disputed the university researchers. The agency, which responded only in writing to questions, contended that the criticisms leveled by the advisory committee and other researchers were not accurate and that it had always supported a mix of longer- and shorter-term research. 'The key is a focus on high-risk, high-payoff research,' Jan Walker, a Darpa spokeswoman, stated in an e-mail message. Given the threat from terrorism and the demands on troops in Iraq, she wrote, Darpa is rightly devoting more attention to 'quick reaction' projects that draw on the fruits of earlier science and technology to produce useful prototypes as soon as possible. The Pentagon shift has put added pressure on the other federal agencies that support basic information technology research. At the Directorate for Computer and Information Science and Engineering of the National Science Foundation, the number of research proposals has soared from 2,000 in 1999 to 6,500 last year. Peter A. Freeman, its director, said that the sharp rise was partly attributable to declines in Pentagon support. 'Darpa has moved away from direct funding to universities,' Mr. Freeman said. 'Even when they do directly fund, some of the conditions and constraints seem to be pretty onerous. There is no question that the community doesn't like what the head of Darpa has been doing, but he has his reasons and his prerogatives.' The transformation of Darpa has been led by Anthony J. Tether, a Stanford-educated electrical engineer who has had a long career moving between executive positions at military contractors and the Pentagon. Last year, Dr. Tether's new approach led to a series of cutbacks at a number of computer science departments. Program financing for a Darpa project known as Network Embedded Sensor Technology - intended to develop networks of sensors that could potentially be deployed on battlefields to locate and track enemy tanks and soldiers - has been cut back or ended on as many as five university campuses and shifted instead to traditional military contractors. 'The network has now become as vital as the weapons themselves,' Dr. Tether said in an appearance before the advisory committee last year, testifying that secrecy had become more essential for a significant part of the agency's work. That has created problems for university researchers. Several scientists have been instructed, for example, to remove previously published results from Web sites. And at U.C.L.A. and Berkeley, Darpa officials tried to classify software research done under a contract that specified that the results would be distributed under so-called open-source licensing terms. 'We were requested to remove all publicly accessible pointers to software developed under the program,' said Deborah Estrin, director of embedded network sensing at U.C.L.A. 'This is the first time in 15 years that I have no Darpa funding.' At Berkeley, Edward A. Lee, who was recently named chairman of the computer science department, agreed not to publish a final report at Darpa's request, even though he told officials the data had already become widely available. Despite the complaints, some pioneering researchers support the changes being driven by Dr. Tether and say they are necessary to prepare the nation for a long battle against elusive enemies. 'There are pressures and demands on Darpa to be relevant,' said Robert Kahn, a former Darpa administrator who is now president of the Corporation for National Research Initiatives in Reston, Va. 'People think it should stay the same, but times have changed.' Still, a number of top scientists argue that the Pentagon's shift in priorities could not have come at a worse time. Most American companies have largely ended basic research and have begun to outsource product research and development extensively even as investments in Asia and Europe are rising quickly. And many computer scientists dispute Darpa's reasoning that fighting wars demands a shift away from basic research. During the Vietnam War, they say, Darpa kept its commitment to open-ended computer research, supporting things like a laboratory in the hills behind Stanford University dedicated to the far-out idea of building computing machines to mimic human capabilities. John McCarthy founded the Stanford artificial research lab in 1964, helping to turn it into a wellspring for some of Silicon Valley's most important companies, from Xerox Parc to Apple to Intel. 'American leadership in computer science and in applications has benefited more from the longer-term work,' Mr. McCarthy said, 'than from the deliverables.'

Subject: Nena's 99 luftballons From: johnny5 To: Emma Date Posted: Sat, Apr 02, 2005 at 21:10:18 (EST) Email Address: johnny5@yahoo.com Message: I was at a conference for the space elevator and they had someone from NASA talking about carbon nanotubes and how there was all this sharing of ideas and research, then the military got involved and suddenly everything became classified and hush hush. Why does society still tolerate these power mongers Emma?

Subject: Imagining Multiple Perspectives From: Emma To: All Date Posted: Sat, Apr 02, 2005 at 16:06:45 (EST) Email Address: Not Provided Message: Data analysis in economics can be curiously deceptive if we are not careful, for we must try to analyze with imagine. After all, we are dealing with multiple perspectives where data tends to an average perspective fitting a model maker. I found the following article most interesting, considering or imagining various perspectives.

Subject: The Art of Intelligence From: Emma To: All Date Posted: Sat, Apr 02, 2005 at 16:06:01 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/04/02/opinion/02brooks.html?ex=1112590800&en=fe29a88bbebeda40&ei=5070 The Art of Intelligence By DAVID BROOKS he years between 1950 and 1965 were the golden age of American nonfiction. Writers like Jane Jacobs, Louis Hartz, Daniel Bell and David Riesman produced sweeping books on American society and global affairs. They relied on their knowledge of history, literature, philosophy and theology to recognize social patterns and grasp emerging trends. But even as their books hit the stores, their method was being undermined. A different group rejected this generalist/humanist approach and sought to turn social analysis into a science. For example, the father of the U.S. intelligence community, Sherman Kent, argued that social science and intelligence analysis needed a systematic method, 'much like the method of the physical sciences.' Social research - in urban planning, sociology and intelligence analysis - began to mimic the hard sciences. A new paper by a Yale undergraduate, Sulmaan Wasif Khan, contrasts these two ways of looking at the world. Khan compares the C.I.A.'s 1960's-era National Intelligence Estimates on China, which have been recently declassified, with the work of generalist scholars like Donald Zagoria. The C.I.A.'s intelligence estimates are what you'd expect: bloodless compilations of data by anonymous technicians. They do not draw patterns based on an understanding of Chinese history or make generalizations about the ethos of the Chinese elite. Zagoria's approach was quite different. Relying on a deep understanding of Chinese history and society, he made novelistic judgments about the Chinese leadership's hopes and fears. He imagined how we must appear to the Chinese, and how different American moves would be interpreted. The C.I.A. analysts concluded on Nov. 12, 1970, that there was little prospect of improvement in Sino-American relations. Zagoria said China would be open to a rapprochement. Zagoria was right. Henry Kissinger was in China within months of the C.I.A. report But the scientific method used by the C.I.A., and its technical jargon, can seem to have more authority (used to justify bigger budgets). Academic analyses of society and world affairs are now often quantitative, jargon-laden and hyperspecialized. Historical works have gigantic titles and minuscule subjects - think 'Power and Passion: Walloon Shovel Making, 1723-1724.' So we get decades of calamitous intelligence failures. This week the presidential panel on intelligence pointed to the same failings found by other reports. It said intelligence analysts 'displayed a lack of imagination.' They created artificial specialties - separating regional, technical and terrorism analyses. They built layers of hard analysis on fuzzy and impressionistic information. This commission does what so many others have done. It tries to reorganize the bureaucratic flow charts to produce better results. But the problem is not bureaucratic. It's epistemological. Individuals are good at using intuition and imagination to understand other humans. We know from recent advances in neuroscience, popularized in Malcolm Gladwell's 'Blink,' that the human mind can perform fantastically complicated feats of subconscious pattern recognition. There is a powerful backstage process we use to interpret the world and the people around us. When you try to analyze human affairs using a process that is systematic, codified and bureaucratic, as the C.I.A. does, you anesthetize all of these tools. You don't produce reason - you produce what Irving Kristol called the elephantiasis of reason. The capping irony is that Sherman Kent and the other pseudoscientists thought they were replacing the fuzzy old generalists with something modern and rigorous. But, in reality, intuitive generalists like Jane Jacobs and Donald Zagoria were more modern and rigorous than the pseudoscientific technicians who replaced them. I'll believe the intelligence community has really changed when I see analysts being sent to training academies where they study Thucydides, Tolstoy and Churchill to get a broad understanding of the full range of human behavior. I'll believe the system has been reformed when policy makers are presented with competing reports, signed by individual thinkers, and are no longer presented with anonymous, bureaucratically homogenized, bulleted points that pretend to be the product of scientific consensus. I'll believe it's been reformed when there's a big sign in front of C.I.A. headquarters that reads: Individuals think better than groups.

Subject: Resistance is Futile From: johnny5 To: Emma Date Posted: Sat, Apr 02, 2005 at 21:04:28 (EST) Email Address: johnny5@yahoo.com Message: But we have the info posted earlier how several academic studies back the wisdom of crowds. The borg always are gonna be ahead of Captain Picard - he got assimilated.

Subject: Full Employment From: Terri To: All Date Posted: Sat, Apr 02, 2005 at 15:52:47 (EST) Email Address: Not Provided Message: We ought not to think there is a given amount of work to be done, or any particular work limit for the American economy. The point of proper fiscal and monetary policy is precisely to make sure there is work enough to assure absorption of an ever growing potential labor force and wage and benefits gains as business competes for labor that are a little short of inflationary. The last 5 years of the 1990s showed us just how fine economic policy can provide for a most healthy labor market at no general inflationary expense.

Subject: Then and now From: Pete Weis To: All Date Posted: Sat, Apr 02, 2005 at 15:15:20 (EST) Email Address: Not Provided Message: We are, IMO, almost certainly witnessing the death of atleast one school of economic theory - supply-side/trickle down economic theory. The fact remains that job and wage growth and associated tax revenues have not improved much despite the reduction in taxes for US corporations and the wealthiest Americans. So the 'voodoo economics' tag looks like it will stick. The verdict on monetarist theory is a more complex one. There is little doubt that monetary stimulus has caused asset bubbles, the unwinding of which can cause very severe economic consequences. Furthermore it seems to have done little for the job and wage picture (atleast not enough) while personal debt has gone to record levels. I suppose that monetarists can lay the blame on Greenspan for not applying their theory properly (not enough reduction in money supply in the 90's when things were begining to get out of hand). They might argue that their methods were meant for more minor adjustments, not long term major influxes of monetary stimulus to an economy that had gotten way out of balance between debt and income - I don't know. At this time, I think it is usefull to take a look back in time. It's interesting to note that although many of the conditions of the late 20's and early 30's are in play once again, the roles are reversed. The US is the debtor and foreigners (mostly Asian) are the creditors. We have an additional problem of energy and natural resource supplies becoming scarcer and more expensive. We have a greater problem with the US dollar because of our debt problems. But other problems are remarkably similar. Since the repeal of Glass-Steagle many of the world's largest banks have become quite dependent on income from stock market investment activities. With the very large run-up of housing worldwide they have become dependent on the solvency of mortgages and the consumer credit side of their business. Our largest commercial banks have management which has been involved in corrupt practices involving assisting in fraudulant reporting of corporate earnings when any bank's main asset is its reputation. FDIC has become an ancient relic since most Americans save little and what wealth they do have is invested in the stock market through 401k's and in their homes. Overall consumer debt has now gone well beyond that of the previous high of the early 30's - thanks to the credit card and poor wage growth. The following is from Encarta online regarding the causes of the Great Depression. It contrasts with a monetarist view which lays the blame on governmental policies of the early 30's. But we have lived with Milton Friedman's and Ben Bernanke's 'printing press' methods now for some years and wages still lag real inflation and we're still waiting on the job creation phase. Causes of the Depression Print Preview of Section It is a common misconception that the stock market crash of October 1929 was the cause of the Great Depression. The two events were closely related, but both were the results of deep problems in the modern economy that were building up through the “prosperity decade” of the 1920s. As is typical of post-war periods, Americans in the Roaring Twenties turned inward, away from international issues and social concerns and toward greater individualism. The emphasis was on getting rich and enjoying new fads, new inventions, and new ideas. The traditional values of rural America were being challenged by the city-oriented Jazz Age, symbolized by what many considered the shocking behavior of young women who wore short skirts and makeup, smoked, and drank. The self-centered attitudes of the 1920s seemed to fit nicely with the needs of the economy. Modern industry had the capacity to produce vast quantities of consumer goods, but this created a fundamental problem: Prosperity could continue only if demand was made to grow as rapidly as supply. Accordingly, people had to be persuaded to abandon such traditional values as saving, postponing pleasures and purchases, and buying only what they needed. “The key to economic prosperity,” a General Motors executive declared in 1929, “is the organized creation of dissatisfaction.” Advertising methods that had been developed to build support for World War I were used to persuade people to buy such relatively new products as automobiles and such completely new ones as radios and household appliances. The resulting mass consumption kept the economy going through most of the 1920s. But there was an underlying economic problem. Income was distributed very unevenly, and the portion going to the wealthiest Americans grew larger as the decade proceeded. This was due largely to two factors: While businesses showed remarkable gains in productivity during the 1920s, workers got a relatively small share of the wealth this produced. At the same time, huge cuts were made in the top income-tax rates. Between 1923 and 1929, manufacturing output per person-hour increased by 32 percent, but workers’ wages grew by only 8 percent. Corporate profits shot up by 65 percent in the same period, and the government let the wealthy keep more of those profits. The Revenue Act of 1926 cut the taxes of those making $1 million or more by more than two-thirds. As a result of these trends, in 1929 the top 0.1 percent of American families had a total income equal to that of the bottom 42 percent. This meant that many people who were willing to listen to the advertisers and purchase new products did not have enough money to do so. To get around this difficulty, the 1920s produced another innovation—”credit,” an attractive name for consumer debt. People were allowed to “buy now, pay later.” But this only put off the day when consumers accumulated so much debt that they could not keep buying up all the products coming off assembly lines. That day came in 1929. American farmers—who represented one-quarter of the economy—were already in an economic depression during the 1920s, which made it difficult for them to take part in the consumer buying spree. Farmers had expanded their output during World War I, when demand for farm goods was high and production in Europe was cut sharply. But after the war, farmers found themselves competing in an over-supplied international market. Prices fell, and farmers were often unable to sell their products for a profit. International problems also weakened the economy. After World War I the United States became the world’s chief creditor as European countries struggled to pay war debts and reparations. Many American bankers were not ready for this new role. They lent heavily and unwisely to borrowers in Europe, especially Germany, who would have difficulty repaying the loans, particularly if there was a serious economic downturn. These huge debts made the international banking structure extremely unstable by the late 1920s. In addition, the United States maintained high tariffs on goods imported from other countries, at the same time that it was making foreign loans and trying to export products. This combination could not be sustained: If other nations could not sell their goods in the United States, they could not make enough money to buy American products or repay American loans. All major industrial countries pursued similar policies of trying to advance their own interests without regard to the international economic consequences. The rising incomes of the wealthiest Americans fueled rapid growth in the stock market, especially between 1927 and 1929. Soon the prices of stocks were rising far beyond the worth of the shares of the companies they represented. People were willing to pay inflated prices because they believed the stock prices would continue to rise and they could soon sell their stocks at a profit. The widespread belief that anyone could get rich led many less affluent Americans into the market as well. Investors bought millions of shares of stock “on margin,” a risky practice similar to buying products on credit. They paid only a small part of the price and borrowed the rest, gambling that they could sell the stock at a high enough price to repay the loan and make a profit. For a time this was true: In 1928 the price of stock in the Radio Corporation of America (RCA) multiplied by nearly five times. The Dow Jones industrial average—an index that tracks the stock prices of key industrial companies—doubled in value in less than two years. But the stock boom could not last. The great bull market of the late 1920s was a classic example of a speculative “bubble” scheme, so called because it expands until it bursts. In the fall of 1929 confidence that prices would keep rising faltered, then failed. Starting in late October the market plummeted as investors began selling stocks. On October 29, in the worst day of the panic, stocks lost $10 billion to $15 billion in value. By mid-November almost all of the gains of the previous two years had been wiped out, with losses estimated at $30 billion. The stock market crash announced the beginning of the Great Depression, but the deep economic problems of the 1920s had already converged a few months earlier to start the downward spiral. The credit of a large portion of the nation’s consumers had been exhausted, and they were spending much of their current income to pay for past, rather than new, purchases. Unsold inventories had begun to pile up in warehouses during the summer of 1929. The crash affected the economy the way exposure to cold affects the human body, lowering the body’s resistance to infectious agents that are already present. The crash reduced the ability of the economy to fight off the underlying sicknesses of unevenly distributed wealth, agricultural depression, and banking problems.

Subject: Re: Then and now From: David E.. To: Pete Weis Date Posted: Sat, Apr 02, 2005 at 23:41:10 (EST) Email Address: Not Provided Message: Thanks for your challenging statements. And for the Encarta reference, I took economics 101/102 in the early 60's. I thought I knew something but the encarta reference has, a new for me, cause for the depression. Inequality in income causing demand to fall. Our situation in 2005 is strongly similar to the 1929 situation in at least 5 respects. 1. Productivity increases are not being shared with workers 2. Demand has been propped up with every increasing debt. 3. Efficient advertising driving demand despite financial risk. 4. A huge tax cut for the very rich 5. A troubled world economy All of these are troubling enough - but the middle class is under huge pricing pressure from global competition. Our diminished middle class wont be able to support previous levels of demand. I wish that the debate about economic solutions will be a fair one. It is very disconcerting to see how easily unnecessary wars, torture, and curtailment of civil rights is accepted even applauded. Paul G. Brown is right about Laffer not going away. President Clinton's tax increase and subsequent economic boom cause no difficulties for the Laffer advocates. The tax cuts for the rich have been wasted, the rich don't consume, they invest in hedge funds. Hopefully the economy has enough muscle to muddle through this. If not, we would prefer the post Vietnam type of recession where most of the damage was to return on capital. High unemployment like in 1929 is the worst outcome and hopefully demand can be boosted enough.

Subject: In argentina From: johnny5 To: David E.. Date Posted: Sun, Apr 03, 2005 at 00:03:16 (EST) Email Address: johnny5@yahoo.com Message: The middle class went from nice luxury cars to 5 people squeezing into a small 1980's model fiat. From spending time shopping the nice malls to find bargains - to digging through garbage to find cardboard - why I do not know - but these were the comments of people from the cspan2 argentinian speech today who just recently visited there and saw the crash of the middle class. The wealthy have given a senate job back to the argentinian that got them there - Carlos Menem - him and clinton were the only 2 heads of state to give talks at some IMF conference I believe. Where is the defender of the little guy in argentina? I read in cuba the middle class have went from nice big cars to everyone riding bicycles? http://64.233.161.104/search?q=cache:LTYzXSkf2HgJ:www.coha.org/Press%20Release%20Archives/1997/97.14.pdf Carlos Menem senate&hl=en Clinton's Amnesia on Argentine Realities Matches That of His Tawdry Host President Clinton praises Argentine President Menem for democratic achievements and human rights advances, while, in fact, the Argentine president has obstructed true advances in those directions i President Clinton, whose superficial understanding of Latin American realities is burdened by no historical perspective or true sense of the region's recent travail, is bestowing praise on one of the hemisphere's most tawdry and controversial political figures, Argentine President Carlos Menem. In a one-week trip to three Latin American countries--none of whose democratic bona fides are all that secure--President Clinton has been unfortunately playing the role of a Babbitt engaged in commercial hustling. His one-dimensional emphasis on trade in a region which has repeatedly been gulled by foreigners selling snake oil which eventually turned to economic poison, have been inspired more by President Coolidge's words, 'the business of America is business,' than the high-minded vision of F.D.R. or President Kennedy. References to such abiding hemispheric problems as poverty and the concentration of wealth are dealt with by pro-forma one-liners that do not deserve to be taken seriously, since they are meant to cover bases rather than advance a great humanistic campaign. Democratic Stalwart? The U.S. President also has lauded the Argentine authorities (the heirs of those who coddled Nazi war criminals for decades) for overseeing democratic advances and the great strides the country has taken in the area of human rights. In fact, Menem has been a foe of democratic consolidation, disgracing its institutions by the non-stop scandals that have afflicted his tenure in office. Rather than the second San Martin that the White House portrays, Menem is little more than a self-serving hustler and manipulator who repeatedly lies and engages in acts of cover up in order to fend off accusations of corruption, feather his own nest, and defend the military against human rights accountability. hlenem's callous and raucous nature is epitomized by his larger-than-life personal situation. Tipping his hat to political expediency, Menem was reunited with his wife, Zulema Yomas, just in time for the 1988 Peronist presidential primary. However, after Yomas repeatedly criticized her husband for his social policies, Menem had her expelled from the presidential palace. Relations between the two further deteriorated in March 1995, when their son died in a helicopter crash; Yomas insists her son was murdered and that her ex-husband is covering it up. Political or judicial opposition has proved no barrier to Menem's self-absorbing plans. Shortly after being elected president, Menern circumnavigated a resistant Supreme Court by enlarging it from 5 to 9 judges, and packing it with his supporters. Likewise, Congress has , been effectively enasculated by the President's propensities to govern by decree, completely disregarding the Argentine electorate. It is universally believed that Menem is setting himself up to run for President again in 1999, with the Peronists pushing to once again amend the constitution to allow a president to serve three terms. Cld Traditions Continued Demonstrating a massive indifference to his country's widespread unemployment and poverty as well as ethical sensibilities, Menem, a man of relatively humble origins and modest wealth, has transformed himself into being the lord of a stately manor. He has built a golf course so secluded that it is visible only from the air, and an international airport for his home-town of Anillaco (population 900) so he can fly his private jet to his new, palatial home--complete with sauna, gym, swimming pool and tennis court. As one Argentine journalist said, 'Menem is building himself a private Disneyland in Anillaco.' Making the Clinton soft-money campaign scandal appear an insignificant blip on the scale for public rectitude, after news of the facility was disclosed, Menem insisted that his house and airport were financed with private donations, mostly from the ranks of Argentina's business community. Ruling With An Iron Hand Menem's 'Disneyland' also serves to further highlight the President's undemocratic psychology of attempting to control the press. While he was unable to block the broadcast of the investigative report detailing his desert empire, he did receive the satisfaction of seeing all four of the journalists responsible for it fired and the program cancelled. Only a month ago, a New York Times editorial said: 'President Carlos Menem seems to be encouraging violence ... he publicly called for physical assaults against journalists who offend.' The Argentine President's modus operandi, without question, appears to be to strike first, and strike hard. Shortly after being fired for a disagreement over economic policy, his highly regarded former finance minister, Domingo Cavallo, charged that since 1990, cabinet members repeatedly gave judges instructions on how to handle important cases. As Cavallo said in a 1996 New York Times article, 'In Argentina there is no security or justice.' Menem's response was to attack the former minister's credibility, accusing him of being motivated by revenge, and seeing to it that he was expelled from the Peronist party. Yet, allegations of a skewed and corrupt justice system have been a persistent theme throughout Menem's reign. In 1992 there was a a bombing attack on the Israeli embassy, followed by the bombing of a Buenos Aires Jewish community center in 1994, causing a total death toll of almost 100 innocent victims. The failure of the authorities to act quickly and decisively to resolve these cases, which have been widely viewed in Argentina as a result of collusion by the police (who allegedly helped stage the bombing), has been seen as being sufficiently scandalous to prompt a U.S. Senate resolution condemning Menem's inaction. When former Lt. Commander Adolfo Scilingo recently went public, cataloging his role in throwing desaparecidos into the South Atlantic --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- -- Page 2 President Carlos Menem Page 2 of 2 from airplanes during Argentina's 'dirty war,' Menem failed to use the opportunity to morally condemn the operations and hold the - military responsible for its actions. Indeed, rather than seeking to redress the heinious excesses of the military dictatorship and advance ) human rights, Menem has been tireless in trying to deflect public media attention from the subject, insisting that the period of military rule must remain a matter of crime without punishment. Through a series of actions he has taken or directly supported, the entire officer corps of 1,000 has been exonerated from blame for atrocities conducted in the period of the 'dirty war' from 1976 into the 1980s, and all of those involved in the murder of upwards of 18,000 civilians have been absolved. It is this military that now will txa candidate for high-tech weapons sales, due to Clinton's lifting of the Carter era arms ban, and whose sinister history has provided the basis for the outrageous White House offer to designate Argentina as 'a non-NATO military ally,' one of the most embarrassing and bizarre designations that as yet have been devised by the State Department. No Friend Of Press Freedom The recent murder of crusading photo-journalist Jose Luis Cabezas has raised more questions about the nefarious nature of Menem's government. A key suspect in the judicial investigation into this crime is the mega-business magnate and political power broker, Alfredo Yabran. A shadowy figure in Argentine life, Yabran has appeared in the country's media at the center of a corruption firestorm. In 1995, he was specifically identified by Cavallo as public enemy number one, the ultimate embodiment of the mafia in Argentine politics. Since it took office, the Clinton Administration has supported Menem's policy of amnesia when it comes to human rights abuses. At the same time, the White House has followed a policy of selective indignation, insisting that war criminals indicted for crimes against the citizens of the fomier Yugoslavia and those involved in the killing of the Bureau of Alcohol, Tobacco and Firearms agents in Waco, be brought to justice. In its September 16, 1997 editorial, the New York Times flatly charged that Menem had 'stunted its [Argentina's] democratic growth.' Clinton has been touring South America in what is, ostensibly, a celebration of democracy. Yet if democracy is so important to his administration, why is Menem's Argentina--the perversion of democracy--being drawn closer to the U.S., and on the verge of receiving major 'non-NATO ally' status? The President and his wife are scheduled to spend their last night in the country at the Argentine resort city of Bariloche. The fact that no Argentine community harbored more exiles apparently was not enough to persuade the US. president to do what is right by deciding not to enjoy its hospitality. Authored by Semi W. Burges, a Research Associate at the Washington, DC-based Council on Hemispheric Affnws 1 10M 1- 1 Press Release

Subject: Re: In argentina From: David E.. To: johnny5 Date Posted: Sun, Apr 03, 2005 at 04:00:06 (EDT) Email Address: Not Provided Message: What is most interesting is they recovered despite not following IMF orders.

Subject: Re: Then and now From: Paul G. Brown To: Pete Weis Date Posted: Sat, Apr 02, 2005 at 19:22:56 (EST) Email Address: Not Provided Message: > > We are, IMO, almost certainly witnessing the death of atleast one > school of economic theory - supply-side/trickle down economic > theory. > As much as I would like to think so, I have my doubts. Over the years we have accumulated plenty of evidence that the only way the government can stimulate an economy is through demand management: the factors which determine investment and savings aren't things which can be 'managed' by direct policy means. Never-the-less I predict we will never be entirely rid of the ideas of Mr Laffer et al. They are too conveniently aligned with the interests of the powerful and the privileged.

Subject: Re: Then and now From: Pete Weis To: Paul G. Brown Date Posted: Sat, Apr 02, 2005 at 19:44:36 (EST) Email Address: Not Provided Message: I believe we are near the point of a 'revolution' in political and economic thought. I'm not certain, though, how far or exactly where that revolution will take us. The economic events of the 30's created such a revolution. Unfortunately old ideas which get their support from powerful interests don't die without a lot of suffering and a consequential hunt for the 'guilty'.

Subject: Re: Then and now From: Emma To: Pete Weis Date Posted: Sat, Apr 02, 2005 at 19:53:44 (EST) Email Address: Not Provided Message: Why is there no way for policy to create saving or investment? Think a moment beyond Chicago School theory in which all governed economic policy cancels out. Public schooling must surely be investment. Conservation meansures must surely be saving. Beyond the theory...

Subject: Re: Then and now From: Paul G. Brown To: Emma Date Posted: Sat, Apr 02, 2005 at 21:36:40 (EST) Email Address: paul_geoffrey_brown@yahoo.com Message: I think there is evidence that you can affect savings and investment, but in terms of stimulus, these effects are, well pretty effective. High interest rates, for example, can be used to stifle investment and modify inflationary expectations. But in times of low growth low interest rates a) don't encourage investment if the investing class doesn't see any evidence that it is going to get any return, b) can create the opportunity for speculative bubbles (Hello Florida/California/Sydney Real Estate) and c) disuades us from saving. Monetary policy (I think it was Galbraith said this) is like a string: you can't push on a string. You can do micro things to promote savings and investment: tax credits, etc. But in terms of evidence that it helps much. . .

Subject: Well stated Paul and... From: Pete Weis To: Paul G. Brown Date Posted: Sat, Apr 02, 2005 at 23:00:53 (EST) Email Address: Not Provided Message: better formulated to answer Emma's question.

Subject: Re: Then and now From: Paul G. Brown To: Paul G. Brown Date Posted: Sat, Apr 02, 2005 at 21:37:33 (EST) Email Address: Not Provided Message: Not 'I think there is evidence that you can affect savings and investment, but in terms of stimulus, these effects are, well pretty effective.' Rather 'I think there is evidence that you can affect savings and investment, but in terms of stimulus, these effects are, well pretty ineffective.'

Subject: Re: Then and now From: Pete Weis To: Emma Date Posted: Sat, Apr 02, 2005 at 21:08:31 (EST) Email Address: Not Provided Message: If you believe that jobs and wages will not get much better in the near future then you must accept the notion that growing personal debt will begin to take an ever higher toll on paychecks and consumption. If you believe that, given the present, economic environment of high debt, rising energy and raw material costs, that the present stock market and housing markets are overpriced and set to begin eroding then you must also accept that this also will reduce consumption. There is lots of talk about soft landings vs. hard landings. Any soft landings such as we experienced in the late 80's (after the 87 market crash) and early 90's (during that mild recession) were followed by strong job markets and rising wages and in both those periods we enjoyed some of the cheapest energy relative to inflation in history. Personal debt was, in those years, still well short of where it is now. Even the difficult times of the 70's were rescued by the hightech boom that boosted both the stock and job markets. Furthermore a very large drop in energy costs and gradual drop in interest rates further contributed to 20 years of apparent prosperity. I might add to this that the 70's were not preceded by irrational exuberance and bug run-ups in stocks and housing. In the 70's credit cards were just emerging. This time around it is much more similar to the early 30's which involved a very hard landing. Remember that the further development of economic theory since WWII which was mainly aimed at avoiding another 30's style depression has not been tested until now. If you look at our situation now it's difficult to make a case that we will avoid a hard landing despite all the advances in economic theory. So two possibilities arise - either (1) present economic theory is heavily flawed or (2) it has not been implimented properly. Perhaps it's a combination of the two. Anyway, things have gotten to the point, IMO, where no amount of fiscal and monetary policy by the US alone will turn the tide from a hard landing. The eerie similarities to the 30's is hard to miss. Whether this is a perfect storm or 'economic armegedon' per Stephen Roach's description, we've got some very difficult times ahead. Someone has got to demonstrate to me that a significant improvement in jobs and wage increases here in the US, Japan, and Europe is just around the corner for me to believe we won't have a very hard landing in the near future.

Subject: Re: Then and now From: Emma To: Pete Weis Date Posted: Sat, Apr 02, 2005 at 18:25:25 (EST) Email Address: Not Provided Message: Pete, I have read this remarkable commentary several times. What you appear to be getting at is a failure of traditional economic policy to allow for the continuation of the sort of modest movement to an equality of opportunity we experienced from the New Deal through the 1970s. So, then, why not question are economic theories and structures. Interesting and most thoughtful. I will think about the problem you have presented us. Thank you.

Subject: Wonderful Comment From: Terri To: Pete Weis Date Posted: Sat, Apr 02, 2005 at 15:44:40 (EST) Email Address: Not Provided Message: This is perfectly done and most convincing. Wonderful.

Subject: A Morsel of Goat Meat From: Emma To: All Date Posted: Sat, Apr 02, 2005 at 15:00:25 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/03/23/opinion/23kristof.html?ex=1113109200&en=a7d363e1937cfb20&ei=5070 A Morsel of Goat Meat By NICHOLAS D. KRISTOF Binga, Zimbabwe The hungry children and the families dying of AIDS here are gut-wrenching, but somehow what I find even more depressing is this: Many, many ordinary black Zimbabweans wish that they could get back the white racist government that oppressed them in the 1970's. 'If we had the chance to go back to white rule, we'd do it,' said Solomon Dube, a peasant whose child was crying with hunger when I arrived in his village. 'Life was easier then, and at least you could get food and a job.' Mr. Dube acknowledged that the white regime of Ian Smith was awful. But now he worries that his 3-year-old son will die of starvation, and he would rather put up with any indignity than witness that. An elderly peasant in another village, Makupila Muzamba, said that hunger today is worse than ever before in his seven decades or so, and said: 'I want the white man's government to come back. ... Even if whites were oppressing us, we could get jobs and things were cheap compared to today.' His wife, Mugombo Mudenda, remembered that as a younger woman she used to eat meat, drink tea, use sugar and buy soap. But now she cannot even afford corn gruel. 'I miss the days of white rule,' she said. Nearly every peasant I've spoken to in Zimbabwe echoed those thoughts, although it's also clear that some still hail President Robert Mugabe as a liberator. This is a difficult place to gauge the mood in, because foreign reporters are barred from Zimbabwe and promised a prison sentence of up to two years if caught. I sneaked in at Victoria Falls and traveled around the country pretending to be a tourist. The human consequences of the economic collapse are heartbreaking. I visited a hospital and a clinic that lacked both medicines and doctors. Children die routinely for want of malaria medication that costs just a few dollars. At one maternity ward, 21 women were sitting outside, waiting to give birth. No nurse or doctor was in sight, and I asked the women when they had last eaten meat, eggs or other protein. They laughed uproariously. Lilian Dube, a 24-year-old who had hiked 11 miles to get to the hospital, said that she had celebrated Christmas with a morsel of goat meat. 'Before that, the last time I had meat was Christmas the year before,' she said. 'I just eat corn porridge and mnyi,' a kind of wild fruit. An elementary school I visited had its fifth graders meeting outside, because it doesn't have enough classrooms. Like other schools, it raises money by charging fees for all students - driving pupils away. 'Only a few of the kids who started in grade one are still with me in school,' Charity Sibanda, a fifth-grader, told me. 'Some dropped out because they couldn't pay school fees. And some died of AIDS.' As many as a third of working-age Zimbabweans have AIDS or H.I.V., and every 15 minutes a Zimbabwean child dies of AIDS. Partly because of AIDS, life expectancy has dropped over the last 15 years from 61 to 34, and 160,000 Zimbabwean children will lose a parent this year. AIDS is not President Mugabe's fault, but the collapse of the health system has made the problem far worse. The West has often focused its outrage at Mr. Mugabe's seizure of farms from white landowners, but that is tribalism on our part. The greatest suffering by far is among black Zimbabweans. I can't put Isaac Mungombe out of my mind. He's sick, probably dying of AIDS, and his family is down to one meal a day. His wife, Jane, gave birth to their third child, Amos, six months ago at home because she couldn't afford $2 to give birth in the hospital. No one in the family has shoes, and the children can't afford to attend school. They're a wonderful, loving family, and we chatted for a long time - but Isaac and Jane will probably soon die of AIDS, and the children will join the many other orphans in the village. When a white racist government was oppressing Zimbabwe, the international community united to demand change. These days, a black racist government is harming the people of Zimbabwe more than ever, and the international community is letting Mr. Mugabe get away with it. Our hypocrisy is costing hundreds of Zimbabwean lives every day.

Subject: A shocking tale From: johnny5 To: Emma Date Posted: Sat, Apr 02, 2005 at 20:56:25 (EST) Email Address: johnny5@yahoo.com Message: Before Freedom, people seem to want a full belly, what would the founding fathers think of this Emma? This is so sad.

Subject: Hybrid-Car Tinkerers and No-Plug-In Rule From: Emma To: All Date Posted: Sat, Apr 02, 2005 at 14:56:35 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/04/02/business/02plug.html?8hpib=&pagewanted=all&position= Hybrid-Car Tinkerers Scoff at No-Plug-In Rule By DANNY HAKIM DETROIT - Ron Gremban and Felix Kramer have modified a Toyota Prius so it can be plugged into a wall outlet. This does not make Toyota happy. The company has spent millions of dollars persuading people that hybrid electric cars like the Prius never need to be plugged in and work just like normal cars. So has Honda, which even ran a commercial that showed a guy wandering around his Civic hybrid fruitlessly searching for a plug. But the idea of making hybrid cars that have the option of being plugged in is supported by a diverse group of interests, from neoconservatives who support greater fuel efficiency to utilities salivating at the chance to supplant oil with electricity. If you were able to plug a hybrid in overnight, you could potentially use a lot less gas by cruising for long stretches on battery power only. But unlike purely electric cars, which take hours to charge and need frequent recharging, you would not have to plug in if you did not want to. 'I've gotten anywhere from 65 to over 100 miles per gallon,' said Mr. Gremban, an engineer at CalCars, a small nonprofit group based in Palo Alto, Calif. He gets 40 to 45 miles per gallon driving his normal Prius. And EnergyCS, a small company that has collaborated with CalCars, has modified another Prius with more sophisticated batteries; they claim their Prius gets up to 180 m.p.g. and can travel more than 30 miles on battery power. 'If you cover people's daily commute, maybe they'll go to the gas station once a month,' said Mr. Kramer, the founder of CalCars. 'That's the whole idea.' Conventional hybrid electric cars already save gas. But if one looks at growth projections for oil consumption, hybrids will slow the growth rate of oil imports only marginally, at best, with the amount depending on how many hybrids are sold. To actually stop the growth of oil imports and potentially even reduce consumption, automakers have focused on developing cars powered by hydrogen fuel cells. But fuel cells would require a complete reinvention of the automobile, not to mention the nation's gas stations, and the technology to put them on the road is still a long way from fruition. Advocates of plug-in hybrids say the technology for these vehicles is available now to the point that people are building them in garages. 'All of the relevant technology is at hand,' said Frank Gaffney, founder of the Center for Security Policy and an assistant defense secretary in the Reagan administration. His group was among a coalition of right-leaning organizations that released an energy plan this year promoting plug-ins as one way to increase fuel efficiency in light of the instability of the Middle East. 'If you're thinking about this as an environmental issue first and foremost, you're missing the point,' Mr. Gaffney said. Curbing dependence on foreign oil, he added, 'is a national security emergency.' Toyota, however, says the plug-in is not ready for prime time. 'They say this is the next great thing, but it just isn't,' said David Hermance, an executive engineer at Toyota. 'The electric utilities really want to sell electricity and they want to sell it to the transportation sector because that expands their market. They have an agenda.' But the plug-in hybrid is not just coming out of the garages of enthusiasts in California. DaimlerChrysler has developed several dozen plug-in hybrid vans in cooperation with the Electric Power Research Institute, a group financed by more than 300 utilities, including the New York Power Authority and Southern California Edison. Testing of the vans will start this year, and one will be used by The New York Times on a newspaper delivery route in Manhattan. Several small companies are also developing or have developed plug-in hybrid prototypes. 'We think it's the only way to rekindle interest in electric transportation,' said Robert Graham, who manages research into electric vehicles for the Research Institute. 'There are no technology hurdles at all. It's simply a matter of getting the vehicle built out on the street and getting people to recognize its value.' For power companies, the notion of people plugging in cars overnight represents not only a new way to make money, but the vehicles would also draw power mostly during off hours which would improve efficiency, because power plants cannot simply shut down at night as demand diminishes. As it stands, though, modifying a hybrid like the Prius to enable it to plug in would add perhaps $2,000 to $3,000 to the cost of a car that is already roughly $3,000 more expensive than conventional gas cars. Advocates say the costs would be much lower if such cars were mass-produced by a major automaker. But Nick Cappa, a spokesman for DaimlerChrysler, was cautious, calling the technology one of many the company was exploring. Among its current drawbacks is that the added batteries take up space and make the company's Sprinter van several hundred pounds heavier. 'This is part of a small program investigating these technologies,' Mr. Cappa said. And Mr. Hermance of Toyota said that batteries today were not durable enough to handle the wide range of charging up and charging down that a plug-in hybrid would need, calling that the most damaging thing you can do to a battery. Edward Furia, the chief executive of AFS Trinity Power, a privately held company in Bellevue, Wash., that develops mechanical batteries called flywheels, agreed with Mr. Hermance, but said that a secondary energy storage technology like a flywheel could solve the problem. 'If you've got a flywheel with your chemical battery, you can draw down the chemical battery, but when it's time to do a heavy lift, to accelerate or absorb energy, the flywheel is doing the acceleration or the absorption, not the chemical battery,' said Mr. Furia, whose company is developing its own plug-in hybrid that it says will get several hundred miles per gallon. While many environmentalists support the technology, some say in terms of emissions, electric cars would only be as good as the power plants that produce electricity. 'The concern on plug-in hybrids is that we not substitute addiction to one polluting fuel for addiction to a more polluting fuel,' said Dan Becker, the head of the Sierra Club's global warming and energy program. 'Coal is more polluting than gasoline, and nearly 60 percent of U.S. electricity is generated by burning coal.' Roger Duncan, a deputy general manager of Austin Energy, a utility owned by the City of Austin, Tex., said that 'it's hard to say what impact it will have on the nation as a whole,' but that in regions that use cleaner-than-average power sources, like Austin or California, it would provide a clear emissions benefit. Mr. Duncan even imagines a day when drivers could be paid to return energy to the grid during times of excessive demand. Plug-in hybrid prototypes have been around for several years, but the idea of modifying a Prius stemmed from the curiosity of some Prius owners in the United States, Mr. Kramer said. They were aroused by a mysterious unmarked button on their Prius and discovered that in Priuses sold in Europe and Japan, the button allows the car to drive for a mile in electric-only mode. Mr. Hermance said the feature was disabled in Priuses sold in the United States because of complications it would have created in emissions-testing rules. Mr. Kramer said 'a bunch of engineers reverse-engineered it in the United States and figured out how to hack it.' But they soon wanted to travel on batteries for more than a mile and began to collaborate through CalCars on adding batteries to the Prius that would allow for longer pure electric travel. With the help of dozens of volunteer engineers collaborating online, the group retrofitted a Prius in Mr. Gremban's garage to travel about 10 miles on nothing but battery power. Mr. Duncan said the plug-in hybrid was 'very realistic, because it's not that big a leap in technology.' 'Look what Felix has done with Prius off the street,' he added. 'This isn't rocket science.'

Subject: Re: Hybrid-Car Tinkerers and No-Plug-In Rule From: jimsum To: Emma Date Posted: Sat, Apr 02, 2005 at 21:54:28 (EST) Email Address: jim.summers@rogers.com Message: I own a Prius and I really want a plug-in option. I have a 3 km commute, and surely it wouldn't take too much battery power to go that distance and back. However, the Toyota engineer has pretty much talked me out of it. His job depends on the batteries in the Prius lasting the life of the car; they guarantee it for 8 years. If plug-in batteries only last three years; they won't be worth $3000. And worse for the Toyota engineer, all hybrid car batteries will be given a bad reputation.

Subject: Re: Hybrid-Car Tinkerers and No-Plug-In Rule From: Emma To: jimsum Date Posted: Sun, Apr 03, 2005 at 10:27:32 (EDT) Email Address: Not Provided Message: Thanks, Jim. Then what is your conclusion. Should there be an option of battery type? Are you pleased with the Prius.

Subject: Re: Hybrid-Car Tinkerers and No-Plug-In Rule From: jimsum To: Emma Date Posted: Sun, Apr 03, 2005 at 21:11:20 (EDT) Email Address: jim.summers@rogers.com Message: I am really happy with the car, I can't think of much that can be improved. I bought it about a year and a half ago, and like most people, I never saw one let alone have a test drive. So I was really happy when I didn't find anything wrong with it. The car is bigger than I expected, about the size of an Accord or Camry, and it has a huge amount of legroom in the rear. The car has a very high-tech design. There really isn't a dashboard; the digital speedometer is just below the windshield, where it is very easy to see. The touch screen is used for just about everything else, like the climate controls and the CD player. They stuck buttons on the steering wheel for things like volume and temperature control. The car is very quiet. You can't really feel it when the gas engine starts up or stops. The slower you go, the better the mileage you get, so I get the best mileage in traffic jams! I find it has changed my attitude towards heavy traffic a bit; I'm still annoyed at the delay, but I get the compensation of better mileage and of a nearly silent car. The mileage is good, but not magical. The faster you go, the more gas you burn. I find I get about 20% better mileage than I did in my previous car, a 1992 Honda Civic hatchback; even though the Prius is a bigger car. My overall average after 24000 km is about 5.8 l/100km or 42 mpg (U.S. gallons). The mileage is much better when temperatures are above freezing; I get closer to 5.0 in the summer (49 mpg). The car is pretty expensive, but I think it is likely worth the cost. Gas prices are not going down, and traffic is getting more congested; both of these factors favour hybrids over regular cars. Now onto my wish list :-) I wish the car were more open to tinkering. It would be great to use the touch screen with a PDA; I keep a log book to record my gas purchases, I'd love to use the screen instead. The same goes for the electricity. Why not have a way to feed electricity into the system? I believe the Toyota engineer when he says the existing batteries would be ruined by plug charging; but I'm sure different batteries could be designed that can stand up to it. I just want to be able to add aftermarket parts, like you can add turbochargers and nitrous systems to regular cars. I'd love to replace the roof and hood with solar cells, and not even have to pay for the electricity. At any rate, I am really happy that Toyota is selling the Prius, even if it can be improved a bit.

Subject: When Marriage Kills From: Emma To: All Date Posted: Sat, Apr 02, 2005 at 14:40:11 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/03/30/opinion/30kristof.html?ex=1113109200&en=a941cc4cfd221b5c&ei=5070 When Marriage Kills By NICHOLAS D. KRISTOF Livingstone, Zambia — Sex kills all the time, particularly here in Africa. But prudishness can be just as lethal. President Bush is focusing his program against AIDS in Africa on sexual abstinence and marital fidelity, relegating condoms to a distant third. It's the kind of well-meaning policy that bubbles up out of a White House prayer meeting but that will mean a lot of unnecessary deaths on the ground in Africa. The stark reality is that what kills young women here is often not promiscuity, but marriage. Indeed, just about the deadliest thing a woman in southern Africa can do is get married. Take Kero Sibanda, a woman I met in a village in Zimbabwe. Mrs. Sibanda is an educated woman and lovely English-speaker who married a man who could find a job only in another city. She suspected that he had a girlfriend there, but he would return to the village every couple of months to visit her. 'I asked him to use a condom,' she said, 'but he refused. There was nothing I could do.' He died two years ago, apparently of AIDS. Now Mrs. Sibanda worries that she and her beautiful 2-year-old daughter, Amanda, have H.I.V. as well. Encouraging more use of male and female condoms might reduce such tragedies, for there's a disdain for condoms in many countries that social marketing might change (there's an African saying: 'Who wants a sweet with the wrapper still on?'). The fact is that condoms have played a crucial role in the campaigns against AIDS that have been relatively successful, from Thailand's '100 percent condom program' to the efforts in Uganda, Cambodia and Senegal. And condoms don't cause sex any more than umbrellas cause rain. In theory, everybody agrees on how to prevent AIDS: the ABC method, which stands for abstinence, being faithful and condoms. But the Bush administration interprets this as ABc. New administration guidelines stipulate that U.S.-financed AIDS programs for young people must focus on abstinence or, for those who are already sexually active, 'returning to abstinence.' Here in Livingstone, Zambia, I visited Corridors of Hope, a U.S.-financed center for young people that has proved cheap and effective in reducing H.I.V. among prostitutes and long-distance truck drivers. One prostitute in the program is Mavis Sitwala, an orphan (probably because of AIDS) who is supporting her five siblings and one child. She says that truck drivers pay $1 for sex with a condom or $4 for sex without. 'At times, you need food or money to pay the rent,' she said, 'and so even if he won't use a condom, you agree.' Encouraging Ms. Sitwala to 'return to abstinence' isn't likely to get far, but encouraging more use of condoms might save her life, the lives of her clients and the lives of her clients' wives. Indeed, the Bush administration recognizes that, allowing condoms to be handed out to prostitutes in programs like Corridors of Hope - but not to society as a whole. There's a bit of wiggle room in the administration guidelines. But the U.S. Center for Health and Gender Equity reports that in several countries, the U.S. is already backing away from effective programs that involve condoms. The irony is that President Bush's plan to tackle AIDS in Africa - spending far more than any previous administration - could be one of his best and most important legacies. It tackles one of the most important humanitarian challenges in the world today: at present infection rates in Zimbabwe, 85 percent of today's 15-year-olds will die of AIDS. So I wish Mr. Bush would reach out beyond the ideologues to a real expert, like Loveness Sibanda. I met Mrs. Sibanda (no relation to the other Mrs. Sibanda) and her child in her village in Zimbabwe. She is 26, and her husband works in the city of Bulawayo, where she has heard that he has a girlfriend. Every few months he comes back to the village and insists on sleeping with her, without a condom. She now dreads these visits. Perhaps the White House thinks it has the moral high ground when it preaches, completely irrelevantly, to women like Mrs. Sibanda about the need to be faithful. But it strikes me as hypocritical to pontificate about virtue while pursuing an ideological squeamishness about condoms that risks condemning Mrs. Sibanda and millions like her to die of AIDS.

Subject: Cspn2 3:31pm - Roles Of Married Woman From: johnny5 To: Emma Date Posted: Sat, Apr 02, 2005 at 14:44:50 (EST) Email Address: johnny5@yahoo.com Message: 03:31 pm 1:09 (est.) Forum Roles of Married Women Virginia Festival of the Book Forum Roles of Married Women Virginia Festival of the Book Charlottesville, Virginia (United States) ID: 185910 - 3 - 03/19/2005 - 1:14 - $29.95 A panel discussion of the role of the wife in American society was held in the Charlottesville City Council Chambers Panelists include: Meredith Broussard, author of The Dictionary of Failed Relationships: 26 Tales of Love Gone Wrong; Karen Houppert, author of Home Fires Burning: Married to the Military-for Better or Worse; Anne Kingston, author of The Meaning of Wife: A Provocative Look at Women and Marriage in the Twenty-first Century; and Meg Wolitzer, author of The Position and The Wife. The moderator is Bella Stander, Book Promotions Consultant

Subject: Another Kind of Racism From: Emma To: All Date Posted: Sat, Apr 02, 2005 at 14:38:34 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/04/02/opinion/02kristof.html Another Kind of Racism By NICHOLAS D. KRISTOF LUBIMBI, Zimbabwe The hardest place in the world to be an optimist is Africa. Much of Africa is a mess, and no country more so than Robert Mugabe's Zimbabwe. The continent has been held back by everything from malaria to its nonsensical colonial boundaries, but the two biggest problems have been lousy leaders and lousy economic policies - and Zimbabwe epitomizes both. What makes Robert Mugabe a worse oppressor of ordinary Zimbabweans than the white racist rulers who preceded him is not just the way he turned a breadbasket of Africa into a basket case in which half the population is undernourished. It's also the fact that he's refusing to let aid organizations provide food to most of his people. He prefers to let them starve. In one western Zimbabwean village, I found a woman, Thandiwe Sibanda, who is trying desperately to keep her family alive. 'I'm the only one left to care for the children,' she said. 'My husband died, along with his other wife.' So now she is trying to provide for her own four rail-thin children as well as the two children of the other wife (who presumably died of AIDS along with the husband - so Mrs. Sibanda will very likely die of it as well). 'All we can eat is corn porridge,' she said, 'and there isn't nearly enough even of that.' Mrs. Sibanda is adopting the same survival strategies as nearly every other peasant family I spoke to - they are down to one or two meals a day. She pulled her children out of school last fall to save the $2.25 in annual school fees, as are many other families. Her daughter just had a baby a few days ago but has no milk to feed it. The infant may be the first to die. Jealous Sansole, a member of Parliament who opposes Mr. Mugabe, told me that in his district, people are already beginning to die of hunger. I didn't see that, but malnutrition is probably speeding up deaths from malaria, diarrhea and certainly AIDS. The only reason more haven't died is food aid. Mrs. Sibanda's village, for example, until recently received regular food distributions from the World Food Program and the Save the Children Federation. But last year, President Mugabe declared that Zimbabwe did not need food assistance. This was a lie, but Mr. Mugabe ordered the World Food Program and the aid groups it works with to stop handing out food to the general population. Some groups continued to distribute food that was in the pipeline, and I visited some villages that received food until January. But now the food aid has all ended. At an elementary school I visited, the principal said that three-quarters of the pupils could not afford breakfast and came to school hungry. Along the border with Mozambique, poor families are marrying off their daughters at very young ages so they will no longer have to feed them. If the old white regime here was deliberately starving its people, the world would be in an uproar. And while President Bush should be more forceful in opposing Mr. Mugabe's tyranny, it's the neighboring countries that are most shameful in looking the other way. There's a liberal tendency in America to blame ourselves for Africa's problems, and surely there's far more that we should do to help. We should encourage trade, forgive debts, do research on tropical diseases and distribute mosquito nets that protect against malaria. But some problems, such as Mr. Mugabe, are homegrown and need local solutions, like an effort by South Africa to nudge him into retirement. One of Africa's biggest problems is the perception that the entire continent is a hopeless cesspool of corruption and decline. Africa's leaders need to lead the way in pushing aside the clowns and thugs so their continent can be defined by its many successes - in Ghana, Mali, Cape Verde, Mauritius, Uganda and Botswana - rather than by the likes of Idi Amin, Emperor Bokassa and Robert Mugabe. There's a twinkle of hope, for Nigeria and other West African countries have shown the gumption to denounce seizures of power in Togo and São Tomé. But South Africa is still allowing Mr. Mugabe to cast a pall over the entire continent out of deference for his past fight against white oppression. Frankly, Zimbabweans have already suffered so much from racism over the last century that the last thing they need is excuses for Mr. Mugabe's misrule because of the color of his skin.

Subject: Mortgage or property tax - take a pick From: johnny5 To: All Date Posted: Sat, Apr 02, 2005 at 14:14:58 (EST) Email Address: johnny5@yahoo.com Message: http://www.sptimes.com/2005/03/25/Citytimes/No__for_sale__sign_Bu.shtml No 'for sale' sign? Buyers don't care Residents in neighborhoods near downtown Tampa are being asked to sell as real estate prices climb. By SHERRI DAY Published March 25, 2005 --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- -- TAMPA - Ora Lee Scott sees it all from her front porch. Sometimes they come by mail, carefully worded letters from speculators asking to buy her house in Tampa Heights. Real estate brokers or would-be home buyers slowly cruise her block examining houses from their cars. On Sundays, bicyclists stop and snap pictures of bungalows and Victorians. The bold come to Scott's front door and pose a series of questions. Invariably, they always start with, 'Do you own your house?' Scott said. Then comes the hammer. 'Do you want to sell?' For Scott, 75, the answer is always no. 'They can just stop because I'm not going to do that,' said Scott, a retired nanny who lives in a bungalow on E Amelia Avenue. 'My mama died and left me this house. And I'm going to try to stay until I die and leave it to somebody else.' Scott, who has lived in Tampa Heights for most of her life, finds herself the recipient of a curious fortune. As the quality of life in her historic neighborhood increases, so, too, do requests to buy her 80-year-old house. Scott usually asks those who inquire what makes her house so special. 'They never give you an answer or they say, 'We just thought we'd like to live over here,'' she said. 'But I know it's more than that. I'm not stupid, not by a long shot.' Area real estate agents say Scott's case is a scenario that plays out every day in underdeveloped areas around downtown Tampa. As real estate prices in South Tampa's core neighborhoods climb, fringe areas look a lot more appealing. Suburban commutes and daily battles with gridlock also prompt homeowners to seek housing closer to their jobs. Now, neighborhoods shunned years ago by upwardly mobile professionals headed to suburbia are being courted again. Along with Tampa Heights, communities such as East Ybor City, Carver City, Palmetto Beach and Riverside Heights are on the brink of renaissance, agents and developers said. Homeowners in those neighborhoods increasingly find themselves the target of sales pitches. It's the price the residents pay for being in the next hot neighborhood. 'The prices have gotten to the point where it's exhausting some people and they just can't afford to get into South Tampa,' Tampa developer Dennis Johnson said. 'People see that I can go to Palmetto Beach or Forest Hills and get something for a lot less money. You can't have South Tampa, but you don't want to go out to Cross Creek.' Marie Preston, a real estate agent with Preston & Farley, said Tampa's burgeoning residential communities include Riverside Heights, Gandy/Sun Bay South and Palmetto Beach. She's got big predictions for Palmetto Beach. 'That's going to really blossom,' Preston said. 'We talk about that all time. It's certainly underpriced.' Lindsey Harris, president of the Palmetto Beach Community Association, agrees. He plans to use his day job in Caldwell Banker's South Tampa office to publicize his neighborhood. 'I should have been working this community,' Harris said. 'I'm getting ready to do some things through Caldwell Banker to really help put this community on the map.' Harris lapses into real-estate speak and touts the attributes of the neighborhood, which borders McKay Bay: 'Affordable housing. A-plus elementary school. Waterfront housing.' Young professionals and young families make up his target audience. For some Palmetto Beach residents, increased attention is a mixed bag. On one hand, the neighborhood has more services, including an improved DeSoto Park, a new pool and a bike path. But the fear of higher property taxes looms large. 'Some of us are on fixed incomes,' said Irene Rodriguez, a retired social worker who owns a house on Bermuda Boulevard along McKay Bay. 'If the property values go up, they can tax you out of your homes. I might have to go back to work to pay the taxes. 'Some of us don't want to be discovered.' Property owners with homestead exemptions can only receive a maximum 3 percent property tax increase each year. Still, some homeowners worry that the cumulative effect of higher property values over several years could overwhelm longtime homeowners, particularly the elderly. In Palmetto Beach, the median home value in 2000 was $60,000, according to the Hillsborough County Property Appraiser's Office. Four years later, the median value jumped to $85,750, a 43 percent increase. Other developing neighborhoods also showed a similar increase in median values, property records show. In the same period, the median value of homes in Carver City rose 39.4 percent. Likewise, median home values in Tampa Heights jumped 36.1 percent. The rise in value prompted Carver City/Lincoln Gardens homeowners association president Lorraine Wiley to encourage her members to hold on to their properties. At the association's March 3 meeting, the word to hold out came from an unlikely source. 'Nobody should be selling,' said Tampa developer James R. Mikes, who plans to build two townhome projects in the neighborhood. 'You're getting all the letters. If you're going to sell, sell when the prices are at their highest. Don't anybody sell right now.' But some Carver City residents aren't listening. Nadie Spivey, 82, has been trying to sell his home on Chestnut Street behind a Jefferson High School practice field for several years. 'I want to sell, but no buyers have come along yet,' said Spivey, who paid $500 for his lot in the 1960s. He said he built his house for $10,000. 'I lost my wife, and I don't have any business with this now. It's expensive. You can see now, my grass needs cutting.' Many of the houses on Spivey's block have for-sale signs in their front yards. That's because more than a year ago, a real estate agent told the residents he could get them top dollar for their property. Word on the street was that a developer was eyeing the property and planned to erect a hotel. But so far, few of the houses have actually sold. Frustrated, Spivey eventually removed the sign. Johnnie Mae Lane and her husband never put one up. But they have been expecting commercial development on the block for more than 40 years. Back then, the landowner told the Lanes that schools would come to the area as would a shopping center and hotels. So far, all of that has happened, Lane said. With their children long grown, the Lanes are prepared to move whenever the eager developers come - if the money is right. 'I let them know in the beginning, 'You're going to have to make me an offer that I can't refuse,'' she said. 'When that offer comes around, we'll know what it is. So far nobody has made us an offer that we can't refuse.' The Lanes' price? $200,000. Not everyone is willing to move. Some wonder where they would be able to afford to buy. Many already feel defeated, figuring that gentrification will eventually force them beyond city limits. Some longtime residents in those neighborhoods view their new neighbors with suspicion. Earlier this week in Tampa Heights, Jimmy Jones, a 37-year-old truck driver, spoke of 'they' and 'them,' meaning the whites and Latinos who are moving into the mostly black neighborhood. 'When we first moved here, most of them moved up to Carrollwood and Lutz,' Jones said. 'Now they're trying to push us out and come back in. A lot of people are pretty upset about it, but they feel there's nothing they can do.' Jones, sitting on a friend's front porch, bemoaned the unraveling of his neighborhood's once close-knit community. His friend, an elderly woman who owns a Tampa Heights house, echoed his concerns. Recently, Tampa's code enforcement officers cited her for having a chain-link fence. Although she owns her home, she fears costs will keep mounting now that home values are rising. Palmetto Beach's Joe Villa, 60, does not share her concerns. He lives across the street from DeSoto Park and said that all his neighborhood has lost in recent years are run-down mobile home parks, crime and drugs. He frequently gets offers to buy his house. But now that things are looking up in the neighborhood, he's renovating with no plans to sell. 'This house has been paid for, for the last 15 years,' said Villa, a machinist at the Port of Tampa. 'I'm sure property taxes will go up sooner or later. Still, it can't be as bad as paying a mortgage payment.' Sherri Day can be reached at 226-3405 or sday@sptimes.com [Last modified March 24, 2005, 08:29:25]

Subject: Argentina collapse - cspn2 today 4:44 pm From: johnny5 To: All Date Posted: Sat, Apr 02, 2005 at 12:04:57 (EST) Email Address: johnny5@yahoo.com Message: You can watch it on the webcast if you don't have cable. http://inside.c-spanarchives.org:8080/cspan/schedule.csp 04:44 pm 1:12 (est.) Speech And the Money Kept Rolling In (and Out): Argentina Politics and Prose Bookstore Paul Blustein , Washington Post Speech And the Money Kept Rolling In (and Out): Argentina Politics and Prose Bookstore Washington, District of Columbia (United States) ID: 185857 - 03/04/2005 - 1:12 - $29.95 Blustein, Paul, Correspondent, [Washington Post], Business Mr. Blustein talks about his book And the Money Kept Rolling In (and Out): Wall Street, the IMF, and the Bankrupting of Argentina, published by PublicAffairs. The book details the economic collapse of Argentina in 2001. The author contends that in the late 1990s Argentina employed new policies that were in keeping with the ideologies of the IMF, Wall Street financial institutions, and the World Bank. When Argentina failed to successfully implement these policies, the result was a complete collapse of not only the economic infrastructure but the government as well, leaving millions in financial ruin.

Subject: Rational Efficient Market Participants From: johnny5 To: All Date Posted: Sat, Apr 02, 2005 at 11:34:36 (EST) Email Address: johnny5@yahoo.com Message: Sorry Terri, I can't share your optimism on the rational efficiency of the masses. Miss Cleo made how much off of suckers? http://www.museumofhoaxes.com/hoax/aprilfool/ www.snopes.com Don't forget all the people buying that holy mary grilled chese frying pan link from EBAY I sent you earlier.

Subject: Interest Rates and Asset Prices From: Emma To: All Date Posted: Sat, Apr 02, 2005 at 10:32:40 (EST) Email Address: Not Provided Message: Though I am sympathetic to worry about rapidly rising real estate prices, nonetheless prices fixing by interest rate changes would presume we know what housing prices ought to be and this is a tricky tricky problem at best. Long term interest rates are still remarkably low because institutional demand for such debt is high and supply somewhat limited. Investors are confident there will not be a long term inflation problems. I suspect that Alan Greenspan will ask for a 50 or even 75 basis point increase in rates as he has done before, if he feels the bond market is anticipating to many 25 basis point moves to allow for stability of prices for various asset classes. Trying to lower real estate prices is simply too dangerous; notice Japan.

Subject: Re: Interest Rates and Asset Prices From: Pete Weis To: Emma Date Posted: Sat, Apr 02, 2005 at 12:42:02 (EST) Email Address: Not Provided Message: 'Trying to lower real estate prices is simply too dangerous; notice Japan.' At this point I would have to agree with you. The fed will only raise rates steeply if a more severe dollar crisis occurs. Right now our economy balances atop a steep sided real estate mountain. Rising oil is an additional problem as we must borrow more of the world's savings to import more costly oil. As Stephen Roach states - 'the US absorbs about 80% of the world's savings'. When you mention Japan, it's interesting to note that they maintained low interest rates, a trade surplus, and oil remained cheap through about mid 2003 and still their real estate dropped considerably from the 'bubble' it experienced during the late 80's and early 90's. You have to wonder why or how we would avoid a fairly severe real estate correction if Japan failed in this.

Subject: Dukes Of Hazzard From: johnny5 To: Pete Weis Date Posted: Sat, Apr 02, 2005 at 13:35:12 (EST) Email Address: johnny5@yahoo.com Message: http://www.demos-usa.org/pubs/home_insecurity_v3.pdf While many U.S. households have benefited from the recent rise in real estate prices, homeowners who have bought at record high prices are vulnerable to a fall in property values that could leave them owing more on their mortgage than their home is worth. This risk is aggravated by the fact that many Americans have reduced the equity in their home to pay off credit card debts and cover day-to-day expenses. More troubling still is evidence that many appraisers fraudulently inflate property values during the buying or refinancing of homes. This paper explores the implications of appraisal fraud. A few properties my father had in south georgia had this problem as he discovered when he tried to sell recently, the appraiser jacked the valuation, the bank officer made a bigger loan, the insurance man made a bigger insurance contract, the property tax lady boosted the property tax - the woman at the tax office was the wife of the lawyer/appraiser who was the brother of the bank officer who were the uncles of the insurance agent. Systemic risk indeed! Granted this was no MIAMI and a smaller south georgia town - Valdosta. But the good ole boy system is well in place to milk what they consider the outside investor and let him bear the risk of LIES.

Subject: Born to Be a Foreigner In Japan From: Emma To: All Date Posted: Sat, Apr 02, 2005 at 09:34:50 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/04/02/international/asia/02gyun.html?pagewanted=all&position= Born to Be a Foreigner in Her Motherland By NORIMITSU ONISHI TOKYO CHUNG HYANG GYUN'S news conference was a sight seldom seen in Japan, the raw anger written across her face, the fury in her voice and words, the palpable feeling that these last words would somehow redeem the futility of her actions. 'I want to tell people all over the world that they shouldn't come to Japan to work,' Ms. Chung said in the perfect Japanese befitting someone who has lived nowhere else but Japan. 'Being a worker in Japan is no different from being a robot.' After a decade-long battle, the Supreme Court ruled recently that Ms. Chung, the daughter of a Japanese woman and a South Korean man, who was born in Japan and has lived all her life here, could not take the test to become a supervisor at her public health center because she is a foreigner. 'I have no tears to shed,' said Ms. Chung, a 55-year-old nurse. 'I can only laugh.' Ms. Chung is what the Japanese call a Zainichi, a term that literally means 'to stay in Japan,' but that is usually shorthand for Koreans who came here during Japan's colonial rule, and their descendants. Considered outsiders both in Japan and on the Korean peninsula, they have, over the years, adopted different ways of living in Japan. In a Japan that has softened its attitudes toward the Zainichi, many have become citizens and taken Japanese names, melding into the larger population. Others have taken citizenship, but kept their Korean names. Others still, like Ms. Chung, have taken neither citizenship nor name. Disagreements exist, even within the same family, including Ms. Chung's. Reaction to the court's ruling - that local governments can bar 'foreigners' from holding official positions where they exercise 'government power' - was split along political lines. Liberals said an aging Japan with a shrinking workforce would lose by shutting out people like Ms. Chung, who could hardly be considered a true foreigner. Conservatives said foreigners like Ms. Chung should simply become Japanese citizens. The morning after Ms. Chung's news conference, her boss asked her whether she regretted her words, she recalled in an interview, one recent evening after work, at her apartment here. 'No way,' was her answer. 'I didn't say enough.' Ms. Chung's story begins, as do all the stories of the Zainichi of her generation, with her parents. Her father, Chung Yeon Gyu, an author and Korean nationalist who opposed Japanese colonial rule, arrived in Japan in the 1920's. According to Toshio Takayanagi, a historian at Hosei University here who researched Mr. Chung's life, Mr. Chung published novels and essays critical of the Japanese government through the end of World War II; his writings were often censored here, and in 1944 he was put on a watch list by a special police unit. DURING Japan's colonial rule, from 1910 to 1945, some Koreans came here seeking economic opportunities while others were brought as forced laborers. By 1944, nearly two million Koreans lived in Japan, though most were repatriated after Japan's defeat, and the number fell to under 600,000 by 1947. In 1952, the Zainichi here were made to choose between South or North Korean citizenship, and were recognized as permanent residents of Japan. Ms. Chung's father and mother settled in Iwate Prefecture in northern Japan. Growing up there, Ms. Chung remembers, most of her classmates were told by their parents not to associate with her; a few, though, who came to play at her house are still friends. When she entered junior high school, a teacher ordered her to adopt a Japanese name, complaining that she could not read her Korean one. Other Zainichi in her class, who used Japanese names and hid their real ethnic background, faced anguish at graduation ceremonies when certificates were handed out in their Korean names. Unwanted in Japan, she had dreamed of finding acceptance in South Korea, where she headed to study after graduating from college in Japan. 'But what I faced was terrible discrimination,' she said. South Korea, under the military rule of Park Chung Hee from 1961 to 1979, was fiercely suspicious of Zainichi, many of whom were pro-North Korea. (A Zainichi would, in fact, later try to assassinate Park in Seoul, killing his wife instead.) What is more, Zainichi like Ms. Chung, who barely spoke Korean, were not considered Korean at all, she found. 'I was told that Zainichi are the people who did not come back to Korea because they did not want to spend money,' she said, recalling what would be her first and last trip to South Korea. 'If I said my mother was Japanese, they looked at me as if they were looking at a dirty thing.' Eventually, Ms. Chung became a public health nurse and in 1988 was hired by the Tokyo metropolitan government. Given the traditional Japanese respect for civil servants, her daily life became easier. For once, she faced no discrimination and even considered getting Japanese citizenship. But everything changed in 1994 when she applied to take a test for a managerial post. After she was told that managers had to be Japanese, she filed the lawsuit that was recently rejected by the Supreme Court. In recent years, general civil service positions have been opened to non-Japanese, including in 11 out of 47 prefectures and most big cities. But only a few municipalities, like Kawasaki City near here, have opened management-level positions to non-Japanese, and the Supreme Court ruling now makes it less likely that other municipalities will follow suit. THE easiest route toward the managerial posts is, of course, to acquire Japanese citizenship, a choice more and more Zainichi are making. In 2003, there were only 470,000 officially recognized Zainichi, a drop of about 100,000 since 1993. Most became naturalized Japanese, no longer counted as Zainichi. One of them is Ms. Chung's older brother, Tei Taikin, a professor at Tokyo Metropolitan University specializing in Japan-Korean relations and Zainichi issues. He became a naturalized Japanese in 2004 and changed his name. He has written about his agonizing choice and urged his sister to do the same. A Zainichi is confined to an uncertain existence, he wrote in Chuo Koron, a conservative monthly. 'In order to remove such uncertainty, you need to get your nationality closer to your identity - that is, acquire Japanese nationality and, hopefully, you can live as a Korean-Japanese.' After getting citizenship, he said, he felt as if he had passed through a tunnel. He did not feel as if he had sprung 'suddenly into the bright world when I got out of the tunnel.' 'But, nonetheless,' he said, 'I feel a kind of relief or lifting of burden.' Ms. Chung said she had not read her brother's essays. 'Zainichi who get Japanese nationality do so feeling, 'What else can I do?' ' she said. 'They do so because they do not want to be discriminated against.'

Subject: Why Save From: Terri To: All Date Posted: Sat, Apr 02, 2005 at 08:29:21 (EST) Email Address: Not Provided Message: We might continually emphasize saving now, for with economic conditions and valuations that suggest lower investment returns in future saving becomes all the more important. There are people well able to save who do not do so because return prospects seem low or who believe that a home will be saving enough. Well, real estate beyond a home at reasonable values is a fine investment. Real estate however is richly valued in market after market, and a home is nice to live in without concern for continual price appreciation, and mortgages in time will generally have to be paid with other investments. The sense again is of a time for caution and caution means more saving not less, though we seem to be saving less.

Subject: Savings From: Terri To: All Date Posted: Sat, Apr 02, 2005 at 07:04:41 (EST) Email Address: Not Provided Message: The problem we have looking ahead is that reasonably high stock values with very high earnings and low dividends less room for robust stock market returns than we would prefer. Low long term bond yields mean lower long term bond returns that we would prefer. These are difficult investment conditions for American households, and we had better be saving far more than we are. Saving is critical however much equity we may have in our own homes.

Subject: House rich, cash poor From: johnny5 To: Terri Date Posted: Sat, Apr 02, 2005 at 11:02:12 (EST) Email Address: johnny5@yahoo.com Message: You can't eat a house, but they sure cost a lot to maintain and pay taxes and insurance on and to heat and cool. http://www.siliconinvestor.com/readreplies.aspx?msgid=21181978 To: John Vosilla who wrote (28918) 3/30/2005 2:22:52 PM From: Grace A. Zaccardi Read Replies (1) | Respond to of 29024 I can't talk my Boomer clients in these over priced bubble areas to even think about selling and moving somewhere cheaper. I have clients, friends and family members whose family incomes are in the 50-60k range living in 700k to million dollar houses with 100k mortgages who refuse to even think about selling. If they do take out equity it is usually to make some improvement in the house itself. It makes me crazy that people want to keep that much of their net worth in a house. They may change their minds as they get older, especially if they do wind up cash poor. I find that the older people get the less amenable to change they become. http://www.siliconinvestor.com/readreplies.aspx?msgid=21184476 To: John Vosilla who wrote (28952) 3/31/2005 3:33:22 PM From: Grace A. Zaccardi Respond to of 29024 I heard today that only 7% of boomers have $150K available cash for retirement Half of the retirees in any given year retire with no cash assets, only their SS benefits for income.

Subject: Re: House rich, cash poor From: johnny5 To: johnny5 Date Posted: Sat, Apr 02, 2005 at 11:55:20 (EST) Email Address: johnny5@yahoo.com Message: http://www.contraryinvestor.com/mo.htm Look at the chart near the bottom - real estate as % of net worth versus equities as a % of net worth from 45 - 2005

Subject: Dividends From: Terri To: All Date Posted: Sat, Apr 02, 2005 at 06:37:29 (EST) Email Address: Not Provided Message: The dividend on the S&P Stock Index is about 1.6% after Vanguard costs. This dividend is too low but completely secure for the index as a whole and increases possibly 4% a year. Dividends are favored with a 15% tax. The Value Index has a dividend about 2.4%. Though analysts are always telling us dividends are being raised, investors are not demanding better dividends and companies are not paying them though they could easily do so. I would expect corporate savings to be used increasingly for mergers of various sorts.

Subject: The Weak Labor Market From: Terri To: All Date Posted: Sat, Apr 02, 2005 at 06:02:00 (EST) Email Address: Not Provided Message: A healthy labor market for America would mean a steady creation of 200,000 and more jobs each month. The low job creation number this month was made weaker because the last 2 months job creation numbers were lowered. There is a problem with little wage or benefit gain that reflects a weak labor market. A sigh is warranted.

Subject: Cheer up Terri - this is Progress From: johnny5 To: Terri Date Posted: Sat, Apr 02, 2005 at 10:20:01 (EST) Email Address: johnny5@yahoo.com Message: Old jobs and models and paradigms and economies will die so that fresh new ones are birthed, what a great opportunity for people to retrain into newer more advanced fields the world needs to progress our science and workforce and living standards.

Subject: A Cautious Strategy From: Terri To: All Date Posted: Sat, Apr 02, 2005 at 05:43:10 (EST) Email Address: Not Provided Message: Earnings quality appears to be deteriorating. Also, the price earning ratio for the S&P Index is high and the price dividend ratio is very high. Stock buyback levels, beyond what is needed to cover options exercise, do not compensate for low dividends. So, there is cause to worry. However, as in 2000, earnings levels are at record highs after allowing for quality issues then and now. The problem is the record level of earnings should not be cause for much confidence. Earnings have come at the expense of labor, earnings have come in a very low interest rate and high growth environment. Sustaining the level of growth of earnings will be most difficult, as in 2000, and it is sutaining the level of earnings that will likely determine whether the stock market can continue to trade at current levels. A cautious strategy then as in 2004 would seem to be much in order. I keep asking myself where is there relative value.

Subject: Interest Rates From: Terri To: All Date Posted: Fri, Apr 01, 2005 at 20:23:30 (EST) Email Address: Not Provided Message: There are 2 near term problems that persist in the economy, too little job creation and increasing energy prices. The different nature of the problems may present a problem for the Federal Reserve. Energy price increases may increase near term inflation, so the Fed will wish to keep increasing interest rates. The weak job market will dictate that the Fed be careful in raising rates for fear of further stifling job creation. The guess then from the bond market is continued slow movement by the Fed.

Subject: A Parts Supplier to an Aging Population From: Emma To: All Date Posted: Fri, Apr 01, 2005 at 19:16:42 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/03/26/business/26stryker.html?pagewanted=all&position= A Parts Supplier to an Aging Population By BARNABY J. FEDER On a Friday morning not long ago, a surgical team at the New York Hospital for Joint Diseases sliced, drilled, probed, sawed and hammered its way through a two-hour operation to replace the left knee of Joseph Madden, a retired policeman, with a metal and plastic substitute. Hovering in the background, when he was not scurrying off to two neighboring operating rooms to peek in on knee operations there, was Dan Driesse, a sales representative for the Stryker Corporation. Stryker, based in Kalamazoo, Mich., manufactured all three artificial knees being implanted that morning. Mr. Driesse was on hand to answer any questions that came up or to substitute devices quickly if the doctors decided that a slightly different size was needed. But that is just scratching the surface of Stryker's involvement. Stryker also made the new surgical navigation system that Mr. Madden's surgeon, Dr. Patrick Meere, was testing that morning. Dr. Meere wore Stryker's Steri-Shield gown and surgical hood to protect himself as he worked. He used its cutting guides and power tools to saw off the ends of Mr. Madden's thigh and shin bones and to drill the holes into which Stryker screws were inserted to hold the pieces of the artificial knee. And when it came time to apply bone cement to hold the new knee in place, Dr. Meere reached for Stryker's Mixivac mixing unit and whipped up a batch of Simplex P, a Stryker product that leads the orthopedic adhesives market. Like a major supplier of parts to an auto assembly line, Stryker offers countless devices and accessories to hospitals worldwide, some on a just-in-time basis. But automakers can only dream of the kind of growth prospects that Stryker has. Ever-increasing numbers of aging baby boomers will be driving demand for Stryker's hips, knees and spinal implants - and the tools to install them - for years to come. Investors like what they see. Although the company is still not widely known by patients, its shares are now worth $18.6 billion, roughly the same value investors put on longtime heavyweights like International Paper, Volkswagen and General Mills. Wall Street's view reflects not just Stryker's prospects but respect for its track record under John W. Brown, an unassuming workaholic who ran Stryker for 27 years. During that time, earnings grew by more than 20 percent every year but one. Mr. Brown, 70, now Stryker's chairman, gave up his job as chief executive on Jan. 1. The successor Mr. Brown recruited, Stephen P. MacMillan, 43, now has Wall Street wondering how long he can keep up the blistering growth pace. 'MacMillan is in a honeymoon period,' said Dr. Mark Landy, an analyst who follows device companies for the Susquehanna International Group of Companies. ' 'Show me' is coming.' Mr. Brown, a Tennessee native and engineer by training, transformed Stryker from a family-owned business with $70 million in annual sales of hospital beds and surgical tools into a diversified health care giant with $4.2 billion in revenue last year. In orthopedics, its biggest business, it runs neck and neck with Johnson & Johnson for market leadership, slightly ahead of Zimmer Holdings, based in Warsaw, Ind. Stryker's intense culture is on display at its large orthopedics factory in Mahwah, N.J., where each manufacturing station tracks and posts on its bulletin board not just standard production records but even details like employee sick days. As Stryker sees it, sick days are a measure of morale because motivated workers show up even when they are ill. Mr. MacMillan is well aware that pressure to hit high growth targets has seduced many companies into misguided investments and accounting shenanigans. 'Actually, 20 percent earnings per share growth is our second most important metric,' Mr. MacMillan said. 'The most important thing we need to do is to make sure we continue to run the company in an ethical manner where we don't bend the rules to meet our goals.' Stryker's attention was focused on such issues late in 2003 when the Justice Department subpoenaed records of Physiological Associates, a subsidiary that provides physical therapy services. Stryker says the unit's top management has been replaced and that it is cooperating with the government's investigation into whether the unit, the only part of the company that does not make a product, fraudulently overcharged for services. Mr. Brown fashioned Stryker into a highly decentralized sales-driven company - so Stryker might seem especially vulnerable to such misconduct. The company, for instance, has developed an extensive screening program with the Gallup Group to spotlight attributes like competitiveness in job applicants. But Mr. Brown was also wary enough of the competitive personalities Stryker recruited to demand strict financial monitoring practices at the operating divisions. Mr. Brown said in an interview recently at a New York sales meeting that one division fired its top salesman for pushing more product into a hospital's inventory than the hospital ordered at the end of last year. 'Our management pounced on it,' he said proudly of the division leaders, whom he declined to identify. Mr. MacMillan's background includes marketing consumer products like Tylenol at Johnson & Johnson and running a group of human and animal health companies with $2 billion in revenue at Pharmacia. He joined Stryker as president and chief executive in 2003. Even before Mr. MacMillan took over, better marketing had become a priority for Stryker. Stryker's advertising to consumers of its ceramic hip replacements, featuring the golfer Jack Nicklaus, has been an eye-opening success in an industry used to thinking of surgeons, not patients, as its customers. But Stryker concedes it stumbled onto that opportunity when Mr. Nicklaus participated in a clinical trial and was delighted with the results. Now, it is trying to build its brand actively rather than simply reacting to a lucky break. 'Steve is going to make Stryker better known on Main Street and around the world,' Mr. Brown said. Mr. MacMillan also wants Stryker to move faster to marry biotechnology and orthopedics. The long-range dream is to develop protein products that grow or restore bones and can be injected, with none of the trauma involved in inserting today's metal or ceramic substitutes. Mr. Brown began investing in such innovations in 1985, but, $300 million later, the only uses approved by the Food and Drug Administration for the Stryker protein are limited to humanitarian cases where other bone-healing procedures have failed. Meanwhile, Medtronic, which did a better job of analyzing the market and demonstrating its product to the F.D.A., is raking in huge profits from Infuse, a protein compound used to grow bone in spinal fusion procedures. The race to develop bone protein products is one of many signs that even as the orthopedics business grows to meet the needs of an aging population, it may be split among several competing technologies, all of them requiring heavy investment to develop. Last fall, Stryker bought SpineCore, a start-up company in Summit, N.J., to gain access to its designs for artificial disks that could be implanted in the lower back and neck. The investment, which will cost up to $360 million depending on progress in developing the disks, brought the total invested in start-up disk companies by Stryker and three large rivals to more than $1 billion. Stryker, which does not expect SpineCore's first product to be approved before 2008 at the earliest, is betting that its design will be a big enough improvement to overcome the disadvantage of being among the last to market. In the shorter term, Stryker looks well positioned to hit its 20 percent earnings growth goal this year. In the longer run, though, Mr. MacMillan's challenge may be to convince Wall Street that Stryker can become stronger by recalibrating its growth goals. 'His legacy,' said Dr. Landy, the analyst, 'could be to lead a diversification that would lay the basis for somewhat slower growth over a longer period of time.'

Subject: Bankruptcy Bill Solution From: TalkieToaster To: All Date Posted: Fri, Apr 01, 2005 at 18:12:14 (EST) Email Address: aitoaster@yahoo.com Message: I put up a site called Plastic Revolution This is a response to the bankruptcy bill passed with not so much as a wimper in the senate. I want to turn it into a scream! so sign up start sending back their letters. I have a stats site set up so you can keep track of your progress! also... I've now put a list of states showing the ones who've joined the effort on the site to kill the Bankruptcy Bill When you join from your state I will turn it purple on the page! plasticrevolution.org Let's chip away at these guys Plastic Revolution plasticrevolution.org

Subject: The Growth of U.S. Executive Pay From: Emma To: All Date Posted: Fri, Apr 01, 2005 at 14:12:49 (EST) Email Address: Not Provided Message: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=648682 The Growth of U.S. Executive Pay LUCIAN ARYE BEBCHUK Harvard University YANIV GRINSTEIN Cornell University Abstract: This paper examines both empirically and theoretically the growth of U.S. executive pay during the period 1993-2003. During this period, pay has grown much beyond the increase that could be explained by changes in firm size, performance and industry classification. Had the relationship of compensation to size, performance and industry classification remained the same in 2003 as it was in 1993, mean compensation in 2003 would have been only about half of its actual size. During the 1993-2003 period, equity-based compensation has increased considerably in both new economy and old economy firms, but this growth has not been accompanied by a substitution effect, i.e., a reduction in non-equity compensation. The aggregate compensation paid by public companies to their top-five executives during the considered period has added up to about $290 billion, and the ratio of aggregate top-five compensation to profits increased from 4.8% in 1993-1995 to 10.3% in 2001-2003. After presenting evidence about the growth of pay, we discuss alternative explanations for it. We examine how this growth could be explained under either the arm’s length bargaining model of executive compensation or the managerial power model. Among other things, we discuss the relevance of the parallel rise in market capitalizations and in the use of equity-based compensation.

Subject: Where they stick that stolen boot From: johnny5 To: Emma Date Posted: Fri, Apr 01, 2005 at 14:53:58 (EST) Email Address: johnny5@yahoo.com Message: http://www.e-offshore.net/incorporate.asp http://www.e-offshore.net/faq.asp#4 Q: Who are you main type of clients? A: The majority of our clients are qualified professionals such as accountants, lawyers, Trust Companies, Investment Advisors and Management consultants. However, we do also provide services to the general public. Q: In which jurisdiction must the beneficial owner be disclosed to the authorities? A: The beneficial owner must be disclosed in jurisdictions such as Jersey, Bermuda and Labuan. Double click on the icon 'Information' for all other jurisdictions in which the beneficial owner is disclosed to authorities and also jurisdictions in which the beneficial owner is not disclosed to the authorities. It is important to note that in some jurisdictions the beneficial owner is not disclosed to the authorities, but to banks and to Registered Agents. In the Bahamas the beneficial owner is disclosed to the Registered Agent. In Switzerland the beneficial owner is to be disclosed to the bank for the opening of corporate bank accounts. Q: Is it worth my/our while to become an affiliate if I/ we incorporate as the following is my requirement for incorporation 2, 6, 10, 50, 500, 1000 A: It is definitely worthwhile to become an affiliate member. As an affiliate member you will automatically benefit from a 15% discount of standard prices on all your incorporations. There after there are more substantial discounts for volume users as denoted in the following table: Number of Companies EFS Discounts Up to 1,000 15% off standard price 1001 to 1700 17.5 % off standard price 1701 and over 20% off standard price Q: How secure is your site? How can you ensure no third party interference? A: Our website incorporateacompany.com uses the latest 128bit encryption technology for its security system (the first non-banking offshore website to do so.) This extremely high level encryption secures our data travelling over the Internet. We host our own server, therefore no third party is involved and that is another guarantee for security. Our data is transmitted and stored safely offshore. We ensure that we retain information on a country or jurisdiction which has strict legislation that supports the confidentiality of our affiliates’ information. Further more World Pay Plc process all credit card payments. Electronic Financial Services Limited has created a Privacy Statement that demonstrates that our firm is committed to privacy. The Privacy Statement discloses our information and dissemination practices for our website. Q: I wish to incorporate in Andorra. However, I am aware that the shareholder has to be Andorran? How can I as a foreign investor retain control and power of the company as a shareholder? A: As a foreign investor who wishes to retain control and power of your company a Usufruct Contract is drafted. This allows the transfer of the Andorran Shareholders power back to the Offshore Investor to enable the Offshore Investor full control of the company incorporated. Therefore, using the Usufruct contract the offshore investor is the owner of the company and not the Andorran Shareholder. Q: What is an IBC Company? A: An IBC is an international Business Company, designed to provide maximum privacy and is not subject to local taxation. This type of company is owned by non-residents and is not permitted to trade within the jurisdiction where it is incorporated. Q: Where is my personal information that I input into your computer being held? A: All personal information on clients is held offshore in order to maximise security. Back to top Q: What is the advantage of my personal information being held offshore? A: So that personal confidential information is only retained in a country or jurisdiction which enjoys strict legislation that supports client confidentiality.

Subject: Market Timing and Value Investing From: David E. and Terri To: All Date Posted: Fri, Apr 01, 2005 at 10:53:51 (EST) Email Address: Not Provided Message: Hi Terri, let me take a different tack on this, and find out what you think. Warren Buffet has never been a market timer or a follower of MPT. His plan has been to buy low, his dilemna has been that everything is high. You can argue that Buffett has stuck with his plan - to buy low. But I don't think you can call him a market timer unless you want to call value investing market timing. In my opinion, its not market timing unless there is an element of 'I know what the market is going to do'. Value investing doesnt care about the market, the first and only directive is to buy value. When probable returns are very close to the bond market, there is no value. Exactly, and this is what I have tried repeatedly to explain but you have done it better. Exactly. Warren Buffett must buy in the billions, and that is harder than our buying for there are far fewer possibilities. All I hope for is an idea every month or so, and idea of value, and there usually comes such an idea and I buy. This has proven successful for me, but this is what buying value is really about. Exactly.

Subject: Conundrums From: johnny5 To: David E. and Terri Date Posted: Fri, Apr 01, 2005 at 12:56:41 (EST) Email Address: johnny5@yahoo.com Message: 'its not market timing unless there is an element of 'I know what the market is going to do'. I don't understand - hasn't he made it very very clear he expects the US markets and the US dollar to go down soon? He does not merely expect it to just FLUCTUATE as was a famous quote in investing history, but he expects it to go down no? He has also said a soft landing or gradual slide of the dollar will not fix what he thinks is wrong - so not only does he say it will go down - but it will be HARD when it goes down - that is value investing and not market timing? It is getting blurry to me.

Subject: Re: Conundrums From: David E.. To: johnny5 Date Posted: Fri, Apr 01, 2005 at 16:15:53 (EST) Email Address: Not Provided Message: Johnny5 good points - but I don't think Warren Buffet has violated his prime directive - which is to value invest. And he has come to a point where his actions look very much like 'macro' economic forecasts. Warren Buffet is unable to find any 'value' investments so what is left for him to do. Just one thing 'value' invest his money, and I think you can say, he is value investing when he chooses some foreign currencies over the dollar. I did the same thing, but I did it using MPT. I am overweighted foreign. But (hopefully) not being a market timer, I am not 100% foreign. In the 25 year period that this mix will cover I will do an average of what the US does and the rest of the world does. If I was a market timer I would bet the ranch against the dollar.

Subject: Insurance Regulator's Trails to Dublin From: Emma To: All Date Posted: Fri, Apr 01, 2005 at 10:30:04 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/04/01/business/worldbusiness/01irish.html?pagewanted=all&position= For Insurance Regulators, Trails Lead to Dublin By BRIAN LAVERY and TIMOTHY L. O'BRIEN DUBLIN - Inside a sprawling complex of emerald-green glass towers, where derelict shipyards once lined the River Liffey, financiers have helped transform this city into one of the world's most innovative insurance providers. They have also turned Dublin into an unlikely hot spot in a growing insurance scandal that has toppled chief executives and even pulled the investing legend Warren E. Buffett into its orbit. Regulators around the world have followed several trails of suspect financial transactions back to Ireland, which more than a decade ago instituted accommodating tax and regulatory standards aimed at encouraging insurers to set up shop here. At the center of those investigations is the General Re Corporation, a unit of Berkshire Hathaway, a holding company that includes Mr. Buffett's insurance operations. Investigators are exploring General Re in connection with possible financial manipulation at some of the world's largest and most prestigious insurers. General Re, which has a substantial presence here, is just one among dozens of companies that have enjoyed a surge in business since first venturing to Dublin in the early 1990's. Dublin's insurance boom came on the heels of a natural disaster. In 1992, Hurricane Andrew ravaged southern Florida and Louisiana, causing more than $25 billion in damage and forcing insurers to pay a host of claims. Some insurers, battered by the losses, were hesitant to take on large risks after that disaster. That spawned a new breed of competitors in Bermuda willing to fill the gap. Another crop of insurers chose to hopscotch past the Caribbean and locate here. The city's insurance industry is based in a 40-acre self-contained business park, the International Financial Services Center, where the Irish government offers a corporate tax rate far below the rates other large European Union members impose on companies. The center is home to hundreds of concerns that employ about 16,000 people. Aided by what even members of the Irish Parliament fondly call the 'light touch' of the country's financial regulators, Dublin has promoted an entrepreneurial culture that allows billion-dollar insurance companies to open their doors and begin selling policies in a matter of weeks. In 2003, the most recent year with data available, 56 international insurance and reinsurance companies in Dublin wrote gross premiums worth at least 14 billion euros ($18 billion), and held around 45 billion euros ($58 billion) in assets, according to the industry's lobbying arm, the Dublin International Insurance and Management Association. Despite handsome compensation, Dublin's insurance executives tend to keep a low profile and disdain ostentatious displays of wealth. 'People are working too hard to be caring about their egos,' said Sarah Goddard, head of the insurance association. An educated work force, a good family environment and Dublin's cosmopolitan attractions have also drawn insurers. Despite its wet weather, Dublin has other pluses compared with balmier insurance locales like Bermuda, including more available housing, parking spaces and long-term visas. But along with its reputation for innovation, Dublin has become known in the insurance industry as something of the Wild West of European finance, a perception that helped prompt the creation of the Irish Financial Services Regulatory Authority two years ago. Despite its mandate for stricter oversight, the agency has yet to impose major sanctions on any Irish institution, even though Ireland has recently experienced several major banking scandals. But industry representatives dispute the idea that Ireland may be home to unchecked financial frauds. 'I don't regard this regime as being in any way lax,' said Aileen O'Donoghue, director of Financial Services Ireland, a trade group. 'We certainly wouldn't be selling ourselves as fast and loose.' Even so, investigators and regulators in the United States, Australia and Europe are examining General Re's role in selling policies that, in some cases, may have helped paper over weaknesses at insurers and other companies. In at least one case, such policies may have contributed to a major financial collapse. In many instances, financial technicians working for a General Re unit here known as the 'alternative solutions group' devised complex, newfangled insurance products that have drawn investigative scrutiny and have come back to haunt Berkshire and other major insurance companies. 'The vast majority of the world doesn't regulate reinsurance because it's a business-to-business operation,' Ms. Goddard said. 'These are all big boys playing the same game together.' The centerpiece of the current round of inquiries is an arcane product called finite reinsurance. Insurers buy reinsurance to limit their own exposure to catastrophic claims. Finite reinsurance is used to soften the impact of claims paid out over a long period. While finite products are at the center of current inquiries, analysts say that the entire reinsurance business, much of it in offshore locales like Ireland and Bermuda, is plagued by poor documentation and weak regulation. 'They are very much handshake, frenzied types of transactions; that has always been the culture of the business,' said Keith Buckley, a managing director and head of the insurance group at Fitch Ratings. 'It's been something of the good-old-boy type of network, with a somewhat lackadaisical approach to documentation and other things that still exists in the reinsurance departments of too many companies.' Dublin has attracted numerous reinsurers enamored of Ireland's advantages, particularly affiliates of American and German companies. Henning Ludolphs, managing director of the Irish division of Hannover Re of Germany, said that a low cost base was a significant reason reinsurance companies, among other financial institutions, initially set up operations here. 'In the early days of '92 or '93, it was a reasonably affordable place to do business,' and an easy place to start a company because of the accommodating stance of the Irish government, Mr. Ludolphs said. The strong euro and Ireland's soaring inflation rate in the late 1990's have eroded those cost advantages, but Dublin is cheaper - 'a couple of times' so - than Bermuda as a place to do business, he added. Cologne Re, another German reinsurer, was among the pioneers of the Irish industry in the early 1990's. General Re acquired a controlling stake in Cologne Re in 1994, and Berkshire, in turn, acquired General Re in June 1998. A Cologne Re executive, John Houldsworth, oversaw the company's business here in the early 1990's and he later became a senior member of General Re's alternative solutions group. Regulators and investigators said that the group was at the center of two high-profile finite reinsurance investigations, one in Australia and the other in the United States. Australian regulators said that a troubled insurer named FAI used finite products to feign profitability shortly before HIH Insurance Ltd., a fast-growing Australian conglomerate, bought it in 1998. HIH collapsed four years ago beneath the weight of ill-considered acquisitions like FAI and other problems. Mr. Houldsworth and five other General Re executives were involved in improprieties related to the FAI transactions, Australian regulators said. In October, the regulators permanently barred all the executives from Australia's insurance industry. Regulators say that Mr. Houldsworth and another executive, Tore Ellingsen, continue to work for another General Re unit in Dublin, where Mr. Houldsworth oversees finite reinsurance operations. In December, Australian regulators barred another General Re executive, Milan Vukelic, for the FAI deal, but reinstated him on appeal. Mr. Vukelic is now the chief executive of the Faraday Group, a General Re unit based in London. Mr. Houldsworth, Mr. Ellingsen and Mr. Vukelic declined to comment. In the United States, the Securities and Exchange Commission and Eliot Spitzer, the attorney general of New York, are investigating a questionable finite transaction between General Re and the American International Group that originated in Dublin in late 2000 and involved Ronald E. Ferguson, General Re's chief executive at the time. Regulators say the transaction artificially increased A.I.G.'s premium reserves, ultimately helping its stock price and its ability to acquire another company. Mr. Buffett will be meeting with American regulators and law enforcement officials on April 11 to discuss that transaction. Mr. Spitzer's office considers Mr. Buffett to be a witness in the investigation, not a target, according to a person briefed on the inquiry. Berkshire has said repeatedly that its chairman had no knowledge of improprieties related to the transaction and that his subordinates are responsible for decisions made by units like General Re. Regardless of whether the perception of lax regulation is justified in Ireland, the rules governing reinsurance in Europe are due to change soon. A European Union directive currently under discussion and scheduled to take effect next year will establish a regulatory framework spanning the 25-country union. It will mandate closer scrutiny than that provided by the current Irish system, in which one of the chief regulatory requirements is that an insurer notify authorities whenever there is a change on its board.

Subject: Re: Insurance Regulator's Trails to Dublin From: Setanta To: Emma Date Posted: Fri, Apr 01, 2005 at 10:57:00 (EST) Email Address: Not Provided Message: interesting article. wonderfully biaised though. as a financial services auditor i can attest that the image portrayed of the regulatory environment is not correct. we have problems with corporate governance as with all other juristictions but the problem with finite insurance lies soley with US accounting standards. I have long advocated the adoption of 'substance over form' standards as they exist in the UK and Ireland. in essence a finite policy (used for income smoothing purposes) is a loan by any other name. US GAAP permits this to be accounted for as an insurance premium, and as such, is exempt of tax. this is due to the legal form of the transaction being an insurance policy. In the UK and Ireland this would be considered a loan (the substance of the transaction determines the treatment not the form) and no tax implications arise. we would not ask the US to change its regulatory environment because a few english or irish companies avail of conflicts with domestic accounting standards and it is not fair that ireland is criticised for its regulatory environment. (the banking scandal which was for a period of 5 years, while unpleasant, amounted to a change of 3-4% of the relevant bank's profits for 2004, which pales in significance to corporate governance problems in other countries.) the greatest regulatory change will be the adoption of IFRS throughout the EU next year. this will ensure a cross border standard that will enable investors to compare companies throughout the union. a nightmare for us who will have the ineviable task of trying to explain to companies why they cannot account to goodwill and bad debt provisions as they did in the past! furthermore it will end accrual accounting for hedges as we know it. from now on all hedges will be marked to market and there will be no unpleasant surprises off balance sheet.

Subject: Thanks to Dublin From: Emma To: Setanta Date Posted: Fri, Apr 01, 2005 at 11:34:12 (EST) Email Address: Not Provided Message: I was hoping you would at once comment, and hope for more of your Dublinesque perspective.

Subject: Now on cspn2 corporate crooks From: johnny5 To: Emma Date Posted: Fri, Apr 01, 2005 at 13:05:27 (EST) Email Address: johnny5@yahoo.com Message: News Conference Corporate Trust Study American Academy of Arts and Sciences National Press Club, Morning Newsmaker Washington, District of Columbia (United States) ID: 186026 - 03/23/2005 - 1:11 - $45.00 Overholser, Geneva, Professor, University of Missouri, School of Journalism Silvers, Damon, Associate General Counsel, AFL-CIO Berlowitz, Leslie C., Executive Director, American Academy of Arts and Sciences Rosenfeld, Gerald, Chief Executive Officer, Rothschild North America The American Academy of Arts and Sciences released its new report titled “Restoring Trust in American Business.” The report examined the recent corporate scandals and includes steps for improving corporate conduct and restoring confidence in American business. They talked about improving enforcement of regulations and standards of conduct, monitoring corporate accounting, and preserving business integrity. Following their remarks they answered questions from the audience.

Subject: Hume and Milton Friedman From: johnny5 To: johnny5 Date Posted: Fri, Apr 01, 2005 at 14:19:30 (EST) Email Address: johnny5@yahoo.com Message: Technological Lock in - they talk about how 30 years ago milton friedman and chicago friends helped reshape the paradigm that individual market participants trying to maximize thier personal economics would benefit the whole and that the courts adapted this when thinking of corporate culture and this all needs to be unwound - but it could take decades :(. They attacked the NY times with others and how the small families still have so much voting power in the few large newspapers. They said large media used to be objective but no longer and this fuels the fire of lacking corporate governance, but I read posts here from the NY times that people present daily. --- Today I read articles here from the NY TIMES with attacks on japan, germany, and Dublin, but what of self reflection? They talk of nets in africa, but would not dare slam Warren and his 12 million generosity no? Hypocrisy my NY TIMES friends? They said we are no longer in a culture that supports long term decisions, but short term ones with short term traders, short term media attention, short term analysts and short term quick profit seeking CEO's. They said Ceo's were the heroes of america and police and firemen were scum until 9/11 and people wanted to worship firemen then, huh? Anyways, multinationals learned a long time ago how to escape the long arm of the law and how to escape culture and environment concerns when profit are in the midst! This group fools themselves that changes in America can change the world. People given the control of resources of our society see everything in terms of a balance sheet - human lives are lost in the equations. Ferengi Rules of Acquisition: http://www.dmwright.com/html/ferengi.htm Rule 001 » Once you have their money, you never give it back. Rule 020 » Only give money to people you know you can steal from.

Subject: Shifting Car Buyer Trends in China From: Emma To: All Date Posted: Fri, Apr 01, 2005 at 10:27:13 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/04/01/business/worldbusiness/01auto.html?pagewanted=all&position= Shifting Buyer Trends Set Back Western Carmakers in China By KEITH BRADSHER HONG KONG - In the first months of the year, the Chinese slowed their purchases of automobiles, and the cars they did buy tended to be small and inexpensive - trends that are hurting Western manufacturers like General Motors and Volkswagen. The Chinese auto market has been the best source of growth and profits in recent years for American and European manufacturers. But total vehicle shipments from manufacturers to dealers in China slowed by 10 percent in January and February compared with those months last year. Sales of large cars are falling, mainly because of government restrictions on corporate and government purchases of fleets, but also because of higher gasoline prices. In their place, dealers are selling many more bare-bones subcompacts and tiny minivans that sell for less than $5,000 because they have flimsy seats and engines no more powerful than those on some motorcycles. These very small vehicles carry minimal profits for manufacturers. At the same time, Korean and Japanese automakers are rapidly increasing their shares of the Chinese market by expanding production in China and by entering segments of the market, like large cars, they had largely avoided. Buyers like Li Feng, a 29-year-old airport worker who was shopping for a black $14,500 Hyundai Elantra in Shanghai on Thursday afternoon, say that they find Asian manufacturers' cars increasingly comfortable and affordable. 'Cars from Korea and Japan seem popular these days; a lot of my friends and relatives bought Korean and Japanese cars,' Mr. Li said. Such shifting sentiments have dealt a setback to Western manufacturers, although the extent of the setback is still emerging because of difficulties in obtaining accurate sales data in China. Foreign and domestic automakers in China report to the government their wholesale shipments to independent dealers each month. But in contrast to the practice in the United States, automakers seldom announce retail sales by their dealers. Further complicating the picture, the multinationals are allowed to operate in China only through joint ventures with local manufacturers, while domestic Chinese companies claim less than a fifth of the market. The latest wholesale figures show several troubling trends for Western manufacturers, however. General Motors and Volkswagen, the market leaders last year, each halved their shipments of new cars to dealerships in the first two months of this year compared with a year earlier, according to company filings with the Chinese government that have been separately compiled by two consulting firms in China. DaimlerChrysler took even more drastic action, reducing Jeep shipments to dealers by more than 80 percent. G.M. and DaimlerChrysler officials confirmed that they had sharply cut back car shipments to dealerships to reduce inventories of unsold vehicles. But they said that retail sales, which neither company reports monthly in China, had fared better. Daphne Zheng, a G.M. spokeswoman, said that retail sales of cars were up slightly from a year ago, and that the decline in shipments of new cars partly reflected the discontinuation of the subcompact Buick Sail. But shipments of the Buick Regal sedan, once G.M.'s mainstay in the Chinese market, were also down 62 percent. Retail sales of Jeeps were down 42 percent in the first two months of this year, said Trevor Hale, a DaimlerChrysler spokesman. But these sales should be stronger in March, while Mercedes sales are actually up slightly, he added. Volkswagen officials declined to comment on Wednesday and Thursday. Company officials have already warned that the profit this year from China is likely to be lower than last year's, which in turn was half that of 2003. G.M. announced on Thursday that Kevin E. Wale, the chairman of its Vauxhall subsidiary in Britain, would succeed Philip F. Murtaugh, who resigned this week as chairman and chief executive of G.M. China. The company has said that Mr. Murtaugh, 51, resigned for personal reasons. After dominating the operation for nearly a decade, Mr. Murtaugh lost much of his autonomy in the last year as G.M. moved the headquarters of its Asian and Pacific operations to Shanghai from Singapore and named several executives in Detroit to take greater control over overseas divisions in areas like vehicle design. One Western automaker that has not shared the difficulties of G.M. and Volkswagen is the Ford Motor Company, which had been an also-ran in China until now, expanding slowly and cautiously. Ford's shipments to dealers were up 14 percent in the first two months of this year, compared with a year ago, although rising from a low base, with less than 2 percent of the market, according to statistics compiled by Automotive Resources Asia, a Beijing consulting firm, and the Shanghai office of CSM Worldwide, another automotive consulting firm. But while most Western automakers struggle, Hyundai, Honda and Toyota are thriving and rapidly increasing their shipments to dealers. Hyundai has been the biggest winner thanks to the introduction of the Elantra, which offers the roominess of a midsize car at a compact car price. Taxi fleets have been snapping up Elantras, while affluent Chinese families have been paying $18,000 for fully loaded models that include two front air bags and two side air bags. As a result, dealers have been ordering more Elantras than any other model this year, allowing the Elantra to overtake the Volkswagen Santana, long the best-selling car in China, and G.M.'s popular Buick Excelle and Buick Regal. The Toyota Corolla, which Toyota began manufacturing a year ago in China, has also overtaken the Excelle, while Toyota is laying plans to start selling the Camry in China next year. Honda has increased shipments of midsize Accords to dealers by 49 percent this year even as overall shipments of large and midsize cars have plunged by 16 percent. 'Hyundai and Honda, they're picking up the slack from the rest of the market,' said Tim Dunne, the China director for Automotive Resources Asia, a Beijing consulting firm. Hardest hit of all is the luxury car market. Beijing authorities have restricted bank loans in an attempt to restrain steep increases in investment spending, and this has discouraged many companies and governments from adding to their fleets, the main market for luxury cars. Volkswagen's shipments of the once-popular Audi A6 plunged by 73 percent in the first two months of this year compared with the period last year, as the overall wholesale market for luxury cars has shrunk by 63 percent. There is little sign soon of a recovery: senior Chinese officials vowed again on Wednesday and Thursday to redouble their efforts to curb investment spending, according to the official New China News Agency. Sales of less expensive cars have been hurt by restrictions on car loans; only 5 percent of sales are financed now, down from 20 percent a year ago, said Yale Zhang, the emerging markets forecast director in the Shanghai office of CSM Worldwide. Mr. Zhang said monthly sales were likely to remain below year-ago levels for quite a while, until sales start to be compared with the somewhat weak autumn of last year. 'If you really want to see some good numbers,' he said, 'wait until the second half of this year.'

Subject: Warren takes paycut - buys African Nets From: johnny5 To: All Date Posted: Fri, Apr 01, 2005 at 10:13:04 (EST) Email Address: johnny5@yahoo.com Message: Fund Spy Six Investing Headlines for April Fool's Day by Kunal Kapoor, CFA | 03-31-05 | 06:00 AM With April Fool's Day just around the corner, my colleague Gregg Wolper compiled a list earlier this week of 'Seven New Fund Ideas We Hope Not To See'. In keeping with that theme, here are six mutual fund headlines you're unlikely to see anytime soon. Fidelity to Liquidate 43 'Unnecessary' Funds Boston-based Fidelity investments today announced that it is taking a knife to its sprawling fund lineup. According to executive vice president Klaus Shave, the firm has come to the conclusion that it simply offers too many funds. In an interview Shave said, 'A Nordic Fund? What were we thinking? It's much easier to gather assets in a $30-billion small-cap fund.' Shave also sought to debunk rumors that the firm was set to launch a series of funds modeled after the popular 'Lord of the Rings' trilogy. 'There is not going to be a Fidelity Mordor Fund. I don't know how that story got started. It's just not true,' he said. Vanguard Launches Retirement Funds for Future Centuries In a bid to literally consign the competition to the dustbin of history, Vanguard's head of strategic planning Xavier Moolah revealed that the firm was launching new retirement offerings with target dates of 2100, 2180, 2225, and 2310. 'With life expectancies increasing, your descendants need to plan far ahead,' Moolah observed. He added that the compounding effects from investing before you are conceived are even greater than if you were to invest in your childhood. 'We believe this new suite of funds demonstrates our commitment to not only young investors, but also hypothetical children,' said Moolah. Ordinary Investor Understands Fund Prospectus In a startling development, Ira Smolensky of Monmouth, Ill., today became the first person to fully comprehend the language published in a mutual fund's prospectus. 'It's better than winning the lottery,' said Smolensky, who officials confirmed has not previously been institutionalized. The Monmouth resident, who is slated to be honored at the town's annual Prime Beef Festival, expressed surprise at the discovery of the fund's board of directors. Said Smolensky, 'A group of individuals who represent my interests? Who knew?' Meanwhile, fund company lawyers were reportedly meeting to devise ways to ensure nobody would duplicate Smolensky's feat. Gabelli: 'I'm Making Too Much' Legendary investor Mario Gabelli said this week that he's simply 'making too much money.' Gabelli, whose annual compensation for the various duties he provides to his firm has been close to $40 million in recent years, says he's going to take a $1 million pay cut and distribute the savings to shareholders of the firm's mutual funds because 'they really deserve it.' However, Gabelli was quick to dismiss the notion that his compensation was still too high, saying, 'It's what the market will bear.' American Funds Dumps Portfolio Counselor System in Favor of Star Managers Los Angeles-based American Funds today announced that it was doing away with its system of running funds with multiple portfolio counselors, opting instead for high-profile 'star' portfolio managers who oversee funds individually. To get the effort underway, spokesman Russell Sprout disclosed the hiring of fund management wunderkind Chris Lahiji. Lahiji, the 21-year-old former manager of Frontier Equity FEFPX, recently stepped down at his former charge. 'Lahiji is a great fit for us,' said Sprout. 'We've already got too many people with too much experience.' Bill Gross Gives Up: 'The Competition Is Too Tough' With tears in her eyes, PIMCO spokeswoman Tia Dropps announced today that Bill Gross, the legendary manager of PIMCO Total Return PTTRX and other bond funds, has called it quits. 'The brutality of the bond market and the cacophony of voices claiming their superiority have finally had an impact,' said Dropps. Apparently, Gross has come to the conclusion that it’s just not healthy to spend so much time worrying about whether PIMCO is on top. 'Besides,' added Dropps, 'with all his competitors comparing themselves to Gross, telling everyone how much better they are, it just wears you out after awhile.' She also mentioned the frequent media references to Gross being the Bond King as a factor in the decision. 'It's not easy being king,' she noted. 'He wants to just be a duke or an earl for a while.' I Couldn't Make This Up If I Wanted To And finally, an item that, sadly, is actually true. Upon returning to Dreyfus after a three-year stint at Scudder, Thomas Eggers stated in interviews that one of his key goals as the new Dreyfus chief is to 'aggressively' increase the firm's assets. Not that the message needed emphasizing: The 520-word press release heralding Eggers' arrival mentioned the term 'distribution' no fewer than six times. The words 'fund shareholder' were conspicuous by their absence. Kunal Kapoor, CFA, is Morningstar's director of fund analysis. He would love to hear from you, but he cannot provide specific portfolio advice. He can be reached at kunal_kapoor@morningstar.com. APRIL FOOLS

Subject: France and Germany Dogged by Joblessness From: Emma To: All Date Posted: Fri, Apr 01, 2005 at 09:54:28 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/04/01/business/worldbusiness/01jobless.html France and Germany Dogged by Joblessness By MARK LANDLER FRANKFURT - As Germany and France released a fresh batch of dismal employment numbers on Thursday, the specter of seemingly ineradicable joblessness hung over both Europe's economic recovery and the fortunes of its political leaders. Unemployment in Germany rose to 12 percent in March, a post-World War II record, while in France, the rate remained 10.1 percent in February, its highest level in five years. Economists and public officials struggled to find a silver lining in the statistical clouds, but political analysts said the trends were only negative for the German chancellor, Gerhard Schröder, and the French president, Jacques Chirac, who each face difficult ballots in May. Support for Mr. Schröder's Social Democratic Party is eroding, as it faces a potentially damaging defeat in a state election on May 22 in North Rhine-Westphalia, the industrial region that is its bedrock. In France, chronic high unemployment may undermine Mr. Chirac as he tries to rally support behind the European Union's Constitution, which faces a referendum on May 29. France's economy had outperformed those of its neighbors in recent months, but now there are signs that it is faltering. 'Economically and politically, these are not good numbers,' said Hans-Werner Sinn, the president of the Ifo Institute in Munich. 'There is a risk that the upswing we had hoped for is breaking down.' The latest survey of the European Commission showed declines in both consumer and business confidence in March. Last week, Ifo's influential survey reported that business confidence in Germany fell to an 18-month low, suggesting that the job market would remain torpid. Still, economists found some signs of hope, noting that Germany's labor market seems to have stabilized. The number of people out of work actually fell by 40,000, to 5.17 million. The jobless rate rose slightly because of adjustments for seasonal variations in employment. And the statistics continued to reflect a one-time spike from Germany's labor-market changes, under which people receiving social welfare were reclassified as long-term unemployed. On the other hand, the drop in the number of jobless was less than usual for March, when employment typically picks up with the spring thaw. The long winter this year was the culprit for that, analysts said. With all these seasonal blips and one-time effects, Lorenzo Codogno, a European economist at Bank of America in London, said: 'It's getting very, very difficult to understand the underlying trend. The situation is probably less negative than the headline numbers suggest.' German officials certainly took that view. Wolfgang Clement, the minister for economics and labor, declared that unemployment had peaked and that the economy would begin to generate jobs. 'I believe that we will get below the 5 million mark this spring, and that we will not reach it again in the future,' he said. The trouble for the government is that this is not likely to happen before the election in North Rhine-Westphalia. Polls show the Social Democrats, which have controlled the state for 39 years, are trailing the opposition Christian Democrats by nearly 10 percentage points. 'Unless something extraordinary happens, there is a high probability that the party will lose power,' said Reinhard Schlinkert, the chairman of Dimap, a polling firm in Bonn. 'There is widespread disappointment with the S.P.D., especially among its own members.' On the factory floors of the depressed Ruhr Valley, unemployment is Topic A. Employers like Opel, the carmaker owned by General Motors, announced deep job cuts at plants there, while the industrial giant Siemens used the threat of cuts to negotiate a tough new labor contract. More than a million people are out of work in North Rhine-Westphalia alone. The state's unemployment rate of 12.4 percent is roughly the same as the national rate, and it worsened slightly in March. 'The political debate has been dominated by these unemployment numbers,' said Martin W. Hüfner, an economist at HVB in Munich. 'The economy is in transition. But there is a separation between the economic reality and the political agenda.' Analysts say Chancellor Schröder has few levers at his disposal to change the tenor of the debate between now and the vote, as he has already proposed measures like a reduction in corporate taxes. 'He can always hope for another flood,' said Mr. Hüfner, referring to the floods in the summer of 2002 that turned around Mr. Schröder's fortunes in his last battle for re-election. President Chirac is also known for political resilience, which he may need to surmount the negative turn in France. The stubbornly high jobless rate there is, in some ways, even more worrisome than in Germany, economists said, because French consumers have been largely responsible for their country's robust performance, with their free-spending ways. As French companies start to follow their German rivals in cutting jobs, these consumers will become more parsimonious. While analysts said French voters were likely to blame their own leaders first, especially Prime Minister Jean-Pierre Raffarin, who pledged to cut the unemployment rate by 10 percent this year, they said it might also weaken support for the European Constitution. 'It's another sign of failure that the European Union was supposed to bring us prosperity, and it didn't,' said Nicolas Sobczak, an economist at Goldman Sachs in Paris.

Subject: Where are the NEW economic hit men? From: johnny5 To: All Date Posted: Fri, Apr 01, 2005 at 07:22:38 (EST) Email Address: johnny5@yahoo.com Message: Nor have the US and Britain used their power in Iraq to promote transparency in the oil sector. Let us hope that the new Iraqi government does better. It is difficult to see how democracy can take root if the country’s most important source of income remains as veiled in secrecy as it was under Saddam. BWAHAHA! Shhh - loose lips sink ships! http://www.project-syndicate.org/commentaries/commentary_text.php4?id=1900&lang=1&m=series Lifting the Resource Curse by George Soros Countries that are rich in natural resources are often poor, because exploiting those resources has taken precedence over good government. Competing oil and mining companies, backed by their governments, are often willing to deal with anyone who can assure them of a concession. This has bred corrupt and repressive governments and armed conflict. In Africa, resource-rich countries like Congo, Angola, and Sudan have been devastated by civil wars. In the Middle East, democratic development has been lagging. Curing this “resource curse” could make a major contribution to alleviating poverty and misery in the world, and there is an international movement afoot to do just that. The first step is transparency; the second is accountability. The movement started a few years ago with the Publish What You Pay campaign, which urged oil and mining companies to disclose payments to governments. In response, the British government launched the Extractive Industries Transparency Initiative (EITI). Yesterday, three years into the process, the UK convened an important EITI conference in London attended by representatives of governments, business, and civil society. Much has already been accomplished. On the business side, the major international extractive companies have started to acknowledge the value and necessity of greater transparency. British Petroleum has undertaken to disclose disaggregated payment information on its operations in Azerbaijan, and Royal Dutch Shell is doing the same in Nigeria. ChevronTexaco recently negotiated an agreement with Nigeria and Sao Tome that includes a transparency clause requiring publication of company payments in the joint production zone. Most encouraging is that producing countries themselves are beginning to seize the initiative. Nigeria is reorganizing its state oil company, introducing transparency legislation, and launching sweeping audits of the oil and gas sector. It plans to begin publishing details of company payments to the state this summer. The Kyrgyz Republic became the first country to report under EITI, for a large gold- mining project. Azerbaijan will report oil revenues later this month. Ghana and Trinidad and Tobago have also signed on. Peru, Sao Tome and Principe, and East Timor are currently in negotiations to implement the initiative. Equally important, local activists in many of these countries are starting to use EITI as an opening to demand greater public accountability for government spending. My own foundation, the Open Society Institute, has established Revenue Watch programs in producing countries such as Azerbaijan, Kazakhstan, the Kyrgyz Republic, Mongolia and Iraq. But there is a lot more to be done. Two-thirds of the world’s most impoverished people live in about 60 developing or transition countries that depend on oil, mining, or gas revenues. The recently published transparency index from Save the Children UK shows that transparency is the exception, not the rule. Many important producing countries have yet to make even a gesture toward disclosure. There is no reason the major Middle Eastern producers should not be part of this transparency push, and Indonesia should join its neighbor Timor in embracing the EITI. It is also critical that state-owned companies, which account for the bulk of global oil and gas production, be subject to full disclosure. Other governments need to follow the UK’s lead and become involved politically and financially in expanding the EITI. France appears to have done little to encourage countries within its sphere of influence, much less to ensure that its own companies begin disclosing. The Bush Administration’s recent decision to initiate a parallel anti-corruption process through the G-8 leaves the United States outside the premier international forum for addressing transparency in resource revenues while unnecessarily reinventing the wheel in the process. Nor have the US and Britain used their power in Iraq to promote transparency in the oil sector. Let us hope that the new Iraqi government does better. It is difficult to see how democracy can take root if the country’s most important source of income remains as veiled in secrecy as it was under Saddam. The EITI still has a long way to go, but it is one of the most effective vehicles available for achieving a global standard of disclosure and accountability. This week’s summit is an opportunity to assess progress and to define more precisely what it means to implement the EITI by establishing some basic minimum requirements on host countries. Those committed to seeing the wealth generated by energy and mining finally result in better lives for ordinary people would do well to invest in the initiative during this critical stage. The EITI may not be a catchy acronym, but in concert with civil society efforts such as Publish What You Pay, it promises to do a lot more good in the world than most. George Soros is President of Soros Fund Management and Chairman of the Open Society Institute.

Subject: Japanese and Germans sink us AGAIN From: johnny5 To: All Date Posted: Fri, Apr 01, 2005 at 07:14:30 (EST) Email Address: johnny5@yahoo.com Message: WWII repeat, now all we need is Italy to join the war. http://www.project-syndicate.org/commentaries/commentary_text.php4?id=1893&lang=1&m=series In Search of Global Demand by J. Bradford DeLong Once again, Germany and Japan have slipped into recession. Once again, the second and third largest of the world’s major industrial economies are subtracting from, not adding to, growth in the world’s aggregate demand. From the standpoint of German and Japanese citizens, this is bad news. Rapidly improving global technologies should make it relatively easy to deliver rising levels of output and living standards. Yet the German and the Japanese economies have had a hard time doing so for the past decade and a half. Certainly, everyone anticipated fifteen years ago that the current state of both economies would be much better. From the standpoint of global political stability, recession and stagnation in Germany and Japan is potentially even worse news. Democratic governments make a bargain with their people, gaining their long-run legitimacy from their ability to deliver rising living standards and high employment. Crisis, depression, and stagnation make people’s thoughts turn to the fecklessness and corruption of mainstream politicians, the illegitimate powers of special interests, and the cretinism of parliaments. The thoughts people think in times of crisis and depression are not false. Mainstream politicians are often feckless and corrupt (morally if not legally), special interests do have mighty and illegitimate powers, and legislatures are often cretinous. But there is no country in which attempts to draw political conclusions from these popular sentiments have not ended in disaster. From the standpoint of global economic stability, the failure of growth in Germany and Japan is perhaps the worst news of all. Six or seven years ago, there were vague worries that the world economy’s developed core could not run indefinitely on one locomotive, the United States, alone. Now, due to appalling fiscal policy on the part of George W. Bush’s administration and some bad luck, the US economy has wedged itself into a very uncomfortable position, hemmed in by its huge budget and trade deficits. Un-wedging America without a crisis – attaining the economists’ grail of a “soft landing” – requires that a great many people and institutions with enormous holdings of dollar-denominated assets passively stand by and take no action while those dollar-denominated assets lose a third or more of their value against other currencies. There is a recent precedent for this: from 1985 to 1987, holders of dollar-denominated assets took a similar, but much smaller, bath. But can you step into the same river twice? Moreover, achieving a successful soft landing requires more than that holders of dollar-denominated assets be tranquilized into catatonia while they lose their shirts. It also requires that at least eight million American workers who are now employed in construction, consumer services, and related industries find new jobs in export and import-competing industries. That’s not all. At least sixteen million workers outside America who are now employed making exports to America would have to find jobs in other sectors as well. These jobs will have to fulfill demand coming from outside the US, because as a falling dollar and possibly a domestic recession shrinks the gap between American demand and American production, there must be a countervailing boost to demand relative to production outside the US. When the rebalancing comes – and it has already been delayed longer than I would have thought likely – it is important that, as former US Treasury Secretary Larry Summers used to say, the world economy balance up rather than down. Without a rapidly growing Germany and Japan, where will the demand needed to “balance up” the world economy come from in the next several years? A generation from now, we will probably be able to point to China and India as rapidly growing capital-hungry markets capable of filling gaps in global demand. But not yet. While China and India are enormous in terms of workers, they are still small in terms of output and demand. Without rapid demand growth somewhere in the developed world outside the US – and Germany and Japan are the best places to look – it is hard to see how the global economy can balance itself at a high level over the next few years. J. Bradford DeLong is Professor of Economics at the University of California at Berkeley and was Assistant US Treasury Secretary during the Clinton Presidency.

Subject: Demand is a Problem From: Jennifer To: johnny5 Date Posted: Fri, Apr 01, 2005 at 09:03:55 (EST) Email Address: Not Provided Message: We need more world demand for goods and services.

Subject: Let's fix it - personally From: johnny5 To: Jennifer Date Posted: Fri, Apr 01, 2005 at 09:11:59 (EST) Email Address: johnny5@yahoo.com Message: I am all for making babies in the developed world and teaching them about our western demands - when you want to get started sweet sweet Jennifer? Ask NOT what your country can do for you, but what YOU can do for your country - hehe :)

Subject: Too Much Capital From: Emma To: All Date Posted: Fri, Apr 01, 2005 at 06:20:53 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/03/25/business/25norris.html Too Much Capital: Why It Is Getting Harder to Find a Good Investment THERE is too much capital in the world. And that means that those who own the capital - investors - are in for some unhappy times. That thesis may sound inherently unlikely, but it explains a lot. Those with capital find they must pay high prices for investments that are likely to produce only a little income. The relative importance of things other than capital, like commodities and cheap labor, has grown. Evidence of the capital glut can be seen in interest rates. Market rates are low, and even when central banks set out to raise short-term rates, longer-term rates are slow to move. Little additional yield is available to those who buy very risky bonds. For the same reason, stock prices are high. Profit disappointments may not cause the stock market to plunge, since the capital will have to go somewhere. But the return on the underlying investments is likely to be below what investors have expected. With capital in a weakening position, returns that once would have gone to owners of capital have gradually been redirected. That is one way to explain the surge in management compensation in the last two decades. In the early 1980's, when interest rates were high and stock prices low, the average chief executive received no stock options in any given year. Now nearly all get sizable grants, and one study found that chief executive pay rose faster than that of any group save for professional athletes and movie stars. Those who provided the capital had less power to demand the profits from the enterprises they financed. Another sign of excess capital can be seen in what Argentina did to its creditors - and in how they reacted. When Argentina defaulted on its debt in December 2001, many thought it would eventually negotiate a deal with creditors that was similar to previous arrangements made by countries in default. Instead, this year it imposed far harsher terms and refused to talk about them. The vast majority of the bondholders meekly went along and bonds of other emerging markets have not suffered. Emboldened, Argentina's government is sounding an uncompromising note regarding foreign-owned utilities and oil companies. It is betting that it can get away with treating the owners of capital badly and it may be right. Why is there too much capital? One answer is that central banks reacted to the bursting of the technology bubble by cutting interest rates by too much for too long. The resulting liquidity might in other times have sent inflation soaring, but now China's emergence has placed offsetting deflationary pressures on consumer goods prices. The excess liquidity is sloshing around world capital markets. At the same time, China's emergence is spurring investment that the world may not need. The world automobile industry is plagued by overcapacity, but every car company believes it must have plants in China. We have seen too much capital before, but not on a worldwide basis. It flooded into Japan in the 1980's when money there was cheap and the success of the Japanese economy obvious. Japanese business still suffers from excess capacity. Excessive investment in telecommunications in the late 1990's left a lot of unused fiber optic cable. The excess of capital is bad news for wealthy economies, especially as it is happening when aging populations in Japan, Europe and the United States need good investments to finance retirement. But it should be good news for economies that need capital to develop. Capital will not remain in excess forever. Money will be spent on consumption rather than investment, and new technologies and rising demand will eventually create more uses for a supply of capital that will have been depleted as low returns discourage saving. But for those with capital, that could be a slow and painful process.

Subject: Social Security From: Terri To: All Date Posted: Fri, Apr 01, 2005 at 06:17:14 (EST) Email Address: Not Provided Message: Indeed Social Security benefits to those over 55 are threatened. There is an increasing cost in Social Security benefits to cover Medicare benefits. The cost of living increase is gobbled up by Medicare costs. Social Security is indeed under threat, and we must be concerned.

Subject: Social Security [cont.] From: Terri To: Terri Date Posted: Fri, Apr 01, 2005 at 06:18:37 (EST) Email Address: Not Provided Message: The Senate has passed a tax cut on Scoial Security benefits for wealthy retirees. If this tax cut is passed by the House, there will be a significant loss of Medicare revenue for the tax is used by Medicare. This loss in revenue in turn will add to the costs of all who receive Social Security benefits. Social Security is surely and sadly under threat.

Subject: Sounds Fair to me - From: David E.. To: Terri Date Posted: Fri, Apr 01, 2005 at 16:31:57 (EST) Email Address: Not Provided Message: This is not a tax on wealthy persons, other income(including retirement pay, IRA w/d, and interest) as low as $14,000 a year can cause some of your social security income to be taxable. I would say this tax reaches into the lower middle class. The income limits that drive the calculations of tax on social security were set in 1983. At that point, I looked at the limits and thought I never would have to pay those taxes. Big surprise, the limits haven't been adjusted for inflation since 1983, and I am paying taxes on all of my social security. This is a major pain in the but, because a $10,000 IRA withdrawal causes me to pay taxes on $8500 of SS for a total of $18,500. So instead of having a marginal tax rate of 15% - I am forced into a marginal rate of 28%. When I was doing my pre-retirement planning I assumed that tax rates in retirement would be low. Big mistake, for me, the tax rate is higher post retirement. I should have maxed out Roth IRA's rather than maxing out my 401K. This situation applies to a small slice of the populace. A lot of folks have enough retirement income that they shoot right pass the SS trigger points. And there a lot of folks who don't have enough income to hit the SS trigger points. Do your own research to understand how this affects you.

Subject: Robert Shiller's on Stock Returns From: Terri To: All Date Posted: Fri, Apr 01, 2005 at 06:04:55 (EST) Email Address: Not Provided Message: http://www.irrationalexuberance.com/index.htm Robert Shiller: · I have a new, March 2005, study 'The Life-Cycle Personal Accounts Proposal for Social Security: An Evaluation' that uses historical data to assess the returns to investments in the life-cycle personal accounts. These personal accounts would invest heavily in the stock market for young workers, and gradually reduce exposure to stocks as the worker ages. · One can access an Excel file with the data set (used and described in the book) on stock prices, earnings, dividends and interest rates since 1871, updated.

Subject: Why Hold So Much Cash? From: Terri To: All Date Posted: Fri, Apr 01, 2005 at 05:47:43 (EST) Email Address: Not Provided Message: There is enough capital about that we must question how it is being used. Berkshire Hathaway has 47 billion dollars in cash for total assets of 188 billion dollars.

Subject: Share Buybacks From: Terri To: All Date Posted: Fri, Apr 01, 2005 at 05:44:03 (EST) Email Address: Not Provided Message: Remember that share buybacks must be in excess of options covering to make a significant difference to shareholders. How much are share buybacks worth in comparison to dividends, is the question we must ask?

Subject: Dividends and Share Buybacks From: Terri To: All Date Posted: Fri, Apr 01, 2005 at 05:40:51 (EST) Email Address: Not Provided Message: Dividends are 1.6% for the S&P Stock Index. This is an absurdly low figure. Corporations are hoarding cash rather than returning it to shareholders or investing it. Possibly share buybacks make up to an extent for the low low dividends, but we should still be skeptical. This is not a time when share holders are being well treated though corporations have record earnings, and this is worrying. This is not a time when investment is as high as warranted by corporate saving, and this is as worrying.

Subject: Canada 2 bust 2 - so much for can trusts From: johnny5 To: All Date Posted: Fri, Apr 01, 2005 at 01:50:10 (EST) Email Address: johnny5@yahoo.com Message: http://www.lewrockwell.com/north/north356.html ...The decisions of millions of consumers, all over the world, to raise their level of debt has created what the Griffiths Committee calls time-bomb conditions. England is not alone. Consider this report from Canada. Some finance experts are warning Canadians must wean themselves off debt, otherwise they face a major shock if interest rates rise. 'It could be catastrophic in terms of the whole economy,' says financial counselor Allen MacLeod. Interest rates have been quite low in Canada for the past several years. But Canadian paycheques have grown very slowly. To prop up their standard of living, many Canadians have resorted to cheap credit and stopped saving money. Lines of credit have grown at a record pace in Canada, up 30 per in 2004 alone. Holly McIntosh and Frank Lestage’s bank offered them a line of credit a few years ago. 'They just give you the money and people spend and spend,' Lestage said. 'It doesn’t take long to get it under control, but you have to realize what you’re doing and that takes a while. You have to get in trouble to realize what’s going on.' . . . 'I think as things have gotten more expensive, we’ve (become) a need-to-have-now generation,' says Cindy Cassidy. And that’s part of the problem, says consumer advocate Mel Fruitman: 'Consumer debt as a whole in Canada exceeds consumer assets. That means we’re on the brink.' MacLeod says personal bankruptcies are up more than 10 per cent since January.

Subject: Re: Canada 2 bust 2 - so much for can trusts From: jimsum To: johnny5 Date Posted: Fri, Apr 01, 2005 at 23:23:20 (EST) Email Address: jim.summers@rogers.com Message: Canadian consumers are in the same boat as American ones; but government finances are under control and the balance of trade is much better. Also, asset prices have not risen as fast as in the U.S. It should be interesting to compare the outcomes for the two countries, and see which factors are the most important.

Subject: Bolshevism - Collective Risk From: johnny5 To: All Date Posted: Thurs, Mar 31, 2005 at 22:44:38 (EST) Email Address: johnny5@yahoo.com Message: http://www.siliconinvestor.com/readmsg.aspx?msgid=20975651 Standing Solo In The Crowd http://www.gold-eagle.com/gold_digest_05/bonner012205.html Bill Bonner Ek aur ek guyazah A Hindi saying, meaning '1 1 = 11' When we picked up James Surowiecki's new book, The Wisdom of Crowds, we not only expected to be appalled; we counted on it. It is much easier to write a review of a man's errors than it is to praise his merits. Beyond that, we had reason to expect little. We have come to believe that crowds are full of dumbbells and psychopaths; it would be a nuisance to alter such a strongly held opinion at this stage in life. What's more, we felt that the book would probably provide encouragement to communists. No one takes Bolshevism seriously any more. But unseriously, comically, almost accidentally, it has taken over most of the world - including the United States. The cost of paying retirements has been collectivized. health care has been largely collectivized - both by government force and by the insurance industry. Risk of all sorts - including financial risk - have been spread out so much, no one knows exactly how far they reach. If a man defaults on his mortgage in San Diego, who will be the ultimate loser? It is hard to know. Risk is collectivized. And modern corporations are hardly the exploiters and despoilers of Marxist imagination. Au contraire, public companies are now owned by 'the people' - through millions of small shareholdings and mutual funds. And they are managed in such a way that almost guarantees that the capitalists will never make money. Dividend yields are below 2% - while the inflation rate is 3.3%. Investors take on the dividend...even though it represents (assuming the share price remains constant) a net annual loss of 1.3%. The capitalists no longer exploit the proletariat, in other words. Instead, the workers exploit the little capitalists.

Subject: Re: Bolshevism - Collective Risk From: Setanta To: johnny5 Date Posted: Fri, Apr 01, 2005 at 11:07:32 (EST) Email Address: Not Provided Message: 'modern corporations are hardly the exploiters and despoilers of Marxist imagination. Au contraire, public companies are now owned by 'the people' - through millions of small shareholdings and mutual funds. And they are managed in such a way that almost guarantees that the capitalists will never make money. Dividend yields are below 2% - while the inflation rate is 3.3%. Investors take on the dividend...even though it represents (assuming the share price remains constant) a net annual loss of 1.3%. The capitalists no longer exploit the proletariat, in other words. Instead, the workers exploit the little capitalists.' ah, so thats what happening in walmart. the workers are exploiting the owners. sounds fair.

Subject: Re: Bolshevism - Collective Risk From: Terri To: Setanta Date Posted: Fri, Apr 01, 2005 at 13:45:17 (EST) Email Address: Not Provided Message: Pleeease :)

Subject: Our Pain, Their Gain From: johnny5 To: Terri Date Posted: Fri, Apr 01, 2005 at 14:32:32 (EST) Email Address: johnny5@yahoo.com Message: How about the shareholders, workers, and taxpayers take the pain and a few ceo's and high risk taking leaders take the gain?

Subject: Suppose We Were to Time Markets From: Terri To: All Date Posted: Thurs, Mar 31, 2005 at 16:54:52 (EST) Email Address: Not Provided Message: Suppose we were to time markets. Just how are we to do so? When do we sell stocks. All stocks or only some sectors. Do we simply go to money market funds or bonds? How do we time bonds? Where should we be now and for how long? When do we know it is time to return to the market? These are tough questions.

Subject: Mid Cap Value and Bond Funds From: Terri To: Terri Date Posted: Sat, Apr 02, 2005 at 06:27:11 (EST) Email Address: Not Provided Message: Permanent Portfolio is an interesting and useful idea. There are several portfolios. The prime portfolio carries a mix of asset classes that behave well in different markets and tries to move in line with expected shifts in market emphasis. I will pay attention closely, but I do just this at Vanguard and I prefer more flexibility or choice. And I especially prefer the bond fund selection. A mix of Vanguard Select Value and Intermediate Term Investment Grade Bond funds would equal the portfolio. Middle cap value and bonds to balance is a fine idea. Interesting.

Subject: Flight to Quality From: johnny5 To: Terri Date Posted: Thurs, Mar 31, 2005 at 22:36:49 (EST) Email Address: johnny5@yahoo.com Message: http://www.geocities.com/WallStreet/Exchange/9807/Charts/SP500/Outlook.htm The bond market reached an all-time peak several years before the stock market peaked. Similar to our 1990's, stock prices appreciated so quickly that investors moved out of safer bonds into high-flying, speculative stocks. Once the stock market crashed in 1929, U.S. Bonds took over the role as the investment of choice in a flight to quality. This continued until late-1930. The chart shows what happened when the depression-era financial crisis gripped major banks and forced massive failures. Bonds very quickly lost favor and were dumped enmasse. Please note the unsuccessful recovery rally following the stock market peaks. Both eras show a clear 3-wave structure of which the A and C waves are nearly the same length. This was followed by a secondary peak and then a subsequent, and sharp, nasty sell-off. Another recovery occurred, but at an even lower level. And then, the crash unfolded. Our current bond environment is still trying to shakeout and recover from last months abrupt sell-off. So to follow the same 1930's path, the current U.S. Bond chart should rally for several months, but to a lower peak level, and then begin to weaken again. Compare the two charts and draw your own conclusions for what may happen next. If the bond market continues to play out as in our original discussion from last year, then bonds should continue to fall, with rising interest rates (inverse relationship to bond prices), and a break below the lower red line should at least raise the likelihood of a substantial crash scenario to another notch. Using the analogy of the security warning alerts, this should raise the warning from a yellow to orange status. Since the Fed has already said that higher rates will eventually come - although no mention of when - we know that a break of the lower red line is inevitable... it is all a simple matter of 'when'.

Subject: Berkshire Hathaway From: Terri To: Terri Date Posted: Thurs, Mar 31, 2005 at 17:10:26 (EST) Email Address: Not Provided Message: Berkshire Hathaway has assets of about 188 billion dollars, and 47 billion dollars in liquid assets. International currency liquid asset holding are more than 20 billion dollars. So, I have to agree, this is market timing.

Subject: Evidence Of Market Timing From: David E.. To: Terri Date Posted: Fri, Apr 01, 2005 at 10:04:18 (EST) Email Address: Not Provided Message: Hi Terri, let me take a different tack on this, and find out what you think. Warren Buffet has never been a market timer or a follower of MPT. His plan has been to buy low, his dilemna has been that everything is high. You can argue that Buffett has stuck with his plan - to buy low. But I don't think you can call him a market timer unless you want to call value investing market timing. In my opinion, its not market timing unless there is an element of 'I know what the market is going to do'. Value investing doesnt care about the market, the first and only directive is to buy value. When probable returns are very close to the bond market, there is no value.

Subject: Perfectly Described Timing From: Terri To: David E.. Date Posted: Fri, Apr 01, 2005 at 10:51:45 (EST) Email Address: Not Provided Message: Exactly, and this is what I have tried repeatedly to explain but you have done it better. Exactly. Warren Buffett must buy in the billions, and that is harder than our buying for there are far fewer possibilities. All I hope for is an idea every month or so, and idea of value, and there usually comes such an idea and I buy. This has proven successful for me, but this is what buying value is really about. Exactly.

Subject: Re: Perfectly Described Timing From: David E.. To: Terri Date Posted: Fri, Apr 01, 2005 at 16:02:12 (EST) Email Address: Not Provided Message: An investing idea every month is pretty good. I have a new idea, uninvestigated, but here it is. Invest in a closed end fund that holds adjustable rate notes. The good thing is that your principal will stay relatively the same because there is little interest rate risk. As interest rate benchmarks move the yield goes up and the NAV stays steady.

Subject: Re: Perfectly Described Timing From: Terri To: David E.. Date Posted: Fri, Apr 01, 2005 at 19:11:13 (EST) Email Address: Not Provided Message: Clever, use a fund that holds a large portfolio of adjustable rate mortgages. Remember to think about credit risk, but I like this idea. My idea has been prime international drug and medical equipment makers, or health care.

Subject: Permanent Portfolio From: Pete Weis To: Terri Date Posted: Thurs, Mar 31, 2005 at 21:45:33 (EST) Email Address: Not Provided Message: Terri. Take a look at Permanent Portfolio which is a conservative fund - one of relatively few funds in existance which made gains in each of the last 10 years. Last year it gained around 13% I believe. It is designed to withstand shocks such as the 2000-2002 stock market crash. It has also done well to defend against the dollar meltdown. Do a search in Google to read a variety of articles regarding this fund. Other similar funds will be mentioned in these articles. It has been around for more than 20 years. The problem for so many of us - fixed income, government bonds yield such low rates. So we're tempted to place bets on a risky stock market. In times like these funds such as Permanent Portfolio provide relatively low risk (there is no such thing as no risk) and provide returns that are fairly decent and have done a good job of 'hedging' against the market turbulence. By the way Permanent Portfolio is not a hedge fund (involved in derivatives), nor does it short the market. It's based mostly in government securities including US and Swiss, some precious metals and some natural resource companies, etc. When you look at its long term record it's obvious that it has been a well managed fund. Tax consequences are low since it has a low turnover rate.

Subject: Permanent Portfolio - Reviewing From: Terri To: Pete Weis Date Posted: Fri, Apr 01, 2005 at 06:06:07 (EST) Email Address: Not Provided Message: This day, I will thoroughly review the portfolios and comment. Thank you so much.

Subject: Who's your daddy Terri? From: johnny5 To: Terri Date Posted: Fri, Apr 01, 2005 at 15:41:55 (EST) Email Address: johnny5@yahoo.com Message: Watch stargate - Teal'c says not to worship false gods? http://flagship2.vanguard.com/VGApp/hnw/FundsCompareResult?entryPoint=null&step=fundCompare&FundIntExt1=INT&FundIntExt2=EXT&fundFamilyId1=286&fundFamilyId2=228&FundId1=0053&FundId2=1476 Vanguard Precious Metals Versus Permanent Portfolio Precious Metals & Mining Permanent Port Expense Ratio 0.48% 1.58%* 12b-1 Fee None — FundAccess® TransactionFee — None** Purchase Fee None None Redemption Fee Yes Yes Load Fund None None Precious Metals & Mining Permanent Port Year To Date 8.51% 0.52% 1 Year* 21.68% 10.68% 3 Year* 28.67% 14.70% 5 Year* 26.57% 11.13% 10 Year* 8.52% 8.08% Since Inception* 6.35% 6.15% Inception Date 05/23/1984 12/01/1982

Subject: Re: Who's your daddy Terri? From: Pete Weis To: johnny5 Date Posted: Fri, Apr 01, 2005 at 21:31:02 (EST) Email Address: Not Provided Message: Johnny. I'm not sure where you are going with this 'whose your daddy stuff' and 'false gods', but I'll give you the benefit of the doubt. It's has got to be pretty obvious that Vanguard Precious Metals VGPMX and Permanent Portfolio PRPFX are about as comparable as a chihuahua and a labrador. In the first place, while I believe precious metals have very good potential upside at this time they are also quite risky. Over the last 10 years VGPMX has been up 5 years and down 5 years - it has been up as much as 93% (1993) and down as much as 39% in 1997 - the last 3 it has been up big time. When you invest in a fund which is strictly a precious metals fund which invests 90% of its fund in mining company stocks it's a 'leveraged' investment which stands to gain more than the precious metal itself when the metal is rising but stands to lose more than the metal when the metal is falling - truely great volatility. Mining companies typically have very poor earnings and so if you are pumping money into a strictly precious metals fund you are making a bet on human psychology. You believe in the investment not from a fundamentals point of view but from the viewpoint that there will not only be a loss of confidence in currency but that you intend to ride a tide of investor irrational exuberance in mining companies the way some did the dot.com craze of the late 90's. If you don't realize this you will be like those 'who thought they could ride the back of the tiger only to be eaten by the tiger'. Permanent Portfolio has made gains every year of the last 10 and has averaged 11.13% over the last 5 years (which includes the 2000-2002 crash) which is IMO, remarkable. It invests 20% in gold, 5% in silver, 10% in Swiss franc assets, 15% in in stocks of US and foreign real estate and natural resource companies and 35% in cash, Treasury bills, and notes. Vanguard Precious Metals fund invests 90% of its fund in mining companies. Why compare the two? Johnny. You seem to have a Jekyll & Hyde personality.

Subject: Re: Who's your daddy Terri? From: johnny5 To: Pete Weis Date Posted: Sat, Apr 02, 2005 at 01:06:44 (EST) Email Address: johnny5@yahoo.com Message: Never give me the benefit Pete - hell half the time I have posted here I am buzzing from too much wine - 'Permanent Portfolio has made gains every year of the last 10 and has averaged 11.13% over the last 5 years (which includes the 2000-2002 crash) which is IMO, remarkable.' Great, but the expense ratio of terri's daddy Bogle is cheaper and they have done better the past 3. I say this with complete objectivity, I am not invested in either, I hold XOM, a lot of it - I expect it to go down, where I will add, and go up where I will add, and in 30 years I expect all my XOM or whatever it morphs into to make me fat and happy. Who has time for all this asset allocation - I am like Terri - as simple as possible. Scottrade buys of XOM every quarter. 'Johnny. You seem to have a Jekyll & Hyde personality.' Haha my friend, every good scientist becomes his own worst critic and harsh enemy. Be true to yourself and none can bear false witness of you. I am long XOM, have been for awhile, expect to be for a good while longer, in fact I don't ever expect to put a large part of my wealth outside of energy, it is the FUNDAMENTAL we all need.

Subject: Social Security, Growth, Stock Returns From: Emma To: All Date Posted: Thurs, Mar 31, 2005 at 15:59:18 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/03/31/politics/31social.html?pagewanted=all&position= Social Security, Growth and Stock Returns By EDMUND L. ANDREWS WASHINGTON - In barnstorming the country over Social Security, administration officials predict that American economic growth will slow to an anemic rate of 1.9 percent as baby boomers reach retirement. Yet as they extol the rewards of letting people invest some of their payroll taxes in personal retirement accounts, President Bush and his allies assume that stock returns will be almost as high as ever, about 6.5 percent a year after inflation. 'For the life of me, I can't imagine why anybody would argue against young workers having the ability to invest and build a better retirement for their future,' Treasury Secretary John W. Snow said Wednesday in a speech in Bozeman, Mont. A growing number of economists, however, including many who favor personal accounts, say Mr. Bush's assumptions are optimistic. Many believe that stock returns will be lower than they have been in the past, closer to 5 percent than 6.5 percent, and that returns on a balanced mix of stocks and bonds will be much lower than that. 'Most economists would argue that, over a long period of time, there is a linkage between what the stock market will return and how well the economy does,' said David Blitzer, chairman of the Standard & Poor's index committee, which oversees the S.&P. 500 stock index. The statistical battle is politically important. If investment returns are just one percentage point lower each year than predicted, a person would end up with 35 percent less money than she expected after 30 years of saving. Under Mr. Bush's plan, moreover, people would need to earn at least 3 percent a year after inflation just to make up for automatic cuts in traditional Social Security benefits. In a paper to be presented on Thursday at the Brookings Institution, three economists who are longtime critics of Mr. Bush argue that stock returns are likely to be about 4.5 percent if economic growth slows as much as the administration predicts. 'We find it arithmetically very difficult to construct scenarios in which asset returns are at their historic average values and real G.D.P. growth is markedly slowed,' wrote the economists, Paul Krugman of Princeton University, whose Op-Ed columns in The New York Times have long been sharply critical of Mr. Bush's plan; J. Bradford DeLong of the University of California, Berkeley; and Dean Baker of the Center for Economic Policy and Research, a liberal research organization in Washington. To make the numbers work, the economists contended in their paper, domestic profits would have to grow far more rapidly than they have in the past, or American companies would have to become huge exporters of capital to faster-growing countries. At the moment, the United States is a huge net importer of foreign capital. Administration officials and many independent analysts disagree, saying the link between overall economic growth and investment returns is weak. But many Wall Street analysts warn that stock returns are likely to be significantly lower in the future for a separate reason: stock valuations are high relative to expected earnings, and they are likely to remain that way. The S.&P. 500 index is currently valued at about 20 times earnings, which translates to an expected return of about 5 percent a year. The historical average is about 15 times earnings, or an expected return of more than 7 percent. William C. Dudley, chief United States economist at Goldman Sachs, estimates that stock returns are likely to be about 5 percent in the future, because investors are accepting lower 'risk premiums.' Other experts agree. 'My view is that stocks really can't deliver the same returns in the future as in the past, unless we have a major decline in stock prices,' said John Y. Campbell, a professor of economics at Harvard University and an adviser to the Social Security trustees on the issue in 2001. 'But what we see is valuations bouncing around 20 times earnings, which is higher than historical levels.' Two recent computer simulations, one by Robert J. Shiller at Yale University and one by the Congressional Budget Office, suggest that even historical stock returns are no guarantee against losing money. Under Mr. Bush's plan, workers would be allowed to divert up to 4 percent of their payroll taxes to personal retirement accounts. But people would have to earn at least 3 percent a year after inflation to break even, because their traditional benefits would be reduced by the amount of their contributions, plus 3 percent a year in interest. To protect people from stock market volatility, the government would also offer a 'life cycle' investment account that would gradually reduce the share of stocks relative to conservative Treasury bonds as they neared retirement. Mr. Shiller, using financial data going back to 1871, found that people who enrolled in life-cycle accounts would have lost money 32 percent of the time. The median annual return was 3.4 percent, barely above the break-even point in Mr. Bush's plan. The results highlighted the inherent trade-off: higher returns come with higher risks. The Congressional Budget Office recently ran similar computer simulations. Analysts there took historical stock returns and average volatilities and simulated stock returns for thousands of artificial 20-year periods. The result was that stocks earned less than Treasury bonds about 20 percent of the time. Stephen Goss, chief actuary for the Social Security program, defended the administration's assumptions. 'Keep in mind that we are trying to make projections over a very long time, 75 years,' Mr. Goss said. 'I would suggest that 5 percent at the moment makes perfect sense. But if you buy at another time, when the price-earnings ratio is 10, you would expect a higher return over time.' Many experts agree that slower economic growth in the United States does not mean lower rates of return. Confronted with lower demand in the United States, companies can spend less money on expansion and more on dividends. Or they can invest more heavily in countries with faster-growing populations. 'Growth might slow in developed countries, but it's not clear to me that world growth is going to slow down at all,' said Jeremy J. Siegel, a professor at the Wharton School of the University of Pennsylvania and a leading analyst of long-term stock trends. 'I think world growth will go up.' But White House officials may be revising their assumptions. N. Gregory Mankiw, who recently stepped down as chairman of the Council of Economic Advisers, said Mr. Bush's proposed break-even rate of 3 percent on personal accounts may be too high. The yield on inflation-protected Treasury bonds is about 2 percent. White House officials say they are open to proposals for changing the break-even point, which would raise the plan's cost, but Democratic lawmakers remain fundamentally opposed to Mr. Bush's plans. 'The basic arguments are over the extent to which people ought to be given more freedom over their risk and return choices,' Mr. Mankiw said. 'Returns on the stock market may affect the choice people make, but the question of whether they should be given a choice is broader than the issue of returns.'

Subject: Warren and Human Capital From: johnny5 To: Emma Date Posted: Thurs, Mar 31, 2005 at 22:29:30 (EST) Email Address: johnny5@yahoo.com Message: 'Confronted with lower demand in the United States, companies can spend less money on expansion and more on dividends. Or they can invest more heavily in countries with faster-growing populations.' Dividends are at historic LOWS and Warren is NOT investing in foreigners where birth rates are high - he is holding his cash - not giving it to nets in africa where people still like sex and breeding.

Subject: Protecting Health Care Benefits From: Emma To: All Date Posted: Thurs, Mar 31, 2005 at 15:42:46 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/03/31/politics/31retire.html Judge Blocks Rule Allowing Companies to Cut Benefits When Retirees Reach Medicare Age By ROBERT PEAR WASHINGTON - A federal district judge on Wednesday blocked a Bush administration rule that would have allowed employers to reduce or eliminate health benefits for retirees when they reach age 65 and become eligible for Medicare. Ten million retirees could have had benefits cut under the rule, which was adopted last April by the Equal Employment Opportunity Commission. The judge, Anita B. Brody of the Federal District Court in Philadelphia, struck down the rule and issued a permanent injunction that prohibits federal officials from enforcing it. The rule 'is contrary to Congressional intent and the plain language of the Age Discrimination in Employment Act,' the 1967 law that bans most forms of age discrimination in the workplace, Judge Brody wrote. The erosion of retiree health benefits is an explosive political issue. Before issuing the rule, the commission was deluged with letters opposing it. The rule would have created an explicit exemption to the age discrimination law, allowing employers to reduce health benefits for retirees when they became eligible for Medicare. Under the rule, Judge Brody said, employers could have given older retirees 'health benefits that are inferior' to those given retirees younger than 65. The commission argued that employers were more likely to continue providing health benefits to retirees under 65 if they were allowed to reduce or eliminate benefits for those 65 and older. AARP, the main plaintiff in the case, rejected that argument. It said the rule would accelerate the erosion of retiree health benefits, a trend that has been evident for more than a decade. Christopher G. Mackaronis, a Washington lawyer for AARP, said Wednesday: 'The rule was an example of executive arrogance. Federal agencies have no authority to rewrite laws passed by Congress. The rule was adopted in April 2004, but officials tucked it in their back pocket while they courted older voters last year. After the election, they moved forward with the regulation.' The rule, written by the commission, was reviewed and cleared by other agencies, including the Department of Health and Human Services. Cari M. Dominguez, the chairwoman of the commission, said her agency would ask the Justice Department to appeal the ruling to the United States Court of Appeals for the Third Circuit, in Philadelphia. The appeals court ruled on the same legal issue five years ago, in a case involving retirees who had worked for Erie County, Pa. Judge Brody closely followed the precedent laid down by the appeals court. The commission's rule would allow employers to engage in 'the exact same behavior' prohibited in the Erie County case, Judge Brody said. In that case, the appeals court found that Congress had intended the age discrimination law to apply 'when an employer reduces health benefits based on Medicare eligibility.' In the district court, the commission argued that it had the power to exempt certain conduct from the age discrimination law as long as the exemption was reasonable, 'necessary and proper in the public interest.' Judge Brody rejected that contention. The commission, she said, was trying to 'issue a blanket exemption for illegal behavior,' not confined to a few individual cases. 'An administrative agency, including the E.E.O.C., may not issue regulations, rules or exemptions that go against the intent of Congress,' she added. The law clearly forbids employers to discriminate on the basis of age in setting pay and employee benefits, Judge Brody said. And the law, as interpreted by the appeals court, 'prohibits the practice of coordinating retiree benefits with Medicare eligibility,' she said. No law requires employers to provide health benefits to workers or retirees. Employers can legally provide benefits to active workers and not to retirees. Many employers have eliminated retiree health benefits. But, Judge Brody said, if an employer provides benefits to retirees, it cannot discriminate among them on the basis of age. Lawyers said the ruling would apply to companies that give health benefits to early retirees and want to reduce coverage when the retirees reach 65 and become eligible for Medicare. Employer-provided health benefits do not duplicate Medicare. Rather, they help retirees pay medical expenses not covered by Medicare. Those expenses could include co-payments and deductibles and prescription drug costs, beyond what Medicare might pay. Michele Pollak, a lawyer at AARP, said, 'It is less expensive for employers to purchase a health plan that supplements Medicare than it is to purchase health benefits for younger retirees not eligible for Medicare.' The American Benefits Council, a trade group for large employers, and the HR Policy Association, which represents human resource executives at 250 large companies, said they were disappointed with Judge Brody's decision. Daniel V. Yager, senior vice president of the association, said the ruling was 'a major setback for many employers that are trying to maintain employer-provided benefits for pre-65 retirees.'

Subject: Protecting Older Workers From: Emma To: All Date Posted: Thurs, Mar 31, 2005 at 15:40:11 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/03/31/politics/31scotus.html?pagewanted=all&position= Supreme Court Removes Hurdle to Age Bias Suits By LINDA GREENHOUSE WASHINGTON - Workers who sue their employers for age discrimination need not prove that the discrimination was intentional, the Supreme Court ruled on Wednesday. Adopting a pro-worker interpretation of the federal law that prohibits age discrimination in employment, the 5-to-3 decision held that employees can prevail by showing that a policy has a discriminatory impact on older workers, regardless of the employer's motivation. The decision removed the requirement, imposed by a number of lower federal courts, that employees produce the equivalent of a smoking gun in order to win an age discrimination suit. Since discrimination on the job is often subtle, and proof of motivation often elusive, the need to demonstrate intentional discrimination has led to the dismissal of many lawsuits before trial. But the Supreme Court's decision, in an opinion by Justice John Paul Stevens, did not leave employers defenseless. They will be able to defend themselves by proving that a challenged policy was based on 'reasonable factors other than age.' In fact, the court accepted that defense in the case at hand, a lawsuit brought by a group of older police officers in Jackson, Miss., who challenged the city's decision to give proportionately more generous raises to officers with less than five years on the force, most of whom were younger. In another case involving age discrimination in the workplace, a federal district judge on Wednesday blocked a Bush administration rule that would have allowed employers to reduce or eliminate health benefits for retirees when they reach age 65. The appeal by the officers in Jackson reached the Supreme Court after two lower courts - the federal district court in Jackson and the United States Court of Appeals for the Fifth Circuit, in New Orleans - ruled that the law required them to prove intentional discrimination and that claims of a discriminatory impact were categorically unavailable. In rejecting that interpretation of the statute, the Supreme Court nonetheless found that the city's rationale for the differential raises was 'unquestionably reasonable.' The city had said it needed to raise salaries in the junior ranks in order to become more competitive with other police departments in the region in recruiting and retaining officers. 'While there may have been other reasonable ways for the city to achieve its goals, the one selected was not unreasonable,' Justice Stevens said. While the plaintiffs did not win their case, the result of their Supreme Court appeal, Smith v. City of Jackson, No. 03-1160, was to remove a significant ambiguity from a statute that is of growing importance to an aging American workforce. Within five years, half the labor force will be at least 40 years old, the age at which the law's protections apply. The debate among the lower courts over how to interpret the statute 'has been one of the great unresolved conflicts,' James J. Brudney, a law professor at Ohio State University and an expert on labor law, said in an interview on Wednesday. He said the decision was surprising given the trend toward foreclosing what are known as 'disparate impact' claims. While it remains to be seen whether employees invoking these claims will prevail in substantially greater numbers, the decision will almost certainly result in more such cases going to trial, rather than being dismissed at the early stages on summary judgment. That prospect, in turn, will require employers to examine any policies that have different impacts on workers of different ages and to make sure that they can justify the policies on a basis other than age. Professor Brudney said the decision left important questions to be addressed in future cases, such as whether cost-saving can be accepted as a reasonable justification for a policy that falls more harshly on older workers, who are usually among the highest paid. Judges have disagreed on this issue, he said. While five justices agreed Wednesday that disparate-impact cases should be permitted, they did not agree on the reasoning. Justice Stevens was joined by Justices David H. Souter, Ruth Bader Ginsburg and Stephen G. Breyer in concluding that the text of the statute, as well as its consistent interpretation by executive branch agencies, supported the conclusion that such cases should be permitted. Justice Stevens cited the statute's prohibition of actions that 'deprive any individual of employment opportunities or otherwise adversely affect his status as an employee.' He noted that 'the text focuses on the effects of the action on the employee rather than the motivation for the action of the employer.' Justice Antonin Scalia said the court did not need to examine the statute itself but should accept the views of the Equal Employment Opportunity Commission, which adopted the disparate-impact interpretation of the statute in a formal rule-making proceeding soon after the law's enactment. 'This is an absolutely classic case for deference to agency interpretation,' Justice Scalia said. One curiosity of the case was that the Bush administration did not appear in the Supreme Court to present the Equal Employment Opportunity Commission's view of the statute. The solicitor general's office declined to file a brief defending the commission's regulation. Justice Clarence Thomas, a former chairman of the commission, and Justice Anthony M. Kennedy joined a dissenting opinion by Justice Sandra Day O'Connor. Chief Justice William H. Rehnquist did not participate in the case. He had just begun his treatment for thyroid cancer with the case was argued on Nov. 3. In her opinion, Justice O'Connor emphasized a different portion of the statute. She noted that the law prohibits employers from taking specific actions against an individual 'because of such individual's age.' The 'natural reading' of the text, Justice O'Connor said, was that 'an employer is liable only if its adverse action against an individual is motivated by the individual's age.' This was the second consecutive ruling from the court to give a broad interpretation to a federal civil rights law. On Tuesday, the court ruled that the law known as Title IX, which bars sex discrimination in schools and colleges, also prohibits retaliation against those who complain about sex discrimination.

Subject: What if the Economy Slows? From: Terri To: All Date Posted: Thurs, Mar 31, 2005 at 15:22:53 (EST) Email Address: Not Provided Message: We are a cyclical economy, though in the last 25 years the cycles have grown increasingly less pronounced. Growth ebbs and increases, but more and more gently. The reasons for the gentler business cycles are that the economy has become more flexible and resilient these years. Resource movement in response to changes in market conditions has been eased for both labor and capital. Technical advance allows for more flexibility. But if we are a more resilient economy on a micro level, we have been able to use macro economic policy to our advantage to dampen swings in growth. Then, from a micro vantage the question of and landing and recovery would not seem to warrant much concern. From a macro perspective the question will be can we readily use monetary and fiscal policy to stimulate the economy in a downturn. There is where the worry of excessive debt comes in. Will monetary policy still allow for stimulation no matter the debt? I do not know why not. Lowering interest rates works when there is mild inflation, and we have mild inflation. Fiscal policy however which might also be used to stimulate the economy in a slower manner than monetary policy is the problem. Debt makes a tax and spending stimulus more of a problem in stimulating a slow growth economy. Thus, we have a tool and we are really missing a tool.

Subject: America and China From: Emma To: All Date Posted: Thurs, Mar 31, 2005 at 14:58:33 (EST) Email Address: Not Provided Message: Through the last 30 years, relations between China and America have grown increasingly complex and friendly. Entirely to my surprise, there has been considerable discussion of late of a possible break in the friendly relations that have developed. Suddenly the evidence of a surge in economic development in China seems to have set off a sense that competition between us will become increasingly fierce. I can not imagine why. There is everywhere in China a dependence on American markets, and no reason this dependence will grow less. China is still quite a poor country and will be many decades in working on development. As China has established relations with us and liberalized and surged in development cultural ties with us have grown markedly. There are few schools in which English is not taught, and required. Cultural exchanges between America and China are far too many to count. American brands are found through China as Chinese goods are found everywhere in America. Why are we worried? The idea that China's leaders would wish to harm us economically or otherwise is hard to understand. They would be harming China. There will be all sorts of disputes, but disputes can be readily settled by nations with our relations. I see absolutely no crisis looming in relations with China.

Subject: Re: America and China From: Paul G. Brown To: Emma Date Posted: Thurs, Mar 31, 2005 at 15:19:23 (EST) Email Address: paul_geoffrey_brown@yahoo.com Message: Nations do not have permanent relationships; only permanent interests. I completely agree that the Chinese government doesn't wish us harm. But neither are they looking out for us, particularly. Their interest in US Treasuries is a mechantilist policy intiative with the goal of keeping foreign exchange rates steady, thereby creating a healthy environment for investment in manufacturing for export. You can still maintain friendly relations with another nation while at the same time supporting competition. Many firms today have a physical presence in Asia and employ lots of locals. Many firms have a multi-nationalist mindset. I think this is a good thing. But if one nation wants to encourage those firms to invest more in its economy, well, then it has no interests in creating a good investment climate elsewhere. My firm has no interests in ensuring that all of the other firms we deal with are profitable. If they want to buy something from us that might bankrupt them if they screw it up, we'll still sell stuff to them. And then turn the paper if they can't make the payments. I guess this is all another way of pointing out that there is this big disconnect between the real strength of the US, and what many citizens (and politicians) believe to be the case.

Subject: Re: America and China From: Emma To: Paul G. Brown Date Posted: Thurs, Mar 31, 2005 at 15:25:23 (EST) Email Address: Not Provided Message: Excellent post and response. I quite agree, but the response softens your post somewhat.

Subject: Re: America and China From: Paul G. Brown To: Emma Date Posted: Thurs, Mar 31, 2005 at 15:29:03 (EST) Email Address: paul_geoffrey_brown@yahoo.com Message: Perhaps a better way to ask the question would have been (paraphrasing Mr Greenspan): 'At what point does it cease to be in China's interests to keep topping up the punch bowl?'

Subject: Re: America and China From: Emma To: Paul G. Brown Date Posted: Thurs, Mar 31, 2005 at 15:51:19 (EST) Email Address: Not Provided Message: Then, I am in complete agreement with you. China for its own sake must give over the dollar peg. How long the peg can sustained without a growing inflation problem is not clear, but I would guess not all that long. Domestic demand in China needs to be stimulated for the transition. as you suggest. One year, two years...?

Subject: China, Geopolitics, and all that From: Paul G. Brown To: All Date Posted: Thurs, Mar 31, 2005 at 13:41:59 (EST) Email Address: paul_geoffrey_brown@yahoo.com Message: A troubling thought. A message or two below, Pancho post the Nye piece about China's developing militarism, reminding us (faux) economists that there is more to heaven and earth (and the middle kingdom) than resides in our philosophy. Over on the WSJ, Mr Roubini and Mr Altig agree that we're about to endure a rain of shit, but disagree in their forecasts of how many inches of it to expect. Mr Altig argues that, among other reasons, foreign central banks will not allow the US dollar to to lose its status as the major reserve currency. 'At a minimum, that status confers an enormous incentive for central banks all over the world to ensure that the adjustments that occur do so in an orderly manner.' Mr Altigs 'soft landing' argument rests on the premise that a soft landing is somehow in the interests of the creditor nations. It seems to me that he's mistaking means and ends. The elevation of US national interests is not a Chinese priority. The elevation of Chinese national interests is. So long as Chinese national interests and US national interests co-incide, the Chinese will seek to maintain the staus quo, buying US Treasuries, funding US debt. But once indigenous Chinese economic development becomes self-sustaining -- that is, once the US consumer begins to decline in importance to the Chinese economy -- all bets are off. At that point it becomes in China's interests to precipitate a sharp (downwards) correction in the US dollar. Doing so would a) increase US energy costs, going some way to offsetting the increased price competitiveness of US manufacturing, b) wreak havoc with US investor sentiment, c) increase the cost of servicing the debt to the point that it weakens US militarism .. well, you get the idea. At what point does it become in China's interests to tug the rug and bring the lamps crashing down?

Subject: Re: China, Geopolitics, and all that From: Pete Weis To: Paul G. Brown Date Posted: Thurs, Mar 31, 2005 at 15:53:53 (EST) Email Address: Not Provided Message: 'once the US consumer begins to decline in importance to the Chinese economy -- all bets are off.' With the backdrop of a lack of overall wage growth and record consumer debt accumulated during a period of near record low interest rates - continued high mortgage originations = continued US consumer spending = probable continued Asian bank purchases of US treasuries. Once housing begins to decline so does the US consumer.

Subject: If only china could export houses From: johnny5 To: Pete Weis Date Posted: Thurs, Mar 31, 2005 at 22:16:54 (EST) Email Address: johnny5@yahoo.com Message: As was posted before.

Subject: Public Health Measures and Trade-Offs From: Emma To: All Date Posted: Thurs, Mar 31, 2005 at 11:34:06 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/03/31/business/31scene.html?pagewanted=all&position= Public Health Measures Always Involve Trade-Offs By ALAN B. KRUEGER IN extraordinary circumstances like this,' President Bush said of the Terri Schiavo predicament, 'it is wisest to always err on the side of life.' Uwe E. Reinhardt, a Princeton University health economist, said that from his perspective President Bush was not quite right: the president should have said 'err on the side of life years.' There are two reasons for this distinction. First, no action can save a life indefinitely; life can only be extended. Saving the life of an infant leads to more expected life years than saving the life of a centenarian. Second, health economists are typically concerned with finding policies that maximize the total number of life years, or, equivalently, the average life expectancy of the population, leaving aside quality-of-life issues for now. A focus on life years recognizes that there are inevitable trade-offs involved in health and safety policies. One can believe that life is sacred and still recognize that trade-offs exist. If government policy always erred on the side of life, the speed limit would be reduced to 5 miles per hour to eliminate all fatal accidents. Of course, voters would not stand for a 5 m.p.h. speed limit, so at least implicitly policy makers recognize that there is a trade-off between risk and the time required to transport goods and people on the highways. This principle was clearly stated by the Office of Management and Budget in the 2003 budget: 'Since the nation does not possess enough resources to eliminate all risks, an important performance goal for government is to deploy risk-management resources in a way that achieves the greatest public health improvement for the resources available.' Yet research indicates that the government generally does a poor job in choosing policies that maximize life years. Many programs are intended to reduce the risk of premature death. If the government used its limited budget to maximize the number of life years, the cost of saving an additional life year would be the same across different programs. In actuality, the cost per year of life saved varies widely across regulations and programs. Some cost-effective initiatives that would reduce risks are passed over, while others that are more costly and less effective are put in place. For example, a program of prenatal care for pregnant women is estimated to cost $2,800 per year of life saved, while the cost per year of life saved from regulating airborne benzene is around $5 million. A 1995 study by public health specialists of 587 possible lifesaving interventions found that a quarter of them cost less than $6,900 per year of life saved and a quarter cost more than $372,000 per year of life saved (updated to 2005 dollars) - a ratio of more than 50 to 1. In general, safety standards and preventive medical treatments were more cost-effective than environmental regulations. Why does the cost per life year saved differ so much across policies? There are two main explanations. First, the government may get things wrong. There is no mechanism to make the government pursue the most cost-effective strategies because agency budgets are monitored by different Congressional committees and because the costs of complying with regulations are not counted in the federal budget. As a result, regulations may appear to be less expensive than programs that are more cost-effective but require direct government spending. Lobbying by vested interests may also lead policy makers to stray from the most efficient risk reduction programs. Second, the public may value some programs more than others for reasons other than the programs' ability to save lives, and policy makers may be carrying out the voters' wishes. For example, people may prefer that the government reduce lung cancer by regulating pollution instead of by providing antismoking education, even if the number of life years saved and costs are identical. Such preferences may arise because people let their emotions get in the way of reason. Or the public may view reducing risks differently if the exposure to the risk is voluntary (smoking) as opposed to involuntary (pollution). To learn how the public evaluates programs intended to reduce premature deaths, Uma Subramanian of the World Bank and Maureen Cropper of the University of Maryland presented 1,013 people with hypothetical choices between pairs of lifesaving programs, like controlling radon in homes versus banning pesticides on fruit. Participants were told to suppose that each program had the same cost and would save the same number of lives each year. After participants selected a program that they thought was best for society, they were asked whether they would switch if the other program saved more lives, with the specific number of extra lives saved randomly assigned in each case. The researchers found that both the number of lives saved and the characteristics of the programs mattered. When the costs and number of lives saved were the same, a majority of respondents favored cutting pollution over cutting smoking, screening for colon cancer, requiring dual air bags in cars or providing pneumonia vaccinations. Seventy-two percent of the participants favored banning pesticides over controlling radon in homes. At a given cost and number of lives saved, the participants were more likely to support programs that were geared toward risks that could not easily be controlled, that were more serious, that affected them personally and that were more immediate. Other research by psychologists finds that people prefer to reduce risks that are dreaded and unfamiliar. Still, participants put tremendous weight on the number of lives saved by a particular program. Of the six pairs of programs considered, a majority never favored a less effective program if the number of lives saved was 2.15 times that in the more effective program. Bearing in mind that costs were assumed to be equal in the hypothetical comparisons, this range is much smaller than the range in cost per lives saved in actual government programs, suggesting that the public would like policy makers to put more weight on finding the most cost-effective ways to extend lives. Of course, actual decisions are more complicated than hypothetical ones because of issues like quality of life. But a focus on maximizing life years makes the trade-offs clear. Instead of focusing on one tragic case that most Americans considered a private matter, Congress and the president would have better served the public interest if they had sought to align public policy with voters' interests in maximizing the number of life years saved. Infant mortality, for example, is lower in Cuba than in the United States, according to the 2005 C.I.A. World Factbook. It is hard to believe that a government focused on maximizing life years could not do better. Alan B. Krueger is the Bendheim professor of economics and public affairs at Princeton University.

Subject: Thucydides: 'U Iraq, they Taiwan'? From: Pancho Villa To: All Date Posted: Thurs, Mar 31, 2005 at 08:40:25 (EST) Email Address: nma@hotmail.com Message: China’s “Peaceful” Rise? by Joseph S. Nye In recent weeks, China announced a 12.6% increase in its defense spending; America’s CIA director, Porter Goss, testified about a worsening military balance in the Taiwan Strait; and President George W. Bush pleaded with Europeans not to lift their embargo on arms sales to China. Yet Chinese leaders have spoken of China’s “peaceful rise” or, more recently, its “peaceful development.” Analysts such as John Mearsheimer of the University of Chicago have flatly proclaimed that China cannot rise peacefully, and predict that “the United States and China are likely to engage in an intense security competition with considerable potential for war.” Optimists point out that China has engaged in good neighbor policies since the 1990’s, settled border disputes, played a greater role in international institutions, and recognized the benefits of using soft power. But skeptics reply that China is merely waiting for its economy to lay the basis for future hegemony. Who is right? We will not know for some time, but the debaters should recall Thucydides’ warning more than two millennia ago that belief in the inevitability of conflict can become one of its main causes. Each side, believing it will end up at war with the other, makes reasonable military preparations that are read by the other side as confirmation of its worst fears. In fact, the “rise of China” is a misnomer. “Re-emergence” would be more accurate, since by size and history the Middle Kingdom has long been a major power in East Asia. Technically and economically, China was the world’s leader (though without global reach) from 500 to 1500. Only in the last half-millennium was it overtaken by Europe and America. The Asian Development Bank has estimated that in 1820, at the beginning of the industrial age, Asia accounted for three-fifths of world output. By 1940, this fell to one-fifth, even though Asia was home to three-fifths of the world’s population. Rapid economic growth has brought output back to two-fifths of the world total today, and the Bank speculates that Asia could return to its historical levels by 2025. Asia, of course, includes Japan, India, Korea, and others, but China will eventually play the largest role. Its high annual growth rates of 8-9% led to a tripling of its GNP in the last two decades of the twentieth century. Nonetheless, China still has a long way to go and faces many obstacles. The US economy is about twice the size of China’s; if it grows by only 2% annually, and China’s economy grows by 6%, they could reach parity sometime after 2025. Even so, they would not be equal in composition or sophistication. China would still have a vast, underdeveloped countryside, and would not equal the US in per capita income until sometime after 2075 (depending on the measures of comparison.) China is a long way from posing the kind of challenge to American preponderance that the Kaiser’s Germany posed when it surpassed Britain in the years leading up to World War I. Moreover, simple projections of economic growth trends can mislead. Countries tend to pick the low-hanging fruit as they benefit from imported technologies in the early stages of economic take-off, and growth rates generally slow as economies reach higher levels of development. In addition, China’s economy suffers from inefficient state-owned enterprises, a shaky financial system, and inadequate infrastructure. At the same time, politics has a way of confounding economic projections. Creating a rule of law and institutions for political participation has lagged behind economic growth, and growing inequality, massive internal migration, an inadequate social safety net, and corruption could foster political instability. Indeed, some observers fear instability caused by a weak, rather than a rising, China. As long as China’s economy does grow, its military power will likely increase, thus making China appear more dangerous to its neighbors and complicating America’s commitments in Asia. A RAND study projects that by 2015, China’s military expenditure will be more than six times higher than Japan’s, and its accumulated military capital stock will be roughly five times higher (measured at purchasing power parity). Whatever the accuracy of such assessments of China’s military growth, the outcome will also depend on what the US and other countries do. The key to military power in the information age depends on the ability to collect, process, disseminate, and integrate complex systems of space-based surveillance, high speed computers, and “smart” weapons. China and others will develop some of these capabilities, but, according to many military analysts, China is not likely to close the gap with the US soon. China’s inability to compete with the US on a global basis does not mean that it could not challenge the US in East Asia, or that war over Taiwan is impossible. Weaker countries sometimes attack when they feel backed into a corner, such as Japan did at Pearl Harbor or China did when it entered the Korean War in 1950. If, for example, Taiwan were to declare independence, China would likely intervene with armed force, regardless of the perceived economic or military costs. But it would be unlikely to win such a war, and prudent policy on both sides can make such a war unlikely. There is no need for the US and China to go to war. Not every rising power leads to war – witness America’s overtaking of Britain at the end of the nineteenth century. If China’s rise remains peaceful, it promises great benefits to its own people and to its neighbors – and to Americans. But, remembering Thucydides’ advice, it will be important not to mistake analysts’ theories for reality, and to continue pointing this out to political leaders and publics. Joseph S. Nye, a former US Assistant Secretary of Defense, is Distinguished Service Professor at Harvard, and author of Soft Power: The Means to Success in World Politics. http://www.project-syndicate.org/commentaries/commentary_text.php4?id=1898&lang=1&m=series

Subject: Freedom for Taiwan From: johnny5 To: Pancho Villa Date Posted: Thurs, Mar 31, 2005 at 10:26:53 (EST) Email Address: johnny5@yahoo.com Message: 'Not every rising power leads to war – witness America’s overtaking of Britain at the end of the nineteenth century. ' Weren't the US and britain more closely linked by political, social, historical, ethnic structure than china and the US are today?

Subject: Re: Freedom for Taiwan From: Pancho Villa alias Thomas Paine To: johnny5 Date Posted: Thurs, Mar 31, 2005 at 15:27:40 (EST) Email Address: nma@hotmail.com Message: 'Weren't the US and britain more closely linked by political, social, historical, ethnic structure ...?' http://www.oracleband.net/Lyrics/we-are-family.htm

Subject: Market Timing From: Terri To: All Date Posted: Thurs, Mar 31, 2005 at 06:25:19 (EST) Email Address: Not Provided Message: Proper investors do not time markets, rather they find reasonable values and move in the direction of those values. Values may be fleeting, they may be long term, but finding values is not timing. Timing is virtually impossible for any extended period. Finding value is possible.

Subject: Proper Investors? From: johnny5 To: Terri Date Posted: Thurs, Mar 31, 2005 at 10:15:59 (EST) Email Address: johnny5@yahoo.com Message: Who taught you proper investors don't time markets? Warren Buffet and Charlie are timing the market - they are not the very DEFINITION of a proper investor? Where did you learn this from? Certainly not warren or munger.

Subject: Earnings From: Terri To: Terri Date Posted: Thurs, Mar 31, 2005 at 07:27:37 (EST) Email Address: Not Provided Message: What is so surprising about corporate earnings now is that earnings are back at the record levels of 2000. The recovery in earnings has been exceptionally fast and sharp, and earnings at such levels make me very very nervous for how can they be sustained other than at the expense of labor and under ideal economic conditions?

Subject: Dividends From: johnny5 To: Terri Date Posted: Thurs, Mar 31, 2005 at 10:17:23 (EST) Email Address: johnny5@yahoo.com Message: Terri why are we at historically low dividend payouts - why aren't they given us shareholders more of that money they are hoarding?

Subject: Re: Dividends From: Terri To: johnny5 Date Posted: Thurs, Mar 31, 2005 at 17:12:25 (EST) Email Address: Not Provided Message: Dividends will only rise if investors avoid stocks that pay no or poor dividends. This has not happened.

Subject: Earnings Danger From: Terri To: All Date Posted: Wed, Mar 30, 2005 at 21:19:08 (EST) Email Address: Not Provided Message: Here then we have an internal market problem that could be serious. Record eanings, and a Federal Reserve intent on slowing the economy, and a reasonably expensive market. A decline in earnings and this market could look a lot more than reasonably expensive. As an aside, for all the complaints about international competition earnings are surely not effected.

Subject: Finally Worrying From: Terri To: Terri Date Posted: Wed, Mar 30, 2005 at 21:59:16 (EST) Email Address: Not Provided Message: Finally, I am worried a bit :)

Subject: Warrens Quotes From: johnny5 To: Terri Date Posted: Thurs, Mar 31, 2005 at 00:17:25 (EST) Email Address: johnny5@yahoo.com Message: Welcome the gift the investing gods may be sending your way Terri - don't worry, be happy. If you are looking to purchase stocks throughout your life, you should welcome price declines as a way to add stocks more cheaply to your portfolio - Warren Buffet The intelligent investor is likely to need significant willpower to keep from following the crowd - Benjamin Graham. Unless you can watch your stock decline by 50% without becoming panic stricken, you should not be in the markets - Warren Buffet Only buy samoething that you would be happy to hold if the market shut down for 10 years - Warren Buffet I buy when other people are selling - J. Paul Getty Far more money has been lost by preparing for corrections or the anticipation of them that has been lost in the actual corrections - Peter Lynch The inevitable never happens, it is the unexpected always - Keynes When we are living on this much borrowed money, we have little borrowed time - Volcker 'The rest of the world owns $10 trillion of us, or $3 trillion net. That is, U.S. claims on foreign assets run to only $7 trillion. If lots of people try to leave the market, we'll have chaos because they won't get through the door.' In a nutshell, the trade deficit is forcing foreign central banks to ingest U.S. currency at a rate approaching $2 billion a day. Buffett continues: 'If we have the same policies, the dollar will go down. A continuing fall in the dollar 'could cause major disruptions in financial markets. There could be unpredictable side effects. It could be precipitated by some exogenous event like a Long-Term Capital Management,' Buffett says, referring to the 1998 collapse of a steeply leveraged hedge fund. How about a soft landing for our deficit-addicted economy? Don't count on it. We're running $100 billion a year in the hole against China, but Buffett doesn't expect that an upward revaluation of the renminbi (stoutly resisted, in any event, by the Chinese government) would greatly reduce this number. How about a rise in short-term interest rates? They used to say on Wall Street, 'Six percent interest will draw money from the moon.' Buffett is skeptical, though, that the recent tightening by Fed Chairman Alan Greenspan will do much more than 'put off the day of reckoning.' Buffett reflects wistfully on the writings of David Ricardo, the 19th-century trade theorist: 'In those days the trade imbalances got settled in gold--and when they ran out of gold, people stopped doing business with you.' Warren Buffet, Berkshire Hathaway, January 11, 2005 There is an old Wall Street saying - 'Put ten percent of your money in gold and hope it doesn't work' Foolproof economies and markets don't take into account the ingenuity of fools.

Subject: Bear market timing From: johnny5 To: johnny5 Date Posted: Thurs, Mar 31, 2005 at 00:20:52 (EST) Email Address: johnny5@yahoo.com Message: http://socialize.morningstar.com/NewSocialize/Asp/FullConv.asp?forumId=F100000015&convSeqNumber=40897&mrr=1112231160 15. 50 best months and 50 worst months sudhi| 03-30-05 | 08:06 PM (Reference to Shilling's 1992 paper in Financial Analysts Journal titled : 'Market-timing : Better than a Buy and Hold strategy') : Table : DJIA Average Simulation (Jan 1946- December 1991) 50 strongest-50 weakest --- All-other --- Ave annual return months --- --- -months --- --- -months Long --- --- --- Long --- --- --- Long --- --- --- --- -11.2% 0 --- --- --- --- 0 --- --- --- --- Long --- --- --- --- -10.8% 0 --- --- --- --- Short --- --- --Long --- --- --- --- -18.2% Shilling adds, 'The moral of this exercise is clear. It's profitable to be in stocks during bull-markets, but it's even more profitable to be short stocks, or at least out of the market, during bear-markets -- even if many of the major bull market months are missed completely'

Subject: Earnings are Too High From: Terri To: All Date Posted: Wed, Mar 30, 2005 at 19:48:24 (EST) Email Address: Not Provided Message: Corporate earnings have again reached the peak they found in 2000. While you might think I would be pleased, I am decidedly not. There are 2 problems with the explosion of earnings as a proportion of GDP. First, the gain in share of earnings has come at the expense of labor. Wages and benefits are not keeping up with productivity increases or even lately with inflation. Second, it is difficult not to think we are at an earnings peak and stocks are priced for just such a peak. But, earnings as such a proportion of GDP, earnings growth at such a level, earnings at this level can not continue. A decline in earnings with stocks priced for ideal earnings and we could have quite a difficult market.

Subject: Democracy Now video with PK From: Auros To: All Date Posted: Wed, Mar 30, 2005 at 15:17:57 (EST) Email Address: rmharman@auros.org Message: http://www.democracynow.org/article.pl?sid=05/03/29/153250

Subject: Technology: Fish Farming From: Emma To: All Date Posted: Wed, Mar 30, 2005 at 14:56:05 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/03/30/national/30Fish.html Fish Farms Tied in Study to Imperiling Wild Salmon By CORNELIA DEAN Fisheries experts have known for some time that farm-raised salmon can be vulnerable to infestations of parasites called sea lice, but there has been disagreement about the extent to which the parasites spread to wild fish, especially in the waters off British Columbia and the Pacific Northwest. Now Canadian researchers suggest that fish farms are such prodigious producers of parasites that juvenile fish become very heavily infested just by swimming near them. In fact, their model suggests, the young fish are so heavily affected that they may turn into secondary sources of infestation for other wild fish out at sea. The new findings, by Martin Krkosek and Mark A. Lewis of the University of Alberta and John P. Volpe, a former colleague there who is now at the University of Victoria, British Columbia, are described in the current issue of Proceedings of the Royal Society B, a British journal. They add more fuel to the intense debate over the wisdom of turning to aquaculture to replace stocks of wild fish, many of which have crashed in recent decades under the pressure of commercial and even recreational fishing. In fact, the researchers said their findings were so startling that they suggested that the parasite problem occurred wherever wild fish shared the ocean with fish farms. Asked about the new work, the British Columbia Salmon Farmers Association referred questions to Prof. Scott McKinley, a fisheries expert at the University of British Columbia, who said the correlation that the researchers reported was not evidence of cause-and-effect. To demonstrate that, Professor McKinley said, 'they would have to show that the lice that are on the fish originated on the farms.' Sea lice live in salt water, and juvenile wild salmon first encounter them when they swim down river to the sea. The parasites bite fish to feed on their blood, creating open lesions that can disturb the fishes' osmotic balance with sea water. With the advent of fish farms, anchored cages that function as underwater feedlots for hatchery-bred salmon, the juvenile fish encounter unusually large numbers of parasites, the authors of the new report say. They did their fieldwork in April and May 2003, when they trapped about 5,500 juvenile pink and chum salmon swimming in a long, thin fjord in British Columbia that is also home to two salmon farms. Each fish was examined by hand for parasites. The scientists said they concluded that the fish were free of parasites until they neared the farms but that by the time they passed them and headed out to sea they could be so infested they ended up spreading parasitic contagion as they went. Dr. McKinley said this evidence was not enough to convict the fish farms. But Daniel Pauly, another fisheries researcher at the University of British Columbia, said evidence so far was consistent with the hypothesis that wild fish near fish farms were affected by sea lice.

Subject: Window Dressing Stock Market Rally From: Terri To: All Date Posted: Wed, Mar 30, 2005 at 14:13:53 (EST) Email Address: Not Provided Message: Notice the end of quarter window dressing stock market rally. This is where mutual fund managers play for a while.

Subject: Window Dressing From: Terri To: Terri Date Posted: Wed, Mar 30, 2005 at 16:24:00 (EST) Email Address: Not Provided Message: A market such as this day's shows us what mutual fund managers can do throwing money at winners to close the quarter books with what looks like a perfect portfolio. Still no luck for the quarter, but you finsh with a gook looking portfolio.

Subject: Suppose We Lose Economic Resiliency From: Terri To: All Date Posted: Wed, Mar 30, 2005 at 12:57:42 (EST) Email Address: Not Provided Message: Ah, I understand more clearly. Micro adjustment and resilience is a slow in coming process. Macro adjustment allows us time to adjust in a fairly benign manner. We are losing our ability to use macro economic policy effectively. There is the problem that Alan Greenspan does not address and foolishly did not anticipate. We may be losing our ability to use macro economic policy to adjust to economic shocks. Then, 'locusts' it may really be. Surely, I do not worry enough. That I am argued with is wonderfully valuable, but I well may need to worry more.

Subject: Resilience of Developed Economies From: Terri To: All Date Posted: Wed, Mar 30, 2005 at 11:15:16 (EST) Email Address: Not Provided Message: We might well ask how have we fared so remarkably well these last 25 years? In 1965, we were told of deficits forever and the approaching end for Social Security and Medicare. By 2000, we were in remarkable surplus and the worry, ever so foolishly by by Alan Greenspan, was that American might in a decade have no debt. Were we not remarkably robust from 1965 to 2000? Was there more than a ripple of a problem for us as the wave of Asian currency problems spread? Could Alan Greenspan be right about the economy's resilience? Again, have not Japan and Britain and France and Germany shown a remarkable resilience these 25 years? Why should this flexibility have come, and why can it not prevail?

Subject: Re: Resilience of Developed Economies From: Pete Weis To: Terri Date Posted: Wed, Mar 30, 2005 at 11:50:15 (EST) Email Address: Not Provided Message: 'We might well ask how have we fared so remarkably well these last 25 years?' An excellent, fundamentally central question. Despite over 20 years of current account deficits with little respite and net wealth, as Buffet puts it, being exported abroad, we live in bigger houses, own bigger automobiles (which recently exceeded total drver licenses) and have far more baubles than we had 20 years ago. Is this due to 'resiliency' (whatever that means) or is something else going on? Does 2 plus 2 really equal 10?

Subject: We are Grown More Resilient From: Terri To: All Date Posted: Wed, Mar 30, 2005 at 11:04:41 (EST) Email Address: Not Provided Message: Alan Greenspan has several times told us about the how flexible the American economy has become, how resilient, how well the economy has sttod against shocks since 1980. I do not take this observation lightly. A decline in 2 days in October 1987 of more than 30% in the American stock market, was stabilized is 2 days and the market calm and rising less than 2 months later. Stocks finished the year with gains, and there was no recession. The economy continued to grow reasonably even though interest rates were not lowered dramatically. Though we are told 'we are very vulnerable to unanticipated shocks,' forgive me for thinking we are strikingly resilient to shocks and appear to be growing more so. Have we not proven so, are we not grown more resilient? Were there no shocks these 5 and 10 and 15 and 20 and 25 years?

Subject: Our economy has..... From: Pete Weis To: Terri Date Posted: Wed, Mar 30, 2005 at 11:38:11 (EST) Email Address: Not Provided Message: become 'flexible' to the extent our housing market holds up. If and when the housing market should begin to tank - no more 'flexibility'. Now, there are a number of factors which influence the housing market - in what direction are they headed?

Subject: Stable Economic Growth From: Terri To: All Date Posted: Wed, Mar 30, 2005 at 10:48:27 (EST) Email Address: Not Provided Message: Notice that GDP growth in the final quarter of last year was 3.8% in real terms. Inflation was 1.7%. Growth in profits 12.5%. These are numbers that should give us confidence of our ability to contiue to grow reasonably and control inflation. The economy continued to grow reasonably the first quarter of this year. Though the stock market has been flat for the quarter, corporate profits are rising and this will make and is making for better stock valuations. Are these figures merely deceptive? I do not think so.

Subject: Looking to Africa From: Emma To: All Date Posted: Wed, Mar 30, 2005 at 09:59:24 (EST) Email Address: Not Provided Message: There is ample reason to criticize America and Europe and Japan for not devoting more effort and resources to fostering development in sub-Saharan Africa. There are surely individuals as well who could and should be more active in Africa, for in individual action there is hope for more. This is a proper discussion that we all can build on. Everywhere through Africa there are struggles for a better lives that can be assisted. The developed countries, we each, have this obligation.

Subject: The Dollar Will Not Collapse From: Terri To: All Date Posted: Wed, Mar 30, 2005 at 06:25:52 (EST) Email Address: Not Provided Message: I simply cannot imagine that the Federal Reserve will allow interest rates to rise enough because of a dollar value adjustment to create a recession. We have deficit problems, but we are simply too strong an economy for a change in the value of the dollar to be so harmful. Britain devalued the Pound early in the 1990s with no trauma for the domestic economy. A devaluation of the dollar simply does not seem so worrisome. No matter the perceived logic, I do not believe that a change in relative value of the dollar will bring America to recession. A 20% asset price decline in America would bring all sorts of international investments. Earnings of our international corporations would increase were there a loss in dollar value. Why would Europeans and Asians not snap up P&G shares and the like? Though I understand the logic of the problem we have, I do not find us by any means so vulnerable.

Subject: Examining the Dollar Value Issue Again From: Terri To: All Date Posted: Tues, Mar 29, 2005 at 21:57:52 (EST) Email Address: Not Provided Message: After some rest, I will think through the dollar value problem again. The growing sense I have is that we could easily find the dollar losing 20% of its value against selected currencies. What then? What is the simplesr protection?

Subject: Bond Results From: Terri To: All Date Posted: Tues, Mar 29, 2005 at 20:25:35 (EST) Email Address: Not Provided Message: Though I believe the bull market in long term bonds has ended, there has still been no meaningful price decline for long term bonds. I am still struck by how well they are holding up. The Vanguard Long Term Bond Index is down just -0.7% for the year so far. Intermediate Term Bond Index is down -1.8%. Short Term Bond Index is down -0.9%. GNMA is down -0.4%. Inflation Protected Securities down -1.4%.

Subject: Vanguard Returns From: Terri To: All Date Posted: Tues, Mar 29, 2005 at 18:42:08 (EST) Email Address: Not Provided Message: http://flagship5.vanguard.com/VGApp/hnw/FundsByName Vanguard Returns 12/31/04 to 3/29/05 S&P Index is -3.4 Large Cap Growth Index is -4.5 Large Cap Value Index is -2.1 Mid Cap Index is -2.4 Small Cap Index is -5.4 Small Cap Value Index is -4.9 Europe Index is -0.6 Pacific Index is -2.9 Energy is 11.1 Health Care is -1.2 REIT Index is -8.3 High Yield Corporate Bond Fund is -1.4 Long Term Corporate Bond Fund is -0.2

Subject: Sector Indexes From: Terri To: Terri Date Posted: Tues, Mar 29, 2005 at 18:45:27 (EST) Email Address: Not Provided Message: http://flagship2.vanguard.com/VGApp/hnw/FundsVIPERByName Sector Indexes 12/31/04 - 3/29/05 Energy 13.7 Financials -7.5 Health Care -1.7 Info Tech -8.9 Materials -0.9 REITs -8.3 Telecoms -8.3 Utilities 2.0

Subject: Bad quarter From: johnny5 To: Terri Date Posted: Tues, Mar 29, 2005 at 20:05:01 (EST) Email Address: johnny5@yahoo.com Message: It's been a bad quarter for most people Terri, I am glad you are doing well. I heard once that investing was like an oak tree, it would have been good to plant one 20 years ago, but that is no reason not to plant one today.

Subject: Re: Bad quarter From: Terri To: johnny5 Date Posted: Tues, Mar 29, 2005 at 20:22:22 (EST) Email Address: Not Provided Message: Nicely put :)

Subject: The china bashing has begun From: johnny5 To: All Date Posted: Tues, Mar 29, 2005 at 17:14:17 (EST) Email Address: johnny5@yahoo.com Message: How will the RICHIE ceo's BITE china and make them conform Pete? Are they going to be able to get Bush to jump or will he just sell them a lie like is done with a strengthening dollar? Gutierrez Pledges to `Turn Up Heat' on China Over Fake Goods March 29 (Bloomberg) -- U.S. Commerce Secretary Carlos Gutierrez tried to reassure business leaders today that he would increase pressure on China to stem counterfeiting, drawing on his own experience to label the rate of abuse as unsustainable. Gutierrez, who had been chief executive of Kellogg Co., said that just three months after Kellogg started selling corn flakes in China in 1996, counterfeit boxes were on sale at neighborhood shops. The Chinese court system made it difficult to get the fake goods pulled from the shelves, he said. ``America's businesses are counting on us to turn up the heat on countries where intellectual property violations occur,'' Gutierrez told a meeting of the Washington International Trade Association today. Gutierrez, who took the helm of the Commerce Department last month, is picking up on an issue that his predecessor, Donald Evans, warned could undermine the U.S.-China commercial relationship. That's put Gutierrez on a narrow path as he tries to sell Bush's agenda of opening trade while promising to clamp down on barriers to U.S. exports around the world. ``If trading partners violate the letter or spirit of our agreements, we will hold their feet to the fire,'' Gutierrez said. ``We must make sure our exporters get a fair shake, and that includes tariff and non-tariff barriers.'' China had a $162 billion trade surplus with the U.S. in 2004, the largest trade gap in history. U.S. companies complain that China's credit subsidies, currency peg and other government aid allow Chinese companies an unfair export advantage. Makers of drugs, movies, auto parts, razors, food and dozens of other products say the effect of China's trade policies is being exacerbated by businesses in China counterfeiting their merchandise, stealing the designs or technology of their products, and mislabeling cheap products as brand-name goods. Unsustainable Record, movie and software companies petitioned the U.S. government last month to haul China into consultations at the World Trade Organization over pirated merchandise they say sapped $2.5 billion in sales last year. Gutierrez today quoted industry statistics that say more than 90 percent of music, movies and software sold in China is pirated. ``Over the long haul this is just not sustainable,'' he said. In addition to piracy, Gutierrez also pressed for Congress to approve a pending free-trade agreement with five Central American nations and the Dominican Republic. That deal, known as Cafta, is about cutting barriers to U.S. exports, solidifying democracy in the region and sending a signal around the world that the U.S. wants to cut trade barriers globally, he said. ``All these other countries are waiting to see how Cafta goes,'' Gutierrez said. ``They are waiting to see how Congress and how our country feels about trade. That's why Cafta is of such symbolic value.'' http://www.bloomberg.com/apps/news?pid=10000080&sid=aYsPDcjDP92k&refer=asia

Subject: Brazil: Free Software From: Emma To: All Date Posted: Tues, Mar 29, 2005 at 13:38:54 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/03/29/technology/29computer.html?pagewanted=all&position= Brazil: Free Software's Biggest and Best Friend By TODD BENSON SÃO PAULO, Brazil - Since taking office two years ago, President Luiz Inácio Lula da Silva has turned Brazil into a tropical outpost of the free software movement. Looking to save millions of dollars in royalties and licensing fees, Mr. da Silva has instructed government ministries and state-run companies to gradually switch from costly operating systems made by Microsoft and others to free operating systems, like Linux. On Mr. da Silva's watch, Brazil has also become the first country to require any company or research institute that receives government financing to develop software to license it as open-source, meaning the underlying software code must be free to all. Now Brazil's government looks poised to take its free software campaign to the masses. And once again Microsoft may end up on the sidelines. By the end of April, the government plans to roll out a much ballyhooed program called PC Conectado, or Connected PC, aimed at helping millions of low-income Brazilians buy their first computers. And if the president's top technology adviser gets his way, the program may end up offering computers with only free software, including the operating system, handpicked by the government instead of giving consumers the option of paying more for, say, a basic edition of Microsoft Windows. 'For this program to be viable, it has to be with free software,' said Sérgio Amadeu, president of Brazil's National Institute of Information Technology, the agency that oversees the government's technology initiatives. 'We're not going to spend taxpayers' money on a program so that Microsoft can further consolidate its monopoly. It's the government's responsibility to ensure that there is competition, and that means giving alternative software platforms a chance to prosper.' Microsoft has offered to provide a simplified, discounted version of Windows for the program. Though a final decision on which software to install has been delayed several times, as has the program's rollout, Mr. Amadeu and some other government officials have publicly criticized Microsoft's proposal, calling the version's abilities too limited. Still, Microsoft has not given up just yet. The company, which declined to make an executive available for an interview, said in a statement that it was still 'working with the PC Conectado project to see if there's a way Microsoft can help.' Under the program, which is expected to offer tax incentives for computer makers to cut prices and a generous payment plan for consumers, the government hopes to offer desktops for around 1,400 reais ($509) or less. The machines will be comparable to those costing almost twice that outside the program. Buyers will be able to pay in 24 installments of 50 to 60 reais, or about $18 to $21.80 a month, an amount affordable for many working poor. The country's top three fixed-line telephone companies - Telefónica of Spain; Tele Norte Leste Participações, or Telemar; and Brasil Telecom - have agreed to provide a dial-up Internet connection to participants for 7.50 reais, or less than $3, a month, allowing 15 hours of Web surfing. The program aims at households and small-business owners earning three to seven times the minimum monthly wage, or about $284 to $662. The government says seven million qualify, and it hopes to reach a million of them by year-end. That may seem ambitious in a developing country of 183 million people where only 10 percent of all households have Internet access and just 900,000 computers are sold legally each year. (Including black-market sales, the number is closer to four million, still a small fraction of the number sold in the United States last year, according to the International Data Corporation, a technology research firm.) 'We're well aware that we're talking about doubling the domestic market for personal computers,' said Cezar Alvarez, the presidential aide in charge of the PC Conectado program. 'But it's absolutely feasible.' Some analysts have questioned the effectiveness of such programs, noting that some similar projects in Asia have become bogged down in red tape and, in some cases, have ended up favoring the elite. In Malaysia, for instance, the government is introducing a second affordable-computer program after its first attempt failed because of poor planning and fraud - something Brazilian officials say they are working hard to prevent. Others say the government should focus its technology initiatives elsewhere, especially in schools. Only 19 percent of Brazil's public schools have computers. The government says it plans to complement the PC Conectado program with stepped-up efforts to put more computers into schools. It is also investing $74 million to open 1,000 community centers in poor neighborhoods by year-end with computers that run free software programs and offer free Internet access - supplementing similar programs by local governments and nongovernmental organizations. The drive to bridge the digital divide has drawn widespread praise throughout the technology industry. But the preference for open-source software has been controversial, with critics inside and outside the government saying Mr. da Silva's administration is letting leftist ideology trump the laws of supply and demand. 'The government shouldn't be the one who decides what hardware and software will go into these computers,' said Júlio Semeghini, a member of Congress from the opposition Social Democratic Party. 'That's undemocratic.' The open-source route, however, has support beyond the da Silva administration. Walter Bender, the executive director of the Media Lab at the Massachusetts Institute of Technology, whose opinion was solicited by the Brazilian government, replied in a recent letter that 'high-quality free software' has proved more effective in stimulating computer use among the poor than scaled-down versions of proprietary software. Though he said he did not oppose giving consumers a choice, he concluded that 'free software provides a basis for more widespread access, more powerful uses and a much stronger platform for long-term growth and development.' Whatever the government decides, most industry analysts agree that the program will probably help combat software piracy, which is widespread in Brazil. And by wooing new consumers, 'even if the program doesn't reach its goals, it's going to end up stimulating the computer and software markets,' said Jorge Sukarie, president of the Brazilian Association of Software Companies. 'It's not perfect, but it's certainly better than nothing.'

Subject: The battle for resources From: Pete Weis To: All Date Posted: Tues, Mar 29, 2005 at 11:19:27 (EST) Email Address: Not Provided Message: When you consider the US military's presence in the world's main oil region, the world dividing itself into competing trading alliances (reminiscent of military alliances), the impending threat of US tariffs on Chinese goods and this dispute between China and Japan in the East China sea, we don't get a warm fuzzy feeling for the idea that nations will join together for the common good and avoid damaging trade wars and coming to blows over competition for resources. March 29, 2005 Drawing the Line on Energy By JAMES BROOKE AHA, Japan - Midway between Okinawa and China, the Ramform Victory, a Norwegian seismic ship, is performing routine survey work, trawling with long seismic cables and using sound waves to create three-dimensional images of oil and gas deposits. But nothing is routine when Japan commissions a survey of what is hidden below the contested waters of the East China Sea. Chinese coast guard ships treat the surveyors as spies, radioing warnings to leave and shadowing the ship for days on end. On one occasion, the Chinese ships nearly collided with the vessel. Japan's trade minister, flying in a Japan coast guard plane, conducted an ostentatious survey, circling over the bright yellow gas production platform that China is building a mile west of waters claimed by Japan. Confronting the Chinese face to face, the trade minister, Shoichi Nakagawa, later sat in front of a Chinese negotiator, dropped two straws in a glass of orange juice, and, forgoing customary Japanese politeness, complained that China was about to 'suck out Japan's resources with a straw.' The seismic ship, he said, according to ministry officials, found that two deposits under development by China extend into Japanese economic waters. In days of sharply higher energy prices, long-dormant border disputes have suddenly come alive for Japan, the world's second-largest energy-consuming nation after the United States. Galling Japan is a realization that large deposits of oil and gas lie on the nation's watery fringes. Long cocooned by these water buffers, Japan is suddenly bumping shoulders over undersea oil and gas resources with China, South Korea and Russia. [In talks in Tokyo on Monday between Japan and China, the world's second- and third-largest oil consumers, Japanese negotiators again demanded that China share its drilling data or drop the project, news agencies reported. The Chinese side rejected the demands and repeated an earlier proposal for a joint venture. [But calls are mounting for a Japanese-only project in waters of the East China Sea that both nations claim. On Friday, a ruling party panel urged Japan's government to invite Japanese companies to drill in the area, a call bolstered by the simultaneous release of a Foreign Ministry report that China conducted 22 'illegal' surveys of Japanese economic waters last year, triple the number in 2003.] Tensions are also flaring between Japan and South Korea over a disputed island group. The Korea Gas Corporation announced in mid-March a 10-year, $225 million investment program to develop what the state-run company said was $150 billion worth of gas hydrate deposits, roughly equivalent to South Korea's natural gas needs for 30 years. To the north of Japan, Japanese companies are investing about $1 billion a year to develop oil and gas reserves off Sakhalin, a Russian island that was half-owned by Japan until the end of World War II. But in the fall of 2004, Asia's broadest economic shoulders, China and Japan, bumped over a pipeline to ship Siberian oil. Japan won the first round when Russia went for billions of dollars in Japanese financing to build the line to the Sea of Japan. In response, the Chinese prime minister, Wen Jiabao, announced at a recent Beijing news conference that over the next 18 months, Russian oil exports to China by rail would increase by 50 percent, to 300,000 barrels a day. The Russian government and President Vladimir V. Putin, he added, 'have made it very clear that first consideration will be given to China when they build the Siberian oil-gas pipeline.' Spurred by high energy prices, China is pursuing a new energy realpolitik. Entering the Americas, Chinese energy officials are running rings around the United States, exploring deals with Canada, Cuba, Mexico and Venezuela. In Northeast Asia, the fact that China now is Japan's largest trading partner is not stopping China from potentially draining gas from what Japan calls its exclusive economic zone. 'The exclusive economic zone is a microcosm of the Sino-Japanese rift,' said Jeffrey Kingston, an American historian who directs Asian studies at Temple University Japan in Tokyo. 'Japan won Round 1 on the pipeline. Now, China is getting increasingly desperate.' In the energy brinkmanship on the high seas west of Okinawa Island, China's $1 billion project is to pump its first gas in August, sending the fuel through a 300-mile pipeline to Shanghai. Compounding Japan's loss of face, Mr. Nakagawa told Parliament in February that the first 260 miles of the line was built with $120 million of Japanese development aid. He confessed, 'It is truly regrettable that this sort of thing happened.' Japan now is tripling its research budget in the East China Sea, to $125 million in 2005. Japan is also spending $100 million to build its own seismic survey ship. On Feb. 22, the day after Prime Minister Junichiro Koizumi appealed to make the East China Sea 'a sea of cooperation, not a sea of conflict,' Mr. Nakagawa told reporters, 'We will definitely call on China to stop its work.' He added that he might soon authorize two Japanese companies to start drilling in the contested area. To strengthen oil and gas exploration worldwide, Japan is to disband the Japan National Oil Corporation, its state-run energy exploration company, on April 1. With a record of drilling largely dry holes in its 305 projects around the world, this company ends 38 years of existence with almost $7 billion in losses. Its successor, the Inpex Corporation, was listed on the Tokyo Stock Exchange in the fall of 2004 and is to be run on profit-making lines. Inheriting some of the state company's oil and gas reserves, Inpex will start as a midsize multinational exploration company, similar in reserves to Unocal. Over the next three years, Japanese oil companies and trading houses are to invest about $20 billion in oil and gas exploration and production, roughly double the level of the last three years, according to Nihon Keizai Shimbun. Since the late 1960's, China and Japan have suspected that the waters between China and Okinawa Island contain large deposits of oil and gas. 'In the Japanese area, there is high possibility we can find not only gas, but oil,' Tsutomu Toichi, managing director of the Institute of Energy Economics, a nonprofit group in Tokyo, said in an interview. With the economic boundary in dispute, Asia's two giants had let the energy riches lie untouched. Instead, they focused on their larger economic relationship. Soon, China became Japan's largest destination for foreign investment. Last year, China displaced the United States as Japan's largest trading partner. But with China's economy growing at 9.5 percent last year, and at an annual rate of 8.4 percent since 2000, Chinese officials fret that energy shortages will cap growth. Over the next 25 years, China's dependency on imported oil is forecast to double, hitting 80 percent of its total consumption, according to forecasts by the International Energy Agency, an intergovernmental agency based in Paris. In one setback, two foreign companies, the Royal Dutch/Shell Group and Unocal, dropped out in the fall of 2004 from the Chinese gas development west of here, then China's largest gas joint venture with foreign partners. Both companies cited commercial reasons. A high-ranking Japanese energy official who insisted on not being identified, however, took a different view: 'Commercial reasons include political risks. I think they judged that it's not worth doing, even taking political risks.' Undeterred, the Chinese partners, the China National Offshore Oil Corporation and the China Petrochemical Corporation, said they would march ahead with plans to start producing in the summer of 2005. The Chinese may have the last laugh. China National is considering a $14 billion takeover of Unocal. As Chinese workers extend the seabed pipeline to the edge of Japan's claimed economic waters, Chinese diplomats reject Japanese demands that China share drilling data on the reservoirs. On Feb. 18, Mr. Nakagawa, the Japanese trade minister, said that preliminary results from his agency's 2004 survey work indicate that two of three major gas fields China plans to develop in the area extend into Japan. 'We demand that China hand over data and stop exploration in the East China Sea until this problem is resolved,' said Mr. Nakagawa, a conservative with prime-ministerial ambitions. China's Foreign Ministry spokesman, Kong Quan, replied that the two fields 'completely fall under the framework of China's rights.' As the coast guards of both countries brace for confrontations, Yomiuri Shimbun has reported that Beijing has awarded Chinese energy companies exploration rights over 12 blocks that extend into Japanese economic waters. Three of the 12 are entirely inside the Japanese economic area. At the heart of the dispute are different legal interpretations of each nation's exclusive economic zone. The United Nations Convention on the Law of the Sea gives each coastal nation an economic control zone extending 200 nautical miles, or 230 standard miles, from shorelines. But the distance between Okinawa and China is about 400 miles. Japan advocates a median line between the two countries. China advocates using as its economic border the eastern extension of the continental shelf, an approach that moves the economic border to an area 50 miles west of the Okinawa archipelago. 'The center line is only a Japanese proposal and isn't a mutually agreed border as a result of negotiations between the two countries,' Wang Yi, China's ambassador to Japan, told reporters last October at a news conference in Tokyo. 'It isn't fair to use this borderline to judge which side is right or wrong.'

Subject: More conundrums From: johnny5 To: Pete Weis Date Posted: Tues, Mar 29, 2005 at 11:48:18 (EST) Email Address: johnny5@yahoo.com Message: How you can be so concerned, and Terri 100% positive there will be no trade wars or tariffs is a conundrum to me. How do 2 very intelligent people come to almost completely opposite conclusions from the same history and data and events? When such confusion arises, pessimist or optimist predictions may not serve as well as historical analysis - with similar events in our past - what has been the outcomes? Human technology, economics and science may progress, but human nature has not changed all that much in 5000 years no? Millions are murdered everyday and even the 2cnd wealthiest man in the world Mr. Buffet contributs a huge percentage of his wealth when he donates 12 million a year to charity - draw your own conclusions.

Subject: Human Nature From: johnny5 To: johnny5 Date Posted: Tues, Mar 29, 2005 at 12:22:25 (EST) Email Address: johnny5@yahoo.com Message: 'THe smallest act of kindness is worth more than the grandest intention.' Many die everyday because Warren has chosen to wait until his death to contribute a good portion of his unused wealth to charity. Those nets that control malaria in the 3rd world would save a lot of humans right now. He says he can find no stocks to invest in, what about people? Human nature is non selfish huh - yet you econs tell me to reinforce selfish beliefs and this will help everyone. THe more time we judge people, the less time we have to love - mother theresa You can't build a reputation by what you are going to do - Henry Ford

Subject: So what's your point? From: Pete Weis To: johnny5 Date Posted: Tues, Mar 29, 2005 at 17:26:19 (EST) Email Address: Not Provided Message: You yourself have not been shy about complaining about this or that. Now that you are quoting Mother Theresa are you getting ready to volunteer for the mission field?

Subject: Connections From: johnny5 To: Pete Weis Date Posted: Tues, Mar 29, 2005 at 17:57:14 (EST) Email Address: johnny5@yahoo.com Message: This ties in to your original post pete that YES INDEED trade wars and selfish protectionism are VERY possible and maybe even very likely - but something that terri says is impossible. For if even a wise soul like warren with more money than he can spend right now is selfish at such a macro scale - why do people like terri think this cannot be true of rich nations and governments? At the macro scale they don't seem to do much long term planning anymore. Your point makes sense to me, terri's confuses me, why does she think trade sanctions or trade wars are an absolute impossibility - I would have though warren was a much more generous donor than what he is, let's not even get started with trump and the rest on the fortune 500 list - they seem to count wealth in how many green papers they can accumulate - what of our wealth in happy healthy educated world citizens - our human capital - why do some of their macro decisions not seem to take this VALUE into account?

Subject: Human greed From: johnny5 To: Pete Weis Date Posted: Tues, Mar 29, 2005 at 17:42:35 (EST) Email Address: johnny5@yahoo.com Message: I was pointing out how warren alone could save MANY people's lives if he were to act now with money he does not need or use and can't find a use for it in stocks - those Mosquito NETS that emma posted about. But I wanted to criticize myself that mother theresa said it was people pointing out flaws and always being judgemental that didn't leave room enough for love of our brother in this world - something I was pointing out I was doing with warren. This all gets back to human nature which I don't feel has changed all that much along with our technology. I am not going to africa, I already did europe and mexico, and I am tired now. Besides I hear they may hang gringo's like me, my 1/8 mexican heritage doesn't make my skin dark enough I fear - BWAHAH! This all get's back to the main point though, the theory that selfish behavior is the best action individually and will benefit the whole globally. My sister chose not to have kids because that was the best choice individually, much better to shop at macy's and live la vida loca on easy money than be tied to the responsibility of child raising with a mate that would do the same, but as a nation our demographics are a BAD problem. This completely DESTROYS the theory that selfish indvidual action benefits the whole if you ask me. Warren is being selfish when he holds his money in stocks that could be gifted to poor starving malaria dying people in Africa - billy gates gives a lot - why does warren give so little? My sisters individual choice and many like her hurt our HUMAN CAPITAL, well governments and nations do not survive without human capital - the children are our future - warren could spend MONEY to build HUMAN capital over in africa with those nets and save lives but he is choosing not to know? Or is all this too complicated and I am not making sense?

Subject: Re: Human greed From: Paul G. Brown To: johnny5 Date Posted: Wed, Mar 30, 2005 at 02:09:58 (EST) Email Address: Not Provided Message: First Johnny5, Warren B is not dead yet. Surely it's premature to judge the man's life and legacy at this point. Bill G. is a friend of Warren's--as I understand it--and they must have talked about Bill's philanthropy. Second, there is an argument that charity is not a long term solution to poverty. And I think I buy that particular argument to the extent that the person on the other end of the debate is prepared to buy the corollary: exploitation is no solution either. Mixing 'gunboat diplomacy' with airdrops and inadequate vaccination programs is the worst of all possible worlds. I don't know what the solution to Africa's problems are. For what it's worth I think Bill's actions are a lesser evil than Warren's apparent inaction. But I think it will take more than a change of heart by a couple of billionares. I wonder how many African's have to die before we begin to realize that post-colonialism has been more of a tragedy than colonialism. (Which isn't to say that colonialism was a gas, either.) Feeling melancholy. Pray for Terri, everyone.

Subject: Human decency From: Emma To: Paul G. Brown Date Posted: Wed, Mar 30, 2005 at 10:00:56 (EST) Email Address: Not Provided Message: Johnny, Paul, Pete, Terri, all are to be commended for caring in differing ways.

Subject: Statesmen From: johnny5 To: Emma Date Posted: Wed, Mar 30, 2005 at 23:59:46 (EST) Email Address: johnny5@yahoo.com Message: Marshall Field - Good will is one thing that competition cannot undersell or destroy. Politicians plan for the next election, Statesmen plan for the next generation.

Subject: Investing Happily From: Terri To: All Date Posted: Tues, Mar 29, 2005 at 11:10:08 (EST) Email Address: Not Provided Message: The idea of buying material gold unless I were an art dealer or significant collector and knowledgeable about buying sculpted art pieces would never occur to me. Gold as such is an absurdly risky and poor returning investment. A precious metal and mining fund can however be useful for moderate or limited time frames. My gold has always been well valued corporations. So I am as always happily invested mainly in stock funds and stocks, using limited duration bond funds for liquidity while I look about as always, and feeling amply protected. All I need has been at Vanguard, though I am always aware of alternatives. Not being as smart as many analysts, I prefer simplicity.

Subject: Re: Investing Happily From: Terri To: Terri Date Posted: Tues, Mar 29, 2005 at 19:25:06 (EST) Email Address: Not Provided Message: All I wish to do is slightly beat the Total Stock Market Index from year to year.

Subject: Pudding proof From: johnny5 To: Terri Date Posted: Tues, Mar 29, 2005 at 11:25:29 (EST) Email Address: johnny5@yahoo.com Message: What has your portfolio done with simple investing the past months and 3-4 years?

Subject: Simple and Effective Investing From: Terri To: All Date Posted: Tues, Mar 29, 2005 at 06:08:13 (EST) Email Address: Not Provided Message: Any investor might have bought Vanguard health care or energy or REIT Index fund in 1999 when the NASDAQ was rising at astonishing speed and the S&P rising to record valuation levels. Long term bond funds could have been bought in 1999. Even value indexes. Energy, REITs, health care, long term bond funds all had poor years in 1999 and all were well valued. Value stocks were only fairly expensive rather than absurdly so. There was no need for difficult and risky and expensive bear funds and options, but with knowledge an investor can try all sorts of techniques. I do not know enough to be complex, so I try to learn well how to be simple and effective. We are in 2005. Again, we can ask ourselves where are the values? We can ask where is safety, because there are fewer obvious values than in 1999 or 2000?

Subject: Always Simple and Effective Investing From: Terri To: Terri Date Posted: Tues, Mar 29, 2005 at 06:30:23 (EST) Email Address: Not Provided Message: The idea for me is to learn from economists and analysts, but always to turn ideas to simple realistic investment possibilities. After all, I am not Warren Buffett, and can not invest as Warren Buffett, but I can always own Berkshire Hathaway shares if I so choose. What is fairly valued and simple to own is always the question.

Subject: Where is Value? From: Terri To: Terri Date Posted: Tues, Mar 29, 2005 at 07:27:35 (EST) Email Address: Not Provided Message: HOw can investors be sensible now is the problem we always confront.

Subject: Roubini From: johnny5 To: Terri Date Posted: Tues, Mar 29, 2005 at 10:05:13 (EST) Email Address: johnny5@yahoo.com Message: As the recently posted article shows, there is a good chance for a HARD landing in US dollars, US real estate, US equities. The recent comments by greenspan and bears at the CFR conference don't add positive sentiment. Warren said get out of such things, he did so. Richard Benson said to as well, he recommended a sophisticated foreign asset strategy with a hedge fund for the richies, but poor people like you and me Terri he said go to www.everbank.com - simple enough. Opening an account with everbank is no harder than with vanguard - so what frightens you? Diane over at fund freebies said international bonds: http://www.diansfundfreebies.com/audio3/lavine159.html Easy enough - the article is by hartford total return bonds no? I wish making money were easy Terri, but sometimes it is VERY HARD and simple solutions are not effective in extreme times. If you listen to mogambo, there are easy ways and many places to buy physical gold. www.gold-eagle.com for starters. Pete already said tocqeville, pimco, or vanguard have precious metals to buy. Better safe than sorry, I would not bet against warren buffet. Are you 100% bonds as the information from previous bear markets showed was prudent?

Subject: Altig Versus Roubini March 29 From: johnny5 To: All Date Posted: Tues, Mar 29, 2005 at 00:36:33 (EST) Email Address: johnny5@yahoo.com Message: http://online.wsj.com/public/article/0,,SB111202112287190860,00.html ECONOBLOG Does Overseas Appetite for Bonds Put the U.S. Economy at Risk? March 29, 2005 Much has been said in recent months about the growing U.S. budget, but less has been said about how the U.S. is managing the deficit, keeping the government functioning by selling Treasury bonds -- lots of them. But will these IOUs keep things running smoothly? In an appearance before the Council on Foreign Relations earlier this month, Federal Reserve Chairman Alan Greenspan warned that the federal budget shortfall is 'a significant obstacle to long-term stability.' Foreign central banks' readiness to buy up U.S. bonds, he said, is keeping interest rates artificially low, masking the dangerous market potentials and making it easy to ignore the deficit. And all this foreign buying adds to the current-account deficit, the shortfall on all trade and investment income between the U.S. and the rest of the world. But not all economists agree with Mr. Greenspan. WSJ.com invited economist bloggers Nouriel Roubini and David Altig to duke it out over the potential perils of the current-account deficit. Take a look at what they have to say, and chime in with your own thoughts here. * * * Nouriel Roubini writes: Should U.S. and global investors be concerned about the concentration of U.S. government bonds in the hands of foreign central banks and the possibility that a move to diversify such foreign reserves could affect U.S. markets? My answer is yes: Investors should worry about such concentration and the possibility of foreign exchange diversification out of U.S. dollar assets. If such diversification were to occur, there would be a significant risk of a hard landing for the U.S. and the global economy (see this file for details). Such diversification would lead to a sharp fall in the value of the U.S. dollar, significantly higher U.S. long-term interest rates, a sharp fall in the price of various risky assets (equities, housing, high-yield debt, emerging market debt) and a sharp slowdown of the U.S. and global economy. Is this concentration large and excessive and are there meaningful risks of diversification that would lead to the hard-landing scenario? First, the concentration is very significant and excessive: Since 2001, there has been almost no increase in the net amount of holdings of U.S. Treasurys by U.S. residents. Almost all of the new net supply of U.S. Treasurys has been purchased by non-residents, and about two-thirds to three-quarters of such foreign purchases have been made by foreign central banks, especially in Asia, but also in other regions. On the current-account side, since 2002, about two-thirds of the U.S. current-account deficit (almost 6% of GDP in 2004) has been financed by foreign central banks. And because the current account deterioration since 2001 has been driven by the emergence of the fiscal deficit (the 'twin' fiscal and current account deficits), from 2001 on foreign investors haven't been buying our stocks and capital stock (net foreign direct investment and equity portfolio flows were negative to the yearly tune of almost $200 billion in 2003 and 2004). Foreign financing of the U.S. current account is mostly from foreign central banks and directed to the purchases of U.S. Treasury issues. By now 53% of U.S. Treasurys are held by non-residents, with 29% of them officially held by foreign central banks (unofficially, a much larger fraction). Worse, the public debt management of the U.S. has been reckless with the attempt to reduce the short-run cost of borrowing achieved by reducing the average maturity of Treasurys to 55 months and the marginal maturity to 33 months. Since financing needs of the U.S. government (between issuance of net new debt due to the ongoing fiscal deficit and refinancing of the existing maturing debt) will be close to $800 billion in 2005 and above $1 trillion in 2006-2008, there is now a meaningful rollover or refinancing risk for the U.S., given this risky financing structure and the fact that most of the purchases of U.S. Treasurys is done by non-residents, especially central banks whose appetite for additional accumulation of U.S. dollar assets will shrink over time. Second, when it comes to diversification: Foreign central banks will, over time, for many reasons reduce their willingness to accumulate U.S. dollar assets and Treasurys. The argument that China and other Asian economies have to keep accumulating U.S. dollar reserves, and thus Treasurys, because they want to keep their currencies weak in order to support export-led growth is becoming increasingly less valid for a number of reasons: a) Once their currencies move, capital losses on central banks' holdings of dollar assets will be massive, as high as $100 billion or 7% of China's GDP today if the Chinese currency were to move by 20% now. b) Such losses will be higher the longer these countries wait, as reserves will be much higher and the need for fundamental appreciation larger (as high as $300 billion of 20% of GDP by 2008). c) China and other Asian countries are starting to rethink a growth model based mostly on current account surpluses and export led growth. c) Such forex intervention is only partially sterilized and is thus leading to excessive base money creation in China and other Asian economies; and this monetary creation is fueling a credit and lending boom that is feeding a real investment and real-estate bubble that is out of control in China. d) These currencies' fundamental equilibrium real exchange rate is appreciated and if the real appreciation does not occur via a nominal appreciation, it will occur through socially and economically costly inflation; e) A free-riding game is starting to occur where smaller central banks are starting to diversify away from dollars into euros and yen and this will put even more pressure on China to change its peg. f) The willingness of Europe and Japan to intervene is limited. g) Continued maintenances of fixed rates in Asia will increase protectionist pressures in the US and Europe. The argument that non-resident investors will keep on investing in U.S. assets given the safety of the U.S. and its better growth prospect is losing its appeal. In the 1990s, foreigners were financing a current-account deficit driven by an real investment boom and rapid capital accumulation (inflows of foreign direct investment, M&A and net portfolio equity investments). Since 2001, equity investment and FDI have been negative and the foreign financing of the current account is mostly financing at low returns a large and growing fiscal deficit. Also, the dollar needs to depreciate over time to reduce the external deficit, and this implies large expected capital losses that reduce the foreign willingness to finance the U.S. Moreover, as argued above, foreign central banks have now strong incentives to diversify. They don't even need to dump their existing stocks of U.S. dollar assets to cause sharp financial distress: Since the U.S., on top of the existing stock of dollar assets held by non-residents, is issuing every year another $650 billion of new supply of dollar claims to finance the U.S. current account, it is sufficient that foreign central banks reduce the rate at which they accumulate new dollar reserves, to lead to a sharp movement of the U.S. dollar, of U.S. long-term interest rates and of the price of many other risky assets. The risks discussed above are thus not predicated on an argument that the U.S. will soon and suddenly lose its status as a major reserve currencies. Of course, the U.S. would have already gone belly up if it had been an emerging market economy with twin deficits of this size and such shortening of the maturity of its public and external debt. The U.S. strengths include: the U.S. dollar's continued status as the major reserve currency; the residual -- but eroding -- policy credibility of the U.S.; the fact that the U.S. borrows in its own currency, not a foreign one; and its regime of flexible exchange rates. Still, having the biggest superpower and only hyperpower in the world being the largest net debtor in the world and the largest net borrower in the world (at growing rates) is both unprecedented and dangerous. Given likely trends in U.S. twin deficits that are likely to worsen, non-residents will have to increase the share of their portfolios invested in U.S. assets while facing increasingly certain large capital losses. Thus, the willingness of both official (central banks) and private investors to accumulate U.S. assets, and especially U.S. Treasurys, will shrink over time leading to higher risks of a hard landing. Without serious fiscal adjustment in the U.S., a further sharp fall of the dollar wouldn't be benign. It would improve the U.S. current account only through a fall in consumption and investment driven by much higher real interest rates, once foreign central banks reduce their willingness to finance the U.S. twin deficits. As former U.S. Treasury Secretary Summers put it, we are facing a 'balance of financial terror' where reduced willingness of China and other countries' central banks to finance the reckless U.S. fiscal policies will lead to a severe real and financial hard landing. * * * David Altig writes: I truly do enjoy reading and listening to Nouriel discuss these issues -- much like I enjoy a good horror movie. It's a frightening ride while you are experiencing it, and I can't say that I don't sometimes get the willies in the dark of the night. But the whole thing just doesn't seem so scary to me in the light of day. We've got many posts to go, so at this point I'll just touch briefly on the main arguments. First, I don't think anyone is arguing about whether an adjustment in U.S. external balances is coming. They are big, to be sure, and cannot continue to grow. But those observations alone aren't sufficient to support a hard-landing scenario. So on to Nouriel's arguments... There is no denying the fact that almost all of the federal debt issued by the U.S. government since 2001 has been accumulated by foreigners. But, for now, I will simply quote from a recent speech by Federal Reserve Governor Ben Bernanke: '... The so-called twin-deficits hypothesis, that government budget deficits cause current-account deficits, does not account for the fact that the U.S. external deficit expanded by about $300 billion between 1996 and 2000, a period during which the federal budget was in surplus and projected to remain so. Nor, for that matter, does the twin-deficits hypothesis shed any light on why a number of major countries, including Germany and Japan, continue to run large current-account surpluses despite government budget deficits that are similar in size (as a share of GDP) to that of the United States. It seems unlikely, therefore, that changes in the U.S. government budget position can entirely explain the behavior of the U.S. current account over the past decade.' Nouriel also argues that the exchange-rate imbalances are getting worse. But as I noted in a post at Macroblog, calculations of the real renminbi/dollar exchange rate, for example, don't suggest that the Chinese peg is, with certainty, the biggest part of the picture. I'll quote this time from the Cleveland Fed Economic Trends article that I referred to in my post: 'To be sure, China has many artificial barriers to trade and financial flows that help it sustain an overall balance-of-payments surplus, but the contribution of its exchange rate policies seems to have been overstated.' Finally, I disagree with the claim that the 'risks are not predicated on an argument that the U.S. will soon and suddenly lose its status as a major reserve currency.' At a minimum, that status confers an enormous incentive for central banks all over the world to ensure that the adjustments that occur do so in an orderly manner. Even if we have nothing else going for us -- which I don't concede -- that fact alone is probably enough to make the soft-landing scenario the clear front runner. Over to you, Nouriel. * * * Nouriel writes: Regarding the hard-landing scenario, unfortunately I am not the only one who has expressed serious concerns about the U.S. 'twin deficits,' the sustainability of the U.S. public and external debt accumulation and the risks deriving from the reliance on foreign central bank financing of these twin imbalances. Similar concerns and alarms have been expressed in academic, policy, press/media and Wall Street circles by Rubin, Sinai and Orszag, Summers (and here, too), Peterson, Roach, Gross, Bergsten, the IMF (also, here), Rogoff and Obstfeld (plus this) and Eichengreen, just to cite a few. Even Greenspan is seriously concerned, as both his November and February remarks suggested (as cleared by lead Fed inside watcher John Berry, Greenspan meant to express concerns about the sustainability of the U.S. current account in his February remarks, not lack of concern, as incorrectly interpreted by the markets). And similarly, many other Fed governors (Geithner, Ferguson, Yellen and Hoenig, to name a few) have expressed concerns about the U.S. twin imbalances and/or their financing. Altig cites Bernanke to refute twin deficits. But speaking of U.S. 'twin deficits' today doesn't imply that all current-account deficits are caused by fiscal deficits or that all fiscal deficits are associated with current-account deficits. The current account is the difference between national savings (private and public) and national investment. In European countries and in Japan, fiscal deficits are associated with current-account surpluses as private savings are high (unlike the U.S.) and investment rates are relatively low. And in the 1990s, as argued above, the U.S. was running 'good' current deficits, driven by an investment boom while national savings were growing slower than investments (as public savings were turning to a surplus but private savings were falling). After 2000, however, investment as a share of GDP fell by 4% while the current account worsened by 2% of GDP, not improving by 4% as it would have if savings (as a share of GDP) had remained constant. So, why did the current account worsen instead of improve? Because public savings went from a 2.5% of GDP surplus in 2000 to a 3.5% of GDP deficit in 2004, a 6% of GDP worsening of the fiscal balance. Thus, we have indeed been experiencing 'twin deficits' in the last four years; that is clearly evident based on the data. Also, I haven't argued that China and its currency value are the main source of the U.S. external imbalance. Quite to the contrary, I have repeatedly argued that the major source of the global imbalances is the U.S. fiscal deficit and that a move by China and other Asian countries to appreciate their currencies wouldn't much improve the U.S. external deficit unless the U.S. significantly reduces its fiscal deficit. If China and Asia were to move their currencies (and thus reduce their financing of U.S. deficit) without an adjustment to the U.S. fiscal deficit, the shifts would lead to the hard landing I spoke of: The U.S. external deficit in that case would improve only via a fall in consumption and investment driven by higher real interest rates caused by such reduced financing. So, China isn't the major problem. The reckless U.S. fiscal policies are. But of course, in an orderly -- as opposed to a disorderly -- global rebalancing, China and Asia need to do their share (move their currencies), and Japan and Europe need to do their share (reduce their 'growth deficit' via accelerated structural reform and monetary stimulus in Europe) while the U.S. does its share (getting serious about reducing the fiscal deficit via spending controls, reversing some of the unsustainable tax cuts and giving up on a senseless and budget-busting Social Security privatization that would add to the cumulative deficit and public debt over $4.5 trillion over the next two decades). Finally, even if the U.S. won't soon lost its role as the main reserve currency, it isn't necessary for central banks to dump in large amounts their existing stocks of U.S. dollar assets in order to cause a hard landing. It is enough for them to be less willing to continue to finance the U.S. ongoing fiscal and current account flow deficit in order to get sharp movements of the U.S. dollar and U.S. long rates. If Asian and other central banks start to dump dollars and the European Central Bank and the Bank of Japan intervene, the existing U.S. Treasury hot potatoes that other central banks and foreign investors want to get rid of would be transferred to ECB and BoJ as they provide yen and euros via their intervention. The problem is that the hot potatoes are growing at the rate of $650 billion dollars a year (last year's U.S. current-account deficit on its way to become a $800 billion deficit in the near future) and someone abroad, whether private investors or a central bank, has to hold this huge net increase in U.S. dollar liabilities. The willingness of private investors to hold these new and old dollar assets has already shrunk. And the willingness of central banks to keep on accumulating more and more dollar reserves -- on the top of the trillions of dollars that they are already holding and need to rollover yearly -- will soon also be sharply reduced as the real and financial costs and risks of it are becoming massive. That is when free riding of reserve diversification will lead to the unraveling of this U.S. Ponzi game of unsustainable fiscal and external debt accumulation. * * * David writes: Of course, every responsible policy maker is concerned about the recent trajectories of fiscal and current account deficits. My old boss, Jerry Jordan, used to say that unsustainable things usually come to an end. And I've not argued -- nor has anyone else I think -- that your hard-landing view suffers from some internal inconsistency. The question is, why would our best guess be that things will play out the way you fear? To set up my next question, let me note that in my previous comment I was not citing Bernanke as a refutation of the twin deficits hypothesis. What Bernanke's arguments mean to me is that we should think pretty carefully about the economic realities that underlie a current account deficit (and capital inflow). Up to 2000, it was clearly an expansion of demand for dollar-denominated assets. After that, I agree that low saving -- driven by fiscal policy perhaps, but likely a positive outlook for the U.S. economy as well -- is the plausible explanation. As we would expect, the former period was associated with an appreciation of the dollar, the latter period was associated with the reverse. What, then, should we make of the last four months or so, over which the current-account deficit has persisted and the value of the dollar has more or less stabilized? I, of course, have no idea, and it is a short period of time, but let me make two observations. First, the expansion in the U.S. continues to look much firmer than in most other developed countries. Second, the news from euroland and yenland have not instilled much confidence in the proposition that the challenges in the U.S. are unique, or even particularly large compared to those in the economies from which the legitimately competitive currencies come. (I have documented some of the scathing reviews of last week's EU meetings here, here, and here, and the latest on Japan's travails here.) So that naturally leads to this question: If they flee from the dollar, to where are they going to run? Your 'hot potato' metaphor is not apt, I think. In a game of hot potato you throw the offending spud to your neighbor, and your hands are empty. Not so in dumping dollars -- you have to end up with something else, and hope it's not a flaming carrot. Right now, perhaps investors are thinking that bet looks less than obvious. But maybe you can convince me it isn't so... * * * Nouriel writes: It's true that unsustainable policies cannot continue forever. But an unsustainable runaway fiscal train on the way to a wreck can stop in two possible ways, either by hitting the wall in a financial crash or by changing or reversing course and thus avoiding the hard landing. But there is no signal that U.S. fiscal policy, which everyone agrees is unsustainable, is changing course. If anything, the administration's policies will worsen the deficit and increase the likelihood of the train wreck. The administration budget, claiming to be able to cut the deficit by 'half,' from $412 billion last year to $233 billion in 2009, is a joke that not even Republicans will vote for. Freezing total non-defense discretionary spending to 2005 levels until 2009 has zero chance of passing. Historically, such spending has grown at the same rate as nominal GDP, so that its share to GDP is constant. If that continues and the administration achieves its tax and social security goals (making income, dividends, capital gains and estate-tax cuts permanent, fixing the alternative minimum tax and partially privatizing Social Security), the deficit will balloon to $600 billion, or 4.5% of GDP, in 2009 and to $1.2 trillion, or 5.5% of GDP, by 2015. Even assuming very conservative growth of discretionary spending (i.e., at the rate of inflation that implies a sharp reduction of spending as a share of GDP), deficits would be $500 billion by 2009 and $900 billion or more by 2015. So, the U.S. fiscal situation is unsustainable and getting worse, not better; thus, the U.S. external balance will also get worse, regardless of the dollar, if the fiscal is totally out of line. And the administration lives in delusional dream that you can maintain a tax burden that is 4% of GDP -- lower than any historical standard -- while increasing more spending for defense, homeland security and a whole host of items that will never be controlled. Thus, the problem is that the foreign financing of the U.S. fiscal deficits, by keeping interest rates much lower than they would have otherwise be, has lead to a delusional view in the administration that deficits don't matter and that they don't affect interest rates. Today, there are no more 'bond vigilantes,' as all new Treasurys are purchased abroad and two-thirds to three-quarters of them are purchased by 'political' actors, i.e. central banks, rather than private investors. With demand for Treasurys so far politically determined and the supply manipulated by a reckless short-termist public debt management policy (very little net issuance of 10-year or longer maturity fixed-rate Treasurys since 2001), it is no surprise that long rates are still as low as they are and that they provide little discipline to U.S. politicians. But once foreign central banks start to pull the plug of net new financing (or even announce such intentions as recent episodes in Korea and Japan suggest), the unraveling will be rapid and ugly. And they will start pulling the plug as their capital losses, financial imbalances, bubbles and inflation pressures become massive and mounting, if not before. And the Chinese -- as well as the rest of Asia -- are starting to seriously reconsider their policy options and reserve and currency strategies. Also, it is true that Japan and EU are not models of economic success but three quick points here on the limits of diversification from dollars into euros and yen: First, currencies often overappreciate or overdepreciate regardless of fundamentals, at least for a while. The dollar went from 80 cents to the euro to the current $1.30 even amid relatively soft European fundamentals. It could weaken to $1.40 or more in the same way in which the euro weakened too much between 1999 and 2002. If investors expect that the dollar will further fall relative to the euro and the yen, it will fall regardless of European and Japanese fundamentals, at least for a protracted period of time. Second, the dollar needs to depreciate further in real terms relative to many currencies (mostly Asian, but even the euro and others), given the unsustainable external imbalance. That fundamental trend and factor over time will dominate any short-term strengthening of the dollar deriving from Fed tightening or higher relative growth rates. Last year, the same happened: The dollar strengthened for a while at the beginning of the year and then started to fall sharply in the summer and fall. This year's short-term improvements of the dollar will be as temporary -- you cannot fight gravity forever. Third, foreign central banks don't necessarily need to diversify into euro and yen assets if they're not optimistic about these regions. They can just sharply slow their accumulation of new dollar reserves and allow their currencies to appreciate. If that happens, the hard landing will become more likely even without diversification into euros or yen. Then, the U.S. will be forced to reduce its new supply of hot rotting potatoes. Back to you, David... * * * David writes: I obviously can't argue with the point that foreign central banks 'can just sharply slow their accumulation of new dollar reserves and allow their currencies to appreciate.' But I don't at all understand the assertion that this makes a hard landing more likely. An unwillingness of the world to absorb more dollar-denominated assets at the margin strikes me as part of the recipe for a plain-vanilla adjustment process. Americans try to consume more than their means, but the rest of the world isn't interested in supplying the goodies. The dollar depreciates to address the imbalance between the supply and demand for the currency, the current-account effects reverse, interest rates rise to choke off the excess demand for U.S. produced goods and services, maybe there is some upward pressure on the price level. Happens all the time. The hard-landing story, it seems to me, rests on the development of some significant capital account shock, by which I mean a substantial attempt to quickly unwind existing dollar portfolios. I think that is what you must mean when you say foreign central banks will 'start pulling the plug as their capital losses, financial imbalances, bubbles and inflation pressures become massive and mounting, if not before.' In other words, the disaster does require pulling the plug, not just turning off the water spigot. Certainly, my comments should not be construed to mean that I believe a soft-landing process is always without bumps. I'm more of an optimist on the fiscal policy outlook than you. I can remember the 1980s version of the twin deficit story. Those deficit-GDP ratios you fear for 2009 and 2015 weren't just a concern then. They were a reality. But things changed, policy adjusted. I have faith that the same will happen again. You are right, of course, to point out the risks, and the longer we ignore those risks the bumpier the ride will be. But I see turbulence, at worst, not a flaming crash. * * * Nouriel writes: We may agree on some issues: Unsustainable fiscal policies need to be redressed, unsustainable external imbalances must be reduced. But there are still a few substantial differences. 1. On whether such unsustainable fiscal policies are likely to be reverse early and in an orderly manner or only after we hit a wall 2. On what happens if bankers in the rest of the world decide to reduce their rate of accumulation of dollar reserves and let their currencies move On the first issue, I see no whatsoever reality check in the administration on fiscal policy. The rhetoric is debt reduction but the actual plans will make the deficit much worse. There has been no admission at all that realistic controls on spending won't be enough, as you can't starve a lean public sector much further (and there has been hard resistance to the only true rule that may constrain spending and unsustainable tax cuts, i.e. the Paygo rule, which requires any spending increase or tax cut to be financed with other spending cuts or revenue increases). No reality check that some of the tax cuts need to be permanent and, instead, aggressive policy steps -- even in the 2006 proposed budget -- to create further tax holes and make all the tax cuts permanent. And on top of all this, a proposed Social Security privatization plan that will add another $4.5 trillion to the debt accumulation without -- by itself -- doing anything to solve the existing unfunded gap. This is fiscal lunacy to me. Yes, the 1980s global rebalancing from the strong dollar and twin deficits was orderly (with a few ugly bumps at Plaza, Louvre, 1987 crash, etc., S&L bubble and bust). But it was so because the Reagan II fiscal policy was the opposite of the Reagan I: reverse tax cuts, give up on pie-in-the-sky Star Wars schemes, institute meaningful spending controls). Then, as the fiscal deficit improved, the dollar gradually fell and the current account improved to balance in the late 1980s. But now, defense and homeland-security spending are up and need to grow, a bottomless multi-trillion-dollar hole has been created through the prescription drug benefit and the most unfair and unsustainable tax reduction for the most wealthy in the nations is being shoved into permanent tax cuts. This is a recipe for eventual fiscal bankruptcy (and it is the conservative S&P that predicted our Treasurys will get into junk bond status if we keep the same reckless policies) and there is absolutely no reality check on the administration yet, as long as foreign central bank finance us. And, compared to the 1980s, we are now the largest debtor ever and with potential financial imbalances and global imbalances that, in the words of Fed Vice Chair Geithner, may increase the risk of a systemic crisis: After all, Geithner has given four speeches in the last 12 months discretely warning of systemic crisis risks and recently linking these risks to the current global imbalances (here and here). On the second issue, in my view the hard landing risk doesn't depend on central banks suddenly and massively dumping their existing stocks of dollar assets. Since the U.S. needs to finance itself to the tune of new flow issuance of claims equal to its current account deficit, it's enough for these central banks to reduce sharply their desired accumulation of new forex reserves to get a sharp correction. After all, last month a single line talking about 'diversification' in an obscure Korean government report to their parliament led to a one-day fall in the Dow of 1.6%, a sharp fall in the dollar and a sharp increase in U.S. long rates. Similar financial turmoil rocking global markets occurred when Japanese Prime Minister Yunichiro Koizumi spoke -- or misspoke -- a few days later. So, wait until real diversification signals emerge and the actual diversification starts to see the real fireworks in global financial markets. Reduced Asian intervention would lead to a soft landing and orderly adjustment if the U.S. fiscal deficit is reduced in tandem and Asian currencies appreciate: In that case, the reduced supply in financing is matched by reduced demand for fiscal financing by the U.S. and the dollar can gradually fall without sharp effects on U.S. long-term interest rates (thus, 'expenditure switching' via real depreciation would lead to an improved trade balance via fiscal 'expenditure reduction,' an orderly rebalancing that maintains U.S. and global growth). But if the reduced foreign financing occurs without a parallel reduction in the U.S. fiscal deficit (in part via tax increases), then we are in hard-landing scenario, where the reduced supply of financing hits a still-persistent demand for fiscal deficit financing. In that case, not only the does the dollar fall, but long-term interest rates shoot up sharply, prices of risky assets (housing, equities, high-yield debt) fall sharply, a systemic crisis occurs and we risk a U.S. and global economic slowdown, if not an outright recession, as sharply higher real rates and negative wealth effect reduce private consumption and investment. In that scenario, the trade deficit will shrink in a disorderly and recessionary way for the U.S. and global economies. To you, David, for the final words... * * * David writes: To me, then, for the closing argument. A few observations. -- How much 'the US needs to finance itself' is not some fixed number. Markets reconcile the demand and supply for dollar-denominated assets. Thus far, Asian central banks, for example, have demanded, and we have supplied. We have, admittedly, supplied in abundance, but that is in part because the price has been low. As the price rises, we will do less. -- On a related point, I don't agree that a soft landing requires fiscal policy to unwind along with the current account. The essential requirement is that national saving increases. It is not unreasonable to assume that saving would be higher if the price of consumption was not so low. Even if fiscal policy is impervious to interest-rate and exchange-rate changes, private saving is not. Crowding out of private spending may not be good for the economy in the long run, but I see no reason that we should assume it will take historically anamolous interest rate changes to adjust to fiscal deficits that aren't themselves historically unusual. -- I grant your point that it is not so easy to see the end game on our current fiscal shortfalls. I do not grant that it was any different in the 1980s. The deficit was 4.7% of GDP in 1992, and at that time there was not much of an end in sight (for which the first President Bush suffered.) The current-account deficit corrections, on the other hand, had been long under way. The magnitude of the current-account deficit is, of course, larger today. But that just suggests to me there is more going on than just those fiscal imbalances. (Which was, essentially, Ben Bernanke's point.) -- Your examples of the brief brouhahas that erupt over periodic statements indicating that this central bank or that government might be rethinking their situation sort of proves my point. Thus far, these episodes have been accompanied by very quick and very definitive back-pedaling. They indicate to me that, for now anyway, the inclination is to take it slow and easy. You seem to think that central bankers who are disinclined to radically reshuffle their dollar holdings would nonetheless be more than willing to cut their accumulation of new dollar-asset flows in ways that effectively yield the same result. I just don't see it. Other than that, I completely agree with you. Thanks for the stimulating conversation. MEET THE PARTICIPANTS David Altig is vice president and associate director of research in the research department of the Federal Reserve Bank of Cleveland. His research focuses on monetary and fiscal policy issues. Before joining the bank in January 1991, Altig was an assistant professor of business economics and public policy at Indiana University. He is currently an adjunct professor of economics in the Graduate School of Business at the University of Chicago. He received a bachelor's degree in business administration from the University of Iowa and master's and doctoral degrees in economics from Brown University. His blog is Macroblog. His comments in this Econoblog represent his own opinion, not those of the Federal Reserve. Nouriel Roubini is associate professor of economics at New York University's Stern School of Business and a senior academic researcher in the field of international macroeconomics. He was senior economist for international affairs at the White House Council of Economic Advisers from 1998 to 1999; then worked as an adviser and director of the Office of Policy Development and Review at the Treasury Department from 1999 to 2000. His latest book, 'Bailouts or Bail-ins? Responding to Financial Crises in Emerging Markets,' was published in 2004. He maintains the Global Macroeconomics Web site and blogs regularly at his Global Economics blog. A graduate of Bocconi University in Milan, he received his doctorate in economics from Harvard University in 1988.

Subject: Important Debate! From: Terri To: johnny5 Date Posted: Tues, Mar 29, 2005 at 21:54:08 (EST) Email Address: Not Provided Message: Excellent debate, and Nouriel Roubini is likely correct.

Subject: AEI slams greenspan From: johnny5 To: All Date Posted: Mon, Mar 28, 2005 at 23:05:58 (EST) Email Address: johnny5@yahoo.com Message: My bet is that Easy Al wimps out and leaves the barrel of monkeys to the next poor guy in line to fix. http://www.aei.org/publications/pubID.22198/pub_detail.asp The decision to end its pre-commitment strategy to a measured 25-basis-point per meeting pace of tightening brings the Fed up against a basic issue. The Greenspan Fed has always been prepared to consider asset markets in distress with attendant possible systemic risk as a relevant consideration in accelerating the pace of easing. A housing bubble puts the shoe on the other foot. If there is an asset market bubble, is the Fed prepared to alter its pace of tightening in order to address the possible systemic risk associated with the growth and eventual bursting of a bubble in housing prices? Only by addressing this question and suggesting that the systemic risk consideration works both ways in the asset markets can the Fed remove a long-building moral hazard problem from asset markets in which the price of risk is simply too low. Greenspan’s decision is whether to bite the bullet now or leave the hard work to his successor.

Subject: She had fun til daddy took the tbird awy From: johnny5 To: All Date Posted: Mon, Mar 28, 2005 at 22:41:18 (EST) Email Address: johnny5@yahoo.com Message: My sister aint gonna stop spending it up la vida loca at the macy's and carrabbas until the credit cards stop coming in the mail and the suckers giving her thier credit cards dries up: http://www.morganstanley.com/GEFdata/digests/20050328-mon.html#anchor0 This is an extraordinary challenge for all of us in dealing with the inevitable stresses and strains of globalization. The rich, developed world needs to do a better job in learning to cope with China. That’s especially the case for US politicians, where China bashing has become an all-too-convenient foil for America’s own unwillingness to boost national saving and wean itself from current account and trade deficits. But China, for its part, also needs to adapt better to changing global circumstances. The Chinese leadership may well need to freshen up its policy approach in order to confront the perils of its own imbalances. The strategy that has worked so well in the early stages of development may now be in need of an overhaul as China comes of age. In that important respect, by going after the asset-dependent American consumer, the Fed may be doing China a real favor. Last week johnnys sis called and said she had 3 new guys take her to carrabbas, olive garden, and one flew her to the bahamas for a 3 day weekend at ATLANTIS!!! She just met this sucker over the net one week before - HUH? I told her he was a fool and she was contributing to this overconsumption - she says I am just bitter I am not a cute girl with 400 guys on the net wanting to buy my free dinner and trips every week! BWAHAHAA!

Subject: Brazilian Plan for Water Diversion From: Emma To: All Date Posted: Mon, Mar 28, 2005 at 21:37:00 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/03/28/international/americas/28brazil.html?pagewanted=all&position= Brazilian Plan for Water Diversion Is Greeted by Skepticism By LARRY ROHTER JUÀZEIRO-PETROLINA, Brazil - For well over a century, the millions of people who live in the parched backlands of northeastern Brazil have looked at the São Francisco River with thirst and longing. Nearly 2,000 miles long, it has been seen as the one hope for ending the cycle of drought and exodus that has made this region the poorest and most backward in the country. But now the government is poised to carry out a bold plan that it says will accomplish those goals. President Luiz Inácio Lula da Silva has authorized $1.7 billion to build a pair of canals hundreds of miles long to divert water from this river basin, the country's second largest, to the most arid parts of the interior. This would be the first phase of a much larger project that envisions eventually redirecting water from the Amazon watershed to this area. Ciro Gomes, Brazil's minister of national integration, likens the sweep and impact of the plan to the creation of the Tennessee Valley Authority in the United States about 70 years ago. 'Roosevelt is a reference point to me,' Mr. Gomes said in a telephone interview from Brasília, the capital. 'You have to think of what that region was before and what it became later because of his vision.' But opponents of the venture, including environmental groups and business interests, argue that so ambitious an undertaking is unnecessary and far more costly than the initial price indicates. They favor the construction of more reservoirs, cisterns, wells and aqueducts, which they contend would be cheaper and more efficient than building the canals and compromising the flow of a river already damaged by pollution and deforestation. 'The problem of the northeast is not the scarcity of water, but the way that water is managed and existing projects left unfinished,' Renato Cunha, director of the Bahia Environmental Group, said in an interview in Salvador, the state capital. 'This plan is not going to solve the problem. It will only exacerbate existing conflicts over who controls land and water.' Traditionally, Brazil has looked to gargantuan public works to resolve many of its social and economic ills. The Trans-Amazon Highway, the Itaipú Dam and the Angra dos Reis nuclear power plants are all examples of megaprojects that were meant to transform the country but, in the opinion of many Brazilians, ended up bringing as many problems as benefits. The São Francisco, sometimes called 'Brazil's Nile,' and the vast hinterland of sand and scrub around it, known as the sertão, hold a special place in the Brazilian imagination. The droughts that have regularly afflicted the region since the 19th century have forced millions of peasants south to cities like São Paulo to seek jobs, a migration akin to that of poor American blacks leaving the South to work in the factories of Chicago and Detroit. Mr. da Silva is himself among those migrants, having been driven from his birthplace in Pernambuco as a child. When he talks of the region's perennial water shortage and the resulting poverty and social distortions, it is always in strongly emotional and personal terms. He has a clear disdain for the traditional political bosses, called colonels, who use their control of the water supply to control votes and expand their landholdings. His government, in fact, has been promoting the proposal as a way to ensure a reliable water supply for poor people and their animals, while accusing opponents of selfishness. 'It is a humanitarian issue' and 'a question of solidarity,' Mr. da Silva said recently. Opponents of the proposal, though, maintain that the talk of helping the poor is a smoke screen. Much - if not most - of the water, they contend, will actually go to fruit growing projects deeper in the interior, for irrigation, or to shrimp farms, two of the fastest-expanding export industries in this part of the country. But Fernando Bezerra Coelho, the mayor of Petrolina and a supporter of Mr. da Silva's governing coalition, contended that even that goal would be misguided and would lack economic logic. 'Why irrigate 100,000 acres that are hundreds of miles from the river when you can irrigate a much larger area right around here at a much lower cost?' he said in an interview here. The proposed project predates the current administration, and before Mr. da Silva's party came to power in 2003, it vigorously opposed the plan, calling it a waste of money that would wrongly benefit a rich elite at the expense of the general population. A confidential party document made available to The New York Times by someone who had access to them through connections with the Brazilian Congress criticized the idea that 'the only solution to the problem is transferral' and concluded that reforestation and better use of underground aquifers could 'allay the regimen of a lack of rain.' But next year is an election year, and Mr. da Silva is expected to seek a second four-year term. The water diversion project promises to be a boon for a handful of construction companies that are among the biggest campaign donors in the country and have been chafing at the government's restrictions on big public works projects, imposed to help meet budget surplus targets promised to the International Monetary Fund. 'This is clearly being done for electoral purposes,' said Ana Cacilda Rezende Reis, a lawyer who belongs to the Permanent Forum for the Defense of the São Francisco. 'It's popular with voters, who have been misled as to who is really going to get the water, but even more so with the people who are going to get the construction contracts.' Mr. Gomes, whose home state stands to be one of the principal beneficiaries of the project, said such accusations are 'unjust.' He noted that Mr. da Silva announced his intention to divert the water during his first month in office, and attributed delays in carrying out the project to 'our desire to negotiate with opponents and incorporate some of their suggestions into the project.' As things now stand, the project has no foreign financing and will be paid for entirely out of the government budget, unusual for a venture on so grand a scale. The previous administration had contacted the World Bank in hopes of securing its support, but those efforts fizzled after the bank did an analysis that turned out to be highly critical of a version of the plan that opponents say differs little from what Mr. da Silva is now proposing. 'The project would have little effect on the cost of emergency water supply during drought years,' the report concluded. 'Secure supplies of household water for the entire northeast could be guaranteed by alternatives at a fraction of the cost of the proposed project.' As originally conceived, the river transfer plan also envisaged replenishing the São Francisco with water from the Tocantins, a river that feeds into the Amazon basin, by reversing the course of a tributary and building a canal of about 200 miles through the heart of the country. Though that part of the project, seen as the most costly and least popular, has been delayed, it has not been canceled. 'This will be done in the future, but not before 2050,' Mr. Gomes said. 'We have to have a hierarchy of priorities so that we don't have water going to waste before the users of it are in place.' Spread over nine states and hundreds of thousands of square miles, the 50 million residents of the northeast are suspicious by nature and experience. Over the years, they have seen one project after another begun and then abandoned with a change of government, or witnessed others bring unexpected problems. For example, the Sobradinho Dam just west of here, built by the military dictatorship and inaugurated in 1978, was supposed to bring jobs and light to residents of the region. It did do that for some, but it also devastated fishing, blocked navigation and ended the cyclical flooding essential to agriculture along the banks of the river. 'The river commerce and shipping that used to animate the economy is dead, and you've got settlements two miles from the river bank that depend on water trucks,' said Misael Aguilar Silva, the mayor of Juàzeiro and the son of a river pilot. 'The river is sick, and this project is only going to make it sicker. It's like forcing an anemic person to donate blood.'

Subject: Large scale central planning too slow From: johnny5 To: Emma Date Posted: Mon, Mar 28, 2005 at 22:37:25 (EST) Email Address: johnny5@yahoo.com Message: I read this article Emma, think of the 3 gorges dam half a world away, and wonder sometimes if these leviathan behemoths man creates is sometimes too large for sensible control. Sometimes we reach too far to the heavens and try to change too fast. But I am certain as some here would say, the good that will come from this in the end outweighs the short term problems now. Steadfast optimism always.

Subject: Science vs. Culture and Mexico's Corn From: Emma To: All Date Posted: Mon, Mar 28, 2005 at 21:34:43 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/03/27/international/americas/27corn.html?pagewanted=all&position= Science vs. Culture in Mexico's Corn Staple By ELISABETH MALKIN CAPULÁLPAM DE MÉNDEZ, Mexico - This ancient Zapotec Indian town of whitewashed adobe houses and tiled roofs perched on a verdant slope of the western Sierra Madre could not be farther from the American laboratories where white-coated scientists create strains of genetically altered corn. This is the birthplace of maize, where people took thousands of years to domesticate its wild ancestor, where pre-Hispanic myths describe it as a gift from the gods, and where cooks prepare it in dozens of ways to be served at every meal. So the discovery of genetically modified corn in the tiny plots here set off a national furor over what many here see as an assault by American agribusiness on the crop that is at the core of Mexico's identity. 'For us, maize is in everything: tamales, tacos, tortillas, pozole,' said Miguel Ramírez, a local teacher who is active in community affairs. 'For us it's sacred.' Then, radiating distrust of government assurances after a decade of free trade that has all but depopulated the Mexican countryside, he asked a familiar question here: 'What is the government doing to make us self-sufficient?' The response was a controversial biosecurity law passed by the Mexican Congress in February, a step that has divided Mexico's scientists. The issue has also put Washington on alert, making it wary of any threat to the 5.5 million tons of corn that American farmers export to Mexico each year, more than to any other country except Japan. After several years of study, a panel of international experts found that the risks to health, the environment and biodiversity from genetically modified corn were so far very limited. But after a public forum here in Oaxaca State, the panel gave special weight to social and cultural arguments about protecting corn. It recommended that Mexico reduce corn imports, clearly label transgenic corn and mill genetically modified corn as soon as it enters the country, to prevent farmers from planting it. In the end, the Mexican government set aside the milling recommendation as too expensive, but the new law requires still unspecified labeling. Over all, imports of American corn, mostly for animal feed, have stayed steady. The United States' response to the report was immediate and blistering. It called the report 'fundamentally flawed' and argued that the recommendations did not flow from the panel's scientific conclusions and undercut provisions of the North American Free Trade Agreement. 'If implemented, these recommendations would unnecessarily limit Nafta farmers' access to high-quality U.S. corn exports, as well as the environmental benefits that biotech corn provides,' a statement read. The argument has exposed deeper chords that have been resonating here for two decades. At its center is a dispute over whether Mexico's embrace of free trade can coexist with age-old farming practices that form the fabric of rural life. Like everyone here, Mr. Ramírez farms a small plot to put corn on his table. Following tradition, each household plants grain selected and saved from the previous year's crop. The practice has created a diversity of corn varieties, reflected in a palette of kernels from nearly white to wine red to blue-black, making Mexico a corn seed bank for the world. One argument against the introduction of genetically altered corn here is the fear that cross-pollination with native varieties could alter the purity of those crops. To many in Oaxaca, the transgenic corn that seeped in from the United States was the final insult from successive governments that have dismantled supports for uncompetitive peasant farming and embraced free trade. The impact has been enormous over the past generation, driving hundreds of thousands of Mexicans from rural areas, many of them to the United States for work. 'There is a systematic strategy to finish off the countryside,' said Aldo González, an advocate on farm issues from the town of Guelatao. Scientists have echoed those concerns, saying the threat to the crop and to the rural population cannot be separated. 'The most important cause of the loss of genetic diversity to the maize varieties is the loss of people, their departure from the countryside for California, New York and Texas,' said José Sarukhán, a respected professor of ecology at the National Autonomous University of Mexico who led the panel. As Congress debated the biosecurity law, opposing sides marshaled their own evidence to support contradictory conclusions. The potential danger to corn - and its special place in Mexican society - remain a centerpiece of opposition to the law. The law's supporters say genetically modified strains could increase yields for Mexico's flagging corn production. They argue that the law sets up safeguards to introduce genetically modified crops cautiously and monitor their effects. But such promises carry little weight in Oaxaca. After scientists found transgenic corn in the fields of these mountains in 2001, despite a 1998 ban on commercial planting, Mr. Ramírez, the local activist, and others here asked for a study of the issue. That led to formation of the study panel, which was set up by the Commission for Environmental Cooperation, a government-financed group that monitors the environmental effects of Nafta, and was made up of experts from Mexico, the United States, Canada and Britain. The study concluded that the alien corn found here probably came from American food imports distributed in government stores for the poor and planted by local farmers. One such farmer, Olga Toro Maldonado, said the new corn produced well the first year. But the grain she saved and planted the following year produced 'tiny, ugly little things.' That is because she planted corn developed for the Great Plains. In the end, she said, 'we realized that it is better to have our own maize.' The new law promises special rules to protect corn, gives the environmental ministry new power over whether to approve any transgenic crops and allows communities to set up zones that are free of transgenics. The ban on commercial planting is still in effect.

Subject: Re: Science vs. Culture and Mexico's Corn From: johnny5 To: Emma Date Posted: Mon, Mar 28, 2005 at 22:33:26 (EST) Email Address: johnny5@yahoo.com Message: I heard this on NPR today Emma, diversity gives us robustness. It is a shame more people are not taking to heart that the more centralized and monoculture this world becomes - the weaker it becomes to single problems or attacks on our food or economies or populations.

Subject: Bush's trade policy 8am Cspn2 From: johnny5 To: All Date Posted: Mon, Mar 28, 2005 at 20:42:00 (EST) Email Address: johnny5@yahoo.com Message: 08:30 am 1:00 (est.) LIVE Speech Trade Issues Washington International Trade Assn. Carlos M. Gutierrez , Department of Commerce The beginning and end of this live program may be earlier or later than the scheduled times. Speech Trade Issues Washington International Trade Assn. Washington, District of Columbia (United States) ID: 186081 - 03/29/2005 - 1:00 - No Sale Gutierrez, Carlos M., Secretary, Department of Commerce Secretary of Commerce Carlos Guiterrez will discuss the Bush Administration's trade priorities for the next four years. Will the unions and rich ceo's and lobby start them china bashing or not?? Tune in econ fans and bring your own popcorn to the show!!@

Subject: Dividends in decline?? Why hold back? From: johnny5 To: All Date Posted: Mon, Mar 28, 2005 at 14:25:20 (EST) Email Address: johnny5@yahoo.com Message: http://www.foxnews.com/printer_friendly_story/0,3566,151542,00.html ....In an odd parallel, it turns out that Buffett isn't the only big-time player sitting on cash. According to the most recent Outlook newsletter from Standard & Poor's, most of the companies in the S&P 500 (search) have been holding out on investors, too, by not paying out their usual percentage of dividends. In a recent column, Mark Hulbert quotes from the S&P newsletter: 'Companies in the S&P 500 are still sitting on a mountain of cash. We estimate that non-financial corporations in the index currently have about $602 billion in cash and cash equivalents on their balance sheets.' Let's see ... since Berkshire Hathaway isn't included in the S&P 500 index, we know that we can add another $43 billion to that $602-billion figure to get up to a minimum of $645 billion in cash that U.S. companies are sitting on. And the reason they have so much cash, according to S&P, is that S&P 500 companies are paying out only 32 percent of their earnings as dividends. That compares with a long-term average of 54 percent. So, even if investors do buy an S&P 500 stock, they won't get the normal share of earnings back in their quarterly dividend checks. That partially explains why the current yield for the Dow Industrials at 2.3 percent (again, according to S&P) is still below the traditional 3-6 percent range of yields. So, let's ask the question again: If Warren Buffett is holding cash, and if corporations are holding cash rather than paying dividends, what's a little old everyday investor supposed to do? Repeat after me: Hold onto your cash. Unless you want to watch your portfolio follow the market as it ... well, to put it delicately, as it becomes less overvalued. Notice that Buffett is not investing in real estate, an all-too-tempting alternative for regular folks who have some money they would like to invest but who don't trust the stock markets. In fact, as the most recent issue of The Elliott Wave Financial Forecast points out, many people are 'now captivated by the concept of easy wealth through real estate. … According to the National Association of Realtors, a stunning 25 percent of the 7.7 million homes sold in 2004 were purchased strictly as investments.' In the United States, though, even as investors in certain locales continue to flip homes at higher prices, some important indicators made telling turnarounds in January. Total U.S. home sales dropped dramatically by 9.7 percent from December 2004 to January 2005 (before revisions), even as median sales prices on new U.S. homes plunged 13% from $229,700 to $199,400. That decline in the median sales price is the largest one-month fall in the history of the data, which goes back to 1963. So it looks like the real estate market may not provide a safe place to run to in the future. Back to one final baseball analogy from Buffett. While writing about performance for the year, Buffett describes the CEO of one of their insurance companies as a superstar: 'His slugging percentage is right up there with Barry Bonds' because, like Barry, [he] will accept a walk rather than swing at a bad pitch.' Bonds may not be swinging for the bleachers this year due to injuries, but the Oracle of Omaha's lesson is still useful: Know when to swing at the markets and know when to lay off and take the intentional walk. Susan C. Walker writes for Elliott Wave International, a financial analysis company. She has been an associate editor with Inc. magazine, a newspaper writer and editor, an investor relations executive and a speechwriter for the Federal Reserve Bank of Atlanta. She received her B.A. in Classics from Stanford University.

Subject: Bangkok seminar From: Angela B. To: All Date Posted: Mon, Mar 28, 2005 at 12:58:26 (EST) Email Address: angela_beau@yahoo.com Message: I caught a newspaper ad about Krugman's upcoming Bangkok seminar in May. I'm very interested but can't find further information anywhere. Does anyone know how to sign up or where to find the details? Thanks in advance.

Subject: Bears and Bond Funds From: Terri To: All Date Posted: Mon, Mar 28, 2005 at 10:46:22 (EST) Email Address: Not Provided Message: The important problem with bearish analysts is not giving investors realistic ideas about how to protect portfolios. Investing in bear funds or buying options or gold or foreign bonds or foreign currencies, are difficult and highly risky and expensive choices. At least bullish analysts can easily offer realistic choices in low cost long term indexing. What would make bearish analysis sensible would be suggestions on use of bond funds, not bear bond funds but regular low cost fairly constant duration bond funds. But, bears seldom mention bond funds so I seldom pay attention to bears.

Subject: Empirical Evidence? From: johnny5 To: Terri Date Posted: Mon, Mar 28, 2005 at 20:22:17 (EST) Email Address: johnny5@yahoo.com Message: 'The important problem with bearish analysts is not giving investors realistic ideas about how to protect portfolios.' Hmmm, back in 2002, Mogambo was telling me to buy gold, it was $300 then, its around $420 today. Back in 2002 warren buffet was shorting the dollar and buying foreign currency, the dollar has fallen how much against the Euro? Jim Rogers said back in 2002 to buy commodities - that Pimco commodity fund has went up how much since 2002? The aden sisters and other on 321gold back in 2002 told me to buy OIL and energy stocks, I bought XOM in the high 30's, its around 60 now. What did those bulls in the Vanguard TSM do since 2002? ' Investing in bear funds or buying options or gold or foreign bonds or foreign currencies, are difficult and highly risky and expensive choices.' I never bought a bear fund, but scottrade lets you buy options, you can buy gold mutual funds, you can go to a pawnstore and buy real gold cheap or a coin store, and there a ton of places on the net that sell you gold at the spot price for cheap. www.everbank.com had the foreign currency plays - another recommendation from benson on 321gold. ' At least bullish analysts can easily offer realistic choices in low cost long term indexing.' You and I must interpret history differently Terri. ' What would make bearish analysis sensible would be suggestions on use of bond funds, not bear bond funds but regular low cost fairly constant duration bond funds. But, bears seldom mention bond funds so I seldom pay attention to bears.' Don't pay attention, you haven't made the money bears have made the past 3 years either and I know you invest to WIN Terri - not to lose.

Subject: No see, no hear, no do From: johnny5 To: johnny5 Date Posted: Mon, Mar 28, 2005 at 20:31:06 (EST) Email Address: johnny5@yahoo.com Message: Who did better the past 3 years, the prophets who allocted perfectly stock/bond in the bear markets - or those silly bears who made 100% a year the past 3 years in gold or oil or energy or commodity plays or currency plays and got out of pure domestic stock/bonds? http://socialize.morningstar.com/NewSocialize/Asp/FullConv.asp?forumId=F100000015&convSeqNumber=40705&mrr=1111528020&t1=1112059610 Alec, (username ats59) and I did a bit of research to see exactly how a portfolio of just two Vanguard funds, Total Stock Market Index Fund (VTSMX) and Total Bond Market Index Fund (VBMFX), actually performed during the last severe three year (2000-2002) bear market. Here are cumulative returns: VTSMX..100%.....80%.......60%......40%.....20%......0% VBMFX.....0%.....20%.......40%......60%.....80%....100% --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- - 2000...-10.57%..-6.18%..-1.79%.. 2.61%.. 7.00%.. 11.39% 2001...-10.97%..-7.09%..-3.21%.. 0.67%.. 4.55%... 8.43% 2002...-20.96%.-15.12%..-9.27%..-3.43%.. 2.42%... 8.26% --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- - Return.-37.07%.-26.01%.-13.75%..-0.25%. 14.57%.. 30.76% For cumulative returns from two other bear markets [73-74 & 30-32]. S&P 500 100% 80% 60% 40% 20% 0% 5 Yr Tr 0% 20% 40% 60% 80% 100% 1973 -14.70% -10.84% -6.98% -3.12% 0.74% 4.60% 1974 -26.50% -20.06% -13.62% -7.18% -0.74% 5.70% Cumul Return -37.30% -28.73% -19.65% -10.08% -0.01% 10.56% S&P 500 100% 80% 60% 40% 20% 0% 5 Yr Tr 0% 20% 40% 60% 80% 100% 1930 -24.90% -18.58% -12.26% -5.94% 0.38% 6.70% 1931 -43.40% -35.18% -26.96% -18.74% -10.52% -2.30% 1932 -8.20% -4.80% -1.40% 2.00% 5.40% 8.80% Cumul Return -60.98% -49.76% -36.81% -22.04% -5.33% 13.42% Terri, you say you stick your head in the sand when bears talk and I can't understand why you choose a strategy that even if you were 100% bond would have saved your butt in the bear - you would have not made near the money as those silly bear analysts. They made a ton the past few years.

Subject: Berkshire Hathaway Insurance From: Emma To: All Date Posted: Mon, Mar 28, 2005 at 10:06:07 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/03/28/business/28buffett.html?pagewanted=all&position= Investigation of Insurance Puts Buffett in a Spotlight By TIMOTHY L. O'BRIEN Over the last four decades, Warren E. Buffett has built Berkshire Hathaway into one of the world's largest and most successful insurers. Along the way, he has navigated the stock market with legendary prowess and offered folksy guidelines for proper corporate governance. Now, with investigators on three continents examining Berkshire affiliates and a deadline looming tomorrow to respond to an Australian regulatory inquiry, Mr. Buffett's company is in the unfamiliar position of having to defend its integrity. Berkshire insurance affiliates run by Mr. Buffett's most trusted deputies are involved in what investigators describe as possible financial manipulation at insurance giants like the American International Group and the Zurich Financial Services Group. Investigators are examining Berkshire transactions that they say helped lead to the collapse four years ago of an insurance company involved in the biggest financial scandal in Australian history. Investigators say they have traced many suspect transactions to a Berkshire subsidiary in Dublin, where at least two Berkshire executives who were recently banned from the Australian insurance market for engaging in abusive practices continue to work for the company. Investigators are trying to determine the extent of Mr. Buffett's knowledge of the deals, which remains unclear. The involvement of other senior executives based in the United States, Ajit Jain and Joseph P. Brandon, and Ron Ferguson, a retired Berkshire insurance executive, is also unclear; all three men oversaw insurance operations that sold products at the core of international regulatory scrutiny. None of the executives has been charged with wrongdoing. The broad investigation into the insurance industry has already brought down top executives of other insurers, including Maurice R. Greenberg, the former chief executive of the American International Group. A.I.G. directors are nearing a decision to cut all ties to him. Among other transactions, regulators are looking at a deal Mr. Greenberg struck in late 2000 with the General Re Corporation, a unit of Berkshire Hathaway. While many companies are being scrutinized, one person briefed on the various investigations described General Re as 'at the center of the storm.' A Berkshire spokesman declined to respond to questions about the executives, their business dealings or the investigations, other than to cite a statement from Berkshire's most recent annual report: 'Operating decisions for the various Berkshire businesses are made by managers of the business units. Investment decisions and all other capital allocation decisions are made for Berkshire and its subsidiaries by Warren E. Buffett.' To the extent that the statement distances Mr. Buffett from Mr. Jain, Mr. Brandon, and Mr. Ferguson - all of whom report or reported directly to him - it contrasts with Mr. Buffett's description in his 2001 shareholder letter about his interactions with Mr. Jain. 'I have known the details of almost every policy that Ajit has written since he came with us in 1986,' Mr. Buffett wrote. 'Ajit's business will ebb and flow - but his underwriting principles won't waver.' Mr. Buffett has successfully dealt with scandals in the past. Berkshire invested heavily in Salomon Brothers in 1987 and four years later, Mr. Buffett agreed to become the firm's interim chairman in the wake of a Treasury trading scandal, and he quickly cleaned house. Although he is best known for multibillion-dollar returns on investments in Coca-Cola, The Washington Post, Gillette and other concerns, his company, Berkshire, is an Omaha holding company that owns major insurers including National Indemnity and General Re. Mr. Buffett, 74, is a self-described devotee of the insurance business who relishes the challenge of assessing risks and offering policyholders protection from daily mishaps like auto accidents to more exotic catastrophes like hurricanes. As Berkshire's insurance offerings have evolved, it has crafted ever more esoteric products that in theory exist to help users insulate themselves financially from the world's calamities. But in practice, law enforcement officials and regulators say, users have deployed these same products to manipulate corporate earnings or mask underlying financial woes. The Securities and Exchange Commission; the Justice Department; the New York attorney general, Eliot Spitzer; and regulators in Ireland, Britain and Australia are all shining investigative spotlights on arcane products known as finite reinsurance - with General Re figuring in each of those investigations. Fitch Ratings, a firm that monitors insurers, criticized finite reinsurance in a recent report, noting that its 'primary purpose is not true risk transfer in the traditional sense, but financial statement enhancement.' Analysts and regulators said that investigations of the improper use of finite reinsurance were still in their early stages but that in many instances the suspect buck stopped at Berkshire's door. 'At the end of the day, in terms of the finite universe that Fitch is aware of, Berkshire Hathaway has deep roots into this market,' said Michael J. Barry, a managing director at Fitch. 'They're one of the biggest sellers. And it's just not here in the U.S. It's global.' Reinsurance is protection insurers buy for themselves to limit their own exposure to large claims. Finite reinsurance is used to soften the impact of claims that may have to be paid out over a particularly long period. Investigators and regulators said that some reinsurers have used finite products as substitutes for bank loans, selling them to companies that want to artificially pump up their books. The perils of that game have surfaced in charges of financial manipulation and a number of prominent insurance failures. Australian regulators said that a troubled company named FAI used finite products to feign profitability shortly before HIH Insurance Ltd., a fast-growing Australian conglomerate, bought it in 1998. HIH later toppled beneath the weight of ill-considered acquisitions like FAI and other problems. According to regulators, General Re, the Berkshire affiliate, sold suspect finite products to FAI in 1998 when Mr. Ferguson was the unit's chief executive. Another Berkshire unit, National Indemnity, sold a questionable finite product to FAI in 1998, when Mr. Jain was overseeing the unit. That transaction included a 'side letter' that required FAI not to seek payment on the policy for three years. Regulators consider side letters red flags because they mitigate the risk transfer in finite reinsurance - and essentially repackage the product as a short-term loan used to spruce up an income statement. Although Berkshire itself acquired General Re in 1998 after the first FAI transaction, Mr. Ferguson served as General Re's chairman and chief executive from 1987 to 2001. He remained as chairman until retiring in 2002. Berkshire's Mr. Brandon, who joined General Re in 1989 and became the insurer's chief financial officer in 1991, has been the unit's chief executive since late 2001. When Mr. Ferguson was succeeded as chief executive by Mr. Brandon in 2001, Mr. Buffett offered praise for both men. 'Ron has exemplified integrity, professionalism and leadership,' Mr. Buffett said at the time. 'In selecting the people I want to work with and who have run businesses for me, I look for the very same qualities that I would want to see in a man who was going to marry my daughter. Ron passes this test with flying colors. 'I have great confidence in Joe Brandon's leadership abilities,' Mr. Buffett added, 'reinsurance expertise and financial skills, and look forward to working closely with him and General Re's next generation of leaders.' Insurance premiums accounted for about $21 billion of Berkshire's $74.3 billion in revenue last year. General Re represents one of Berkshire's four main insurance units and contributed about a third of the premiums Berkshire booked as revenue last year, but it has been plagued by large underwriting losses in recent years. In October, Australian regulators barred six General Re executives from the country's insurance industry for improprieties related to the FAI transaction. Two of them, John Houldsworth and Tore Ellingsen, continue to work for Cologne Re, a General Re division based in Dublin. In December, Australian regulators barred another General Re executive, Milan Vukelic, for the FAI deal, but reinstated him on appeal. Mr. Vukelic is now the chief executive of the Faraday Group, a General Re unit based in London. Mr. Houldsworth, Mr. Ellingsen and Mr. Vukelic did not respond to phone calls seeking comment. Regulators and investigators said that most of Berkshire's questionable finite products sold in Australia and elsewhere originated in a General Re division known as the 'alternative solutions group,' which is based in Dublin. Ireland is among the world's friendliest jurisdictions for reinsurers, offering a regulatory environment that some analysts have criticized as overly loose and forgiving. Ireland established a new monitoring agency, the Irish Financial Services Regulatory Authority, in 2003 in response to these concerns. Regulators said the agency is currently investigating General Re's operations in Ireland. Mr. Spitzer was in Dublin last week to give a speech on corporate governance. Mr. Spitzer's office is investigating a questionable finite transaction between General Re and A.I.G. that originated in Dublin in late 2000 and early 2001 and involved Mr. Ferguson. The attorney general's office said the deal artificially increased A.I.G.'s premium reserves and helped it acquire another company. Mr. Buffett and Mr. Greenberg, the former A.I.G. chief, have been friendly rivals over the years and they banded together in an unsuccessful attempt to buy the portfolio of Long Term Capital Management, a hedge fund that roiled financial markets when it nearly collapsed in 1998. The S.E.C. and Mr. Spitzer's office issued subpoenas to Berkshire, General Re and Berkshire's other insurance affiliates in December and January. Other problems have cropped up for General Re. It sold a questionable finite product to an Australian unit of Zurich Financial, a Swiss insurer buffeted by financial woes, and Australian regulators are investigating that transaction. A Zurich Financial spokesman confirmed the investigation but declined to comment other than to say the deal occurred between 2000 and 2002. Australian regulators recently told General Re that the company has until tomorrow to show cause why it should not face further investigations for finite dealings in Australia. Meanwhile, the Justice Department is investigating General Re for questionable policies it sold to Reciprocal of America, a failed malpractice insurer that operated in the South. Tennessee and Virginia regulators have also sued General Re for fraud, contending that the company sold finite policies to Reciprocal that masked financial problems at the company. In addition to Fitch, Standard & Poor's, another major ratings agency, has voiced misgivings about finite reinsurance while also pointing out its belief that most finite products have legitimate and important uses. A spokesman for the Reinsurance Association of America, an industry trade group, said that reinsurers were working with state regulators and law enforcement officials to develop a response to the recent round of investigations but that the industry does not believe that its accounting and disclosure practices need repair. An individual with direct knowledge of Berkshire's finances said finite reinsurance accounts for just 1 percent of the company's overall earnings and that the business does not propel its growth. So far, all the inquiries have not been much of a drag on Berkshire's stock. Even so, the legal risks and possible damage to its reputation that Berkshire has incurred as a finite vendor may be costly. 'From an investigative perspective we're probably at the top of the fourth inning,' said Mr. Barry of Fitch. 'There's a lot more that we expect to happen.'

Subject: Bond Funds as Income Security From: Terri To: All Date Posted: Mon, Mar 28, 2005 at 10:04:18 (EST) Email Address: Not Provided Message: At a time when there is concern about our economy and stock markets, not explaining to investors the long term safety of bond funds is completely irresponsible. If an older investor is wealthy enough to live entirely on S&P dividends then bond funds may never be necessary, but with an S&P dividend yield of 1.6% an investor would need possibly 3 million dollars in a diverse portfolio of value stocks or the value index, 2.3% yield, to be secure in income and able to wait out any difficult market.

Subject: Africa Looks to Show Itself Off From: Emma To: All Date Posted: Mon, Mar 28, 2005 at 09:53:49 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/03/28/business/worldbusiness/28africa.html Africa Looks to Show Itself Off to the U.S. By NICK MADIGAN LOS ANGELES - If ever a place labored under a set of stereotypes, it is Africa. Whether they perceive it as a land of barbarous political extremes or as a stunning setting for tracking wildlife, Americans have long tended to reduce the vast continent to a list of clichés. With the start of the Africa Channel later this year on cable television in the United States, a group of entrepreneurs seasoned in the intricacies of African culture and history hope to demystify the continent for American audiences. 'We're personally invested in really transforming the way people think about Africa,' said Jacob Arback, a former vice president at DirecTV International and a co-founder of the new venture, which has been almost three years in the making. 'This is a passion product.' Mr. Arback and his colleagues say they have secured the rights to 1,200 hours of movies, music and reality and variety shows that have already been broadcast in various African nations, primarily South Africa. Some features, including a daily current-events program, 'Africa Today,' will be produced specially for the 24-hour channel. 'When this channel goes on the air, Africa will no longer be known as the dark continent,' said another of the channel's founders, James Makawa, a Zimbabwean who worked for NBC News as a correspondent in New York and Chicago and in 2000 helped start the African Broadcast Network, a pan-African network of television stations with affiliates in 18 countries in sub-Saharan Africa. 'We're not saying there are not negative things,' said Mr. Makawa, whose family fled to the United States in 1977, during the Rhodesian war. Despite predominant images of genocide, famine and disease in some African nations, he said, interest in Africa remains enormous. 'Historically, if there had not been interest in the place, the colonial powers would not have plundered it or built the empires that they did,' Mr. Makawa said. 'Modern-day Africans say it's different now. They want to be heard and they want to participate in the global economy, but they can't participate if people don't know who they are.' Mr. Makawa, Mr. Arback and Richard Hammer, a former executive with Columbia Pictures Television, say they are close to signing agreements with cable systems in the United States to make space for their programs, and are aiming for a debut in July. Their efforts have been helped by interventions from Andrew Young, the former ambassador to the United Nations and former mayor of Atlanta, who is chairman of the channel's board. The channel's investors also include two players in the National Basketball Association, Dikembe Mutombo and Theo Ratliff. 'What we get from Africa is only the bad news' from Darfur and Rwanda, said Mr. Young. 'The cable news channels in the United States tell the same story over and over, but there are so many exciting things going on.' Mr. Young recently returned from Rwanda, where he said a new constitution dictates that a percentage of candidates who lose elections be seated anyway in Parliament, where 30 percent of the members are women. In Nigeria, he said, traditional medicine doctors are 'getting very interesting results in AIDS treatment.' Such stories, he said, will 'grab people's curiosity' on the Africa Channel, which he and his colleagues stressed will not be aimed solely at the African-American market but at viewers who are already watching A & E and the History, Discovery, Travel and National Geographic channels. Marketing and promotion will be limited by cost, Mr. Young said. 'We're counting on the grapevine to popularize this channel,' he said. 'Eventually, we're looking at building a communication bridge between Africa and the U.S.' For Felicia Mabuza-Suttle, a talk-show host who has been called the Oprah Winfrey of South Africa, the channel is 'the best news ever to come out of America about Africa.' 'The western media has capitalized on the devastation of Africa, but we are about to see another side of Africa,' said Ms. Mabuza-Suttle, who plans to have an interview program on the new channel. 'The only way to get more and more Americans to travel there is to bring Africa to them.'

Subject: Why Bonds Funds? From: Terri To: All Date Posted: Mon, Mar 28, 2005 at 08:31:32 (EST) Email Address: Not Provided Message: There has been no time in 35 years that bond funds of moderate to low duration would not have protected a portfolio. They will protect a portfolio as well now. Even long term bond funds are protective. The Vanguard GNMA Bond Fund has a 2.5 year duration. There is no credit risk since the thousands of bonds in the portfolio are government insured. The yield is about 4.7%. So, if interest rates were to climb by 2 percentage points from here the price of the fund would fall somewhat less than 5%. That would mean the interest earned would just make up for the share price decline in a year. But, yields would rise by 2 percentage points. Actually the investor would make money the first year, and make about 6.7% the second year. Bond funds protect a portfolio if duration is controlled as in Vanguard funds, and if there is negligible credit risk as there is.

Subject: Why Bonds Funds From: Terri To: All Date Posted: Mon, Mar 28, 2005 at 07:28:30 (EST) Email Address: Not Provided Message: Later I will expand, but I can find no time since 1970 when moderate to low duration bond funds would not have sheltered a portfolio. We can think through this finding this day.

Subject: Using Bond Funds for Balance From: Terri To: All Date Posted: Mon, Mar 28, 2005 at 06:28:11 (EST) Email Address: Not Provided Message: The portfolio concern should simply be how to be properly conservative. The answer would seem to be fairly low duration bond funds to balance stock funds. This safety factor is continually ignored to investors peril.

Subject: CFR congress From: johnny5 To: Terri Date Posted: Mon, Mar 28, 2005 at 07:11:46 (EST) Email Address: johnny5@yahoo.com Message: The audio link a few posts down is worth listening too Terri, they get deep down and personal what they are doing with thier private wealth, one says gold, one says short the dollar, one says foreign equities, I didn't hear any of them say domestic bonds - they are highly educated 30 year veterans at the macro level - please listen, as you will GAIN a lot of context lost in just reading the transcript: http://www.cfr.org/pub7915/cfr/2005_corporate_conference.php jump to about 57 minutes into the broadcast for thier answers: http://www.cfr.org/pubs/streams/2005/3-11-05_Dollar.mp3 World Economic Update: Wither the Dollar Steven Roach, J.P. Morgan Chase and Company Ethan Harris, Lehman Brothers James Grant, Grant's Interest Rate Observer Daniel Tarullo, Georgetown University Law Center Listen to the Audio Transcript http://www.cfr.org/pub7959/james_p_grant_stephen_roach_ethan_harris/whither_the_dollar.php GRANT: On Asian currencies, the value of which is being suppressed through the most strenuous central bank action, and also on gold, which has a great advantage of not having a finance minister to protest against its rising value. [Laughter] .....QUESTIONER: I'm Roger Kline. First question is, are each of you short the dollar in terms of your personal balance sheet, and if not, why not? That's one question. TARULLO: OK. QUESTIONER: I'll hold the second one. TARULLO: You guys want to answer that first. UNKNOWN: Yeah. TARULLO: Ethan? Now if those are mostly-- HARRIS: I had it-- TARULLO:--mostly yen--mostly yen [inaudible]-- HARRIS: I was carrying a 5,000 yen note in here but it seems to have disappeared. QUESTIONER: No, I'm curious. You just made a compelling argument. You're all more or less in agreement, I want to see if you have the strength of your ostensible convictions or whether actually-- UNKNOWN: I've been-- QUESTIONER:--there's not that much going on. UNKNOWN: I'm involved as a general partner in a fund that invests in Japanese equities, and we hedge half of our exposure. So we have great confidence in our corporate analysis, in our security analysis, we have a little less confidence in macroeconomic stuff. So we are--we used to hedge--we used to hedge 100 percent of our exposure, we now hedge 50 percent. And personally, gold. UNKNOWN: Yeah. HARRIS: I talk the talk, but don't walk the walk. I don't have any real--I mean, in terms of--there's nothing significant in my own personal portfolio. The--I am very conservative right now in my investments, I'll say that much. UNKNOWN: But they're dollars. UNKNOWN: But they're in dollars. QUESTIONER: OK. TARULLO: I'm told by my broker that I am overweighted in foreign-denominated assets. UNKNOWN: Yes. [Laughter] QUESTIONER: Yes, what? UNKNOWN: Yes, he's short the dollar. QUESTIONER: Is he really? And that's short the dollar on your balance sheet. UNKNOWN: Yeah.

Subject: CEO's pressuring Bush and Snow for Decline From: johnny5 To: johnny5 Date Posted: Mon, Mar 28, 2005 at 07:25:44 (EST) Email Address: johnny5@yahoo.com Message: QUESTIONER: Yeah. Thanks. Roger Kubarych, Council and HPB Group. Why are corporate CEOs of the largest companies so inept at getting their views across to a Republican administration about the dollar? Case in point [inaudible] just left, but she'll remember February 22nd, Financial Times, speech the day before by [Rick] Wagoner, the CEO [chief executive officer] of General Motors, blasting the administration's foreign exchange policy toward the dollar. It also is a company whose bonds, as Jim can verify, are now trading at yields that are close to junk bond yields. And as Ethan can verify, Lehman has changed the rules for the calculation of which company's bonds can go into their corporate bond index--first time I've ever seen such a move--to make it easier for companies like that, should they get downgraded, to stay in the bond index. I've--these are three dots to be connected. TARULLO: Roger, when you talk about--you talk about dislike of administration--you said foreign exchange policy-- QUESTIONER: That's what [inaudible]-- TARULLO:--do you literally mean foreign exchange policy? QUESTIONER: No. Wagoner's speech was all about the dollar, that the dollar was being allowed to be too strong, that the administration had not criticized the--all of this, what do you call it--manipulation through foreign exchange intervention. It was a first-class blast at the administration. TARULLO: And was that--was the--either the text or the subtext to push China more? QUESTIONER: And Japan. He's more worried about Japan than Korea - TARULLO: They want them to sell their U.S. government security. QUESTIONER: He wants to see the dollar down like [Institute for International Economics Director] Fred Bergsten wants to see the dollar down. And many other CEOs want to see the dollar down because they're not making any money. If you look at the GDP figures, the car industry in the U.S. hasn't made any operating income in five years. The reason why the companies still have net cash flow is because they run banks, finance companies, GMAC [General Motors Acceptance Corporation], Ford Motor Credit. But operating income of U.S. auto--just look at the GDP accounts: negative for five years. So that's a troubled sector, that's the casualty of the strategy of having a very high dollar relative to a situation where you wouldn't buy so many foreign cars or foreign car parts, and you'd have a smaller current account deficit. But where we are now has a legacy. It got here and it got here through a process of essentially subsidizing the housing market with very low interest rates. Each one of your guests has said that. And we've had a housing boom which has allowed high consumption and we've had a manufacturing sector that employs a couple million people less than they used to. UNKNOWN: Well, I guess John Snow is supposed to be here, right? [Laughter] TARULLO: He's off pitching social security privatization. [Laughter] QUESTIONER: I don't agree with what the administration's policy [is] on the dollar, but I'd said--I'd say two things. One, they--there--Snow's own belief as he told me personally is that at this stage it's counterproductive to push China. And it's better off to kind of go softly with them and hopefully the revaluation will occur. They don't react well to being pushed too hard. That's what he said. I'm just representing him here. The other view that you might accept is that to come out and say we have a weak dollar policy might be disruptive financial markets, so better to stick to the old mantra we've got a strong dollar even though it drops every year, and we don't do anything to stop it, but we've got a strong dollar policy because you don't want the disruptive adjustment. But I agree with your premise, which is that it's time to get on with the adjustment. If I was the treasury secretary, I'd in a very subtle way be changing my language around the dollar. Not come out and say we've got a disaster here, time to sell, but more kind of, let's let the markets find a sensible level for this - UNKNOWN: But wait. I mean, Roger, I mean, it hasn't--the dollar's down [inaudible] at 15 percent, three years, the administration's let it--you know, they've played ball. I mean, every once in awhile, you know, the president says something out of the other side of his mouth, but the general philosophy of the strong dollar rhetoric that has driven at least the official statement of the U.S. currency policy has been tolerant of market-driven declines in the currency, and I think--I'm not going to sit--and I'm the last person to defend the administration, but I think if they saw another 5 percent a year for another few years they--that would be the objective or the thing they really want to forestall, because there are consequences as if the dollar's decline gets out of hand and spills over into other asset classes that--which threaten the asset-dependent U.S. economy. But, I think that--you know, Snow is a CEO--a former CEO, and I think he understands the story and is constrained as to how far he can take the rhetoric, but I think he has certainly taken the stance that has not resisted the dollar's, what he would say, orderly decline.

Subject: Group Medical Insurance Access From: Terri To: All Date Posted: Mon, Mar 28, 2005 at 06:18:07 (EST) Email Address: Not Provided Message: I have found no ready access to group medical insurance for households with no work coverage that also do not qualify for Medicaid. We should discuss alternative coverage if we are aware of such alternatives. The problem is broad and daunting, and little discussed at present.

Subject: New ad in Tampa for NASE From: johnny5 To: Terri Date Posted: Mon, Mar 28, 2005 at 06:55:39 (EST) Email Address: johnny5@yahoo.com Message: Ehealthinsurance.com is the easiest I have found: One AD I heard yesterday said you could get NASE (self employed) insurance - you start a small home based business with your spare time, business license cost maybe 50 bucks a year and then get this GREAT insurance, only reading here the insurance aint so great: http://freelance-seattle.net/discuss/insurance/nase.shtml 'The NASE is continually researching quality benefit programs for you. Your membership in the NASE makes it possible for us to negotiate valuable benefits at competitive rates.' --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- -- FS-Discuss Responses regarding this insurer: It's not the most inexpensive, but association membership has additional benefits. I am still looking for other alternatives, though, and would be interested in hearing about what you have found so far. I met one of their agents at a business networking meeting The lead story in yesterday's Wall Street Journal was 'Nonprofit Groups That Tout Insurance Have Hidden Links: Associations That Offer Deals Are Often Set Up by Insurers; Rate Boosts Come Later.' The main example they use in the story is the NASE, which was started up by the same guy who launched an insurance company called UICI. He founded NASE only a year after UICI. UICI is the sole insurer endorsed by NASE. So one way of looking at the NASE is that it's simply a sales channel for UICI. There are several troublesome revelations about NASE's health insurance in the story. Their policies are convoluted and offer inadequate coverage ($300 to $400 a day for hospital room and board, for example, while the average cost is more like $700). A former UICI manager says that 'They are training agents to trick the consumer' (altering benefit information in their sales materials, for example). And there are many anecdotes about dissatisfied customers. A sidebar to the story offers these tips for sorting out the ties between nonprofits and insurers: Be wary of associations that charge high enrollment fees ($100 or more). Ask whether a portion of association dues are paid to insurance agents for enrolling members. Ask the insurer if the same policy endorsed by the association is available to the general public. If so, joining the association may not be necessary. There is much more good info in the story. If you're thinking about joining an association to get a good deal on health insurance, it's probably worth a trip to your local library to read the whole article: 'Nonprofit Groups That Tout Insurance Have Hidden Links,' Wall Street Journal, November 21, 2002. I found NASE's insurance to be a waste of money too. They never paid a single claim... even trips to the emergency room were declined. I finally got tired of fighting them and cancelled the insurance. Had NASE's [National Assn of Self-Employed] insurance before that and wouldn't advise using them. I paid for every single thing out of pocket, even routine dr's visits! I had insurance from NASE for a couple of years. I switched to NASE when Regents dropped individuals like hot potatoes. The NASE insurer was MEGA Life & Health. I paid $185 a month, which included a monthly NASE membership fee. I used their legal service once, but none of the other member services. I remember the NASE insurance sales rep was very, very aggressive, on the phone and in person. In the sales pitch, she implied that a hospital would accept $300 a night, even though their stated rate is $700, because Blue Cross and Blue Shield have negotiated $300 a night rates with hospitals. 'Implied' is the key word, because in retrospect she never made that statement outright. The sales pitch was very polished, right down to the almost total lack of printed materials. A sign of a highly trained sales pro is when they can make a convincing presentation without brochures or slides. (Even Dale Carnegie's professional sales program recommends some props.) She used a legal pad, and left none of her notes and diagrams behind. Only the forms and such were printed. I had NASE's insurance for a couple of years, and never needed it. Their coverage was very flexible, allowing me to shape my own major medical/hospitalization plan. I paid basic office visits, etc., to keep the rate down. My partner and I just switched to a Regents group plan, and got whacked with the same 60% rate increase as everyone else. Now we're looking into alternatives. I know that other 's-corps' can get insurance thru them. * I get health insurance through NASE, of which I'm a member, and I pay about $135 a month.

Subject: There will be No Trade War From: Terri To: All Date Posted: Mon, Mar 28, 2005 at 06:17:28 (EST) Email Address: Not Provided Message: There are always protectionist bills floating about Congress, for legislators need to respond to various local interests, but there is no chance of a serious effort to tax imports from China. There are always trade conflicts but there will be no trade war with China or Mexico or Canada or Europe or Japan. The possibility is not there.

Subject: The root of all evil - love of what? From: johnny5 To: Terri Date Posted: Mon, Mar 28, 2005 at 06:57:41 (EST) Email Address: johnny5@yahoo.com Message: You believe that rich people with greedy intentions cannot influence our government or policy, that multinationals with deep pockets and labor unions with hungy mouths cannot get the administration to jump - I don't share your belief Terri.

Subject: Council on Foreign Relations slam dollar From: johnny5 To: All Date Posted: Sun, Mar 27, 2005 at 23:12:03 (EST) Email Address: johnny5@yahoo.com Message: http://www.cfr.org/pub7915/cfr/2005_corporate_conference.php Listen at the audio World Economic Update: Wither the Dollar Steven Roach, J.P. Morgan Chase and Company Ethan Harris, Lehman Brothers James Grant, Grant's Interest Rate Observer Daniel Tarullo, Georgetown University Law Center Listen to the Audio Transcript

Subject: Elite Protectionists = who protects Pete From: johnny5 To: All Date Posted: Sun, Mar 27, 2005 at 22:15:55 (EST) Email Address: johnny5@yahoo.com Message: Pete who will protect me and you? Elite Protectionists by William Greider http://www.thenation.com/doc.mhtml?i=20050411&s=greider A man-bites-dog story of momentous implications is unfolding in Washington: The US multinational establishment, having successfully championed free-trade orthodoxy for decades, may now be flirting with protectionist heresy--a stiff tariff against China to stanch America's hemorrhaging trade deficits. Fred Bergsten, the multinationals' leading economic authority, warns that the United States is in 'big trouble,' taking on foreign debt beyond anything any industrial nation has experienced and comparable to Mexico and Thailand just before they crashed in the 1990s. Bergsten, director of the Institute for International Economics, is lobbying elite circles to demand decisive action by the Bush Administration--an 'import surcharge' as high as 50 percent on all Chinese imports--to avert financial meltdown. Meantime, a bipartisan group of senators--nine Democrats, five Republicans--has introduced Senate Bill 295, which targets China with a 27.5 percent tariff. Charles Schumer, the lead sponsor, calls it 'a tough-love effort.' The co-sponsors include Democratic minority leader Harry Reid and, more surprising, Hillary Clinton, a longtime free trader close to financial leaders like former Treasury Secretary Robert Rubin, now an executive at Citigroup. The bill lets politicians express solidarity with constituents who lost their jobs, without offending big hitters. Conceivably, we could be witnessing the start of a break from the era of US-led globalization in which Washington preached unfettered trade to the rest of the world. Now it is America that needs protection, its trade deficits swollen to more than $600 billion a year, its capital borrowing from abroad approaching 7 percent of GDP. Bergsten predicts that, unless there is dramatic action, the deficits will keep rising until something truly awful happens to the US economy and, therefore, the global economy too. Bergsten, Assistant Treasury Secretary in the Carter Administration, is a high-church free trader offended by the protectionist label. His institute's board of directors includes heavyweights from Citigroup, Morgan, United Technologies, ChevronTexaco and the Carlyle Group, plus former Federal Reserve chairman Paul Volcker, David Rockefeller and Jean-Claude Trichet. Alan Greenspan is listed as an 'honorary director.' Improbable as it sounds, Bergsten insists he is freelancing this explosive proposition. 'The big companies and financial firms are not goosing China,' he told me. 'They all like the status quo and are very much in disagreement.' He does acknowledge, however, heightened anxiety among financiers about America's swollen debt position. The declining dollar has not reversed the US trade deficits, as experts like Bergsten had predicted, and it must fall much further to do so. 'Wall Street,' Bergsten explains, 'faces a risk of precipitous decline--an overshooting free fall that would shatter confidence, drive US interest rates toward double digits and crash equities à la Black Monday in 1987.' The multinational club does not intend to abandon free-trade dogma. Bergsten's strategy--threatening tariffs--is meant to bluff China and other Asian nations into letting their currencies appreciate and allowing the dollar to fall much further so the US trade deficits will shrink, at least enough to avert a financial crisis. The strategy is also designed to light a fire under George W. Bush. 'It is virtually inconceivable,' Bergsten wrote in the Financial Times, 'that the Bush Administration could skate through four more years without addressing these issues decisively.' In a sense, Bush is being handed a weapon to use to intimidate the trading partners: Work out a deal with us or protectionist politics may engulf us all. Schumer's bill provides for a six-month negotiating period-- time enough for Beijing to relent--before the ax would fall (other Asian nations can't move on currencies unless China does because they'd lose their own export sales to Chinese goods). Bergsten has worked out a clever but strained rationale for how his import surcharge defends free trade: China and the others, he says, are manipulating their currencies to gain trading advantage. But all important nations manage their currencies for economic advantage; furthermore, during the 1990s, American experts encouraged developing nations to peg their currency to the dollar, exactly what China's doing now. Bergsten argues that the United States should take his accusation to the IMF and WTO, but the threat seems hollow since such a case would take years. The bleeding is now. Waving the tariff 'stick' to pressure others can be risky, however. When Bergsten presented his case before the Council on Foreign Relations in February, financier and former Commerce Secretary Pete Peterson sounded in agreement but cited the risks. 'I don't suggest using sticks lightly,' he said. 'They're a very dangerous thing to get started because they can result in retaliation and so forth.' But they can also work, Bergsten responded. 'Absolutely,' Peterson said. These events also pose a large domestic political risk for the multinationals: When 'responsible' players break the taboo and talk up tariffs, it could ignite a more honest public debate on globalization. The major news media seem not to have noticed that Democratic leaders and some conservative Republicans are waving the big stick. The establishment probably prefers that this remain an inside-the-Beltway story. Why confuse the public with front-page stories explaining that tariffs are actually useful and legal? Organized labor and others should make sure this story becomes big news. People might begin to ask deeper questions. If free-trade agreements are the road to greater US prosperity, how did the United States wind up in this deep hole? If the government is willing to invoke the tariff weapon to protect US financial interests, why can't it use it to protect US workers and jobs? Why does US trade policy serve the multinational interests but not the nation as a whole? The trade crisis is a new opening in politics, but its origins are bipartisan, spawned by Republican and Democratic Presidents adhering to the orthodoxy. Imagine if John Kerry had had the nerve last year to talk about an emergency tariff to protect America. He might have carried Ohio.

Subject: Scary stuff From: Pete Weis To: johnny5 Date Posted: Sun, Mar 27, 2005 at 23:37:45 (EST) Email Address: Not Provided Message: This is just the kind of thing we were supposed to avoid, because we had learned our lessons from the 30's. Somehow trading partners were supposed to be able to work things out for mutual benefit since we were all aware of the trap of tit for tat trade wars. But here we go once again. Everybody loses but who stands to lose the most. Who will blink first. We put 27-28% tarriffs on Chinese goods and inflation begins to skyrocket as if it isn't a problem already with oil rising steadily. Will the Chinese begin to dump US treasuries? Will this cause a panic away from the dollar? The Japanese would have to reconsider their support for the dollar. Maybe Roubini and Volker are right - perhaps the crisis is close. These tariffs if they go into effect will force the issue. Think the risk of a bond market and dollar panic are rising steeply. Those New Zealand CD's are looking much more appealing.

Subject: Bhagwati on Corruption From: johnny5 To: Pete Weis Date Posted: Mon, Mar 28, 2005 at 05:11:19 (EST) Email Address: johnny5@yahoo.com Message: This guy is a senior fellow with the council on foreign relations - he is an international trade expert - he is on thier front page today www.cfr.org - he was Krugmans teacher - this is what he has to say about protectionism - over on the silicon investor boards someone asked why would they implement a tariff to save 500 underwear jobs in the USA - I don't think they would do it to help the little guy Pete - but to make the rich richer: http://www.columbia.edu/~jb38/Protectionism_Encyclopedia of Economics.pdf Many economists also believe that even if protection were appropriate in theory, it would, in practice, be 'captured' by groups who would misuse it to pursue their own narrow interests instead of the national interest. One clear cost of protection is that the country imposing it forces its consumers to forgo cheap imports. But another important cost of protection may well be the lobbying costs incurred by those seeking protection. These lobbying activities, now extensively studied by economists, are variously described as rent-seeking or directly unproductive profit-seeking activities. They are unproductive because they produce profit or income for those who lobby, without creating valuable output for the rest of society. the U.S. government took an antidumping action against Poland's exports of golf carts, even though no golf carts were sold in Poland. U.S. rice producers got a countervailing duty imposed on rice from Thailand, for example, by establishing that the Thai government was subsidizing rice exports by less than one percent—and ignoring the fact that Thailand also slapped a five-percent tax on exports. Protectionism arises in ingenious ways. As free trade advocates squelch it in one place, it pops up in another. Protectionists seem to always be one step ahead of free traders in creating new ways to protect against foreign competitors. One way is by replacing restrictions on imports with what are euphemistically called 'voluntary' export restrictions (VERs) or 'orderly' market arrangements (OMAs). The United States could have kept Japanese car imports in check by slapping a tariff on them. That would have raised the price, so that consumers would have bought fewer. Instead, the Japanese government limited the number of cars shipped to the United States. Since supply was lower than it would have been in the absence of the quotas, Japanese car makers were able to charge higher prices and still sell all their exports to the United States. The accrual of the resulting extra profits from the voluntary export restraint may also, ironically, have helped the Japanese auto producers find the funds to make investments that made them yet more competitive. HAHA! where have we heard this before? Bush and friends doing things to help themselves while telling the little guys its in their best interests?

Subject: No way to escape...... From: Pete Weis To: Pete Weis Date Posted: Mon, Mar 28, 2005 at 00:16:21 (EST) Email Address: Not Provided Message: our present predicament without a lot of pain. The Chinese may not want to yield to such a public threat and once the US starts down this road it can't easily back down - it will have to go ahead and institute the tariffs. Either way you look at it this means higher interest rates - perhaps much, much higher. Not good for an economy so heavily dependent on its housing market.

Subject: Re: No way to escape...... From: Pancho Villa To: Pete Weis Date Posted: Mon, Mar 28, 2005 at 17:30:35 (EST) Email Address: nma@hotmail.com Message: What is 'protectionism' (in the traditional sense of this term) ? and why does 'protectionism' exist ?

Subject: Re: No way to escape...... From: Pete Weis To: Pancho Villa Date Posted: Mon, Mar 28, 2005 at 20:39:18 (EST) Email Address: Not Provided Message: Protectionism, traditionally is a political reaction to public demand for job protection. Protectionism exists because politicians wish to get re-elected. In this case, however, the tariffs, which are threatened are meant to get China to float its currency and have a twofold target - 1)reduce to some extent, the disparity in wages between China and American workers and 2)by increasing the cost of Chinese labor (presumably if the Yuan rises against the dollar) and Chinese goods, a reduction in our trade deficit with China. I'm not so sure China pegs it currency to the dollar soley for the reason it wants an edge in trade with the US. It has a very shaky financial system according to many published accounts, and from past experience the Chinese are fairly nervous about the solvency of their currency. It's certainly questionable whether a depegging of the Yuan will actually have much real benefit for the overall current account deficit. Threatening tariffs and then implementing them in the event the Chinese don't cave will almost guarantee retaliation - cancelation of contracts to buy boeing aircraft, agricultural goods, etc. and perhaps ending its participation in the continuation of Bretton Woods II. There is no certainty, here, that political leaders on either side will act rationally when they start to pound their chests in public. If history is any guide these things escalate - they don't fade away. So is this high risk for little benefit and are the Chinese really to blame for our economic troubles?

Subject: Another viewpoint From: johnny5 To: Pete Weis Date Posted: Mon, Mar 28, 2005 at 20:53:53 (EST) Email Address: johnny5@yahoo.com Message: After reading bhagwati and bergsten and listening at the CFR corporate conference - they all were in agreement that it was US CEO's and businesses that are gonna be the real powerhouse behind this legistlation, not 500 unemployed grandma millies in the middle of indiana. Remember as the previous article said: But all important nations manage their currencies for economic advantage; furthermore, during the 1990s, American experts encouraged developing nations to peg their currency to the dollar, exactly what China's doing now. Bergsten argues that the United States should take his accusation to the IMF and WTO, but the threat seems hollow since such a case would take years. The bleeding is now. See you got to be careful what you wish for - they wanted profit, cheap labor was the means to the end - they instructed China how to manage things so they could make MORE PROFIT, and china was TOO SUCCESSFUL and now not wanting to listen to them and they don't like that china is not playing nice now and minding like a good dog - bad bad dog. What is China to do? The wests experts told them to peg the yuan and take all our factories and jobs so labor will be cheap and the multinationals will make mega profit, but now China taking their tech and profit for themselves and megacorp not happy anymore.

Subject: In china From: johnny5 To: johnny5 Date Posted: Mon, Mar 28, 2005 at 20:59:05 (EST) Email Address: johnny5@yahoo.com Message: megacorp and gubbment one in the same no? In the US its increasingly that way too - so we break the back of the poor US citizen and consumer to make megacorp china give in so that megacorp US make the dough, if they are smart - they will break the back of both thier respective citizens so that richie in US and China laugh all the way to central bank. Confucious say man that run behind car get exhausted. Man that run in front of car get tired.

Subject: Japanese Dollar Holdings From: Terri To: All Date Posted: Sun, Mar 27, 2005 at 19:45:27 (EST) Email Address: Not Provided Message: There will be no change in Japanese private investor dollar policy until the Japanese or Chinese governments change position. Nothing else matters. Positions are routinely hedged for 1 or 2 years, and corporate liquid assets are already diversified. Speculators can move at any time, but that will not stop the Japanese central bank from buying dollars.

Subject: This is an irrelevant event? From: johnny5 To: Terri Date Posted: Sun, Mar 27, 2005 at 20:49:09 (EST) Email Address: johnny5@yahoo.com Message: Dollar Declines After Koizumi Says Japan May Consider Diversify Reserves March 10 (Bloomberg) -- The dollar dropped in Asia after Japan's Prime Minister Junichiro Koizumi said his country ``in general' needs to consider diversifying the investment of its foreign reserves. Japan needs to make an ``overall judgment' on how to invest reserves by considering the stability of such investments, he said today at the budget committee of the upper house of the Parliament in Tokyo. The dollar fell 1.4 percent against the euro and the yen on Feb. 22 on a report South Korea's central bank will diversify its currency reserves, a comment clarified by the country later. ``Koizumi's remarks led to concern the money will move away from the U.S. dollar assets, leading to the dollar selling,' said Minoru Shioiri, senior manager of the treasury and foreign exchange division in Tokyo at Mitsubishi Securities Co., a unit of Japan's second-biggest lender. The dollar may fall to near 103 yen today, he said. The dollar dropped to $1.3412 against the euro as at 11:45 a.m. in Tokyo from $1.3391 late yesterday in New York, according to electronic currency-dealing system EBS. It traded at 103.94 yen from 103.93. http://www.bloomberg.com/news/markets/currencies.html

Subject: Re: This is an irrelevant event? From: Terri To: johnny5 Date Posted: Sun, Mar 27, 2005 at 21:03:44 (EST) Email Address: Not Provided Message: This was clearly a mistake and irrelevant. The Yen has been remarkably stable against the dollar. I am thinking, but when such comments are made they tell us nothing about planned currency shifts. Not yet, not yet.

Subject: Simple Explanations From: johnny5 To: Terri Date Posted: Sun, Mar 27, 2005 at 21:13:00 (EST) Email Address: johnny5@yahoo.com Message: Clearly a MISTAKE? You think MISTAKES like that are made at that level and such things are said without teams of japanese bankers and economists letting the PM know what that means and he did it our of foolish ignorance? Huh, if our numero uno dude George Bush came out and said time to dump all your US dollars you would blow that off as a mistake?? Terri, we will have to agree to disagree on this one, you see it as a non-event that asians will consider as a mistake, I see it as a relevant forecast the japanese investors will take to heart. AS emma said - why let us KNOW? I don't think he said that as a MISTAKE, maybe as a warning to greenspan, maybe as a warning to china, maybe as a warning to his own citizens, but a mere MISTAKE? You don't really think it is that simple do you?

Subject: Consumption Limited by Production From: johnny5 To: All Date Posted: Sun, Mar 27, 2005 at 19:05:33 (EST) Email Address: johnny5@yahoo.com Message: Bugwhati says we are all going up. Schiff says this: Without such status, America's consumption would be limited by its own production, and its borrowing confined by its domestic savings. In such a world, Americans would have a standard of living far lower than the one currently enjoyed. --- -So given warren believes the foreigners will stop sending us SHINY TOYS or giving us MONEY for nothing since all we produce is DEBT, how can we do anything but FALL? I don't understand why many think we can sell the farm, and its ok because the people that own it will never kick us off it to put in some tenants who have real income to pay?? I had a friend who bought grandma millies house, section 8 here in FLA, so she could buy nice stuff and eat well and he rented it back to her, well grandma millie stopped paying him when the money ran out cause she liked macy's in international plaza, He booted grandma millie and put in a paying tenant. She had to come out of retirement and get a job at mcdonalds and lives in a dump now - but this can't scale to a national or global level? http://prudentbear.com/archive_comm_article.asp?category=Guest Commentary&content_idx=41560 http://www.siliconinvestor.com/readmsg.aspx?msgid=21159699

Subject: The Balance of Trade From: Terri To: All Date Posted: Sun, Mar 27, 2005 at 13:59:32 (EST) Email Address: Not Provided Message: Can the balance of trade be easily strengthened? America can reduce its demand for foreign savings by increasing taxes, cutting government spending, or raising interest rates. Republicans in Congress and the President have pledged to cut taxes not increase them. I can not imagine this Congress raising taxes. There are simply too few discretionary spending cuts possible to make much difference for the budget. That leaves interest rates increases. The Federal Reserve has been raising short term interest rates, but I can not imagine the Fed would force a recession to lower consumption enough to significantly reduce the demand for foreign savings. The argument then is the problem almost certainly continues and worsens, since Europe and Japan are not significantly increasing demand for American exports and China is not about to dramatically increase the value of the Yuan.

Subject: Private Japanese Bond Holders From: johnny5 To: Terri Date Posted: Sun, Mar 27, 2005 at 18:14:26 (EST) Email Address: johnny5@yahoo.com Message: As was posted earlier, the central banks will toe the party line, but private japanese bond holders can end the party if they find better investments, if japanese real estate and equities have finished bleeding - they will pull the plug and start investing at home. Here in my local city, hyundai, kia, honda, and toyota have built BIG new car lots and seem to be selling them hand over fist while GM goes down the tubes. http://globaleconomicanalysis.blogspot.com/2005/03/its-totally-new-paradigm.html And if you look at the chart there, it looks like japanese real estate is near the bottom of the bleeding, sell high, buy low, get rich. Sell that us stuff, but that tokyo stuff, and laugh all the way to the central bank no?

Subject: Re: Private Japanese Bond Holders From: Terri To: johnny5 Date Posted: Sun, Mar 27, 2005 at 18:55:35 (EST) Email Address: Not Provided Message: Japanese private investors could become more active in Japan especially in real estate, but whether the deflation is ending will not be clear to them for a while and there is no indication the Yen will be allowed to appreciate. Likely, not for a while will there be a change in investment. There has been no event to push a change.

Subject: Dollar Dumpage From: johnny5 To: Terri Date Posted: Sun, Mar 27, 2005 at 19:26:51 (EST) Email Address: johnny5@yahoo.com Message: I thought Pete made it clear the asian circle of buddies successively announcing they were going to dump dollars or at least stop buying large amounts of them was concern enough for them? This was not the event to change asian investor sentiment?

Subject: 'The Party's Over' From: Pete Weis To: All Date Posted: Sun, Mar 27, 2005 at 12:40:08 (EST) Email Address: Not Provided Message: The Party's Over Joachim Fels (London) Bear market in bonds… The bear market in bonds is now a little more than a month old. It all started with a shockingly large increase in US January core producer prices and Federal Reserve Chairman Greenspan’s “conundrum” comments (please see my piece entitled “The End of the Bond Rally” in Alpha Strategies, 23 February 2005). Since then, US 10-year Treasury yields have backed up by more than 60 basis points, to 4.62% at the time of writing, driven largely by an upward revision in investors’ inflation expectations and, most recently, a more hawkish Fed statement following the 22 March Federal Open Market Committee meeting. I continue to think this bear market in bonds has much farther to go, and I see yields breaking through the 5% level eventually. … has reached risk assets. In the initial phase of the bond sell-off in late February and early March, the riskier fixed income assets such as corporate bonds and emerging markets continued to outperform. But that’s over now. Risk spreads have widened out, both in corporate land and in emerging markets, with the General Motors profit warning last week serving as the trigger for the risk-reduction trade. Investors’ appetite for risk, which had been huge, appears to be on the wane. We are now witnessing the spreading of the bear market in government bonds to riskier fixed income assets, which have started to underperform. As I see it, this is the beginning of a major bear market in virtually all fixed income assets. Of course, this bear market will not proceed in a straight line. There are still many investors who see the glass as half-full rather than half-empty. They argue that what we are seeing right now is merely a healthy correction of previous excesses and that the fundamentals are still good: The world economy is growing strongly, GM’s plight is an isolated event, and inflation will remain well-behaved, or so the story goes. Thus, many investors who missed the previous rally may see a sell-off as a buying opportunity, which could spark occasional rallies. Sell on rallies. By contrast, I think the glass is not half-full but half-empty, and I would use occasional rallies to sell. In my view, the recent sell-off in fixed income is the beginning of something larger: Rising risk aversion should lead to a further unwinding of speculative positions, and, most importantly, economic fundamentals, which have been largely favourable so far, should deteriorate markedly in the course of this year. The core of my bearish view is stagflation. As I have explained before, I think strong global growth will give way to relative economic stagnation. And I believe that US inflation is headed significantly higher. Stagflation results from super-expansionary demand policies, on the one hand, and negative supply shocks, on the other, and what I have in mind here is negative shocks from rising commodity prices and from slowing productivity -- exactly what we are experiencing at this moment. Stagflation is bad for most asset classes, and deteriorating fundamentals and falling asset prices should mutually reinforce themselves. So, the virtuous cycle of improving economic fundamentals and rallying markets could turn into a vicious cycle, in my view. But excess liquidity should be a mitigating factor. I look for a continuing rise in bonds yields and also a widening of risk spreads over the balance of this year. I’m not mega-bearish, though, because I think there is one important mitigating factor: excess liquidity. If I’m right on stagflation, then central banks, led by the Fed, will probably abandon their tightening campaign later this year. This would keep liquidity abundant and should eventually contain the damage to financial markets. But, again, a precondition for a change in the Fed’s policy stance is a significant slowdown in US economic growth, which has remained elusive so far. Europe: outperformance in the bear market. European fixed income markets have been unable to decouple from the US bear market, but yields have risen less strongly than they have across the big pond. In line with expectations, the transatlantic government bond yield spread has widened further, approaching our target of 100 bp in the ten-year sector. In my view, there is room for an even larger widening. While economic growth in the euro area probably rebounded in Q1, the signals from the forward looking indicators such as the March Ifo survey point to a renewed slowing in 2Q. The rise in oil prices is likely to weigh on consumer spending, and the momentum from export growth appears to be waning. Moreover, the inflation fundamentals in Europe are the mirror image of those in the US: Unit labour cost growth in Europe is decelerating, and the past euro appreciation is still working its way through to consumer prices. Enter the ECB? Against this backdrop, the European Central Bank still looks unlikely to rush into a rate hike anytime soon, despite the relatively hawkish recent rhetoric. Yes, excess liquidity, asset price inflation, and the return of virtually uninhibited fiscal policy discretion through the so-called reform of the Stability and Growth Pact are worrying euro area policymakers. (As an aside, they also worry me a lot, which is why I will again vote for a 25 bp rate hike in the forthcoming ECB Shadow Council meeting.). However, I continue to think that the ECB will want to see a return of economic growth to around its trend pace in both 1Q and 2Q before addressing these issues. With the clouds over 2Q growth building up, excess liquidity is here to stay for quite a while longer. Thus, European bonds look likely to continue to outperform US bonds.

Subject: Re: 'The Party's Over' From: johnny5 To: Pete Weis Date Posted: Sun, Mar 27, 2005 at 19:37:19 (EST) Email Address: johnny5@yahoo.com Message: Great article Pete. Ok so do we jump into euro markets and bonds at this point? More pimco commodities? What does this information make you want to do with your portfolio?

Subject: The Dead Kennedy's From: johnny5 To: All Date Posted: Sun, Mar 27, 2005 at 10:47:24 (EST) Email Address: johnny5@yahoo.com Message: Just last night on NPR I heard a story about a lawsuit with this anti government anti war musical group during the culture wars of the 80's, and how 2 former enemies reached out and made friends. I just watched the Do-gooders speech on C-span2. She said although the liberals did great things in the 60's what they have become with people like hillary clinton is a far cry from what they once were and that NY and its increasing crime are a reflection of how liberalism has failed in that city? THat while mayor rudy was being accused of racial profiling there was s reduction in murders by 2,000 a year. She says the soviets collapsed from the cold war and reagan and gorbachev were key figures with republican breaking them by outspending them. I thought they collapsed because the melting pot over there wasn't mixing so well and people got tired of the corruption. Why is there so much politics and so little empirical based politicism? http://www.amazon.com/exec/obidos/tg/detail/-/1595230033/qid=1111935071/sr=8-1/ref=pd_csp_1/103-8248111-3283058?v=glance&s=books&n=507846 Editorial Reviews From Publishers Weekly From its provocative title, to its headshots of liberals that conservatives love to hate (Hillary Clinton, Michael Moore, Rosie O'Donnell), Charen signals right away that she will make no attempt to bridge a widening divide. She does make an attempt to add some empirical weight to the usual vitriol of liberal bashing, however. This polemic includes over 20 pages of footnotes to back up its various claims and offers a partial bibliography for those wanting to read more written by those who share Charen's political leanings. But even with the citations, Charen's argument (over six chapters) is simple in every sense: everything that has gone bad in American society is the fault of liberal policies and the countercultural movements of the 1960s, and everything that is getting better is the consequence of the leadership of a few (visionary) politicians on the right. Charen makes frequent use of quotes from a range of people in the 'do-gooder' camp (although she seems oddly fixated on Moore, Jesse Jackson and the editorial page of the New York Times), but this is largely a cherry-picking exercise rather than a more thoughtful attempt to evaluate the core assumptions and values that guide liberal policy makers. (Jan.) Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved. Product Description: Mona Charen has a loyal following from her syndicated newspaper column (which runs in more than two hundred newspapers) and her many television and radio appearances. Her first book, Useful Idiots, was an eight-week New York Times bestseller. Now she’s back, switching her focus from foreign policy to domestic issues. Unlike some conservatives who throw verbal hand grenades, Charen never gets shrill or mean. Instead, she focuses on the facts to reveal exactly why liberals are wrong—and how their proposals hurt the very people they claim to be fighting for, as well as the country as a whole. Do-Gooders is a guide to the smug know-it-alls in politics, the news media, and Hollywood who think they know what’s best for the poor and other needy Americans. From Marian Wright Edelman to John Kerry, Hillary Rodham Clinton to Rob Reiner, this book will skewer the liberals by name. It covers topics such as: • Education: Do-gooders send their own kids to private schools while working to deny poor children a better education through voucher programs. • Affirmative Action: Do-gooders defend racial preferences at all costs while ignoring the enormous problems they create for African Americans at all levels of achievement. • Welfare: Do-gooders thought welfare reform in the 1990s would hurt the poor, and they still refuse to admit how much it actually helped. By collecting and exposing the most outrageous quotes and actions of the do- gooders, this book will become a must-read for conservatives across the country as they gear up for the next round of policy battles.

Subject: New York City From: Terri To: johnny5 Date Posted: Sun, Mar 27, 2005 at 11:24:21 (EST) Email Address: Not Provided Message: New York City has had a falling crime rate for at least 15 years, and is statistically one of the safest of all American cities. The crime rate has continued falling under Mayor Michael Bloomberg. Of course, this person is mean and deceiving.

Subject: Re: New York City From: Jennifer To: Terri Date Posted: Sun, Mar 27, 2005 at 14:05:24 (EST) Email Address: Not Provided Message: Mona Charen is always deceiving.

Subject: Blind faith prosecutors From: johnny5 To: Jennifer Date Posted: Sun, Mar 27, 2005 at 18:02:29 (EST) Email Address: johnny5@yahoo.com Message: As the blind faith prosecutor attacked the kennedys, why does Mora attack the liberals, what is her motivation? Why does new york have better crime rates than say LA or Miami - rudy's racial profiling? Why did so many people vote RED if the science shows BLUE policies are fixing the ails of our world and country? Why is economic policy not evidenced based when as even krugman admits, learning from history should be a top priorty as to not repeat it.

Subject: Re: Blind faith prosecutors From: Terri To: johnny5 Date Posted: Sun, Mar 27, 2005 at 19:05:15 (EST) Email Address: Not Provided Message: New York City voted more than 75% Democratic in this election. The policing of New York City is in far more depth and breadth than many cities. Also, police efficiency is evidently excellent. But, as for precisely why, beyond more of a police presence, evidently we do not really know. Why voting patterns are seemingly against so many people's interests, I can not tell though I wish I could.

Subject: Devilish Details From: johnny5 To: Terri Date Posted: Sun, Mar 27, 2005 at 19:30:12 (EST) Email Address: johnny5@yahoo.com Message: ANother thing I hate about her speech and dems too - she says oh - russia fell because reagan spent them to death, or the dems say, the markets were good because we had slick willie for prez - now looking back through history maybe you can argue these gross over simplfications, but this bothers me when either side pens such HUGE MACRO events on 1 person or 1 thing - certainly things are not so simple, more chaos theory study maybe?

Subject: Connections From: johnny5 To: johnny5 Date Posted: Sun, Mar 27, 2005 at 19:32:49 (EST) Email Address: johnny5@yahoo.com Message: As Pete said from that great show connections, many things have to happen for the next stepping stone to appear - gross oversimplification may serve for a small brain to get its mind around difficult concepts, but it does not really illuminate the true issues of why certain things happened. As krugman said, a theory of markets that doesn't take into account the multiple equilibria of past oil price history is worthless if you want something that can work in the REAL world.

Subject: Conundrums From: johnny5 To: Terri Date Posted: Sun, Mar 27, 2005 at 19:14:46 (EST) Email Address: johnny5@yahoo.com Message: Terri my county in Florida voted al gore last election, if you trust the polls, they voted bush this one, why I cannot tell you, it makes no sense to me - did they want the tax cuts? Was it because bush stopped here and kerry didn't? Was it because brother was running the state? Did thier political party loyalty really shift in just 4 years from all the bush success?? huh? Devil in the Details PRECISION is exactly what we need to uncover, these are far too important issues to not understand why certain things are effective in certain places and people die and starve in others. As someone who highly regards empirical evidence and science, we need more understanding of these things. How can the richies here fight for the 50 dollar steak line while people starve to death in other places, how can NY be crime free while LA is a war death zone? Why is there such disparity in a world that technology promised to make much smaller and make a man a world away as your next door neighbor? Is it that technology has failed on it's promises? It would seem to me whatever makes NY work in this day and time of cell phone and computer power could easily be uncovered and applied to the areas that need to emulate the model.

Subject: El Salvador and Lesotho: Regionalism From: Terri To: All Date Posted: Sun, Mar 27, 2005 at 10:31:58 (EST) Email Address: Not Provided Message: What then could be an answer for the currency induced development difficulties that are being experienced in El Salvador and Lesotho? The problems of the copuntires differ, for the first has a currency peg to the dollar which is losing value and the second currency is pegged to the South African Rand which is gaining value. An answer to both appears to be regionalism. The broader based are currency linkages, the less trade will be effected by regional currency differences. Central American and Southern African currency unions would insulate the partners from trade disruptions caused by abrupt regional price changes. Also, the greater scope of regional markets would make for greater bargaining power of each partner in attracting foreign investment. In exchange for broad market access, there should be bargaining over technology transfer as China has bargained. China can offer the prospect of a vast market. Well, a trade block through Southern Africa could offer a nicely sized market as could all Central America.

Subject: Disperse the tower of Babel From: johnny5 To: Terri Date Posted: Sun, Mar 27, 2005 at 17:56:07 (EST) Email Address: johnny5@yahoo.com Message: The beast grew too great, and the head too disconnected from the cells of its body, dispersion was the answer, not more conglomeration. In ancient russia moving away to large farms FAR away from rome was the answer, not moving into the heart of the city. You are catching on Terri! Kudos!

Subject: Is your professor on the take? From: johnny5 To: All Date Posted: Sun, Mar 27, 2005 at 09:45:43 (EST) Email Address: johnny5@yahoo.com Message: Capitalist models of research are killing us!! Why are we killing our non-profit research? Just watched on Cspn2. They say the biggest difference between a university and a brothel is that in a brothel there are certain things they won't do for money!! http://www.amazon.com/exec/obidos/tg/detail/-/0465090516/qid=1111933427/sr=8-1/ref=sr_8_xs_ap_i1_xgl14/103-8248111-3283058?v=glance&s=books&n=507846 Editorial Reviews From Publishers Weekly American universities are the envy of the world, but they may be on the brink of discarding the very values and practices that have made them so successful, argues journalist Washburn, as secretive connections between private industry and the academy have begun to 'undermine the foundation of public trust on which all universities depend.' Washburn has a muckraker's keen eye for scandals and coverups; her examples of academic research suppressed in the name of corporate profits will startle readers. Not content with merely drawing back the curtains on the sordid world of the increasingly revenue-centered university, Washburn argues that the recent partnerships between schools and businesses rarely generate the financial windfall that they promise, leaving educational institutions and state legislatures with strapped resources and hollow rhetoric about creating the next Silicon Valley. While this focus on job creation (or the lack thereof) is the least sensational element of the book, it is the most timely and important, and Washburn's coup de grace is to show that even private industrial leaders and economic pragmatists like Alan Greenspan have begun to criticize the decline of traditional liberal arts education and the rise of the corporate university as economically and socially disastrous. Washburn offers a few modest and thoughtful prescriptions for saving higher education, but this book is more likely to be read for the illnesses it lucidly diagnoses. (Feb.) Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved. Product Description: How the emerging alliance between the worlds of academia and business puts our universities at risk and how this union will affect us all. Our federal and state tax dollars are going to fund higher education. If corporations kick in a little more, should they be able to dictate the research or own the discoveries? During the past two decades, commercial forces have quietly transformed virtually every aspect of academic life. Corporate funding of universities is growing and the money comes with strings attached. In return for this funding, universities and professors are acting more and more like for-profit patent factories: university funds are shifting from the humanities and the less profitable science departments into research labs, and the skill of teaching is valued less and less. Slowly but surely, universities are abandoning their traditional role as disinterested sources of education, alternative perspectives, and wisdom. This growing influence of corporations over universities affects more than just today's college students (and their parents); it compromises the future of all those whose careers depend on a university education, and all those who will be employed, governed, or taught by the products of American universities. Over the last several decades Federal and State governments, despite promises to the contrary, have gradually withdrawn much, if not almost all, support from public and private colleges and universities. As a result, institutions of higher learning have had to turn increasingly to corporate and philanthropic 'gifts' and industry contracts in order to survive and attract students and faculty. Instead of giving primary focus to training, education, scholarship and research, our colleges and universities have had to market themselves as 'products worth purchasing by the consumer --- the parents, students, donors and alumni and corporations. Both science and humanities faculty are now being encouraged to become entrepreneurs rather than merely educators and have to seek ways to profit directly from their intellectual and technical pursuits. 'University Inc' is a highly informative, well-written, if sometimes anecdotal, investigative report about the most egregious cases of commodifying higher education and of corporate influence over university polices and educational practices. It is an easy-to-read book that has been written to aggravate and challenge the reader. Sometimes it gets a bit too personal, but its a lot better read than a collection of dry data supporting the contention that universities have gone overboard in permitting the business world to dictate academic and educational policies and programs of research. Washburn's book is a 'must read' for anyone interested in the future of higher education.

Subject: If I Only Had a Hedge Fund From: Emma To: All Date Posted: Sun, Mar 27, 2005 at 09:36:26 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/03/27/business/yourmoney/27hedge.html?pagewanted=all&position= If I Only Had a Hedge Fund By JENNY ANDERSON and RIVA D. ATLAS IT seemed like an ordinary evening at Crobar, the trendy Manhattan nightclub. Two weeks ago, as Counting Crows performed on stage, young women dressed in expensive jeans pushed toward the front with their khaki-clad, mostly older boyfriends. Few, however, were regulars. On this night, the very rich and the merely rich intermingled on the club's two floors - V.I.P.'s upstairs ($1,000 a ticket) and the rest down below ($250). Most of the 1,250 people gathered for the event, the Robin Hood Foundation charity ball, were part of the city's unlikely new 'it' crowd. Richer than Wall Street rich and more willing to take risks than their traditional money management peers, they are the managers behind the staggering growth in hedge funds, those private, lightly regulated investment vehicles aimed at the ultrawealthy, the run-of-the-mill wealthy and, increasingly, the not-so wealthy. To critics, the frenzy has a very familiar ring. A flood of capital to the latest investment fad. Spectacular accumulation of wealth in a short time. New ventures created easily and often. Those, too, were the hallmarks of the dot-com boom, and, as everyone knows, the bursting of that bubble was far from pleasant. The stampede to hedge funds, some people fear, will be no different. 'It is completely obvious that this will end badly - for the firms, investors, everyone,' said Seth Klarman, founder of the Baupost Group, which manages $5 billion. 'No area of financial endeavor is immune from the effects of competition.' The numbers are mind-boggling: 15 years ago, hedge funds managed less than $40 billion. Today, the figure is approaching $1 trillion. By contrast, assets in mutual funds grew at an impressive but much slower rate, to $8.1 trillion from $1 trillion, during the same period. The number of hedge fund firms has also grown - to 3,307 last year, up 74 percent from 1,903 in 1999. During the same period, the number of funds created - a manager can start more than one fund at a time - has surged 209 percent, with 1,406 funds introduced in 2004, according to Hedge Fund Research, based in Chicago. In a way, hedge funds are to mutual funds what Evel Knievel was to weekend motorcyclists. Unlike mutual funds, which are restricted in the ways they can invest, hedge funds can use leverage, trade derivatives and bet that stocks will fall, a technique called shorting. And unlike mutual funds, which generally try to beat a market average, hedge funds seek positive returns, even in down markets. THE meteoric rise of hedge funds has had a huge impact on the markets, investment banks and investors, who increasingly include institutions like pension funds or endowments. A recent report published by Credit Suisse First Boston said that hedge funds were responsible for up to half of all activity in major markets, including the New York Stock Exchange and the London Stock Exchange. Investment banks are tripping over one another to service them. According to the same report, Wall Street made $25 billion catering to hedge funds - lending them money, trading for them, helping to structure complex derivative transactions or lending them stock to bet against a company. That's one-eighth of the street's total revenue pool. Signs that hedge fund managers have become the financial industry's new elite abound. Young, ambitious talent is fleeing Wall Street in search of hedge funds' overnight riches. In hedge fund offices, employees have perks like swimming pools and basketball courts. And in the wedding announcements of The New York Times, hedge fund managers are often well represented. At cocktail parties throughout Greenwich, Conn. - the informal capital of the hedge fund world - investors sip apple martinis and discuss which funds are in vogue. Because few people outside the industry know exactly how they trade or what they trade, there is a certain mystique to the hedge fund set, which only adds to their allure. Then there's the wealth effect. Billionaire hedge fund managers are pushing up the price of everything from luxury apartments to artwork. Kenneth Griffin, founder of the Citadel Investment Group, based in Chicago, dished out $60 million for a Cézanne. James G. Dinan, founder of York Capital Management, paid $21 million to buy the Fifth Avenue apartment of $6,000 shower curtain infamy, the one once occupied by L. Dennis Kozlowski of Tyco International. Predictably, most people in the hedge fund world scoff at the notion of a bubble. 'Hedge funds are not an asset class, so there is no asset class to burst,' said Jane Buchan, chief executive of Pacific Alternative Asset Management, a fund made up of hedge funds with $7.2 billion under management. 'It's not like real estate. Even if you think about people doing silly things for silly reasons, it's not a bubble. If you look at people traveling on the fringes, it might be a bubble.' Indeed, the so-called smart money - rich investors like Thomas H. Lee, the famed leverage buyout maven - could not seem less worried. 'Every investment board I am in touch with is interested in hedge funds,' said Mr. Lee, ticking off the names of such giants as Calpers and Harvard's endowment fund. Mr. Lee himself has invested a substantial portion of his estimated $1.2 billion net worth in a portfolio of dozens of hedge funds. Yet, as Mr. Klarman said: 'How many venture capital investors in 1999 said, 'We are doomed because of all the money flowing in?' ' Whether the hedge fund boom is a bubble may still be open to debate. But it is certainly not alarmist to wonder about the consequences of such torrid growth, built as it is on the leverage that banks provide managers to double or triple their bets. The Federal Reserve seemed concerned enough last fall, when it set up a group to examine what systemic risks had been created by the explosion of entrants into the market and the aggressiveness with which Wall Street was welcoming them. The Fed also encouraged the revival of a high-profile watchdog group formed in the wake of the market-shaking 1998 collapse of the Long-Term Capital Management hedge fund. Called the Counterparty Risk Management Policy Group II, it will examine everything from narrow credit spreads - a result of low perceived risk - to the cavalier ways that Wall Street lends to hedge funds. 'Hedge funds are significant market players,' Stephen M. Cutler, director of enforcement at the Securities and Exchange Commission, said in an interview. 'They use leverage that mutual funds cannot, so the power of that $1 trillion is magnified. Your concern is not just the investors in the hedge funds but the hedge fund's impact on the market.' To impose a modicum of order on the industry, the S.E.C. has required that most hedge fund management firms register as investment advisers by February 2006, a move that an industry trade group has protested. CONCERNS about hedge funds, however, extend beyond finding out where they are based and whether their managers are felons (two of the objectives of S.E.C. registration). Among other things, it remains a mystery - even to investors - what kind of bizarre financial products are traded by the funds, and how they value them. Given the potential returns, the incentives for investors to bet the house are huge. And many seasoned money managers have closed their funds, opening the door to newcomers to satisfy demand for ever more funds. Perhaps topping the list of concerns is the proliferation of funds of funds, pools of hedge funds that are meant to lower risk but that also come with another layer of fees on top of what standard hedge funds charge. By the end of last year, assets in funds of funds had soared to $359 billion, from $84 billion just four years earlier. Traditionally, investors have needed a minimum of $1 million to get into a hedge fund; with the newest funds of funds, investors with as little as $25,000 to spend can gain entree. Hedge funds may hit Main Street in other ways. At least one fund of funds, Grosvenor Capital, with $15 billion under management, is weighing an initial offering or a sale, people close to the company said. Hedge funds are the new blackboards on which dreams of high finance are drawn. For Karim Samii, who enjoyed a successful career at the investment firm W. R. Huff of Morristown, N.J., the decision to start his own hedge fund came on a bright, snowy morning in December 2003, when he and his wife were visiting his in-laws in Hamburg, Germany. 'I was jogging around the lake and I said to myself, 'Where do I want to be five years from now?' ' he said. His firm, Pardus Capital, will open for business on April 1. 'It's a big bet,' said Mr. Samii, 42. 'But if you think you're good, you take the risk.' Philip Broenniman, a 39-year-old trader, spent five months in 2003 cobbling together $20 million to start Cadence Investment Partners in New York. In late October, a week before his firm was set to open, two investors pulled $13 million. 'We opened our doors with just $7 million,' he recalled. A year later, after posting 16 percent gains, the fund has grown to $119 million. Managers of funds of funds and other entities that invest in hedge funds say they are overwhelmed by the numbers of start-ups. 'We saw 600 pitches last year,' said Ted Seides, director of investments at Protégé Partners in New York, which invests in new hedge fund firms. Of that number, he said, Protégé ended up backing just nine. 'There are a lot of hopes and dreams,' he said. Of course, not all dreams come true. Ask new managers why they are starting funds and the answers often recall the late 1990's: to build something, to test the 'pure art of investing,' to be an entrepreneur. One two-year industry veteran with $60 million under management describes why he did it: 'Because I could.' Even hedge fund experts who pooh-pooh the notion of an investment bubble acknowledge the possibility of a compensation bubble. Instead of just receiving a fixed percentage of the funds they manage, hedge fund managers generally make '1 and 20' - that is, 1 percent of assets under management and 20 percent of profits. To put that in context, a mutual fund company managing, say, $100 million and earning 1 percent of assets under management makes $1 million. By comparison, a hedge fund making the 1 percent management fee and a 20 percent 'carry' takes in $1 million for opening the doors, and an additional $10 million if the fund returns 10 percent. That's $11 million in revenue. 'Hedge funds are an innovation of compensation,' said one fund-of-funds executive. 'It's a compensation system, not an asset class.' The comment is meant to be positive: in hedge funds, compensation is aligned with absolute performance. In the mutual fund industry, by contrast, compensation is usually tied to performance against a benchmark, like a Standard & Poor's index, or assets under management. Will fees come down? Few people think so. 'If you lower your fee, they think something's wrong with you,' said one longtime manager who described the fees as 'absurd.' In fact, fees have been moving higher. When Carl C. Icahn, the famed takeover trader, raised a $2 billion fund last year, he demanded 2.5 percent of assets and 25 percent of the profit. In 2003, the 25 highest-paid hedge fund managers earned more than $200 million, on average, according to a survey by Institutional Investor magazine. The top-ranked manager, George Soros, took home $750 million that year. At No. 2 was David Tepper, manager of the $3 billion Appaloosa funds, who earned $510 million, according to the magazine. The lure of hedge funds, of course, is not supposed to be the high pay but the outsized returns. Lately, the results have been less than compelling. Over the 10-year period that ended last December, hedge funds had an average annualized return of 12.57 percent, according to an index maintained by Hedge Fund Research. That is just slightly ahead of the 12.07 percent return of the S.& P. 500 during that period, though hedge funds earned their return with half the volatility. During the market downturn, however, hedge funds did hold up well. In both 2000 and 2001, for example, the average hedge fund rose nearly 5 percent, according to Hedge Fund Research. That compares with declines of 9 percent in the S.& P. 500 in 2000 and nearly 12 percent the next year. IN 2004, however, the average hedge fund rose around 9 percent, lagging behind the S.& P. by nearly two percentage points, Hedge Fund Research has reported. During the first two months this year, the latest data available, hedge funds were up nearly 2 percent, compared with a flat return for the S.& P. Many in the industry say the sharp increase in both supply and demand won't destroy the fundamentals of the business. 'It is so much the better way of managing money,' said Julian Robertson, who got out of the business five years ago after forging a reputation at Tiger Management as one of the most successful hedge fund managers. Today, he keeps a hand in the industry by providing seed money to new hedge funds. 'Hedge funds have had about a 10-year place in the sun,' he said. 'I don't see any reason for that to stop.' Many industry veterans say the party will continue, partly because of the shift in who invests in hedge funds. As recently as 2000, hedge funds were almost exclusively for the very rich. Now institutions want a piece of the action. Pension funds and other institutions are expected to invest as much as $250 billion in hedge funds over the next five years, according to a recent study by the Bank of New York and Casey, Quirk & Associates, a consulting firm. That would ultimately account for half of all money flowing into hedge funds. But as the pension money comes in, hedge fund returns are likely to go down, as fund managers adapt their strategies to suit the new clientele. Pension funds prize predictability over outsized returns; the average pension fund is looking to make just 8 percent, net of fees, on its hedge fund investments, the Casey Quirk report concluded. That is a far cry from the 25-percent-plus returns generated by rock-star managers like Mr. Soros and Michael Steinhardt. A possible check on hedge funds is the simple fact that while anyone can start one, the industry has a high casualty rate - especially for the smallest funds, which struggle to attract and keep investors. Untested managers whose returns languish often see their capital flee and are forced to shut down. 'There are very low barriers to entry but very high barriers to staying in business,' said Philip Duff, chief executive of FrontPoint, a $4.3 billion hedge fund, citing the average annual life of a hedge fund of 3.5 years. 'That's problematic for investors,' he said - particularly institutional investors who do not relish moving money around. 'There's a reasonable probability a hedge fund will have a significant problem,' Mr. Duff added. The fund, he said, 'will be high-profile, and the question is, if and when that happens, does it materially change the growth in demand? My answer is no.' While new funds have flourished, seasoned managers are also absorbing the demand generated by institutions. 'In 2004 we saw nine $1 billion-plus start-ups, and 2005 is on track to outpace that number,' said Gerard Coughlin, a head of Morgan Stanley's prime brokerage services. 'While the high-profile start-ups command great attention, many established managers are busy broadening their product offering and expanding their footprint. The capacity created by these proven managers and high-profile start-ups is effectively raising the bar on what it takes to be successful as a new manager.' Longtime hedge fund investors have faith in the power of Darwinism. 'It will be survival of the fittest,' said Michael Price, former manager of the Mutual Series mutual funds, who now invests $1.6 billion - a good chunk of it in hedge funds - on behalf of family, friends and two college endowments. 'The guys who are not creative or don't know what they are doing won't last.' That is not to say that there is anything stopping them from starting up - and potentially losing investors' money. 'There's zero shame involved in launching a fund and failing,' said one fund of funds manager who, like many executives in the ultrasecretive hedge fund universe, asked not to be identified. INDEED, it is not unusual for managers to get a second chance. William A. Ackman once ran Gotham Partners, one of the most successful hedge funds in the 1990's, boasting a list of blue-chip investors that included the Ziff family and Martin Peretz of The New Republic. By the end of 2002, Mr. Ackman and his business partner, David P. Berkowitz, were forced to shut the fund after they became stuck in a private equity investment they couldn't sell, and some investors demanded their money back. Since then, Mr. Ackman has raised $410 million for a new firm, Pershing Square; he has promised investors in his new fund that he will not make private equity investments. In the same way that there is no quelling the bulls, there will be no quieting of the critics. The Horvitz family of Cleveland, which made its fortune in road construction, media and real estate, started investing in hedge funds in the 1990's. A decade or so later, it has virtually no money in such funds, said Jeffrey Horvitz, who oversees his family's investments. Too often, he said, the funds produced disappointing returns. 'Hedge funds are no longer attractive,' Mr. Horvitz said, noting the influx of start-ups. 'I see no relief in sight, especially for taxable investors like us.'

Subject: A Malaria Success From: Emma To: All Date Posted: Sun, Mar 27, 2005 at 09:35:06 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/03/27/opinion/27sun2.html A Malaria Success In 1998, the Australia-based mining company BHP Billiton began building a huge aluminum smelter outside Maputo, the capital of Mozambique. The company knew that malaria plagued the region. It gave all its workers mosquito nets and free medicine, and sprayed the construction site and workers' houses with insecticide. Nevertheless, during the first two years of construction there were 6,000 cases of malaria, and at least 13 contractors died. To deal with the problem, the company did something extraordinary. It joined an effort by South Africa, Mozambique and Swaziland to eradicate malaria in a swath of the three countries measuring more than 40,000 square miles. The project is called the Lubombo Spatial Development Initiative, after the mountains that define the region. In the three years since house-to-house insecticide spraying, surveillance and state-of-the-art treatment began, malaria incidence dropped in one South African province by 96 percent. In the area around the aluminum smelter, 76 percent fewer children now carry the malaria parasite. The Lubombo initiative is probably the best antimalaria program in the world, an example for other countries that rolling back malaria is possible and cost-effective. In its first years, financing came from BHP Billiton and the Business Trust, a development organization in South Africa financed by more than 100 companies there. They decided to fight malaria not only to save children and improve health, but also to encourage tourism and foreign investment. Governments should make the same calculation, and should follow the Lubombo example. Malaria kills some two million people a year, nearly all of them children under 5. A commission of the World Health Organization found that malaria shrinks the economy by 20 percent over 15 years in countries where it is most endemic. The Lubombo initiative hires and trains local workers, who spray houses with insecticide once or twice a year, covering their communities on foot. People who get malaria are cured with a new combination of drugs that costs about $1.40 per cure for adults, abandoning the commonly used medicines that cost only pennies but have lost their effectiveness. While it is still the largest antimalaria project started by business in Africa, there are other successful ones, run by Marathon Oil, Exxon Mobil and the Konkola copper mines in Zambia. Fifty years ago, Africa did use house spraying widely, with good results, but such projects vanished as the money dried up. Today money is available again, from the Global Fund to Fight AIDS, Tuberculosis and Malaria, and the Lubombo initiative's managers are beginning to get calls from other parts of Africa. Malaria, unlike many other diseases, is entirely preventable and curable. The challenge for health officials is to fight malaria in very poor countries on a large scale, and now they have the Lubombo initiative to show them how.

Subject: Watching cspn2 now on Glbl Poverty From: johnny5 To: Emma Date Posted: Sun, Mar 27, 2005 at 10:51:22 (EST) Email Address: johnny5@yahoo.com Message: An end to global poverty - Jeff Sachs is saying they can't get the treated nets to the village children because of budget caps. When did money come before human lives? Six dollars per capita for public health - can't bill gates and warren buffet help - I know bill gates as the gates foundation giving a lot to africa - what does warren give? http://www.amazon.com/exec/obidos/tg/detail/-/1594200459/qid=1111938607/sr=8-1/ref=pd_csp_1/103-8248111-3283058?v=glance&s=books&n=507846 Editorial Reviews From Publishers Weekly Sachs came to fame advising 'shock therapy' for moribund economies in the 1980s (with arguably positive results); more recently, as director of Columbia University's Earth Institute, he has made news with a plan to end global 'extreme poverty'--which, he says, kills 20,000 people a day--within 20 years. While much of the plan has been known to economists and government leaders for a number of years (including Kofi Annan, to whom Sachs is special advisor), this is Sachs's first systematic exposition of it for a general audience, and it is a landmark book.For on-the-ground research in reducing disease, poverty, armed conflict and environmental damage, Sachs has been to more than 100 countries, representing 90% of the world's population. The book combines his practical experience with sharp professional analysis and clear exposition. Over 18 chapters, Sachs builds his case carefully, offering a variety of case studies, detailing small-scale projects that have worked and crunching large amounts of data. His basic argument is that '[W]hen the preconditions of basic infrastructure (roads, power, and ports) and human capital (health and education) are in place, markets are powerful engines of development.' In order to tread 'the path to peace and prosperity,' Sachs believes it is encumbant upon successful market economies to bring the few areas of the world that still need help onto 'the ladder of development.' Writing in a straightfoward but engaging first person, Sachs keeps his tone even whether discussing failed states or thriving ones. For the many who will buy this book but, perhaps, not make it all the way through, chapters 12 through 14 contain the blueprint for Sachs's solution to poverty, with the final four making a rigorous case for why rich countries (and individuals) should collectively undertake it--and why it is affordable for them to do so. If there is any one work to put extreme poverty back onto the global agenda, this is it. (Mar. 21) Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved. Product Description: He has been cited by The New York Times Magazine as 'probably the most important economist in the world' and by Time as 'the world's best-known economist.' He has advised an extraordinary range of world leaders and international institutions on the full range of issues related to creating economic success and reducing the world's poverty and misery. Now, at last, he draws on his entire twenty-five-year body of experience to offer a thrilling and inspiring big-picture vision of the keys to economic success in the world today and the steps that are necessary to achieve prosperity for all. Marrying vivid eyewitness storytelling to his laserlike analysis, Jeffrey Sachs sets the stage by drawing a vivid conceptual map of the world economy and the different categories into which countries fall. Then, in a tour de force of elegance and compression, he explains why, over the past two hundred years, wealth has diverged across the planet in the manner that it has and why the poorest nations have been so markedly unable to escape the cruel vortex of poverty. The groundwork laid, he explains his methods for arriving, like a clinical internist, at a holistic diagnosis of a country's situation and the options it faces. Rather than deliver a worldview to readers from on high, Sachs leads them along the learning path he himself followed, telling the remarkable stories of his own work in Bolivia, Poland, Russia, India, China, and Africa as a way to bring readers to a broad-based understanding of the array of issues countries can face and the way the issues interrelate. He concludes by drawing on everything he has learned to offer an integrated set of solutions to the interwoven economic, political, environmental, and social problems that most frequently hold societies back. In the end, he leaves readers with an understanding, not of how daunting the world's problems are, but how solvable they are-and why making the effort is a matter both of moral obligation and strategic self-interest. A work of profound moral and intellectual vision that grows out of unprecedented real-world experience, The End of Poverty is a road map to a safer, more prosperous future for the world. From 'probably the most important economist in the world' (The New York Times Magazine), legendary for his work around the globe on economies in crisis, a landmark exploration of the roots of economic prosperity and the path out of extreme poverty for the world's poorest citizens.

Subject: Trump bitter with fortune Rankings From: johnny5 To: johnny5 Date Posted: Sun, Mar 27, 2005 at 11:00:38 (EST) Email Address: johnny5@yahoo.com Message: I recall hearing how trump was MAD that his 2 billion should have really been 6 billion in wealth because they didn't count some of his holdings - why do the rich get steamed about this issue - why isn't fortune publishing along side that list in the same issue the list of biggest donors to bring shame to some people like Ted Turner did a few years back??

Subject: Buffet kinda cheap From: johnny5 To: johnny5 Date Posted: Sun, Mar 27, 2005 at 11:04:29 (EST) Email Address: johnny5@yahoo.com Message: When buffet dies, looks like the world will get a great boost in charity, but 12m seems CHEAP next to ted turner and billy gates - come on Warren - do something now - you might live another 20 years. http://www.woopidoo.com/biography/warren_buffett.htm In terms of his personal life he is famously frugal. Through the Buffett Foundation he makes charitable donations, usually around $12 m a year in total. He has stated his intention to disburse 99% of his wealth after his death to good causes.

Subject: Caring for Our New Deal Legacy From: Emma To: All Date Posted: Sun, Mar 27, 2005 at 07:17:49 (EST) Email Address: Not Provided Message: Please do not think what we have gained from the New Deal is suddenly preserved and will grow. Social Security and Medicare are not secure as fiscal policy is increasingly irresponsible. Medicare costs are increasingly cutting Social Security benefits. The Senate has just passed a tax cut bill on Social Security benefits for wealthy retirees that will in turn cut Medicare support for us all. The Senate tax cut bill has been scarcely noticed save for the New York Times.

Subject: Lesotho, El Salvador, America, China From: Terri To: All Date Posted: Sat, Mar 26, 2005 at 19:40:26 (EST) Email Address: Not Provided Message: Johnny's Problem: The problem always with development has been to find models that would not result in economic changes in developed nations harming the developing. The hope I have is that China is showing a way. El Salvador is fully dollarized. Even though the dollar is losing value, currencies around El Salvador are losing more value. Also, textile manufacturing is moving to China. Lesotho has a currency tied to the South African Rand which is strengthening against the dollar. So textile sales in Lesotho have been crippled before competition from China. Two countries, two problems to confront. Globalization is not the problem but the promise, how to imagine a solution. We must think here, for of course I had not thought of this carefully before the fine fine question on development was raised though I read the New York Times posts thoroughly.

Subject: Lesotho From: Terri To: Terri Date Posted: Sat, Mar 26, 2005 at 20:04:14 (EST) Email Address: Not Provided Message: Annonymous poem from Lesotho: Would that I had wings to fly up to the sky! Why does not a strong cord come down from the sky? I would tie it to me, I would mount, I would go there to live.

Subject: Be excellent to everyone From: johnny5 To: Terri Date Posted: Sat, Mar 26, 2005 at 21:06:35 (EST) Email Address: johnny5@yahoo.com Message: What a great poem! There are so many challenges to overcome, so much progress to bring to so many people, what great times of new ideas and new adventure!

Subject: Re: Be excellent to everyone From: Terri To: johnny5 Date Posted: Sat, Mar 26, 2005 at 21:22:29 (EST) Email Address: Not Provided Message: Thank you, Dear Johnny. Though I have no response yet, I am thinking. There will be more as we think, for I suppose this is really the problem of this century.

Subject: Bagwhati - Krugman's Teacher From: johnny5 To: All Date Posted: Sat, Mar 26, 2005 at 17:57:09 (EST) Email Address: johnny5@yahoo.com Message: Just got through watching him on C-span2, didn't know he was krugmans teacher but he said he was. He is adamant that living standards in America won't fall - globalization will bring living standards up everywhere with no loss. A rising tide to lift all boats?

Subject: Re: Bagwhati - Krugman's Teacher From: Terri To: johnny5 Date Posted: Sat, Mar 26, 2005 at 18:25:09 (EST) Email Address: Not Provided Message: I agree completely. Development in China and India will help us immensely as long as we continue to be open to trade, and I believe we will be. There is growth enough there for generations, for there are 2.4 billion Chinese and Indians longing for development.

Subject: Some can't swim in rising tides From: johnny5 To: Terri Date Posted: Sat, Mar 26, 2005 at 18:28:07 (EST) Email Address: johnny5@yahoo.com Message: Emma posts from africa and south america how the seamstress women are in poverty lines starving from this globalization, how has globalization helped them Terri?

Subject: Some can't swim yet in rising tides From: Terri To: johnny5 Date Posted: Sat, Mar 26, 2005 at 19:37:36 (EST) Email Address: Not Provided Message: Important question indeed. The problem always with development has been to find models that would not result in economic changes in developed nations harming the developing. The hope I have is that China is showing a way. El Salvador is fully dollarized. Even though the dollar is losing value, currencies around El Salvador are losing more value. Also, textile manufacturing is moving to China. Lesotho has a currency tied to the South African Rand which is strengthening against the dollar. So textile sales in Lesotho have been crippled before competition from China. Two countries, two problems to confront. Globalization is not the problem but the promise, how to imagine a solution. We must think here, for of course I had not thought of this carefully before your fine fine question though I read the post thoroughly.

Subject: Re: Some can't swim yet in rising tides From: johnny5 To: Terri Date Posted: Sat, Mar 26, 2005 at 21:07:27 (EST) Email Address: johnny5@yahoo.com Message: Excellent wonderful thoughts Terri, great great great!

Subject: Liberals hurt those they claim to help cspn2 From: johnny5 To: All Date Posted: Sat, Mar 26, 2005 at 16:19:52 (EST) Email Address: johnny5@yahoo.com Message: Sunday 9:51 am Speech Do-Gooders: How Liberals Hurt Those They Claim to Help Union League Club of New York New York, New York (United States) ID: 186046 - 03/17/2005 - 0:43 - $29.95 Charen, Mona, Syndicated Columnist Mona Charen talks about her book Do-Gooders: How Liberals Hurt Those They Claim to Help (And the Rest of Us), published by Sentinel. Ms. Charen asserts that liberal public policy has worsened numerous domestic social problems. Specifically, she argues that a lenient approach to criminal justice has led to higher crime rates and that liberal politicians routinely exploit racial divisions for political gain. Ms. Charen answers questions from members of the audience following her presentation.

Subject: Re: Liberals hurt those they claim to help cspn2 From: Jennifer To: johnny5 Date Posted: Sat, Mar 26, 2005 at 16:42:22 (EST) Email Address: Not Provided Message: I'll pass on this for sure. Duh.

Subject: Thought reinforcement From: johnny5 To: Jennifer Date Posted: Sat, Mar 26, 2005 at 17:09:46 (EST) Email Address: johnny5@yahoo.com Message: Why do you say that? If you disagree with it, what will you learn from not hearing opposing viewpoints or trying to understand why this person is wrong and think like they do? I don't agree with alot of people in this world, but sticking your head in the sand helps no one eh? I don't know why this person feels this way or why Cspan feels the need to air it, but I will probably watch it if it rains outside. Another program coming on tonight. Unfounded Loyalty Mesa Community College Mesa, Arizona (United States) ID: 185756 - 02/24/2005 - 1:19 - $29.95 Groscost, Jeff, Speaker, R-AZ, Arizona, House of Representatives Perryman, Wayne, Author Mr. Perryman talked about his book Unfounded Loyalty: An In-Depth Look Into the Love Affair Between Blacks and Democrats. He argued that the Democratic Party had taken Black America for granted and challenged African-Americans to study the history of both parties before deciding which one to support. Mr. Perryman asserted that, though largely unrecognized, the Republican Party had done a great amount of good for African-Americans and the civil rights movement. The author answered questions from members of the audience following his presentation.

Subject: China and America Related From: Emma To: All Date Posted: Sat, Mar 26, 2005 at 16:16:49 (EST) Email Address: Not Provided Message: The near future of Chinese development may be broadly seen to rest on just the successful model that has been designed. Excellent economists would argue there is a considerable problem in reserve accumulation, but to the Chinese this may represent a cycle of saving and investment that must be extended for the time for the benefits that are brought in future. Here, relative lack of saving and investment, are found a decided problem for a Warren Buffett or even me.

Subject: Refugee lessons of the past on Cspan2 From: johnny5 To: All Date Posted: Sat, Mar 26, 2005 at 16:08:37 (EST) Email Address: johnny5@yahoo.com Message: The Turbulent Decade: Refugee Crises of the 1990s Library of Congress, Kluge (John W.) Center Washington, District of Columbia (United States) ID: 185808 - 03/08/2005 - 1:19 - $29.95 Ogata, Sadako, High Commissioner (Fmr.), United Nations, Refugees Gifford, Prosser, Director, Library of Congress, Office of Scholarly Programs Clark, Wesley K., Supreme Allied Commander (1997-2000), NATO, Europe Priest, Dana, Correspondent, [Washington Post], National Security Mrs. Ogata talked about her book The Turbulent Decade: Confronting the Refugee Crises of the 1990s, published by W. W. Norton and Company. In the book she recounted her experiences and the lessons she learned as U.N. High Commissioner for Refugees from 1990 to 2000. She explored issues of refugee protection and humanitarian assistance, coordination among humanitarian organizations, NATO and military groups and the global political and strategic climate in which these crises occurred. She was joined by retired General Wesley Clark, who led U.S. and allied troops in NATO's war in Kosovo in 1999 and worked closely with Mrs. Ogata. They addressed some of the challenges that humanitarian aid workers faced during the refugee crises of the 1990s, focusing on relief efforts in several regions, including the Balkans and Afghanistan. They also address the current global climate and the potential for future refugees. The discussion was moderated by Ms. Priest, author of The Mission: Waging War and Keeping Peace with America's Military, published by W.W. Norton and Company.

Subject: Ending Poverty, tonight 9 Cspn2 From: johnny5 To: johnny5 Date Posted: Sat, Mar 26, 2005 at 16:15:12 (EST) Email Address: johnny5@yahoo.com Message: Speech The End of Poverty: Economic Possibilities World Bank Washington, District of Columbia (United States) ID: 186034 - 03/22/2005 - 1:19 - $29.95 Sachs, Jeffrey D., Director, Columbia University, Earth Institute Qureshi, Zia, Senior Adviser, World Bank, Global Monitoring Jeffrey Sachs will talk about his book The End of Poverty: Economic Possibilities for Our Time, published by Penguin Press. It is about how to end poverty around the world by the year 2025. Professor Sachs argues that ending global poverty is a very realistic goal that can be achieved if the U.S. is willing to make it a priority. He criticizes the Bush administration for what he says is a lack of commitment to the cause and argues that free market solutions will not work. He lays out a series of questions that he suggests the executive directors of the World Bank ask any candidate to head the Bank before they decide whether to approve his nomination. Professor Sachs answered questions from members of the audience following his remarks. Commentary is provided by Zia Qureshi, senior advisor for global monitoring at the World Bank.

Subject: cspn2 corporate corruption of US colleges 9am sun From: johnny5 To: johnny5 Date Posted: Sat, Mar 26, 2005 at 16:17:52 (EST) Email Address: johnny5@yahoo.com Message: Speech University, Inc.: The Corporate Corruption of American Higher Education University Book Center (College Park, MD) College Park, Maryland (United States) ID: 185856 - 03/03/2005 - 0:48 - $29.95 Washburn, Jennifer, Fellow, New America Foundation Ms. Washburn will talk about her book University, Inc.: The Corporate Corruption of American Higher Education, published by Basic Books.

Subject: Chinese Saving and Investment From: Emma To: All Date Posted: Sat, Mar 26, 2005 at 15:39:56 (EST) Email Address: Not Provided Message: When we think about the saving level in China, we might also think about the high saving levels of Chinese populaions from Singapore to Malaysia to Indonesia. High saving and investment levels would appear to characterize Chinese communites in Asia. We would do well to be more imitative of such communities, for saving and investment shores up our future. But, this would entail at least some limited change from a consumer culture in America.

Subject: On Working From: Emma To: All Date Posted: Sat, Mar 26, 2005 at 15:27:46 (EST) Email Address: Not Provided Message: People in developed and developing nations move seemingly forever from agricultural to urban settings. Returning is seldom possible or desirable. Education is to be preferred, though this may be troublesome. Macro-economic policy must try to be as job creative as possible.

Subject: History of the PLOW From: johnny5 To: Emma Date Posted: Sat, Mar 26, 2005 at 15:48:05 (EST) Email Address: johnny5@yahoo.com Message: When Rome fell, people moved away from the big city and gladiator entertainment and moved out to the big farms and instead of being money changers in the temple, they were farmers or warriors on the frontier. When people moved to the city in argentina recently, didn't they have to move back to the farms?

Subject: History Teaches but Does not Repeat From: Emma To: johnny5 Date Posted: Sat, Mar 26, 2005 at 15:55:15 (EST) Email Address: Not Provided Message: There may possibly come a time of new rural homesteading, but not now. There was no significant return to farming in Argentina, for there was no need. Subsistence farming or limited size farming is difficult. The movement is away from farms.

Subject: Trade and Saving and Investment From: Emma To: All Date Posted: Sat, Mar 26, 2005 at 14:29:07 (EST) Email Address: Not Provided Message: There is a trade deficit because there is a government budget deficit and too little household saving to compensate. So we consume more than we produce, and that gives us the trade deficit. Economic policy that allows for more saving and investment can in time lessen the trade deficit.

Subject: Warren is betting against policy change From: johnny5 To: Emma Date Posted: Sat, Mar 26, 2005 at 14:51:34 (EST) Email Address: johnny5@yahoo.com Message: Where is your Hope coming from Emma? You confuse me - per Warrens letter and his GATHERING DUST comment on changing policy: But as I argued in a November 10, 2003 article in Fortune, (available at berkshirehathaway.com), our country’s trade practices are weighing down the dollar. The decline in its value has already been substantial, but is nevertheless likely to continue. Without policy changes, currency markets could even become disorderly and generate spillover effects, both political and financial. No one knows whether these problems will materialize. But such a scenario is a far-from-remote possibility that policymakers should be considering now. Their bent, however, is to lean toward not-so-benign neglect: A 318-page Congressional study of the consequences of unremitting trade deficits was published in November 2000 and has been gathering dust ever since. The study was ordered after the deficit hit a then-alarming $263 billion in 1999; by last year it had risen to $618 billion. Charlie and I, it should be emphasized, believe that true trade – that is, the exchange of goods and services with other countries – is enormously beneficial for both us and them. Last year we had $1.15 trillion of such honest-to-God trade and the more of this, the better. But, as noted, our country also purchased an additional $618 billion in goods and services from the rest of the world that was unreciprocated. That is a staggering figure and one that has important consequences. ....The mention of trillions numbs most brains. A further source of confusion is that the current account deficit (the sum of three items, the most important by far being the trade deficit) and our national budget deficit are often lumped as “twins.” They are anything but. They have different causes and different consequences. ....In the article I wrote for Fortune 16 months ago, I warned that “a gently declining dollar would not provide the answer.” And so far it hasn’t. Yet policymakers continue to hope for a “soft landing,” meanwhile counseling other countries to stimulate (read “inflate”) their economies and Americans to save more. In my view these admonitions miss the mark: There are deep-rooted structural problems that will cause America to continue to run a huge current-account deficit unless trade policies either change materially or the dollar declines by a degree that could prove unsettling to financial markets. Proponents of the trade status quo are fond of quoting Adam Smith: “What is prudence in the conduct of every family can scarce be folly in that of a great kingdom. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage.” I agree. Note, however, that Mr. Smith’s statement refers to trade of product for product, not of wealth for product as our country is doing to the tune of $.6 trillion annually. Moreover, I am sure that he would never have suggested that “prudence” consisted of his “family” selling off part of its farm every day in order to finance its overconsumption. Yet that is just what the “great kingdom” called the United States is doing. ....Our spendthrift behavior won’t, however, be tolerated indefinitely. And though it’s impossible to forecast just when and how the trade problem will be resolved, it’s improbable that the resolution will foster an increase in the value of our currency relative to that of our trading partners. Emma it is not wise to bet against Jeff Gordon when he is racing against 40 grandma millies in their mini van who don't have a clue - while he is very experienced - he says the dollar is very unlikely to have a soft landing - why do you think he is wrong and we can fix the policy when the answers were in a report that warren says is gathering dust for 4 years now.

Subject: Re: Warren is betting against policy change From: jimsum To: johnny5 Date Posted: Sun, Mar 27, 2005 at 13:05:37 (EST) Email Address: jim.summers@rogers.com Message: Why focus on just trade? The easy money policies have helped American companies too; remember zero-percent auto financing? Do you think that helped American automakers sell more cars? China, on the whole, is willing to boost sales by lending money to its American customers; in U.S. dollars. Not many American companies are as as willing to extend credit to boost sales, so they suffer in comparison. When you reduce it to fundamentals, U.S. consumers have lots of shiny new toys and Chinese manufacturers have low-interest bonds that pay out in a depreciating currency. It's hard to see that the Chinese have the advantage in this deal.

Subject: Absolutely From: johnny5 To: jimsum Date Posted: Sun, Mar 27, 2005 at 17:52:37 (EST) Email Address: johnny5@yahoo.com Message: Depreciating currency, that will continue to fall, Pete says we need to invest in such a way to anticipate this, that would mean being out of any assets denominated in US currency no? US stocks, US bonds, US cash. So you have emerging markets, but then Emma says hold up, China is a bunch of crooks and Mr. China lost his 400 million investing over there - so where do you go? Pimco commodity fund? People are saying we already have bidded those commodity prices up too far - so where to go for income and wealth generation as an investor? Japanese real estate looks like it is at the bottom and on the way up!! What say you?

Subject: Re: Absolutely From: jimsum To: johnny5 Date Posted: Mon, Mar 28, 2005 at 23:37:17 (EST) Email Address: jim.summers@rogers.com Message: I'm lucky, my domestic market is Canada and I can just keep most of it at home. I don't know if Canada will be able to avoid sharing the pain of whatever crash hits the U.S. market; but I'm keeping most of my investments (80%) in Canada, half in equity funds, half in short-term bond.

Subject: Canadian Trusts From: johnny5 To: jimsum Date Posted: Tues, Mar 29, 2005 at 12:41:25 (EST) Email Address: johnny5@yahoo.com Message: I have been looking at these.

Subject: Policy Change From: Emma To: johnny5 Date Posted: Sat, Mar 26, 2005 at 15:23:14 (EST) Email Address: Not Provided Message: Warren Buffett thinks we have too large a trade deficit, and I agree. I would not think to bet we do not, but the day is pleasing and I am contented and always try to be hopeful. There may be no policy change for years, but conditions do wary.

Subject: Energy storage From: Pete Weis To: All Date Posted: Sat, Mar 26, 2005 at 13:15:43 (EST) Email Address: Not Provided Message: We are spending upwards of $100 billion per year in Iraq and our present administration wants to pump billions into a space based missile defense system in an age when terrorists can transport a nuclear device by boat, truck, small plane, etc. If we cancel Star Wars and use that money to accelerate the development of alternate energy sources along with redesigning and redistributing the power grid and developing new technologies to promote conservation, we can make that leap to escape this near total dependency on fossil fuels. There have been great advances in both wind power and solar power in the last 25 years or so. The costs of generating a kwh from wind energy has dropped from 28 cents in 1980 to 3 cents per kwh presently. Advances in nano-technology have brought great improvements to solar power. Energy storage is a big part of the equation since many of these naturally occuring energy sources are not steady-state producers. The following is from a message board site administrated by Tim O'Flaherty which deals with alternate energy sources. It should be noted that the costs per kwh here are not the ongoing costs of producing electric power, but rather the one time original cost of building and installing the storage facility. For instance the original costs per kwh of production of building a fossil fuel power plant with associated sub stations is much greater than the original cost of building a wind farm (collection of wind turbines) plus battery storage system stations. The original cost of building a nuclear power plant is of course much higher in the extreme, not to mention the security risks. $Windpower-Energy Storage$ Tim O'Flaherty Apr 2 2000, 12:00 am Newsgroups: sci.environment From: 'Tim O'Flaherty' - Find messages by this author Date: 2000/04/02 Subject: $Windpower-Energy Storage$ This is in response to questions about the viability of wind and solar generating systems without affordable bulk energy storage systems. However it should be noted, windpower is already viable. It is limited however, to 10 to 20% of total electrical demand due to it's intermittant nature. As electric power transmission and distribution systems continue to grow and interconnect that figure may improve. There are a number of energy storage systems currently available or on the horizon. Pumped hydro is one. The economic cost* is $500 to $1600/KW . DOE notes that 22GW are installed at 150 facilities in 19 states. The figures given do not indicate cost/kwH so the price for a unit of actual storage capacity is not clear. In spite of it's expense, pumped hydo is seen as viable in some locations. Another possibility is compressed air in existing geologic formations. The cost* estimates are $350 to $500/kw. The DOE at, http://www.eren.doe.gov/power/­pdfs/append_overview.pdf notes that: 'The most appropriate storage systems for such applications..' (solar and wind) ' appear to be batteries.' The DOE lists two batteries as being commercially available, flooded lead acid and valve regulated lead acid. at 750 to 1000 $/kw and 500 to 600 $/kw respectively. Two other options listed as not commercially available yet are zinc/bromine and lithium (utility scale). One remaining cost estimate, 400 to 600 $/kw presumably refers to one or both of these. Another battery option is the redox flow cell. http://www.ceic.unsw.edu.au/ce­nters/vrb/webframe/vanart2a.ht­m By the inventor of the vanadium redox battery (VRB), Dr. Maria Skyllas-Kazacos , University of New South Wales, Sydney AU, gives a good introduction to this system. A shorter look can be had at: http://www.sei.co.jp/sn/97_07.­html The redox system is a unique electrochemical storage system. one of it's advantages is cost. From the first site: 'Cost estimates by the UNSW group and independent consulting groups (10, 11), place mass production costs at between $100 and $300 per kW for the stack and $30 to $50 per kWh for the electrolyte.' For a large system, ' typical projected battery costs for 8 or more hours of storage being as low as US$150 per kWh. ' Of all the options it appears that Redox is the cheapest. This becomes even more apparent when it is considered that the redox battery has a virtually unlimited lifespan. Since all reactions take place in the liquid phase, there are no irreversable chemical changes. The only part of the system that needs regular replacing will be the membrane, perhaps every five years. The battery is not damaged by deep discharge or by rapid charge rates and can be configured such that off-gassing of H2 does not occur as is the case with lead acid batteries. The efficiency is remakable, approaching 90%. Total storage capacity can be sized independent of power by simply increasing or decreasing the electrolyte volume or by increasing or decreasing the number of flow cells. Charge and discharge can take place simultaneously and at different voltages. This in effect makes the system a DC transformer. By electronically monitoring system voltage and switching cells on and off as needed, it is possible to track an optimum voltage for PV and wind generating systems. There is no energy lost with long term storage since the electrolytes are stored separately. A feature that holds great promise for electric transport is the ability to recharge a redox battery by replacing discharged electrolyte with charged thus recharging an electric vehicle in the same time it takes to fill a fuel tank on a conventional vehicle. The discharged electrolyte can be recharged at off peak times from the rid. Instead of gasoline tankers delivering energy to filling stations we can use the electric grid. Even without wind and solar redox makes sense for load leveling, for large scale consumers of electric power such as heavy manufacturing who can purchase power at times of low demand. Bulk energy storage will reduce or end the need for expensive peaking generators by storing excess baseload capacity in times of low demand. This will also allow more efficient operation of baseload generators. For windpower there is another benefit that may not be immediately apparent. Having a means of storing energy will make it worthwhile to design machines that can harvest power from higher but less frequent windspeeds. Presently this would result in short term spikes of power. The energy of wind increases with the cube of the velocity. There is a lot of power out there that is resently too erratic to be useful. Having storage allows this power to be salted away. Also, as wind turbines grow in size and height they will be capturing energy in larger chunks so to speak, storage will only increase the efficiency and tility of these machines. It would appear that the vanadium redox battery is the best choice as a bulk energy storage option. This combined with wind and solar may be our energy future.

Subject: Words on deaf ears From: johnny5 To: Pete Weis Date Posted: Sat, Mar 26, 2005 at 14:23:59 (EST) Email Address: johnny5@yahoo.com Message: Pete, it seems investor sentiment only changes when people read the front page of thier thought control master the NY times, trade off the front page of the NY times to predict the movements of the herd, why try to teach a pig to fly when all he wants is some more slop to feast on? I don't want you losing your butt going against irrational markets and getting into bear funds with tice or commodities with jim rogers and pimco until the NY times says that is where you need to be on the front page - shutting the barn door after the horses have run out. You and I can't make money on fundamentals, we can only make money in anticipating where the herd will rush into or out of I think - the front page of the NY times should be a good proxy for that no? Shorting reits was bad, but now that everyone read the front page of the NY times that real estate is like the stock bubble, investor sentiment will change from that one brief act far more than your years of preaching to the masses. http://www.rasmussenreports.com/daily.htm Saturday March 26, 2005--For the third straight day, the Rasmussen Consumer Index and the Rasmussen Investor Index set new 2005 lows on Saturday. Both are within half-a-point of the lowest level reached in either 2004 or 2005. The Rasmussen Consumer Index fell two more points on Saturday to 105.3. The Index, which measures the economic confidence of American consumers on a daily basis, has fallen a total seven points over the past three days.

Subject: China's High Saving From: Emma To: All Date Posted: Sat, Mar 26, 2005 at 11:25:05 (EST) Email Address: Not Provided Message: A most interesting puzzle, China's astonishingly high saving. Imagine China lending to America. Would it help to think of individuals middle or income households? I have a few households in mind. Hmmm. Though there is ostentation, as we have found, I am at once reminded of the extent to which the Chinese I know are conservative as families. Also, there is the extent to which assets and incomes are pooled in a family. Families extend through far larger circles than is generally found in America. The iron rice bowl is less and less well developed, but basics are often reasonably available. How much can a middle class family save? Hmmm.

Subject: Watching Mr. China on Cspan2 Now From: johnny5 To: Emma Date Posted: Sat, Mar 26, 2005 at 11:49:47 (EST) Email Address: johnny5@yahoo.com Message: www.chinainstitute.org sponsored it. The guy says to buy chinese power and chinese beer interests - he sees these as the big growth areas in china.

Subject: Watching Mr. China on Cspan2 Now From: johnny5 To: Emma Date Posted: Sat, Mar 26, 2005 at 11:48:48 (EST) Email Address: johnny5@yahoo.com Message: www.chinainstitute.org sponsored it. The guy says to buy chinese power and chinese beer interests - he sees these as the big growth areas in china.

Subject: Avoiding Investing From: Emma To: johnny5 Date Posted: Sat, Mar 26, 2005 at 13:45:03 (EST) Email Address: Not Provided Message: The Chinese stock market is among the more dangerous in the world. A wild west sort of market. Always overvalued, offering long term losses so far. Strong growth does not necessarily mean strong stocks.

Subject: He is in it up close and personal From: johnny5 To: Emma Date Posted: Sat, Mar 26, 2005 at 14:05:56 (EST) Email Address: johnny5@yahoo.com Message: Shoud I have second thoughts on the vangaurd international value fund?? If you lived in the old west emma, and wanted to make some money, did you listen at that laying number cruncher sitting in his cushy office in pennsylvania punching the clock to sucker investors or did you listen to the cowboys who road the mail wagons to the new frontier? Don't hold America up to be some bastion of truth after the accounting scandals, mutual fund hearings in congress, and general evidence coming to light of how the GOOD guys here bilk you just like any other country - that is lying to yourself. http://www.amazon.com/exec/obidos/tg/detail/-/0060761393/qid=1111863271/sr=8-1/ref=pd_csp_1/104-4834210-3959962?v=glance&s=books&n=507846 Editorial Reviews From Publishers Weekly A British businessman with a background in accounting and auditing, Clissold joined up with an entrepreneur in the early 1990s and set out to buy shares of Chinese firms and to work to make them more profitable. Within two years, Clissold's venture owned shares in 20 Chinese businesses, with 25,000 employees among them, but the story really centers on Clissold's encounters with the nation's 'institutionalized confusion.' Firing entrenched middle managers became a protracted process that led to factory riots and employees using company funds to set up competing businesses; the anticorruption bureau demanded cash bribes before opening investigations. Clissold's narrative is somewhat aimless, slipping from one misadventure (taking American fund managers to a condom factory) to the next, and there's a certain amount of too-easy humor derived from the exoticism of Chinese culture (e.g., the inevitable banquet where unusual body parts of rabbit and deer are served). Even in these passages, though, Clissold's fundamental respect for the Chinese culture is unmistakable, and the scenes where he leaves his office and interacts directly with the people can be quite vividly detailed. By the late '90s, millions of dollars poured into the companies yield disastrous results from an investment standpoint (and Clissold himself suffers a heart attack), but the Chinese economy as a whole hums ever more loudly. Crossover appeal of this title may be limited, but business readers are likely to be entertained. Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved. Product Description: The idea of China has always exerted a pull on the adventurous type. There is a kind of entrepreneurial Westerner who just can't resist it: red flags, a billion bicycles, and the largest untapped market on earth. What more could they want? After the first few visits, they start to feel more in tune and experience the first stirrings of a fatal ambition: the secret hope of becoming the Mr. China of their time. In the 1990s, China went through a miraculous transformation from a closed backwater to the workshop of the world. Many smart young men saw this transformation coming and mistook it for their destiny. Not a few rushed East to gain strategic footholds, plant their flags, and prosper. After all, the Chinese had numbers on their side: a seemingly endless population, a thirst for resources, and the tide of history. What they needed was Western knowledge and lots of capital. Or so it seemed ... Mr. China tells the rollicking story of one man's encounter with the Chinese. Armed with hundreds of millions of dollars and a strong sense that he and his partners were -- like missionaries of capitalism -- descending into the industrial past to bring the Chinese into the modern world, Clissold got the education of a lifetime. The ordinary Chinese workers, business owners, local bureaucrats, and party cadres Clissold encountered were some of the most committed, resourceful, and creative operators he would ever meet. They were happy to take the foreigner's money but resisted just about anything else. At every turn, the locals seemed one step ahead of Clissold's crew threatening to take the Westerners for all they were worth. In the end, Mr. China isn't a tale of business or an expatriate's love for his adopted land. It's one man's coming-of-age story where he learns to respect and admire the nation he sought to conquer. However EMMA I am not one to rebuke constructive criticism - some of the negative comments - like Pete said - it all looks crooked to me - here and there - get out the PLOW and grow your own future: By any measure, Clissold's tale is a businessperson's nightmare, a sort of Wall Street meets the Wild, Wild East. Politics infects every transaction, rules and contracts are broken as fast as they are made and signed, paperwork is a mess, accounting principles are nonexistent, money disappears or moves from one bank account to another to hide it, local managers lie, embezzle, or compete against their own employer, and everyone works hardest when they are busy lining their own pockets. Attempts to fire managers spark massive lawsuits, beatings, and even riots. Clissold spends nearly all his time putting out fires, holding off his investment fund managers, arguing with Chinese managers he has fired, and pleading his case to judges, government officials, and Party representatives. The harder he works, the more the fund's companies fail until his own health suffers. Tim Clissold tells his story in a surprisingly matter-of-fact tone; he deserves to be far angrier and more cynical. He writes in an entertaining and engaging style, mixing a sort of detached amusement about events with some interesting cultural background. His Chinese managers and officials come across a bit too stereotyped and some of his background is clichéd, but those shortcomings are far outweighed by his outrageous exploits. The only false note occurs in the final two paragraphs of the book when the author attempts - badly and unnecessarily - to soften his message and rationalize the dishonest and outlandish behaviors he has spent the previous 248 pages describing. While Western companies have almost universally eschewed the joint venture approach in China, MR. CHINA nevertheless offers valuable insights about doing business on the mainland. From my own three or four years' observation living in China, I can say that much of Clissold's cautionary advice applies today. Agreements and contracts are still more symbolic than enforceable, adhered to only if and when it suits Chinese interests. I recommend this book highly for both its entertainment value as well as its lessons learned. After so much horrible expeirience, Mr. Clissold deserves credit for writing such an entertaining book without looking bitter or angry. It seems much of the investment under his management have evaporated in the 'learning process,' and I wonder how much profit has been generated so as to justify the investment frenzy in China. On page 127, the author tried to deal with the frustration philosophically that, literally, for every deadbeat, selfish factory director or corrupt government official, there's a whole bunch of smart, hardworking people willing to focus on business growth. Therefore, the author figured that his decision of staying in China and continuing to invest was justified for the sake of the 'good' Chinese, many of whom were his close friends. Given the fact that few foreign ventures have managed to make money in China (maybe except some sweatshops for export purpose), I'm afraid Mr. Clissold's philosophy was more based on emotion than rationality.

Subject: financial demand exceed consumption demand? From: johnny5 To: All Date Posted: Sat, Mar 26, 2005 at 11:03:54 (EST) Email Address: johnny5@yahoo.com Message: http://www.mosler.org/wwwboard/messages/2198.shtml DRAFT FOR COMMENT Enter the Dragon- New Dynamics in the Oil Markets By Tom Nugent and Warren Mosler Traditionally, the hedgers and speculators have ruled the commodity markets. But now a new behemoth has stepped in- the institutional long only, real money, fund manager, who has incorporated indirect ownership of raw commodities as an asset class. Yes, there are very large commercial hedgers, and there are very large hedge funds who are speculators, but this new entrant with $ trillions of assets under management is changing the landscape. In a recent Dow Jones Newswires article by Spencer Jakab, entitled US Pension Funds Dip Toe Into Commodities, Roil Waters the author presents his research into the prospective impact of direct investor involvement in commodities: the advent of new funds that have allowed pension trustees to buy a basket of commodities without dabbling in futures themselves, has unleashed a torrent of money -- an estimated $50 billion of flows into index-tracking funds in the last two years alone, with estimates of another $50 billion on the way in 2005. What makes these funds qualitatively different is that they buy and, for all practical purposes, NEVER sell. In fact, most of them continue to net buy an asset class as a % of their total assets, which means as their financial assets grow over time they buy and hold more and more commodities. And this is exactly what the crude oil markets are telling us. Even as inventories continue to grow well beyond commercial demand, the price continues to rise, as pension funds and the like continue to buy and hoard inventory. And, if allowed to continue, this building inventory will grow indefinitely and NEVER be used! Yes, price is still a matter of supply and demand, but in this case the demand is to hoard- continuously buy and store, and NEVER sell. At the macro level, our own pension funds are buying crude oil to put away forever, by bidding up the price and depriving us FOREVER from using the crude oil they purchase. This is truly a bizarre set of circumstances at the macro level, while it makes perfect sense at the micro level. It is a classic and colossal case of failure of institutional structure to serve public purpose. To make matters worse, this monster has staggering geopolitical consequences that are currently being played out. Hopefully this essay will trigger more of the same that will enlighten our leadership to the forces in motion. But be prepared for things getting much worse before they get better. some comments: ...Interesting article though...I personally have never thought of the money/value question (can financial demand exceed consumption demand for an asset class??) ....Classic shift in the desire to save financial assets to nonfinancial assets. Provides a temporary protection against inflation. Hoarding would be easier with gold than oil but would be too apparent or gold still lacks sufficient 'real' demand? Hoarding will continue until wages and asset prices stabilize at a much higher interest rate (inflation slows). Supply in commodities is unable to keep up with demand, 'real' or 'artificial'. Shift from speculation to investment is needed to create infrastructure for new supply. If supply is sufficient, commodities will be a bad investment (as was for the past 20 years) and 'investment' will end (probably in 20 years). ....I guess the cycle is: fund buys crude to balance it's index portfolio > price goes up > value of portfolio goes up > attacts more assets > buys more crude to rebalance. Lather, rinse, repeat. If it goes on at any scale, it would tend to reverse the dynamics of the global oil industry, so that increased price would lead to increased demand. Could lead to a major tulip-style mania in these funds. I imagine the govt. would step in at some point (having vast stocks of oil sitting in repositories while people are paying $5.00 for gas would inevitably cause a politcal reaction - especially since COngress has a habit of hauling oil executivies before commitees anytime the price of gas goes up 10 cents...) Could get ugly! ....It could also accelerate the rival of existing nuclear fission energy and development of nuclear fusion energy

Subject: Multiple Equilibria From: johnny5 To: johnny5 Date Posted: Sat, Mar 26, 2005 at 11:04:37 (EST) Email Address: johnny5@yahoo.com Message: http://www.mosler.org/wwwboard/messages/2208.shtml Warren: > > This is correct and the start of a phenomenon that > could grow to > substantial proportions. Basis is the > Gorton/Rouenhorst paper out of > Wharton, Yale that advocates the buying and holding > of a collateralized > basked of commodity futures. My best information is > that there is > currently about $40 billion notional in the 'asset > class', with room for > exponential growth. Key will be the bulge in second > and third month > contracts, as holders won't hold spot month for fear > of delivery. Watch > out for big moves at month end as the floor and > short term spreaders are > on the roll trade. > > The next phenomenon to keep your eye on is the > development of ETF's on > physical commodities, which are another way for > non-users to take > physicals off the market. The first one was > approved in gold, but > others are in the works.

Subject: open or closed From: johnny5 To: johnny5 Date Posted: Sat, Mar 26, 2005 at 11:21:28 (EST) Email Address: johnny5@yahoo.com Message: Johnny tried to get his mom into vangaurd energy fund, it was closed to her last week. Is it open yet? If not - here is an alternative - but johnny is in XOM and these things seems to track XOM perfectly. http://biz.yahoo.com/ifunds/050224/20050207_opecoilprice_com_etf_jb_6.html Energy ETFs: A Bet On Higher Oil Thursday February 24, 9:33 pm ET By Jonathan Bernstein, ETFzone Trading Specialist In its meeting last week, OPEC suspended its five-year old oil price band mechanism, formerly $22-$28 for its reference basket of seven crudes. This may seem like an insignificant move given that the price of the reference basket was almost $42 last week and has not traded within the band for over a year. But the OPEC decision underscores what appears to be a new reality, which at least for some has not been fully accepted or understood: oil prices are not expected to make a sustained retreat any time in the foreseeable future. This does not mean that there are no seasonal demand trends. In Spring, for example, as the demand for heating oil falls, prices are historically weak. Seasonal oil price fluctuations are expected to continue. However, just six months ago, popular sentiment was that oil prices were high, gasoline prices were high, but that this was likely temporary. After all, energy prices fluctuate. But OPEC's decision to suspend the price band mechanism points to something different: a structural change in oil demand and higher prices. The chart below shows the price of a barrel of West Texas Intermediate over a 52-week period. Because oil is bought and sold in the futures market, it is not easy for the average investor to make bets on oil. The New York Mercantile is reportedly developing an ETF that will track the price of crude, but this product faces regulatory difficulties and may not be available for some time. In the meantime, some investors have shown interest in the stock of individual oil companies. Although this does provide exposure to oil prices, the correlation may be erratic. Oil service ETFs offer more steady exposure to oil prices, and eliminate some of the risk associated with choosing a specific company for investment. The chart below compares the 52-week return of two oil service ETFs, the Energy Select SPDR (AMEX:XLE - News) and iShares Goldman Sachs Natural Resources (AMEX: IGE - News). A comparison of the two charts above shows that, in the past year, oil the commodity has been more volatile than ETFs containing the companies which service it. As the price of crude jumped from about $35 a barrel in June to about $55 a barrel in October (an appreciation of over 50% in just four months), oil ETFs also improved; however, the ETFs' gain was only about half as much, or 25%. When the price of crude fell sharply in November and December, energy ETFs did not retreat. Now oil is trading higher again and energy ETFs are flirting with new highs. To a certain extent, OPEC members have historically thought in terms of a supply and demand curve. Remove supply, oil costs more. But if oil costs too much more, there is a risk that higher oil will send the world into an economic slump, ultimately hurting world demand for oil. At very high prices, alternative sources of energy become viable, further hurting demand. For this reason as well as others, OPEC, and particularly Saudi Arabia, the worldÂ's largest exporter and low-cost producer, have historically sought to maintain a price level favorable to economic development. But OPECÂ's formal decision to abandon their price band affirms what the market is already indicating: the curve is shifted higher. Last year, rising oil prices were driven by both changes in supply and demand. On the supply side, political trouble in Venezuela restricted supply. Iraq also provided less oil than had originally been anticipated. Hurricanes in the Gulf knocked oil rigs off-line. On the demand side, the most important enduring factors were the increasingly thirsty China and India fueling their economic boom. Like OPEC, investors are looking at the numbers: last year the global economy grew at about 5%. For its part, the US economy grew an astonishing 4% last year, despite some of the highest oil prices seen in years. The conclusion seems to be that high oil prices are not the threat to the global economy that they once were. Though OPEC ministers from different nations vary in their opinions of an ideal price level per barrel, many say that oil at $50 a barrel is not a threat to the world economy. Global expansion and higher oil prices may not ultimately be sustainable. Last year a number of factors arguably contributed to global expansion and increased demand for oil including low interest rates globally, a weak dollar, and massive deficit spending by the United States. Although higher oil and gasoline prices are no longer a nightly news story, the economic costs of higher oil have not gone away.

Subject: China's Success So Far From: Emma To: All Date Posted: Sat, Mar 26, 2005 at 10:35:14 (EST) Email Address: Not Provided Message: Then, during the strong dollar period China was able to sustain growth because it trade in large part with America and besides labor costs are especially low. The strong dollar or Yuan could be used to easily buy investment resources from other Asian countries, and oil was especially inexpensive. Besides, China has had a growing share of high value exports such as aircraft parts for Boeing. The price of doing business in China, has long been technology transfer. So, China grew well through the strong dollar period and was insulated from the Asian currency crisis because of exchange controls and ample reserves beyond. When the dollar began to weaken China was helped again competitively, though reserve accumulation is a growing current problem.

Subject: How much more of our soul can we send? From: johnny5 To: Emma Date Posted: Sat, Mar 26, 2005 at 10:53:28 (EST) Email Address: johnny5@yahoo.com Message: You have a good point Emma, tech transfer, manufacturing transfer, they have hollowed us out in those regards and took that wealth from us, everything I read says about all they have left to take is financial services transfer - then we will be empty and barren and have nothing left to send their way. Remember london used to be the tech, manufacture, financial center of the world no? Then other places with cheap labor and enterprising intellectuals took that throne away - mostly it was america, now the financial center of the world is no longer London, but New York, and then when we read articles that citigroup is going to beijing (was that you?) then what is left to transfer from our tech, manufacture, service sector to china?? In the movie blade runner the prediction was that asia would be the world center for tech, manufacture, finances by 2020 - very prescient film.

Subject: Re: How much more of our soul can we send? From: Emma To: johnny5 Date Posted: Sat, Mar 26, 2005 at 11:45:58 (EST) Email Address: Not Provided Message: Interesting, but there ca be enough work for all and there is no reason increasing trade can not continue to be mutually beneficial as it was between America and Europe for 200 years. There is much more to be discussed however. A bit later...

Subject: We are Only Trading From: Emma To: Emma Date Posted: Sat, Mar 26, 2005 at 11:48:14 (EST) Email Address: Not Provided Message: We are not sending our soul, nor gaining our soul, we are trading. Both countries should and do gain.

Subject: You didn't read Warren Emma From: johnny5 To: Emma Date Posted: Sat, Mar 26, 2005 at 12:15:07 (EST) Email Address: johnny5@yahoo.com Message: He said in the annual report that trading goods and products is smart, he referenced smith I believe, but he said that is NOT what america was doing, we are not trading goods produced on our farm, we are selling off the farm to watch nice made in china plasma tv's. He said we are not trading goods made in our factories to improve our specialization, we are trading off the factories to wear made in china clothes. You disagree? Huh?

Subject: Comparative advantage? From: johnny5 To: Emma Date Posted: Sat, Mar 26, 2005 at 12:04:13 (EST) Email Address: johnny5@yahoo.com Message: When there is no more specialization to disperse, there are a glut of specialists globally, and you are a seamstress who no longer is needed in the world, and there is NOTHING you can retrain to become to add productivity - there are no more or few places to get niche training in, but you are starving and there is some land over in the jungle to grow food on, what do you do Emma?

Subject: Was Timing Easy or Justified? From: Terri To: All Date Posted: Sat, Mar 26, 2005 at 10:01:44 (EST) Email Address: Not Provided Message: The assumption that timing the market is harmful to investors may well prove generally true, and is certainly ture in many cases, but there is more. In 1987, the S&P Stock Index was up 45% by August. A bull market had begun in summer of 1982. The market was expensive and soaring, while interest rates were climbing as the Federal Reserve tightened. Of course, an investor who bought bond funds after July or who became more conservative in stock allocation avoided in part or whole the October crash and kept 40% of more in capital gains. A crashed market was at once a terrific buy. Was timing really so easy or justified?

Subject: A Parts Supplier to an Aging Population From: Emma To: All Date Posted: Sat, Mar 26, 2005 at 09:41:48 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/03/26/business/26stryker.html?pagewanted=all&position= A Parts Supplier to an Aging Population By BARNABY J. FEDER On a Friday morning not long ago, a surgical team at the New York Hospital for Joint Diseases sliced, drilled, probed, sawed and hammered its way through a two-hour operation to replace the left knee of Joseph Madden, a retired policeman, with a metal and plastic substitute. Hovering in the background, when he was not scurrying off to two neighboring operating rooms to peek in on knee operations there, was Dan Driesse, a sales representative for the Stryker Corporation. Stryker, based in Kalamazoo, Mich., manufactured all three artificial knees being implanted that morning. Mr. Driesse was on hand to answer any questions that came up or to substitute devices quickly if the doctors decided that a slightly different size was needed. But that is just scratching the surface of Stryker's involvement. Stryker also made the new surgical navigation system that Mr. Madden's surgeon, Dr. Patrick Meere, was testing that morning. Dr. Meere wore Stryker's Steri-Shield gown and surgical hood to protect himself as he worked. He used its cutting guides and power tools to saw off the ends of Mr. Madden's thigh and shin bones and to drill the holes into which Stryker screws were inserted to hold the pieces of the artificial knee. And when it came time to apply bone cement to hold the new knee in place, Dr. Meere reached for Stryker's Mixivac mixing unit and whipped up a batch of Simplex P, a Stryker product that leads the orthopedic adhesives market. Like a major supplier of parts to an auto assembly line, Stryker offers countless devices and accessories to hospitals worldwide, some on a just-in-time basis. But automakers can only dream of the kind of growth prospects that Stryker has. Ever-increasing numbers of aging baby boomers will be driving demand for Stryker's hips, knees and spinal implants - and the tools to install them - for years to come. Investors like what they see. Although the company is still not widely known by patients, its shares are now worth $18.6 billion, roughly the same value investors put on longtime heavyweights like International Paper, Volkswagen and General Mills. Wall Street's view reflects not just Stryker's prospects but respect for its track record under John W. Brown, an unassuming workaholic who ran Stryker for 27 years. During that time, earnings grew by more than 20 percent every year but one. Mr. Brown, 70, now Stryker's chairman, gave up his job as chief executive on Jan. 1. The successor Mr. Brown recruited, Stephen P. MacMillan, 43, now has Wall Street wondering how long he can keep up the blistering growth pace. 'MacMillan is in a honeymoon period,' said Dr. Mark Landy, an analyst who follows device companies for the Susquehanna International Group of Companies. ' 'Show me' is coming.' Mr. Brown, a Tennessee native and engineer by training, transformed Stryker from a family-owned business with $70 million in annual sales of hospital beds and surgical tools into a diversified health care giant with $4.2 billion in revenue last year. In orthopedics, its biggest business, it runs neck and neck with Johnson & Johnson for market leadership, slightly ahead of Zimmer Holdings, based in Warsaw, Ind. Stryker's intense culture is on display at its large orthopedics factory in Mahwah, N.J., where each manufacturing station tracks and posts on its bulletin board not just standard production records but even details like employee sick days. As Stryker sees it, sick days are a measure of morale because motivated workers show up even when they are ill. Mr. MacMillan is well aware that pressure to hit high growth targets has seduced many companies into misguided investments and accounting shenanigans. 'Actually, 20 percent earnings per share growth is our second most important metric,' Mr. MacMillan said. 'The most important thing we need to do is to make sure we continue to run the company in an ethical manner where we don't bend the rules to meet our goals.' Stryker's attention was focused on such issues late in 2003 when the Justice Department subpoenaed records of Physiological Associates, a subsidiary that provides physical therapy services. Stryker says the unit's top management has been replaced and that it is cooperating with the government's investigation into whether the unit, the only part of the company that does not make a product, fraudulently overcharged for services. Mr. Brown fashioned Stryker into a highly decentralized sales-driven company - so Stryker might seem especially vulnerable to such misconduct. The company, for instance, has developed an extensive screening program with the Gallup Group to spotlight attributes like competitiveness in job applicants. But Mr. Brown was also wary enough of the competitive personalities Stryker recruited to demand strict financial monitoring practices at the operating divisions. Mr. Brown said in an interview recently at a New York sales meeting that one division fired its top salesman for pushing more product into a hospital's inventory than the hospital ordered at the end of last year. 'Our management pounced on it,' he said proudly of the division leaders, whom he declined to identify. Mr. MacMillan's background includes marketing consumer products like Tylenol at Johnson & Johnson and running a group of human and animal health companies with $2 billion in revenue at Pharmacia. He joined Stryker as president and chief executive in 2003. Even before Mr. MacMillan took over, better marketing had become a priority for Stryker. Stryker's advertising to consumers of its ceramic hip replacements, featuring the golfer Jack Nicklaus, has been an eye-opening success in an industry used to thinking of surgeons, not patients, as its customers. But Stryker concedes it stumbled onto that opportunity when Mr. Nicklaus participated in a clinical trial and was delighted with the results. Now, it is trying to build its brand actively rather than simply reacting to a lucky break. 'Steve is going to make Stryker better known on Main Street and around the world,' Mr. Brown said. Mr. MacMillan also wants Stryker to move faster to marry biotechnology and orthopedics. The long-range dream is to develop protein products that grow or restore bones and can be injected, with none of the trauma involved in inserting today's metal or ceramic substitutes. Mr. Brown began investing in such innovations in 1985, but, $300 million later, the only uses approved by the Food and Drug Administration for the Stryker protein are limited to humanitarian cases where other bone-healing procedures have failed. Meanwhile, Medtronic, which did a better job of analyzing the market and demonstrating its product to the F.D.A., is raking in huge profits from Infuse, a protein compound used to grow bone in spinal fusion procedures. The race to develop bone protein products is one of many signs that even as the orthopedics business grows to meet the needs of an aging population, it may be split among several competing technologies, all of them requiring heavy investment to develop. Last fall, Stryker bought SpineCore, a start-up company in Summit, N.J., to gain access to its designs for artificial disks that could be implanted in the lower back and neck. The investment, which will cost up to $360 million depending on progress in developing the disks, brought the total invested in start-up disk companies by Stryker and three large rivals to more than $1 billion. Stryker, which does not expect SpineCore's first product to be approved before 2008 at the earliest, is betting that its design will be a big enough improvement to overcome the disadvantage of being among the last to market. In the shorter term, Stryker looks well positioned to hit its 20 percent earnings growth goal this year. In the longer run, though, Mr. MacMillan's challenge may be to convince Wall Street that Stryker can become stronger by recalibrating its growth goals. 'His legacy,' said Dr. Landy, the analyst, 'could be to lead a diversification that would lay the basis for somewhat slower growth over a longer period of time.'

Subject: Social Security and Productivity From: Emma To: All Date Posted: Sat, Mar 26, 2005 at 09:37:18 (EST) Email Address: Not Provided Message: What is thoroughly sad is that the latest projections of the Social Security trustees, with the absurd assumptions of impossible to comprehend deficits in 75 and 150 and 300 years, has been taken through the media to mean the system is failing and there must be benefit cuts or tax increases or both. The truth is we simply do not know if there will eventually be a Social Security deficit. Certainly there will not be for many years. We will not know for years. If productivity growth and labor force participation are moderately above projections, there will never be a problem. Simply assume productivity is a reasonable 1.9% and there will never be a problem. Of course, if we grow convinced Social Security will fail all is lost.

Subject: Strong and Weak Dollar Growth in China From: Emma To: All Date Posted: Sat, Mar 26, 2005 at 09:23:13 (EST) Email Address: Not Provided Message: Notice the development difficulties immediately called attention to in Lesotho and El Salvador, both countries having adopted what were supposed sensible currency policies. Remember too that China was successfully pegged to the dollar through the Rubin and Summers years at Treasury with an increasing dollar value, especially note how China insulated itself after 1997 from the loss in currency value of surrounding Asian economies. China then has been successful at sustaining growth in strong and weak dollar periods.

Subject: Development and a Weak Dollar From: Emma To: All Date Posted: Sat, Mar 26, 2005 at 09:22:10 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/03/12/business/worldbusiness/12africa.html?ei=5070&en=6b0ddd5ceb03f8fc&ex=1112418000&pagewanted=all&position= Dollar's Fall Silences Africa's Garment Factories By MICHAEL WINES MAPUTSOE, Lesotho - Buy a T-shirt at Wal-Mart, fleece sweats at J. C. Penney or Hanes panties anywhere in the United States, and there's a halfway decent chance that they were stitched together here, in an acre-size garment factory crammed with thousands of frantically clacking sewing machines. Virtually its entire output, 25,000 items of clothing daily, is America-bound. These days, that is a disaster. 'Two thousand people work here, and unfortunately last week I had to retrench 500 people, because there are no orders,' Boodia Heman, director of the Ever Unison Garments factory, said in a recent interview. 'The American buyer is not coming to Lesotho to buy.' Actually, the problem is not so much the buyers from America. It is the American dollar, and its headlong plunge in value. Three years ago, Lesotho's garment factories had to sell only $56 worth of clothes to stores in the United States to cover the monthly wage of 650 maloti for a sewing-machine operator. Today, that same salary consumes $109 in sales. When the dollar is worth 8.5 maloti or more, Mr. Heman said, 'we break even and we are satisfied.' Right now, the weak dollar fetches less than 6 maloti. The dollar could not have shrunk at a worse time for southern Africa. In January, China's powerful apparel industry was freed from the so-called multifiber arrangement, which for decades set nation-by-nation quotas and capped its garment exports to the developed world. Now China, which keeps its currency tightly pegged to the dollar, has begun to pursue the American market much more avidly.... http://www.nytimes.com/2005/03/25/business/worldbusiness/25textile.html?pagewanted=all&position= Fraying of a Latin Textile Industry By GINGER THOMPSON SAN SALVADOR - Mondays are hiring days at the hulking garment factories that in the last 15 years helped lift El Salvador up from war and bring some 90,000 families out of extreme poverty. By 7 a.m., hundreds of women like Gloria Campos are lined up, hoping to get a tiny piece of prosperity. But shifting global trade rules threaten to reverse El Salvador's industrial revolution. Employment in the garment industry, until recently a source of growth, declined in 2004 for the first time in a decade. The government puts the number of jobs lost at nearly 6,000. Managers of assembly plants said the number was almost twice as high. Thousands more jobs will be lost this year, they predicted, threatening to drive up El Salvador's largest export to the United States: its people. Trouble in the garment industry, brewing for years, has heightened here and in other struggling parts of Central America, as an end to global textile quotas at the beginning of the year spreads textile and clothes manufacturing to other parts of the developing world, particularly China....

Subject: Timing the Markets From: Terri To: All Date Posted: Sat, Mar 26, 2005 at 08:38:23 (EST) Email Address: Not Provided Message: Suppose we think about what kind of market timing may be realistic. Perhaps the common wisdom is wrong, and timing can work to an extent. Then how?

Subject: 'Connections' From: Pete Weis To: All Date Posted: Fri, Mar 25, 2005 at 22:28:02 (EST) Email Address: Not Provided Message: This was a long and very fascinating PBS television series - wish they would run it again. Anyway, for those not old enough to have watched it back in the early 80's (I believe), it starts with the narrator standing in a New York subway with a simulated brown-out. It was a time when brown-outs were terrorizing power grids, especially in the Northeast during the hot summers. He asks the question - what would our lives be like if we were suddenly without our technology and without electricity - how specialized and dependent have we become to our modern conveniences? Then he asks the question - where did it all begin? What essential invention started it all? And thus the series starts on a journey through time making many connections - one technological advance leads to another, often by accident - and some of the connections were a stretch, but never-the-less thought provoking. Incidently if you missed the series, the essential invention which started it all was, of course, the plow. It was the point at which we transitioned from hunter-gatherers to agricultural based civilizations which allowed specialization. The amazing thing for me is that it took thousands of years after the invention of the plow for humans to advance much beyond this existence where we depended on human power and/or animal power for transportation and everyday tasks. There was little to no 'middle-class' - only the wealthiest nobility class and a small relatively wealthy merchant class. It was all about ownership of land. And until the 18th century there were no more truely great inventions save the printing press. Oh, there was the development of gun powder, metal smithing, simple human-powered weaving machines, etc., but other than the printing press nothing earth shattering. Then almost suddenly (like touching Stanley Kubrick's obelisk) someone gets the inspiration of harnessing water power in the multitude of rivers and streams in England - the industrial revolution is born. The middle-class, economics, and intense technological development is born. We have transitioned from water power to coal fired steam power to oil and gas fired steam- electric power. But now we are at a true crossroads and one road takes us over a cliff and the other requires a leap to get to the other side. As we hesitate that leap is growing larger and the time to reach the other side growing shorter. Our easy, comfortable life is very much at risk. If we don't transition to the next energy source quickly we will inevitibly regress and the middle-class which is at the heart of our economic, political, and social well being will begin to dissolve. The early stages of this developing chasm will be high inflation as steeply rising energy costs will push up the cost of everything - remember the 70's. This will mandate much higher interest rates and worsen the current account deficit - this will absolutely take out the housing markets in areas where they have risen the most - the 70's were not preceded by a huge run-up in assets including real estate. If you read the article by the Princeton geologist which was posted earlier today and the supporting accounts of troubles in the largest Middle Eastern oil fields regarding water cuts, etc. which have appeared in numerous papers such as the NYT's, then you realize that we are very close to a point of diminishing worldwide oil production at the very time when world demand is rising steeply. The truth - $60/barrel oil will seem very cheap in the not too distant future. Countries like China know this and so they will inevitibly divert a larger and larger portion of their surplus dollars into the hording of this precious resource. Speculation and futures markets are and will continue to run this resource through the roof. Only a very deep, long lasting recession is likely to reverse this and only for a relatively short period before energy costs begin to rise again whether or not the recession continues. If the past is any indication we will wait for the crisis before any real solution is explored.

Subject: THe plow From: johnny5 To: Pete Weis Date Posted: Sat, Mar 26, 2005 at 10:42:14 (EST) Email Address: johnny5@yahoo.com Message: 'Our easy, comfortable life is very much at risk. If we don't transition to the next energy source quickly we will inevitibly regress and the middle-class which is at the heart of our economic, political, and social well being will begin to dissolve.' Not to worry Pete, Let Terri and me cheer you up, my grandfather, and his father and grandfather before him did very well in raising their families and living long healthy lives with little more than using a plow to dig the earth. The problem is not to fear hard work like people lining up in welfar lines, the fear is to negative perceive that living a life of hard work makes one a failure in today's world. All we have to do is turn off these computers, stop letting Oprah waste that energy to forward the chain mails and get the plow out of the shed and make some food. Oprah did a special last year on living like our grandfathers where she went and stayed in an amish like community with no cell phones or electricity and such where they PLOWED the land - she survived and got to know her neighbors very well - she sure hated doing it though - you could tell a hard days work was really bringing down her spirits - not uplifting them. We will be in better shape for the plow, people will talk to their neighbors more, and your food won't have all those chemicals and pollutants that you probably get now.

Subject: A perfect storm From: Dorian To: Pete Weis Date Posted: Sat, Mar 26, 2005 at 05:56:53 (EST) Email Address: Not Provided Message: These recent articles about Hubbert's Peak have been surprising, not because of the anticipated event but because so many highly authoritative people are predicting it just around the corner: one, two, perhaps three years from now. By itself this will pose a crisis of enormous proportions as Pete has outlined, since oil is the lifeblood of modern society. But add into the mix the huge economic imbalances and collapses which seem almost inevitable. Global warming (recent reports indicate much more serious consequences much earlier than anticipated previously), overpopulation, environmental degradation, terrorism combined with easier access to weapons of mass destruction, potential global pandemics (e.g., avian flu)- it raises nostalgia for the days when the worst we had to worry about was Mutually Assured Destruction in the standoff with the Soviets'. There were dangerous, but they were at least reasonable by comparison with Al Qaeda. Who knows what the future may bring, but it looks like the comfortable life we have been used to in the United States will be amply challenged in years to come. Oh, I forgot to mention: we have George Bush at the helm, which is almost like a Divine joke.

Subject: Being Hopeful From: Emma To: Dorian Date Posted: Sat, Mar 26, 2005 at 08:18:16 (EST) Email Address: Not Provided Message: These are important and moving comments. This is evidently not a time when we are collectively able to look ahead with imagination, but there will be such a time. Many people understand the respect with which we need to view our surroundings, our environment. There will be more such people and leaders who reflect these views.

Subject: You are in good hands with all state! From: johnny5 To: All Date Posted: Fri, Mar 25, 2005 at 20:56:03 (EST) Email Address: johnny5@yahoo.com Message: Deficits everywhere you look! http://www.palmbeachpost.com/business/content/business/epaper/2005/03/24/a1d_insure_0324.html Citizens sees $525 million deficit By David Secore Palm Beach Post Staff Writer Thursday, March 24, 2005 The latest numbers from Citizens Property Insurance Corp. has the state-sponsored homeowner insurer of last resort running a $525 million deficit, meaning homeowner coverage statewide will be more expensive for everyone. That shortfall is $125 million more than the $400 million deficit Citizens previously projected. Chief Executive Bob Ricker on Wednesday told the task force examining Citizens that the company appears to be running the deficit after paying $1.6 billion in property-damage claims from 2004's quartet of hurricanes. The task force is charged with finding ways to improve the way the insurer operates. If an independent audit now under way confirms the numbers, Citizens is required by state law to assess all homeowner policies, including those issued by private insurance carriers. The audit, being done by the Ernst & Young accounting firm, is expected to be completed by mid-April. Citizens spokesman Justin Glover said that with a $525 million deficit, a homeowner who pays an insurance premium of $750 a year would be hit with a one-time payment of $50. With an annual premium of $1,500, that translates to a one-time payment of $100. The Citizens board of directors would have to approve the assessment, which then would be reviewed by the state Office of Insurance Regulation before going into effect.

Subject: Where's the bread? From: johnny5 To: All Date Posted: Fri, Mar 25, 2005 at 20:53:55 (EST) Email Address: johnny5@yahoo.com Message: Where did the money go? Pete why do you still invest in the markets knowing how crooked and rigged it is?? http://www.palmbeachpost.com/business/content/business/epaper/2005/03/24/c1a_perelman_0324.html Judge rules banker knew of scheme by Sunbeam By BILL DOUTHAT Palm Beach Post Staff Writer Thursday, March 24, 2005 WEST PALM BEACH — A judge Wednesday found investment banking firm Morgan Stanley helped its client Sunbeam Corp. commit fraud by hawking false information about the company's finances and stock value to investors in 1998. The ruling by Circuit Judge Elizabeth Maass tightens the noose on Morgan Stanley's defense of a $2.7 billion lawsuit by financier Ronald Perelman, who claims he lost millions by taking Sunbeam's stock. Because of the ruling, Perelman needs only to convince a jury that he relied on Morgan Stanley's word in the deal. The jury also will decide damages. Perelman, a former Palm Beach resident, is seeking $680 million from losses and $2 billion in punitive damages. More troubles beset Morgan Stanley on Wednesday when it argued before Maass that it wants to dump its primary legal team defending against the Perelman lawsuit. Perelman's attorneys argued that Morgan Stanley fired the Kirkland & Ellis law firm as part of a ploy to delay the trial and shift blame for pretrial misconduct to its attorneys. 'They should not be permitted to take advantage of their own misconduct,' said Jack Scarola, an attorney for Perelman. 'This is a self-inflicted wound.' Since the Chicago-based Kirkland & Ellis continues to represent Morgan Stanley in a host of other cases, the request to dump them is suspect, said Jerold Solovy, another attorney for Perelman. Morgan Stanley attorneys say no decision has been made on the law firm's representation on other cases. In its request to the court to drop the law firm, Morgan Stanley said it had 'lost all confidence' in the firm and advised it may sue for legal malpractice. Morgan Stanley also offered to pay all costs of the court and Perelman's attorneys for the past four months for any delay caused by replacing Kirkland & Ellis. Maass allowed Kirkland & Ellis to withdraw from the trial but refused Morgan Stanley's request for a six-month postponement in starting testimony. 'This is a problem Morgan Stanley created for themselves,' Maass said in announcing the trial would start March 30, a week late. Maass said the defense is ably represented by West Palm Beach attorneys Joe Ianno, Tom Warner and others. The sudden firing of the Kirkland & Ellis team shocked attorneys in the courtroom. :We have about 200 years of legal experience on our side, but none of us have seen anything like this,' one of the Perelman attorneys said outside the courtroom. Jeff Davidson, the lead attorney for Kirkland & Ellis, sat in the spectators' seats during arguments Wednesday. He declined comment as he left the courtroom. Morgan Stanley has denied it misled Perelman's Coleman Parent Holding Inc. in the deal with Sunbeam, arguing that it also lost millions of its own money on the deal because former Sunbeam CEO Al Dunlap inflated stock values. But the investment banker lost credibility with the court by failing to release company e-mails Perelman said he needed to trace the fraud. Despite a pledge to Maass in June that all e-mails were turned over to Perelman's attorneys, Morgan Stanley knew the pledge was false, Maass ruled on March 1. To punish the firm, Maass turned the tables and ordered Morgan Stanley to prove during the trial it was not guilty to conspiring with Sunbeam to defraud Perelman. That burden usually falls to the party that brings a lawsuit. During one hearing on the issue this month, Maass questioned Davidson's claims that Morgan Stanley was doing the best it could to produce all e-mails. 'Why would I not characterize this as the thief who's not sorry he committed the crime, but really sorry he got caught?' Maass responded. Scarola later asked Maass to declare Morgan Stanley in default of a defense and limit the jury's role to determining money damages. Maass didn't go that far, but settled on reading a statement to jurors that Morgan Stanley knew of a 'fraudulent scheme' to hide Sunbeam's true financial picture. The ruling is punishment for Morgan Stanley's withholding critical evidence from Perelman's attorneys. 'Morgan Stanley's wrongful conduct has continued unabated,' Maass said in her ruling. The court will tell jurors that Morgan Stanley provided Perelman with false information and aided in a scheme to mislead Perelman to cover up massive fraud. If jurors decide Perelman relied on the information, its only remaining duty would be to determine how much money is owed to Perelman, the president of cosmetics giant Revlon Inc. After the ruling, Morgan Stanley issued a statement that it would appeal if a jury finds it defrauded Perelman. 'We respectfully disagree with the court's ruling,' the statement said. 'Far from being part of the Sunbeam fraud, Morgan Stanley was a victim of that fraud, losing $300 million.'

Subject: Understanding China Better From: Emma To: All Date Posted: Fri, Mar 25, 2005 at 18:52:27 (EST) Email Address: Not Provided Message: http://www.pbs.org/wgbh/nova/lostempires/china/ There is a wonderful PBS program called China Bridge, that may better explain how leaders understand China and how they have sought to control a country that really cannot be controlled for centuries. The transcript and exhibits alone will give a feel for Chinese history that will help find China this day.

Subject: Understanding China Better - 1 From: Emma To: Emma Date Posted: Fri, Mar 25, 2005 at 19:03:45 (EST) Email Address: Not Provided Message: There has been a rhythm to leadership in China, when the leaders have been successful. China is vast in population and area and cultural differences area to area are sharp. The felt need is Beijing is ever for control and stability. But, even in periods of collectivization control was a troublesome problem and stability elusive. With market development control becomes at least more complex. How then to administer such a country?

Subject: Tomorrow On Cspan2 From: johnny5 To: Emma Date Posted: Fri, Mar 25, 2005 at 19:50:35 (EST) Email Address: johnny5@yahoo.com Message: In Defense of Globalization Stamford, Connecticut (United States) ID: 185876 - 02/16/2005 - 0:59 - $29.95 Bhagwati, Jagdish N., Senior Fellow, Council on Foreign Relations Mr. Bhagwati talked about his book In Defense of Globalization, published by Oxford University Press. Among the topics he addressed were economic globalization and free trade and the beneficial impact of trade agreements for countries around the world. Professor Bhagwati argued that well-meaning critics misunderstood free market economic globalization and problems like the use of child labor in poor countries. He also argued that the practice of outsourcing had been wrongfully demonized in the U.S. Professor Bhagwati answered questions from members of the audience following his remarks.

Subject: Re: Tomorrow On Cspan2 From: Terri To: johnny5 Date Posted: Fri, Mar 25, 2005 at 20:10:19 (EST) Email Address: Not Provided Message: Thank you, as always.

Subject: Resource Demand and Supply From: Terri To: All Date Posted: Fri, Mar 25, 2005 at 18:11:51 (EST) Email Address: Not Provided Message: Remember, there are China and India to consider. There was an extended period when resource prices were weakened since demand could not match extraction and processing. There was technology application at a fundamental level. Can extraction and processing match demand from here? China, India, Brazil, and we would hope more?

Subject: Resource Investment From: Terri To: Terri Date Posted: Fri, Mar 25, 2005 at 18:12:33 (EST) Email Address: Not Provided Message: There is far less investment in resource exploration and processing and transport than might be expected given the increase in commodity prices. Why, I wonder?

Subject: Time, money & scarcity From: Pete Weis To: Terri Date Posted: Fri, Mar 25, 2005 at 20:44:33 (EST) Email Address: Not Provided Message: Which type of resource are we talking about? There simply isn't much untapped oil reserves in the ground to go after in the first place. Tar sands may be a solution but its expensive to extract and will take a while to develop large scale extraction operations. Many areas which are promising for extraction of base metals or precious metals are remote (no power, roads, etc.) and take years and much expense to get actual mining operations going after extensive drill hole surveys have been completed. Furthermore mining operations are notoriously shaky businesses and it's often difficult to raise capital. Most investors are much more interested in pumping money into Google then say a junior like NovaGold (NG) (which owns sizeable proven reserves of gold & copper) or even a major like Newmont. The market cap of the entire worldwide mining industry is a fraction of just one of the largest S&P companies. So where do you suppose the next phase of irrational exuberance will direct itself?

Subject: Excellent Critique From: Terri To: Pete Weis Date Posted: Fri, Mar 25, 2005 at 20:55:42 (EST) Email Address: Not Provided Message: Excellent comment. This changes my thinking quite a bit. Pete, read this article on real estate: http://www.nytimes.com/2005/03/25/business/25boom.html?pagewanted=all&position= Trading Places: Real Estate Instead of Dot-Coms By MOTOKO RICH and DAVID LEONHARDT

Subject: Interesting article From: Pete Weis To: Terri Date Posted: Fri, Mar 25, 2005 at 23:00:32 (EST) Email Address: Not Provided Message: Donald Trump says 'buy, buy, buy!' It's pretty sad people are listening to this giant ego who went belly-up in the late 80's real estate bust and left a bunch of creditors high and dry. Now he has gone bust with his Atlantic Beach casinos and has been removed from their management. He is a great self-promoter but has been a pretty poor businessman and investor throughout his life and has gotten into many bad investments usually involving real estate. So it's comical as well as sad to see folks buying his real estate investment books. He better sell a lot of those books because, IMO, he and his creditors are about to once again absorb some big time losses with his real estate investments.

Subject: Subsidies for Resource Development From: Terri To: Terri Date Posted: Fri, Mar 25, 2005 at 20:59:36 (EST) Email Address: Not Provided Message: Then, like China we need to use subsidies to encourage reasource development and efficieny of use and conservation. I agree, but politically this will come hard.

Subject: REITs and Earnings From: Terri To: All Date Posted: Fri, Mar 25, 2005 at 17:10:30 (EST) Email Address: Not Provided Message: We really have no experience with this sort of real estate market, or is it more me? Earnings growth for the REIT index has been negative for the last 4 years, which seems to tell us that REITs are appreciating not partly because of income growth but solely because of price appreciation of owned properties. Since the REIT index has led growth in the broad stock indexes since 1973, it is not as though real property is playing catch up.

Subject: The best investment for you money Terri! From: johnny5 To: All Date Posted: Fri, Mar 25, 2005 at 16:41:42 (EST) Email Address: johnny5@yahoo.com Message: You should like this Pete, Terri my friend - does this not make you take pause about your EMH theories in the REAL world? http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&category=19270&item=5565432905&rd=1 OFFICIAL HOLY PAN- Virgin Mary Grilled Cheese Sandwich They bidded up to 20,300 US dollars for a frying pan that grilled a virgin mary cheese sandwich - and you want to talk to me about efficient allocation of CAPITAL - BWAHAHAHA! Some of this is farce, but some people really PAY such prices for such things - my goodness its insanity!!

Subject: Beker, DeLong, and Krugman: On Growth From: Terri To: All Date Posted: Fri, Mar 25, 2005 at 15:04:27 (EST) Email Address: Not Provided Message: http://delong.typepad.com/sdj/2005/03/asset_returns_a.html March 24, 2005 Asset Returns and Economic Growth: Full Draft Yes, we have a full draft of: Dean Baker, J. Bradford DeLong, and Paul Krugman (forthcoming 2005), 'Asset Returns and Economic Growth,' Brookings Papers on Economic Activity 2005:1. Abstract: We in America are probably facing a demographic transition—a slowdown in the rate of natural population increase—and possibly facing a slowdown in productivity growth as well. If these two factors do in fact push down the rate of economic growth in the future, is it still prudent to assume that the past performance of assets is an indication of future results? We argue “no.” Simple standard closed-economy growth models predict that growth slowdowns are likely to lower the marginal product of capital, and thus the long-run rate of return. Moreover, if you assume that current asset valuations represent rational expectations, simple arithmetic tells us that it is next to impossible for past rates of return to continue through a forthcoming growth slowdown. Only a large shift in the distribution of income toward capital or current account surpluses larger than those of nineteenth century Britain sustained for generations give promise for reconciling a slowdown in future economic growth with a continuation of historical asset returns.

Subject: Paul Krugman on Social Security Outlook From: Terri To: Terri Date Posted: Fri, Mar 25, 2005 at 15:07:28 (EST) Email Address: Not Provided Message: http://delong.typepad.com/sdj/2005/03/the_social_secu.html [T]he slight deterioriation in the near-term [Social Security] outlook is the result of a strange asymmetry between what is updated to reflect recent data, and what isn't.... [T]wo very recent events affect the projections for many years to come.... this year's [substantially] oil [price]-driven inflation rate leads to a reduction in the assumed real wage rate in all future periods... this year's low real interest rate leads to lower assumed earnings [on] the trust fund for a very long time.... On the other side, high productivity growth since 2000... seems like big news... [but] isn't factored in at all. The reason is that the trustees use an average over the past four 'full business cycles,' measured from peak to peak (Section IV.B.7).... [T]hey won't take the good productivity news since 2000 into account [at all in forecasting the future] until the economy [begins] another recession. There's something very wrong with that...

Subject: Productivity From: Terri To: All Date Posted: Fri, Mar 25, 2005 at 14:39:39 (EST) Email Address: Not Provided Message: Long term real growth of 2.2% is entirely reasonable, but real stock market returns of 6.5% will be tricky. There is however no reason to believe we are anywhere near exhausting productivity gains from development and application of information technology tools. Productivity applications in health care are wonderfully promising, and we will not soon experience a slowing of growth in demand for health care services. Growth-wise, I am optimistic. Looking to our economic structure, I worry.

Subject: Too Much Capital From: Emma To: All Date Posted: Fri, Mar 25, 2005 at 14:20:32 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/03/25/business/25norris.html Too Much Capital: Why It Is Getting Harder to Find a Good Investment THERE is too much capital in the world. And that means that those who own the capital - investors - are in for some unhappy times. That thesis may sound inherently unlikely, but it explains a lot. Those with capital find they must pay high prices for investments that are likely to produce only a little income. The relative importance of things other than capital, like commodities and cheap labor, has grown. Evidence of the capital glut can be seen in interest rates. Market rates are low, and even when central banks set out to raise short-term rates, longer-term rates are slow to move. Little additional yield is available to those who buy very risky bonds. For the same reason, stock prices are high. Profit disappointments may not cause the stock market to plunge, since the capital will have to go somewhere. But the return on the underlying investments is likely to be below what investors have expected. With capital in a weakening position, returns that once would have gone to owners of capital have gradually been redirected. That is one way to explain the surge in management compensation in the last two decades. In the early 1980's, when interest rates were high and stock prices low, the average chief executive received no stock options in any given year. Now nearly all get sizable grants, and one study found that chief executive pay rose faster than that of any group save for professional athletes and movie stars. Those who provided the capital had less power to demand the profits from the enterprises they financed. Another sign of excess capital can be seen in what Argentina did to its creditors - and in how they reacted. When Argentina defaulted on its debt in December 2001, many thought it would eventually negotiate a deal with creditors that was similar to previous arrangements made by countries in default. Instead, this year it imposed far harsher terms and refused to talk about them. The vast majority of the bondholders meekly went along and bonds of other emerging markets have not suffered. Emboldened, Argentina's government is sounding an uncompromising note regarding foreign-owned utilities and oil companies. It is betting that it can get away with treating the owners of capital badly and it may be right. Why is there too much capital? One answer is that central banks reacted to the bursting of the technology bubble by cutting interest rates by too much for too long. The resulting liquidity might in other times have sent inflation soaring, but now China's emergence has placed offsetting deflationary pressures on consumer goods prices. The excess liquidity is sloshing around world capital markets. At the same time, China's emergence is spurring investment that the world may not need. The world automobile industry is plagued by overcapacity, but every car company believes it must have plants in China. We have seen too much capital before, but not on a worldwide basis. It flooded into Japan in the 1980's when money there was cheap and the success of the Japanese economy obvious. Japanese business still suffers from excess capacity. Excessive investment in telecommunications in the late 1990's left a lot of unused fiber optic cable. The excess of capital is bad news for wealthy economies, especially as it is happening when aging populations in Japan, Europe and the United States need good investments to finance retirement. But it should be good news for economies that need capital to develop. Capital will not remain in excess forever. Money will be spent on consumption rather than investment, and new technologies and rising demand will eventually create more uses for a supply of capital that will have been depleted as low returns discourage saving. But for those with capital, that could be a slow and painful process.

Subject: Future SHOCK - coming on now - Cspan From: johnny5 To: All Date Posted: Fri, Mar 25, 2005 at 13:08:26 (EST) Email Address: johnny5@yahoo.com Message: How will all the old retirees and johnny5's trailer park keep up - how will the mexican migrant worker keep up? Johnny5 has a CS degree and lots and lots of time and he has trouble keeping up. You can give EVERY retiree and mexican migrant a computer, but to EXPECT them to be able to efficiently use that to do much more than have slingfests and flamewars on message boards isn't very realistic to me. They increased productivity being predicted is not a REAL asset - it is fantasy. Technology and the Digital Divide C-SPAN, Washington Journal Washington, District of Columbia (United States) ID: 186048 - 2 - 03/25/2005 - 0:55 - $29.95 Wasow, Omar, Executive Editor, Blackplanet.com Mr. Wasow will talk by remote from New York City to discuss technology and the digital divide between users of new technology and those without access to it. Mr. Wasow is the Internet analyst for NBC as well as the executive editor for the website Black Planet. He will respond to telephone calls, faxes, and e-mail from viewers.

Subject: GDP skyrocketing - Oprah Winfrey on the Net! From: johnny5 To: johnny5 Date Posted: Fri, Mar 25, 2005 at 13:27:55 (EST) Email Address: johnny5@yahoo.com Message: Bwhaha, this guy filmed a tv show teaching Oprah the internet in 2000, oprah on the internet doing email - probably forwarding the chain letters with all the happy faces in it, that does not help our energy or food does it? That does not repair damamged roads and get better info to the EMH participants in stocks does it? But oprah forwarding chain mails is gonna increase productivity a bunch right - not waste a lot of energy on BS that just wastes time and doesnt get much done or educate? This guy says good stable gubbment is far more important than technology in africa, but Carly said those africans using thier HP laptops and getting online with Oprah forwarding emails back and forth would be the engine of growth for the world - BWAHAHA!

Subject: Attention GLUT From: johnny5 To: johnny5 Date Posted: Fri, Mar 25, 2005 at 13:44:00 (EST) Email Address: johnny5@yahoo.com Message: He says the internet helps you make friends, get married, improve your life, most of the people I meet on the internet cuss me out - HAHA! The women I meet on it have so many millions of men giving them attention, I can't keep them in a conversation for longer than 2 minutes, it was much easier back on the farm in the old days to keep lulu bells attention when you were the only guy to talk too within 5 miles and there was no cellphone or net - in this sense the NET is a DIVIDER of people, not uniter. I think increasing divorce trends bear this out as we have become more technological and urban and moved away from rural agricultural. I hear many journalists when commenting on blogging saying the NET is BAD because we can fracture off more now, talk to groups more in line with our own beliefs and shut out news and ideas we dont agree with and therefore never expand our horizons. The guy currently replacing dan rather on the news commented on this too. Too much self reinforcment now in these virtual communities and now icebergs to shatter these titantics can't get in. But I know all my friends in PKARCHIVE BBS would never blind themselves to opposing viewpoints - unfortunately, this board is not representative of much of internet land - I go to diehards board and then to annuity boards and the 2 groups are so divided that they can't learn from each others viewpoints and perspectives to make the whole world better, just focused on thier one little part of the whole. Retirees have thier community, and the young teens have theirs and there is no cross pollenization anymore, walls are going up where we need to be building bridges - the net is not condusive to this.

Subject: Cell Phone call LOST From: johnny5 To: johnny5 Date Posted: Fri, Mar 25, 2005 at 13:59:15 (EST) Email Address: johnny5@yahoo.com Message: BWAHAHA, I am watching the broadcast now and they had to cut a caller because his cellphone call was breaking up - so much for IMPROVING communication with technology - BWAHAHA! This is hilarious! How ironic!!

Subject: Fraying of a Latin Textile Industry From: Emma To: All Date Posted: Fri, Mar 25, 2005 at 12:11:53 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/03/25/business/worldbusiness/25textile.html?pagewanted=all&position= Fraying of a Latin Textile Industry By GINGER THOMPSON SAN SALVADOR - Mondays are hiring days at the hulking garment factories that in the last 15 years helped lift El Salvador up from war and bring some 90,000 families out of extreme poverty. By 7 a.m., hundreds of women like Gloria Campos are lined up, hoping to get a tiny piece of prosperity. But shifting global trade rules threaten to reverse El Salvador's industrial revolution. Employment in the garment industry, until recently a source of growth, declined in 2004 for the first time in a decade. The government puts the number of jobs lost at nearly 6,000. Managers of assembly plants said the number was almost twice as high. Thousands more jobs will be lost this year, they predicted, threatening to drive up El Salvador's largest export to the United States: its people. Trouble in the garment industry, brewing for years, has heightened here and in other struggling parts of Central America, as an end to global textile quotas at the beginning of the year spreads textile and clothes manufacturing to other parts of the developing world, particularly China. But as close and nimble neighbors of the United States, El Salvador's exporters seemed to think that buyers in the United States would keep their workers busy in order to have a fast and easy alternative to Asia. And free trade agreements promised to buffer the region from outside economic forces. That thinking comforted exporters throughout Central America, where an estimated 1,000 textile and apparel factories have employed some 500,000 people. But now, with quotas ended, merchants in the United States and Europe buy where it is cheapest. And here, as in Mexico, the trade agreements have led to more disappointment than promise. As the biggest-name clothing brands hunt for bargains halfway around the world, the factories that became the engine of Central America's formal economy are starting to sputter. In the first two months of this year, authorities said, 18 plants in Guatemala, Honduras, Costa Rica and the Dominican Republic closed; some 10,000 jobs were lost. Nicaragua, with Central America's worst poverty and lowest wages, is the only country that has had an expansion in its young garment industry. Textile powerhouses like Guatemala and Honduras, the third-largest clothing exporter to the United States after China and Mexico, have managed to maintain a rough stability. But industry representatives said they expected orders to dry up at many factories by summer. So far, the ending of the quota system - a 1974 pact known formally as the Multi-Fiber Agreement - has hit hardest in El Salvador. Part of the reason, industry experts said, was that four years ago, this country adopted the dollar as its official currency, giving it no leeway from a devaluation to keep exports competitive. As a result, it has the highest labor and transportation costs in the region. Hiring days put a human face on this grim economics. On a recent Monday, long employment lines were filled mostly with mothers in tattered skirts and plastic sandals who had not finished grade school. These were not new applicants, but seamstresses with years of experience - women who spoke as if they had been caught up in some storm that no one told them was coming. For the last seven years, Ms. Campos, a 42-year-old mother of three, had worked in the maquiladoras - the local term for the assembly plants - and the $5 she earned each day was her family's only income. Then in December 2003, her employers skipped town without notice. They told her and the 400 other workers that they were shutting down the factory for the Christmas holiday. The factory never reopened, and the company left without paying a penny in severance. She quickly found work at another garment-making operation. That one closed in October 2004. Ms. Campos has been standing in lines every Monday. 'I come every week with a lot of hope, ' she said, 'and every week I go home feeling sad. If I don't find a job soon, I don't know how I am going to survive.' El Salvador's economy minister, Yolanda Mayora de Gavidia, said in an interview that the nation's garment industry shrank 3 percent last year as three major and five smaller apparel manufacturers shut down operations. 'Most factories are going to go,' Mrs. Gavidia said. 'We know we are going to be affected by China.' It is the same sobering story being told farther away, in places like Mongolia, Cambodia and southern Africa. But in Central America, a two-day drive from Texas, the crisis in the apparel industry will almost certainly ripple up the continent to the United States. With garment factories moving rapidly out of Mexico, Central America has become the most important customer for mills in the United States that produce fabric. More than 70 percent of the garments made in Central America are produced from American fabric and yarn. 'If we go belly up, the United States will go belly up,' said Francisco Escobar Thompson, an exporter who closed one of his four plants last year and faces the closing of another in 2005. And in this poor region, rising unemployment could mean a lot more empty bellies and surging waves of migrants. With farming in El Salvador having sharply declined in the last decade and agriculture a dying sector of the economy, the maquiladoras provide more than half the jobs in El Salvador's formal economy. More than 40 percent of the population is unemployed or underemployed, and an estimated 100,000 people migrate to the United States each year. Mrs. Gavidia tried to offer a little hope, saying that some of the garment factories might survive if they were able to upgrade to produce fashion apparel, which relies on advanced technology, closer communication with clients and fast delivery. 'We cannot compete with China on low wages,' she said, 'and we don't want to. But our proximity to the United States gives us an advantage in special niches, where clients need high quality and fast turnaround.' In the last year, Mr. Escobar, whose company assembles undergarments and moisture-resistant outerwear, has turned around two of his factories. They have begun 'full-package manufacturing,' he said, meaning that the plants design the patterns, select fabrics, assemble the garments and ship direct to chain stores. If producing garments from design to delivery took 100 steps, his factories used to complete the last 20. Now, he said, they can handle as many as 80. 'It's hard to tell from day to day,' he said, 'because we never know what China is going to do. Things look good today. But I don't know what to expect a few months from now.' He and other factory owners have staked the future of their businesses on the proposed Central American Free Trade Agreement, which is to include Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica and the Dominican Republic. The agreement, which aims to give Central American exports permanent duty-free access to the United States market, has ignited angry protests from workers who fear that freer trade will open the door to harsh competition from the United States. [In Guatemala, one person was killed in mid-March in clashes between police officers and protesters who set up roadblocks along main highways.] The agreement has already won approval from Guatemala and Honduras. Opponents across the region say that their governments have allowed very little public debate about the accord. Conservative legislators in El Salvador approved it in a predawn session in December. In Washington, the Senate is expected to hold hearings on the trade agreement after Easter, and the Bush administration hopes to have the measure approved before the end of May. But it faces a tough fight from the United States textile industry and from labor unions worried about abusive practices in Central American factories. Lloyd Wood of the American Manufacturing Trade Action Coalition said that loopholes in the agreement and poor enforcement of customs laws would allow China to use Central America as a back door into the United States. Supporters respond that with the volume of China's trade, it does not need back doors. Dina Rivera, 34, a Salvadoran mother of three, can already feel the pressure. She said she began working in the maquiladoras eight years ago because she thought that learning a trade would give her job security, something almost unheard of among Central America's poor. Before that, she washed clothes and took care of rich people's babies. Her wages were not enough to save money for long-term plans, Ms. Rivera said. But at least she could count on feeding her family from day to day and sending her children to school. Now, she simply feels counted out. 'The rich can go to China,' she said. 'I want to go, too.'

Subject: Food, Energy, Health, Sustainability From: johnny5 To: Emma Date Posted: Fri, Mar 25, 2005 at 13:01:45 (EST) Email Address: johnny5@yahoo.com Message: 'threatening to drive up El Salvador's largest export to the United States: its people.' --- --Why come here? we dont have the jobs - cant they just disperse into the countryside and start farms and grow thier own food? 'leeway from a devaluation to keep exports competitive. As a result, it has the highest labor and transportation costs in the region. ' --- --Will it be cheaper to ship stuff in from china on planes and boats or cheaper from south america? 'Hiring days put a human face on this grim economics. On a recent Monday, long employment lines were filled mostly with mothers in tattered skirts and plastic sandals who had not finished grade school.' --- --My grandfather never went to school at all and couldnt read or write, but him and grandma sure could work the land and make food grow for thier 8 children. They stayed in great shape slopping those hawgs and picking that cotton and oranges, not standing in line. 'and the $5 she earned each day was her family's only income.' --- --She needs to learn to farm if she wants to eat, apparently her skill as a seamstress is a waste now. ' Ms. Campos has been standing in lines every Monday. ' --- --You can't eat standing in lines, unlike RUSSIA though who had lots of lines, there is lots of good weather and sunshine in her country, good for growing food. No one wants to do that hard food growing work, easier to stand in line and complain you are starving. 'I come every week with a lot of hope, ' she said, 'and every week I go home feeling sad. If I don't find a job soon, I don't know how I am going to survive.' --- --- You can't eat hope, but you can eat food you grow out in the jungle on the land no? 'If we go belly up, the United States will go belly up,' said Francisco Escobar Thompson, an exporter who closed one of his four plants last year and faces the closing of another in 2005. --- - BWAHAHA - THE USA has a way of isolating itself from the crap around it, like switzerland did in ww2 no? 'And in this poor region, rising unemployment could mean a lot more empty bellies and surging waves of migrants. With farming in El Salvador having sharply declined in the last decade and agriculture a dying sector of the economy,' --- --- The better get back on those farms and grow themselves some food, there aint no more work here, the mexican living next to me in the trailer park works for 3 dollar an hour and some weeks he doesnt get a paycheck. 'Dina Rivera, 34, a Salvadoran mother of three, can already feel the pressure. She said she began working in the maquiladoras eight years ago because she thought that learning a trade would give her job security, something almost unheard of among Central America's poor. Before that, she washed clothes and took care of rich people's babies. ' --- -That is a good skill, she might need to refresh her training in that area. learning to farm would be a good investment too probably. 'The rich can go to China,' she said. 'I want to go, too.' --- -Johnny5's uneducated ignorant grandaddy always said, every man needs a farm boy, grow your own food and depend on no man to provide you with it. He died at 93, a very healthy long lived life of great nutrition and daily agricultural work growing his own energy that kept him fit as a fiddle. Today we have fat heart disease ridden people standing in the welfare lines if they arent in the emergency room lines asking where the money and easy jobs and free food are - my grandfather didn't think much of that. He said we stole the land from the indians to be WORKED and USED - BWAHAH!

Subject: Re: Food, Energy, Health, Sustainability From: Emma To: johnny5 Date Posted: Fri, Mar 25, 2005 at 13:43:42 (EST) Email Address: Not Provided Message: People with no land, do not simply move to land and farm in Latin America. Wish they might. The problem is serious, and we should be willing to help more.

Subject: Land indeed Emma! From: johnny5 To: Emma Date Posted: Fri, Mar 25, 2005 at 13:53:42 (EST) Email Address: johnny5@yahoo.com Message: We have a ton of land in America Emma, but some of my old friends are sitting on a bench on US 19 in clearwater starving to death. They lost hope after they lost their jobs, and then the old people here in the park complain it takes 3 hours in line at barnhills buffet to eat - well the local farmers market you can get the ingredients in 5 minutes and cook them in 30 - but they don't think in those terms, my friend does not think about growing his own food, there is such a negative cloud over him that without his nice big job at IBM that he lost, it is DISGUSTING to work the land and only for the real trash in our world, so he starves on the bench. He needs a friend like Terri to lift him up and tell him look Bub, so what if your IBM job is in India now, we have this great country with great land and you can grow great healthy food, but instead people look at him and spit on him on the bench and tell him what a bumb he is and a loser because he doesn't have a Job and in his mind that means he can only be successful and happy working at a big corporate office in high rise tampa with million dollar expense accounts while he jets arond the world in the private jet having 200 dollar wines in his company lunches - how sad. I see some of that in y our article, working a farm is for the TRASH, having a nice job in a building sewing fabric is the only way this women sees feeding her children, growing the food herself is totally unacceptable. I don't know the land situation there, but I see the PERCEPTION problem of farming as a global issue, not just one here in america. I watched a special on China where this couple was in a CLEAN rural village with fresh air and lots of space and water - they had a daughter and moved to the city with its cancer killing air and dirty water and when asked why they made that trade and hurt thier daughters help - the said because who wants to work a farm, she needs an education so she can get a good city job, and the interviwer said well you and hubby grew up in farm villages and you both look happy and healty, and she said NO, even if our daughter dies younger from cancer, having an education and working in the congested polluted city is better - HUH?????

Subject: Raul Julia From: johnny5 To: johnny5 Date Posted: Fri, Mar 25, 2005 at 13:57:45 (EST) Email Address: johnny5@yahoo.com Message: He told a story on the radio, about this poor mexican fisherman, sitting there on the beach fishing, and a rich western businessman came up and said why don't you get a job, and the poor mexican said what for, and the rich businessman said so you can make money, and again the mexican said what for, and the westerner said so you can get rich, and the mexican said what then? the westerner said so you can retire in mexico and fish on the beach all day - and the poor destitute mexican looked up and said you silly fool, I do that now without all that stress of a job.

Subject: Trading Places: A Real Estate Craze From: Emma To: All Date Posted: Fri, Mar 25, 2005 at 12:10:44 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/03/25/business/25boom.html?pagewanted=all&position= Trading Places: Real Estate Instead of Dot-Coms By MOTOKO RICH and DAVID LEONHARDT eal estate-crazed Americans have started behaving in ways that eerily recall the stock market obsession of the late 1990's. In Naples, Fla., some houses have been bought twice in a single day, an early-21st-century version of day trading. Buying stocks on margin has morphed into buying homes with no money down. The over-the-top parties of Internet start-ups have been replaced by flashy gatherings where developers pitch condos to eager buyers. Five years ago, the cable channel CNBC sometimes seemed like a backdrop to daily American life. Its cheery analysis of the stock market played in offices, in barbershops, even in some bars. Today, 'Dude Room,' 'Toolbelt Diva' and other home-improvement shows are the addictive fare that CNBC's exuberant stock shows once were. 'It just seems like everyone is doing it,' Laurie Romano, a 26-year-old self-described real estate investor, said with a giggle as she explained why she was attending an open house this month for the Nexus, a 56-unit building going up in Brooklyn's chic Dumbo neighborhood. She and her fiancé, a dentist, had already put down a deposit on a Manhattan condo earlier in the week and had come to look at another at the Nexus. Nobody can know whether the housing boom of the last decade will end as the dot-com frenzy did. But the parallels are raising alarms among many economists, even those who acknowledge that there are important differences between homes and stocks that significantly reduce the chances of another meltdown. For one thing, houses are not just paper wealth: you can live in them. Still, perhaps the most troubling similarity, some analysts say, is the claim that the rules have somehow changed. In an echo of the blasé attitude that 'new economy' investors took toward unprofitable companies, the growing ranks of real estate investors are buying houses they never expect to be able to rent at a profit. Instead, they think the prices of houses will just keep rising. Indeed, the government reported yesterday that sales of new homes jumped sharply in February, in the biggest monthly increase in four years. A strong economy and an improving job market contributed to the gain. But many buyers were also trying to beat rising mortgage rates, which could eventually cool the market. Adding to the parallels between stocks and housing, some of the doomsayers from the 1990's have returned with new warnings. 'We're going through something very similar in real estate that we did with stocks,' said Robert J. Shiller - a professor of economics at Yale, whose prescient book on stocks, 'Irrational Exuberance' (Princeton University Press, 2000), appeared just a few months before technology stocks began their slide. 'It's driven by the same forces: that investments can't go bad; that it has the potential to make you rich; that you'll regret it if you don't do it; that it looks expensive but is really not.' A new edition of Mr. Shiller's book will be published next month. The cover promises an 'analysis of the worldwide real estate bubble and its aftermath.' Premonitions of a bubble on the verge of popping do not ruffle those who are bullish on real estate. In Miami, Ron Shuffield, president of Esslinger-Wooten-Maxwell Realtors, predicted that a limited supply of land coupled with demand from baby boomers and foreigners would prolong the boom indefinitely. 'South Florida,' he said, 'is working off of a totally new economic model than any of us have ever experienced in the past.' The can't-miss aura of real estate has also helped nudge many families to invest more of their personal wealth in real estate by buying more expensive homes and taking on riskier mortgages - much as ordinary workers used their 401(k) plans to bet on company stocks. There are certainly serious reasons to believe that house prices will not suffer the fate of technology stocks. Not only are houses more tangible, but people do not sell their homes as quickly as stocks, making a panic much less likely. Because of tax advantages, few owners are likely to sell and rent something else simply because local house prices start to decline. As high as they might seem now on the coasts, home prices nationally have not quite doubled over the last decade; during the 1990's, the Standard & Poor's 500-stock index more than quadrupled. 'I just don't think we have what it takes to prick the bubble,' said Diane C. Swonk, chief economist at Mesirow Financial in Chicago, who was an optimist during the 90's. 'I don't think prices are going to fall, and I don't think they're even going to be flat.' Such confidence about real estate has created a 1990's-like stampede of new investors. The night before the Nexus party, Patrick Cullert, 31, and Jennifer Mathews, 29, who are engaged, camped out to ensure they would be near the head of the line for one of 16 condos to be sold at the party. It was today's version of pestering a broker for shares in a hot public offering. And many former stock market enthusiasts are now turning to housing. Douglas Paul, a 46-year-old former analyst, left AT&T in 2002 to buy and sell stocks on his own. But he soon decided that real estate could be another way to make quick profits. Mr. Paul owns two condominium units around Fort Lauderdale and one in Miami Beach, all bought during the last year, in addition to the one where he lives. He plans to sell one of the Fort Lauderdale condos in June for what he believes will be double his investment. 'It really is a very hot real estate market, and I don't know how long it's going to continue,' he said. 'But in the short term, why not profit from it?' Mr. Paul's path is an increasingly common one. The National Association of Realtors estimates that nearly one-quarter of home purchases last year were made by people who thought of the house as an investment rather than a place to live. Seminars promising to teach amateurs the tricks of real estate speculation have proliferated. Even at Harvard Business School, where students have traditionally gravitated to careers in investment banking and corporate marketing, real estate is suddenly hot. About 25 graduates have taken real estate jobs in each of the last two years, up from only six in 2001. It is not quite the gold rush of 2000, when about 200 Harvard M.B.A. graduates flocked to technology companies. But even if they are not working in real estate, some of those graduates are now investing in it. Andrew Farquharson, a member of the class of 1999, said he recently teamed up with a high school friend to buy a home in the Central Valley of California 'out of pure speculation.' He knows of other classmates who have made similar investments. 'I look at this as a short-term investment,' said Mr. Farquharson, 36, who works for a venture capital firm, 'and plan to unload it as soon as things look dangerous.' In addition to the flood of investors, the parallels between real estate and stocks extend into mainstream culture. Real estate bulletin boards and blogs like Curbed.com and Real Estate Pimp have taken the place of financial chat rooms like Tokyo Joe's. ABC has a breakout hit in 'Extreme Makeover: Home Edition,' and Home and Garden Television, a once-obscure cable channel, now draws an average of 827,000 viewers in prime time. The seemingly inevitable how-to guide inspired by Donald Trump - 'Trump Strategies for Real Estate' (John Wiley & Sons) by George Ross, one of Mr. Trump's assistants on his hit show 'The Apprentice' - is a strong seller, already hitting No. 177 on Amazon.com's list in March, less than a month after its release. At the Nexus party in Brooklyn, Steve Nguyen, Ms. Romano's fiancé, said he was heeding Mr. Trump's advice. 'He says buy, buy, buy,' Dr. Nguyen said. The same message is being trumpeted by David A. Lereah, chief economist of the Realtors association, who argues in his new book, 'Are You Missing the Real Estate Boom?' (Currency), that real estate investors will 'experience substantial and satisfying wealth gains' into the next decade. The question that looms over these books is whether they will suffer the fate of another optimistic talisman, 'Dow 36,000' (Times Books), which was a best seller in late 1999. Its authors, James K. Glassman and Kevin A. Hassett, argued that stock prices, despite five years of roaring gains, 'could double, triple or even quadruple tomorrow and still not be too high.' The Dow Jones industrial average hovered around 11,000 when 'Dow 36,000' was published. It dropped below 8,000 in 2002 and closed at 10,442.87 yesterday. Another lingering echo of the stock market boom is the role of the Federal Reserve, the nation's central bank. In the 1990's, the Fed kept interest rates relatively low because it saw little risk of rising inflation despite a booming economy, helping feed a fever for stocks. Alan Greenspan, the Fed chairman, famously asked aloud in 1996 whether 'irrational exuberance' was driving the stock market, but then backed off from second-guessing investors. After the market plunged and the economy weakened, the Fed pushed interest rates down to 50-year lows, helping to fuel the housing boom. This month, Mr. Greenspan made some comments about housing that offered a faint echo of his 1996 musings. 'Analysts have conjectured that the extended period of low interest rates is spawning a bubble in housing prices in the United States that will, at some point, implode,' Mr. Greenspan said in a speech in New York, adding that real estate speculation had shown a 'marked increase.' Nevertheless, he said he did not expect a 'destabilizing' drop in prices, in part because home prices across the country have never fallen significantly. But by one measure, houses in at least a few metropolitan areas are as expensive as telecommunications stocks were in 1999, relative to their underlying value. The average house in San Jose, Calif., costs 35 times what it would cost to rent for a year, according to Economy.com, a research company. In New York and West Palm Beach, this ratio - a rough equivalent of the price-earnings ratio for stocks - is almost 25. In March 2000, the price-earnings ratio of the Standard & Poor's 500 - the combined price of the stocks, divided by their profits per share - peaked around 32, and it was briefly even higher for telecommunications stocks. The S.& P.'s P.E. ratio has since fallen to around 20. Still, no matter how expensive real estate might be, it continues to provide many owners a return worth boasting about. Holly Peterson, who is writing a novel about the idiosyncrasies of New York's rich, said that at dinner parties in Manhattan, she frequently hears complaints about high home prices, followed by claims of quick profits. 'They always hit you with their last jab: 'Of course my money's doubled three times over since I got married,' ' she said. Five years ago, she said, friends at parties were crowing about 'making millions of dollars on paper with $25,000 and $50,000 investments.' But 'most of those people,' she added, 'got wiped out.'

Subject: Monetary Policy From: Terri To: All Date Posted: Fri, Mar 25, 2005 at 11:32:35 (EST) Email Address: Not Provided Message: There have been 2 shallow and short recessions since 1989. There was a deeper recession in 1980, but this recession essentially ended long term inflation as a problem. Apart from the 3 periods of negative growth, the economy has grown well, the unemployment rate has declined, productivity has accelerated, stock and bond and housing values have increased nicely, inflation has declined. Through periods of better and worse fiscal policy, the Federal Reserve has been remarkably successful in policy. Where then is the problem? The Fed helped us to 3% unemployment, the lowest inflation in 40 years, and bouyant markets during the 1990s. Then, the Fed took us gently through what could have been an awful recession. Now, the Fed is being careful the economy does not grow fast enough to generate too much inflation. Difficult to understand many of the complaints, especially by those who complained about too much liquidity and suddenly too little liquidity.

Subject: Bulls and Bears From: Terri To: Terri Date Posted: Fri, Mar 25, 2005 at 12:06:31 (EST) Email Address: Not Provided Message: Since the Fed has been continually successful in monetary policy for 25 years, I would be reluctant to assume there will be no success this time. There are times we may worry about specific economic problem, but we are a remarkably powerful economy. We have prospered through difficult periods, while the period now has threats but ample promises.

Subject: Hubbert's Peak From: Pete Weis To: All Date Posted: Fri, Mar 25, 2005 at 10:32:17 (EST) Email Address: Not Provided Message: The following is an OP-ED piece by Princeton geologist Kenneth Deffeyes. For all the discussion we have had about the current account and federal deficits, the much more important long range economic problem we have is energy. The entire foundation for our economic structure is the harnessing of energy. This is where it all begins. The world's economic well-being is built on relatively cheap energy. This is where the world and America needs to concentrate its efforts - developing and transitioning to new energy sources. If we fail to act quickly enough the economic, political and social consequences will be very severe. March 25, 2005 OP-ED CONTRIBUTOR What Happens Once the Oil Runs Out? By KENNETH S. DEFFEYES Princeton, N.J. PRESIDENT BUSH'S hopes for the Arctic National Wildlife Refuge came one step closer to reality last week. While Congress must still pass a law to allow drilling in the refuge, the Senate voted to include oil revenues from such drilling in the budget, making eventual approval of the president's plan more likely. Yet the debate over drilling in the Arctic refuge has been oddly beside the point. In fact, it may be distracting us from a far more important problem: a looming world oil shortage. The environmental argument over drilling in the refuge has often been portrayed as 'tree huggers' versus 'dirty drillers' (although, as a matter of fact, the north coastal plain of Alaska happens to have no trees to hug). Even as we concede that this is an oversimplification, we should also ask how a successful drilling operation would affect American oil production. The United States Geological Survey has estimated that the Arctic oil field is likely to be at least half the size of the Prudhoe Bay oil field, almost 100 miles to the west. Opening that oil field was like hitting a grand slam: Prudhoe Bay, which has already produced more than 13 billion barrels, is the biggest American oil field. (I was once at a party with a bunch of geologists from Mobil Oil when an argument broke out: who discovered Prudhoe Bay? Everybody in the room except me claimed to have done so.) Unfortunately, you don't hit a grand slam in every at-bat. The geological survey estimates that the Arctic refuge could produce at least half as much oil as Prudhoe Bay. It is also possible, however, that the refuge could produce no oil at all - it often happens in the oil industry. At the other extreme, the upper range of the geological survey's estimate soars to 16 billion barrels. Although the geologists at the survey are widely respected, the upper ranges of their petroleum estimates for the refuge have drawn criticism, sometimes expressed as giggles, from other petroleum geologists. Despite its size, Prudhoe Bay was not big enough to reverse the decline of American oil production. The greatest year of United States production was 1970. Prudhoe Bay started producing oil in 1977, but never enough to raise American production above the level of 1970. The Arctic refuge will probably have an even smaller effect. Every little bit helps, but even the most successful drilling project at the Arctic refuge would be only a little bit. But if the question of whether to drill in the Arctic National Wildlife Refuge is the wrong one, what's the right one? In 1997 and 1998, a few petroleum geologists began examining world oil production using the methods that M. King Hubbert used in predicting in 1956 that United States oil production would peak during the early 1970's. These geologists indicated that world oil output would reach its apex in this decade - some 30 to 40 years after the peak in American oil production. Almost no one paid attention. I used to work with Mr. Hubbert at Shell Oil, and my own independent research places the peak of world oil production late this year or early in 2006. Even a prompt and successful drilling operation in the Arctic refuge would not start pumping oil into the pipeline before 2008 or 2009. A permanent drop in world oil production will have serious consequences. In addition to the economic blow, there will be the psychological effect of accepting that there are limits to an important energy resource. What can we do? More efficient diesel automobiles, and greater reliance on wind and nuclear power, are well-engineered solutions that are available right now. Conservation, although costly in most cases, will have the largest impact. The United States also has a 300-year supply of coal, and methods for using coal without adding carbon dioxide to the atmosphere are being developed. After world oil production starts to decline, a small group of geologists could gather in my living room and all claim to have discovered the peak. 'We told you so,' we could say. But that isn't the point. The controversy over the Arctic National Wildlife Refuge is a side issue. The problem we need to face is the impending world oil shortage. Kenneth S. Deffeyes, a professor emeritus of geology at Princeton, is the author of 'Beyond Oil: The View from Hubbert's Peak.'

Subject: Re: Hubbert's Peak From: Emma To: Pete Weis Date Posted: Fri, Mar 25, 2005 at 13:37:14 (EST) Email Address: Not Provided Message: Please discuss this subject further. This is most important for us.

Subject: What 3 books would you pick Pete? From: johnny5 To: Pete Weis Date Posted: Fri, Mar 25, 2005 at 11:27:55 (EST) Email Address: johnny5@yahoo.com Message: I watched a movie called THE ROAD WARRIOR with mel gibson, they were not fighting over chunks of gold like mogambo wants you to buy, they were fighting over that last OIL WELL. The sequel, BEYOND THUNDERDOME was a battle over pig feces, Then I watched WATERWORLD with Kev Costner, they were not fighting over green US paper, or OIL but dirt. Then I watched a movie called the time machine with Rod Serling, and far into the future dirt and oil and green paper had little value, human entrails were the lifeblood (literally) Toecutter was an interesting guy. http://www.imdb.com/title/tt0079501/

Subject: Re: What 3 books would you pick Pete? From: johnny5 To: johnny5 Date Posted: Fri, Mar 25, 2005 at 11:32:35 (EST) Email Address: johnny5@yahoo.com Message: Who can forget the omega man or the planet of the apes, where the the thing MOST VALUED was in lying to its citizens that HUMANS were the civilization before APES and to keep it all a secret was of great national interest. Disinformation was highly VALUED. Along with soylent green this disinformation was VERY VALUED>

Subject: Goliath Awaits From: johnny5 To: johnny5 Date Posted: Fri, Mar 25, 2005 at 11:35:33 (EST) Email Address: johnny5@yahoo.com Message: Of course I forgot the classic goliath awaits, where an ocean liner sinks to the bottom of the sea and people start a new society under the ocean, the VALUE to thier leaders was in keeping a sustainable population, through lies, deciet and murder they kept society in check. It may have been bad for the individual, but it was great for the community.

Subject: In tv land From: johnny5 To: johnny5 Date Posted: Fri, Mar 25, 2005 at 11:45:28 (EST) Email Address: johnny5@yahoo.com Message: From swiss family robinson to grizzly adams to wil robinson and his DANGER robot to space:1999 to blake's 7 - the PRISONER - we have tons of thinkers speculating what will be VALUABE to people and societies in the future as well as what was valuable in the past. Maslows hieararchy is universal through all these realities, food, water, living space, excretions, entertainment and activity to busy yourself with. It seems many of us VALUE this forum, for we exert much time and energy here. Cheers to all the members for making the BBS so wealthy.

Subject: Evidence Based Economics From: johnny5 To: All Date Posted: Fri, Mar 25, 2005 at 09:52:24 (EST) Email Address: johnny5@yahoo.com Message: To go along with the Phelps article posted yesterday on Evidence Based Economics! http://www.siliconinvestor.com/readmsgs.aspx?subjectid=51347&msgnum=28721&batchsize=10&batchtype=Next Yes, I posted Paul Krugman's interesting article when it was published in the New York Times. He points out that many prominent supply-side supporters did not see any sound economic basis in the theory - as indeed there is none. But for the groupies further down the food chain in the supply-side cult - supply-side 'economics' was gospel truth. You may even qualify as an example of this. Irving Kristol, in his role as co-editor of The Public Interest, was arguably the single most important proponent of supply-side economics. But years later, he suggested that he himself wasn't all that persuaded by the doctrine: ''I was not certain of its economic merits but quickly saw its political possibilities.'' Writing in 1995, he explained that his real aim was to shrink the government and that tax cuts were a means to that end: ''The task, as I saw it, was to create a new majority, which evidently would mean a conservative majority, which came to mean, in turn, a Republican majority -- so political effectiveness was the priority, not the accounting deficiencies of government.'' In effect, what Kristol said in 1995 was that he and his associates set out to deceive the American public. They sold tax cuts on the pretense that they would be painless, when they themselves believed that it would be necessary to slash public spending in order to make room for those cuts.

Subject: Liquidity From: Terri To: All Date Posted: Fri, Mar 25, 2005 at 06:30:04 (EST) Email Address: Not Provided Message: Though there are complaints about liquidity creation, the complaints have not and are not shown reasonable. There has been and is simply little inflation evidenced. The object of the Federal Reserve now is a moderate tightening that will reduce near term inflation levels to correspond with the hopeful outlook of long term bond investors. Hopefully this can be done with a Federal Funds rate of about 4%. This might mean a long term Treasury rate of about 5.5%.

Subject: Liquidity and Interest Rates From: Terri To: Terri Date Posted: Fri, Mar 25, 2005 at 07:23:17 (EST) Email Address: Not Provided Message: Low interest rates tell us there is no reason to fault the Federal Reserve for excess liquidity formation, nor must we fault accounting for quality improvements in constructing economic data. We have problems, but they seem otherwise and the Fed has learned from the 1970s.

Subject: Higher interest rates won't help From: johnny5 To: Terri Date Posted: Fri, Mar 25, 2005 at 09:54:21 (EST) Email Address: johnny5@yahoo.com Message: If You Think Higher Interest Rates Will Help the Dollar, Think Again! 24 March 2005 - Peter Schiff http://www.gold-eagle.com/editorials_05/schiff032405.html Since the release of the Fed Open Market Committee statement yesterday, much has been said about the Fed's newfound commitment to contain inflation. However, currency traders have apparently confused the Fed's mere mention of the word 'inflation' with an actual intention to do something about it. Presuming that a tougher Fed means higher interest rates, traders have aggressively bought dollars. However, this conclusion ignores the facts that higher interest rates will ultimately: 1) precipitate a severe recession, 2) exacerbate both the current account and budget deficits, 3) collapse the housing, stock, and bond market bubbles, 4) cause millions to lose their jobs, 5) bankrupt millions of consumers, and thousands of companies and hedge funds, 6) result in capital flight out of the United States 7) and not even rise high enough to exceed the rate of inflation, leaving real yields negative. Therefore, higher interest rates will actually weaken, rather than strengthen, the dollar. Currency traders betting on the reverse be warned. The Fed is attempting to do with words what it is incapable of doing with deeds. It has neither the means, nor the desire, to combat inflation, which is its own creation. By denying that inflation exists, and pretending to be concerned if it were to emerge, the Fed is able to fool America's creditors, buy life support for the U.S. bubble economy, and postpone the inevitable day of reckoning. Let me elaborate on the points I mentioned earlier: 1) Precipitate a recession - As they will result in the cost of adjustable rate mortgages and other floating rate debt to rise, higher interest rates will crush consumer spending and result in greater shares of household incomes going to debt service. Consumer spending is 80% of U.S. GDP. 2) Exacerbate America's 'Twin Deficits' - Due to the short-term nature of Americas outstanding debt instruments, higher interest rates will increase both the budget and current account deficits, as higher interest payments are required to service maturing debts. Also, the recession itself will add to the deficit, resulting in even more borrowing at even higher interest rates. 3) Collapse the housing, stock, and bond market bubbles - Asset bubbles depend on low interest rates and continued speculation to sustain their inflated prices. When the bubbles burst, the shockwaves will reverberate throughout the entire economy. Individual household net worth's will be turned upside down, with reverse-wealth effects restraining consumption for years to come. The entire financial system will be at risk, as asset prices fall too low to secure the debts they currently collateralize. In addition, as the cost of servicing those debts grows, an increasing amount will default, exerting further downward pressure on prices. 4) Cause millions to lose their jobs - Since the majority of American workers depend on the discretionary spending of other Americans, millions will be unemployed. Especially hard hit will be mortgage and consumer finance, home building, real estate sales, financial services, travel, entertainment, and retailing. In other words, just about every American. 5) Bankruptcy of millions of consumers, and thousands of companies and hedge funds - As the cost of servicing floating rate, short-term debt rises, debts will be increasingly more burdensome to service. Consumers have borrowed heavily with ARM's to buy residential real estate at inflated prices, corporations have financed long-term capital investments and share buy-backs with short-term debts, and hedge funds have leveraged heavily using short-term financing to buy long term bonds. If you thought the 1998 blow up of Long Term Capital Management was bad, multiply it by 1,000. 6) Capital flight out of the U.S. - Recession, unemployment, collapsing assets prices, and waves of bankruptcies and foreclosures, will cause capital, both foreign and domestic, to flee. This will put additional upward press on interest rates and downward pressure on the dollar. 7) Real yields still negative - Despite the fact that interest rates will be rising sharply, inflation will be accelerating even faster. Therefore real interest rates are likely to fall even as nominal rates soar. This will likely weigh heavily on the dollar. In the final analysis, higher interest rates, especially when they result from inflation rather than growth, will likely be the straw that breaks the back of the over-leveraged American economy. As the world's largest debtor nation struggles to make higher interest payments on its massive external liabilities, those holding its IOU's will finally come to their senses. Realizing that the burden will ultimate proof too great, they will attempt to sell. Unfortunately, this realization will likely come too late, as few will be willing to take the other side of the trade. Peter Schiff - C.E.O. and Chief Global Strategist - Euro Pacific Capital, Inc.

Subject: Little Volatility, Much Confidence From: Terri To: All Date Posted: Fri, Mar 25, 2005 at 06:00:43 (EST) Email Address: Not Provided Message: What is interesting is how stable the stock and bond markets are. There is remarkably little volatility. Stocks are slightly negative, bonds are slightly negative. There seems to be a continuing widespread confidence in Federal Reserve policy, despite some loud complaints. The Fed obviously has the trust of investors, which is promising.

Subject: Thank You All From: Terri To: All Date Posted: Thurs, Mar 24, 2005 at 22:33:04 (EST) Email Address: Not Provided Message: This website is our treasure; thank you all. Love you folks!

Subject: Me Too From: Emma To: Terri Date Posted: Fri, Mar 25, 2005 at 00:13:26 (EST) Email Address: Not Provided Message: Thanks to all :)

Subject: Lots More for Us From: Terri To: Terri Date Posted: Thurs, Mar 24, 2005 at 22:33:43 (EST) Email Address: Not Provided Message: Lots more to come....

Subject: Fiscal and Monetary Policy From: Terri To: All Date Posted: Thurs, Mar 24, 2005 at 22:02:18 (EST) Email Address: Not Provided Message: We have long had fine monetary policy. The Federal Reserve has managed policy well at least since Paul Volker. The problem we have appears to be fiscal policy now, not monetary policy. We have turned a surplus to a deficit in the government budget and the deficit will almost surely grow faster than the economy. Fiscal policy is the problem. Tax cuts have created a structural deficit. The government deficit coupled with a low level of household saving has resulted in a large trade deficit. However, the trade deficit seem to be a secondary problem. The question is can we begin to reduce the government deficit?

Subject: Re: Fiscal and Monetary Policy From: Paul G. Brown To: Terri Date Posted: Fri, Mar 25, 2005 at 03:20:34 (EST) Email Address: Not Provided Message: Terri - the really big problem is that it's not a case of 'can'. The deficit will be reduced, one way or another. Argentina just 'reduced' its deficit very effectively. Clinton & Bush I did much the same thing in the 1990's. Argentina's solution means that it's going to pay an extra few % on government bonds for all eternity, while Bush & Clinton's approach got Grover Norquist mad. Guess which one I prefer. . . Pb

Subject: Re: Fiscal and Monetary Policy From: Terri To: Paul G. Brown Date Posted: Fri, Mar 25, 2005 at 05:53:40 (EST) Email Address: Not Provided Message: Please explain further. The resolution I perceive to the structural growth of the domestic deficit, however politically difficult, will be setting aside the income tax cuts of the last several years. This will not happen for several years. We will simply borrow for the time being.

Subject: Re: Fiscal and Monetary Policy From: Paul G. Brown To: Terri Date Posted: Fri, Mar 25, 2005 at 14:52:16 (EST) Email Address: Not Provided Message: My point is only that markets abhor deficits in the same way that nature abhors a vaccum. One way or another, the deficit will be reduced: it's only an accounting abstraction, afterall. Hypothetically, one way to 'reduce the deficit' would simply be to default on it. Simply say to the holders of US treasuries, 'Tough luck. We refuse to honor these pieces of paper.' It would be unconstitutional, but then the Bush admin has argued, and the Supreme Court has repeatedly agreed in the past, that the during times of war and national emergency all kinds of constitutional guarantees can be suspended, so what the heck! Another way to eliminate the deficit would be to shutter the departments of the Interior, Education, Health & Human Services, cease payments to the states for Medicare, etc. This is Grover Norquist's vision of a 'soft landing'. Your outcome, where we allow the Bush tax cuts to lapse, is certainly more attractive (from our point of view), but I'm not sure if it will be enough. Has anyone done the math on what the impact of all that additional debt servicing will have on the fiscal picture? That is, how much additional revenue will be necessary to keep payments to the bond holders? What will be the impact of lower economic growth & productivity have on that outcome?

Subject: Economic Data From: Terri To: All Date Posted: Thurs, Mar 24, 2005 at 20:17:08 (EST) Email Address: Not Provided Message: There is no reason that I can find to question the use of quality adjustments in economic statistics series. National accounts statistics are always being refined, but other than by bond analysts who always find inflation everywhere the data appears to be accepted. The data is obviously accepted by professional bond investors, no matter the analysts.

Subject: Re: Economic Data From: Pete Weis To: Terri Date Posted: Thurs, Mar 24, 2005 at 22:50:33 (EST) Email Address: Not Provided Message: Since economists use statistics regarding CPI, GDP, employment, etc. to measure our present economic state to that of the past, it's only reasonably effective if the method used to obtain the stats was accomplished in a basically similar manner to that of the past. It's certainly good to make refinements which result in more accurate statistics. However, if you make major changes to the way you interpret these statistics then you begin to introduce subjectivity. So when you start to suddenly (as happened in 1999) utilize things like substitution and hedonics to 'adjust' or eliminate statistical elements which would have been factored much differently pre 1999, then their historical comparative value is gone. So how does inflation in 2005 compare to that of 1975? We really don't know. CPI subtracts from GDP. So if we calculated CPI similar to the way we did in 1975 is our present GDP number closer to 3.5 or 2.5? Most of the jobs in the jobs numbers quoted are assumed based on GDP, which is based on historical experience. So how accurate are those jobs numbers?

Subject: Re: Economic Data From: Emma To: Pete Weis Date Posted: Fri, Mar 25, 2005 at 00:16:04 (EST) Email Address: Not Provided Message: Pete, the new data was backtracked years to avoid the problem you so well express. I will ask, however.

Subject: Re: Economic Data From: Pete Weis To: Emma Date Posted: Fri, Mar 25, 2005 at 09:55:16 (EST) Email Address: Not Provided Message: Emma. How was it 'backtracked'? Are there a separate number of stats still published which calculate CPI the pre 1999 way? See 'Calculating the Geometric Mean Formula' on the Bureau of Labor Statistics site.

Subject: On the Austrian School... From: Paul G. Brown To: All Date Posted: Thurs, Mar 24, 2005 at 13:20:31 (EST) Email Address: paul_geoffrey_brown@yahoo.com Message: The 'Austrian School' of economic thought dates the the inter-war period 1920-1940, when Austria--and particularly Vienna--was a thriving center of intellectual life even as the empire surrounding it was a corrupt and collapsing husk. This was the milleu that spawned writers and thinkers like Kafka, Goedel, Schlick (et al.) and economists like von Mises and (the great) Hayek. What all of the thinkers of this time and place (excepting Goedel) shared was an absolute commitment to the primacy of logic and a priori reasoning over messy intuitionist or even empiricism. In a nutshell, if the facts don't agree with the (rigorously reasoned out) theory, then the facts are wrong. And they have a point. Observations and measurements are easy to screw up, and inferring relationships from data is fraught with all kinds of problems. But they do have a tendency to take things too far. Today we have a lot clearer picture of the way the human mind works and these insights help to explain all kinds of 'irrational' behaviors which the Austrians would rule out as being 'impossible', because they are obviously irrational. For example, the Austrians have this position on labor cost which is that the 'supply' of labor is determined by how much labor people are prepared to exchange for leisure given the wage rate. Wages can never be 'too low', therefore, and anyone 'not working' is doing so because they desire leisure instead (at current wage rates). They have some intesting ideas. I just find them, I dunno, incomplete I guess.

Subject: Re: On the Austrian School... From: Pete Weis To: Paul G. Brown Date Posted: Thurs, Mar 24, 2005 at 15:06:01 (EST) Email Address: Not Provided Message: 'Wages can never be 'too low', therefore, and anyone 'not working' is doing so because they desire leisure instead (at current wage rates).' I remember reading that a basic premise of Austrian theory involved the flexibility that business would have and should have adjusting wages downward to deal with hard economic times. This would allow an economy to adjust without having to deal with high unemployment which had a lot to do with making the Great Depression more severe. However, John Keynes pointed out that the advent of unionized labor made this quick downward adjustment in wages impossible. The Austrian economic view tends to place the pain created by economic upheaval almost completely on labor. This would seem to discount the negative political and social backlash that could be born out of this.

Subject: Re: On the Austrian School... From: Terri To: Pete Weis Date Posted: Thurs, Mar 24, 2005 at 15:46:30 (EST) Email Address: Not Provided Message: Pete offers fine additions: The Austrian school seems to have a number of voids in its economic theories involving things like the the lack of consideration for the effects of large shifts in overall wealth from the broad consumer class to a tiny percentage at the top, the shocks from technological advances (disruptions to job markets) and human behaviour (irrational exuberance, corruption, etc.) to name a few. They prefer the 19th century's laissez faire economics (with some refinements) with its many booms and busts of the business cycle to the governmental intervention of the Federal Reserve which they believe tends to make the booms and busts much larger and more dangerous. I'm sure someone who is a devotee of the Austrian school would say my description of their views is very simplistic and it probably is. But I don't believe it is a very broad body of economic theory and seems to ignore, IMO, some major factors.

Subject: Re: On the Austrian School... From: Terri To: Terri Date Posted: Thurs, Mar 24, 2005 at 15:50:37 (EST) Email Address: Not Provided Message: Then, I would add lay off Keynesian fiscal policy adjustments and monetary policy adjustments in response to change economic conditions. Simply limit liquidity and let market adjustments solve micro and macro economic problems.

Subject: Re: On the Austrian School... From: Bobby To: Paul G. Brown Date Posted: Thurs, Mar 24, 2005 at 14:47:14 (EST) Email Address: robert@pkarchive.org Message: 'For example, the Austrians have this position on labor cost which is that the 'supply' of labor is determined by how much labor people are prepared to exchange for leisure given the wage rate. Wages can never be 'too low', therefore, and anyone 'not working' is doing so because they desire leisure instead (at current wage rates).' Just a quibble about attribution here. I'm not sure if this should be attributed to the Austrians specifically. This sounds like the general labor-leisure choice framework that applies to the long-run general equilibrium where full employment occurs. Real business cycle advocates may say it applies in the short-run too. I am not sure why the above characterization of employment would be considered Austrian specifically instead of just 'classical' or 'neoclassical.'

Subject: Re: On the Austrian School... From: Paul G. Brown To: Bobby Date Posted: Thurs, Mar 24, 2005 at 15:48:22 (EST) Email Address: Not Provided Message: > Just a quibble. Quibble accepted. I believe (smacks head to remove rust) that this labor cost model is the product of the whole 'marginalist' idea (value is created by trade at the margins of subjective utility, and wages are trade costs of leisure for labor, etc). This makes it a 'neo-classical', rather than 'classical' idea, because at least in the case of wages the classical school looked at wages in another way entirely (Ricardian 'Iron Law of Wages' and all that ....) I was reaching for a pithy example of an idea in economics that the Austrians would sign up for, one that underscored their allegience to reason over evidence (it's an entirely 'reasonable' idea), and one which was, well, wrong on the face of it (labor and leisure are not complementary goods: all of the phychological evidence shows that people derive satisfaction from their labor, and there is repeated evidence of periods of time when people wanted to work but there was no demand for labor at any (non-exploitative) wage rate).

Subject: Reality and Fancy From: Terri To: Paul G. Brown Date Posted: Thurs, Mar 24, 2005 at 14:04:15 (EST) Email Address: Not Provided Message: Wonderful analysis. The reason reading Austrianism is deceptive is there may be a logic to what is read, but the logic will continually be beyond testing beyond data. We can always imagine economies and individuals in those economies that never were, but the point is imagining the economies in which we live and ouselves in those economies, and then testing out our theories. What then can we and do we know? Wonderful.

Subject: Conundrums From: johnny5 To: Terri Date Posted: Thurs, Mar 24, 2005 at 14:41:18 (EST) Email Address: johnny5@yahoo.com Message: You need to read this again Terri: http://www.project-syndicate.org/commentaries/commentary_text.php4?id=1875&lang=1&m=series Evidence-Based Economics by Edmund S. Phelps There is a movement in medicine to require that applications for licenses to sell a new drug be “evidence-based.” By contrast, trained economists view their discipline as having already achieved this scientific standard. After all, they express their ideas with mathematics and arrive at quantitative estimates of implied relationships from empirical data. But economics is not evidence-based in selecting its theoretical paradigms. Economic policy initiatives are often taken without all the empirical pre-testing that could have been done. A notorious example is postwar macroeconomic policymaking under the radical Keynesians. The radicals relied on Keynes’s untested theory that unemployment depended on “effective demand” in relation to the “money wage,” but their policy ignored the part about wages and sought to stabilize demand at a high enough level to ensure “full” employment. Cecil Pigou and Franco Modigliani objected that if demand were successfully increased, the money wage level would rise, catch up to demand, and thus push employment back down to its previous level. Employment cannot be sustained above its equilibrium path by inflating effective demand. Nevertheless, the radicals prevailed through what the economist Harry Johnson called “scorn and derision.” Postwar macroeconomic policies were dedicated to “full” employment, without any evidence that money wages would not get in the way. In the late 1950’s, neo-Keynesians finally conceded the point raised by Pigou and Modigliani. Will Phillips’s work on wages gave them no choice. But they still insisted that steady increases of demand at a fast enough rate would keep demand one step ahead of the money wage level, so that employment could be kept as high as desired, albeit at the cost of steady inflation. In different ways, Milton Friedman and I objected, arguing that such a policy would require an ever-rising inflation rate. Money wages will lag behind demand, I argued, only as long as the representative firm is deterred from raising wages by the misperception that wages at other firms are already lower than its own – a disequilibrium that cannot last. Like the radicals, the neo-Keynesians did not engage their challengers with empirical testing. The efficacy of high demand was a matter of faith. Yet events in the 1970’s put that faith to a cruel test. When supply shocks hit the US economy, the neo-Keynesians’ response was to pour on more demand, believing it would revive employment. There was little recovery – only faster inflation. The current era offers a parallel. Although policy has since shifted to reflect supply-side economics and real business-cycle theory, the new reigning paradigm’s builders and promoters display the same antipathy to checking data for serious error. An earlier classroom lesson was well-founded: temporarily below-normal tax rates on labor this year, when merged with the prospect of reversion to normal rates next year, will encourage households to squeeze more work into this year and to work less in future years. This proposition was recently tested anew on Icelandic data and performed well. But the supply-siders jumped to the daring conclusion that a permanent cut in tax rates on labor would encourage more work permanently – with no diminution of effectiveness. Larry Summers and I both doubted that this could be generally true. If every increase in the after-tax wage rate gave a permanent boost to the amount of labor supplied, we reasoned, steeply rising after-tax wages since the mid-nineteenth century would have brought an extraordinary increase in the length of the workweek and in retirement ages. But both have fallen, and in continental Europe unemployment is higher. In my view, this core tenet of supply-side economics rests on a simple blunder. What matters for the amount of labor supplied is the after-tax wage rate relative to income from wealth. While after-tax wage rates soared for more than a century, wealth and the income it brought grew just as fast. To be sure, if tax rates were decreased permanently this year, there would initially be a strongly positive effect on labor supplied. But there would also be a positive effect on saving and thus on wealth next year and beyond. In the long run, wealth could tend to increase in the same proportion as after-tax wages. The effect on work would vanish. We must proceed cautiously, however. In standard analyses, the tax cut brings a reduction in government purchases of goods and services, like defense. But a tax cut could instead contract the welfare state – social assistance and social insurance, which constitute social wealth. In that case, the tax cut, while gradually increasing private wealth, would decrease social wealth. The issue is an empirical one. Research I did with Gylfi Zoega a decade ago confirmed that cuts in taxes on labor boost employment in the short run. But what about the long run? Do large long-run effects of tax rates show up in international differences in employment? In 1998 we examined OECD data for a correlation between national unemployment rates in the mid-1990’s and current tax rates on labor. We found none. In 2004, we looked at labor-force participation rates and again at unemployment. Still no correlation. High-unemployment countries include high-tax Germany, France, and Italy, but also low-tax Japan and Spain. Low-unemployment nations include low-tax Britain and the US, but also very high-tax Denmark and Sweden. Neoliberals are now telling continental Europe that tax cuts on labor can dissolve high unemployment. But the effectiveness of such tax cuts would be largely, if not wholly, transitory – especially if the welfare state was spared. In two decades’ time, high unemployment would creep back. The false hopes raised by cutting taxes would have diverted policy makers away from fundamental reforms that are necessary if the Continent is to achieve the dynamism on which high rates of innovation, abundant job creation, and world-class productivity depend. Edmund S. Phelps is Professor of Political Economy and Director of the Center on Capitalism and Society at Columbia University

Subject: Re: Conundrums From: Terri To: johnny5 Date Posted: Thurs, Mar 24, 2005 at 15:12:31 (EST) Email Address: Not Provided Message: This is a fine article, I do agree.

Subject: Double Counting From: johnny5 To: Terri Date Posted: Thurs, Mar 24, 2005 at 16:22:56 (EST) Email Address: johnny5@yahoo.com Message: Remember the current administrations love affair with hedonics, an academic paper was already posted why this was a PROBLEM, not because hedonics were not studied and analyzed by the academics and well researched and thought out, but because hedonics are NOT mature enough for POLICY decisions YET - I think this gets back to the empirical stuff - but we are running blindly ahead with hedonics and this concerned the writer of that paper - I think he was with the NY FED. How sad that after all this history, we don't USE our history and science and empirical data to bear out proper policy - this is no way to run makinds greatest civilization - its far too important to take wild untested risks like this no? Especially with all the computers we have today to be able to use the science to get so much of this right with empricial proof. Cowboy Policy decisions might have worked in the old west - but I thought we were in the ivory towers of computer certainty.

Subject: Re: Double Counting From: Emma To: johnny5 Date Posted: Fri, Mar 25, 2005 at 00:20:40 (EST) Email Address: Not Provided Message: You are always appreciated by me :) Be the free spirit you care to be. Double count all you will, though I have my doubts there is any double counting. Statisticians in the government bureaus really are top notch, and Bill Clinton let the bureaus do the best possible work. Post lots and lots Johnny5.

Subject: Always Interesting From: Jennifer To: johnny5 Date Posted: Thurs, Mar 24, 2005 at 21:49:33 (EST) Email Address: Not Provided Message: Johnny, all your comments are well valued.

Subject: Japan's Ski Industry Stumbles From: Emma To: All Date Posted: Thurs, Mar 24, 2005 at 12:28:56 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/03/24/business/worldbusiness/24skis.html?pagewanted=all&position= Japan's Ski Industry Stumbles on Age and Economy By JAMES BROOKE SHIGA KOGEN, Japan - The Japanese Alps sparkled in the sun after fresh powder dusted this ski resort, the largest in Asia. But on a recent weekday morning, almost 20 percent of the 71 lifts were closed; a long string of chairs climbing a mountain flank was empty except for one black-clad figure. Despite copious snow, fresh air and stunning views, the number of skiers in Japan, the world's second-largest skiing nation, has dropped by more than a third in the last decade. 'Ten to 15 years ago, I remember I had a hard time booking hotels,' Atsushi Hara, 33, said while resting after a run at Sun Valley, a small resort in this huge mountain complex. 'Now, it's so easy to reserve a room. I even see signs saying that there are rooms.' Over all, about 13 million lift tickets are expected to have been sold in Japan this season, down from 18.6 million in 1993. One reason is the aging of the country's population, said Yoshio Sato, president of the Japanese Institute of Free Time and Sports. 'Skiing,' he said, 'is a sport that attracts young people.' But the ski industry's woes are also a microcosm of a broader discontent in Japan, as an economically stagnant society resists changing in response to new conditions. Many ski resorts still ban snowboarding, and only a handful of them have shut down, leading to overcapacity. That, in turn, causes prices to drop, which scares away new investment. By contrast, the American ski and snowboard industry is generally healthy, having gone through a shakeout of marginal resorts in the 1970's that allowed the rest of the industry to focus on attracting new winter sports buffs as older skiers chose other leisure activities. The American industry recorded an annual average of 56.6 million visits in the first four winters of this decade, slightly above the average in the 1990's and 18 percent higher than levels of the 1980's, according to the National Ski Areas Association, a trade group in Denver. As in the United States, the number of winter leisure options in Japan has increased sharply. But in a Japanese twist, younger people who might have been attracted to skiing are instead being drawn into the national addiction to mobile phones. Teenagers and young adults often spend $200 a month for hand-held games, messaging, news services and ring tones. 'In addition to cellphones,' Mr. Sato said, 'they have to buy laptop computers - which uses up the money they would use to buy skis.' The Japanese are now buying half a million pairs of skis each winter, down sharply from 2.5 million at the peak in the winter of 1992-93. And the sport's image has been tarnished for many by memories of high school trips where skiing was mandatory and the après ski meant sitting in a hotel room. 'If a student did not obey the teacher, the teacher would order the student to sit on the snow like on a Japanese tatami mat,' Nobuo Okazawa, a hotel owner here, said recalling scenes as recent as the 1990's. But even as the number of skiers has declined, the number of Japanese ski areas has barely changed. In the last five years, only 4 have closed, leaving 718 still operating. Some companies, burdened with property taxes and mindful of the social impact of closing resorts in one-industry towns, walked out of the business by selling their ski area to the local municipality for one yen. The resulting overcapacity, while good for skiers in the short term, makes it harder for the bigger resorts to generate profits. 'Those guys are not going to let those resorts fail,' said Michael Berry, president of the National Ski Areas Association, in a telephone interview from Denver, 'even when there is no reason for them to exist anymore.' Mr. Okazawa said he had kept his Villa Alpen hotel open largely by relying on personal charm and contacts he developed as a ski instructor in France and Italy. With its sun-faded curtains and yellowing wallpaper patched with adhesive tape, the Villa Alpen, like many hotels here, has a décor frozen in the glory days of the 1970's. With more rooms going empty, Mr. Okazawa strives for maximum revenue by placing coin meters on every possible gadget - television sets, ski-boot dryers, even foot-massage vibrators. Four years ago, he and his son made their only capital investment in recent memory, replacing the hotel's water boiler on their own, saving the cost of hiring professionals. Downhill skiing really took off in Japan when a lift was built at Shiga Kogen as recreation for American soldiers during the occupation after World War II. Later, skiing won a strong Japanese following when Chiharu Igaya, a youth from Hokkaido, won a silver medal at the 1956 Winter Olympics. The biggest encouragement came with 'Take Me Skiing,' a hit romance movie in 1987. 'It's a fad-driven country, and after 'Take Me Skiing,' just about every young person had to do it,' said T. R. Reid, a Denver-based journalist who wrote a Japan ski guide in 1994. He recalled hourlong lift lines in the 1980's. In this area, about 125 miles northwest of Tokyo, the puncturing of Japanese prosperity has meant the closing of almost half the 73 guesthouses that companies opened in the go-go years. With Shiga Kogen bearing a reputation for high prices, other ski areas between here and Tokyo are luring away people with discount offers, like full-day lift tickets and lunch for the equivalent of $35. This huge resort complex has been slow to react, partly because there is no clear chain of command. Decisions are made by 17 area owners, an association of hotel owners and a separate association of landowners. The resort area, situated in a national park, is hobbled by park rules that prohibit the conversion of half-empty hotels into retail and after-ski venues. The solution, many Japanese and outsiders say, is to close marginal ski hills and invest to make the major areas attractive to more Japanese as well as to exert more effort in luring foreign visitors. That approach is transforming the golf industry. With the number of golfers in Japan down to 10 million from 15 million a decade ago, American companies have bought almost 10 percent of Japan's 2,400 golf courses, usually at steep discounts. After cutting fees and instituting family-friendly policies, many of these courses now make a profit. 'Some of the Japanese mountains will close,' said Roger Donazzan, executive chairman of Harmony Resorts Niseko, a private Australian company that bought the Niseko area of Hokkaido last fall. In the first major foreign investment in Japanese skiing, Mr. Donazzan plans to spend about $200 million through 2010 for a new base at the mountain village able to lodge 8,000 visitors. In another area, the Arai Mountain and Spa resort opened in 2002 with a base village copied from Western models. 'We are putting particular emphasis on young families with small kids,' Hiroshi Kojima, the Arai manager, said in English honed while managing an American ski resort in the 1990's. 'With the kids' playground, parents can be hands-off. They can ski while kids are being taken care of.' Although the government has set a goal of doubling the number of foreign visitors by 2010, the concept of catering to foreign skiers is still unfamiliar to many Japanese managers. Shiga Kogen may be the largest ski area in Asia, with 1,500 acres of slopes, but almost everything is written in Japanese. 'By next season, almost all our trail maps, signs and menus will be in English and Japanese,' Mr. Donazzan said. 'Then we are going to add Korean and Chinese.' Australians are responding to the new emphasis on English. In November, Australian Airlines, a unit of Qantas, began twice-a-week service flights between Cairns, in the north of Queensland, and Sapporo. Since then, flights have been booked solid as Australians discovered that a ski vacation in Japan means no jet lag and can cost about half that of a North American trip. Next will be promoting skiing to South Koreans, where an estimated four million skiers crowd into 13 resorts. A precedent of sorts has already been established: with 15,000 golfers for every course at home, some Koreans are now flying to Japan for golfing weekends. The big prize would be China. The Salomon & Taylor Made Company, a Japanese subsidiary of Adidas-Salomon, has set a 10-year goal of selling the same volume of ski goods in China as in Japan. And while Japanese visa policies largely restrict Chinese tourists to groups, China has the potential to pump new life into ski areas. 'Basically it's a good thing,' Mr. Sato, president of the sports institute, said of the glimmers of foreign interest in Japanese skiing. 'If foreign investors enter, we could see the maturing of Japanese resorts into European-style ones.'

Subject: A Takeover Roils Japan From: Emma To: All Date Posted: Thurs, Mar 24, 2005 at 11:43:03 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/03/24/business/media/24livedoor.html?pagewanted=all&position= A Takeover Roils Japan: Politeness Out, Hostility In By TODD ZAUN TOKYO - It has happened before in the United States: a fast-growing Internet start-up sets its sights on an old-line media company, and, in the end, gets it. That was the AOL takeover of Time Warner in 2000. Until now, though, something like that seemed unlikely in Japan, where only a handful of hostile takeovers have been attempted. But a court ruling on Wednesday set the stage for a 32-year-old entrepreneur, Takafumi Horie, and his Internet company, Livedoor, to gain a majority stake in Nippon Broadcasting System Inc., a 50-year-old radio broadcaster. In addition, Mr. Horie's company, which offers Internet services and operates a Web portal similar to Yahoo, has a chance to gain significant influence over the management of Nippon's larger affiliate, Fuji Television Network, the core company in one of Japan's largest media groups. Because the contentious battle for control of Nippon, which began last month when Livedoor announced that it had bought a controlling stake in the broadcaster, is a rarity for Japan, the clash is being followed with a media blitz befitting a celebrity murder trial. The spike-haired Mr. Horie, who prefers T-shirts and khakis, is being portrayed as the representative of a young, more Westernized Japan taking on the country's clubby corporate leaders. 'This is a young Japanese who has got a vision, and he's got the guts,' said Jesper Koll, chief economist for Merrill Lynch in Tokyo. 'The Japanese are no longer afraid to take on their own elite.' The battle also highlights the shift in Japan from what is known as stakeholder capitalism, under which the interests of a company's employees, business partners or managers were often given higher priority than increasing the company's bottom line. Taking its place is an increasingly Western approach in which companies are under pressure to think first about their shareholders. The ruling on Wednesday by the Tokyo High Court blocked a planned move by Nippon to transfer a majority stake in itself to Fuji TV by issuing share warrants to the television company. Fuji would then have been able to convert the warrants into new shares in Nippon, potentially more than doubling the number of outstanding shares in the radio company. That would have greatly diluted the holdings of Livedoor and other current shareholders. But the High Court, upholding a lower court, said that the only purpose of the sale was to keep Nippon under the control of its current management and that the sale, therefore, did not have any strategic value. 'It's regrettable, really regrettable,' the president of Nippon, Akinobu Kamebuchi, said after the ruling. 'We were sure justice would be on our side but that was not accepted. It's really too bad.' He added that Nippon would scrap the warrant sale and was now evaluating what to do next. It could appeal the decision to the Supreme Court. The ruling clears the way for Livedoor, with a market capitalization of 236 billion yen, or $2.2 billion, to take over management of Nippon, with a market cap of 206 billion yen, or $1.9 billion, later this year. Livedoor had a 49.78 percent stake in Nippon Broadcasting as of last Thursday and was expected to be able accumulate a majority stake in time to elect its own directors to the broadcaster's board at the next shareholder meeting in June. Livedoor raised the money it needed to buy the Nippon stock with a sale of 80 billion yen (about $750 million) in bonds, arranged by Lehman Brothers. The bonds would then be convertible to Livedoor stock after the purchase. 'We want to work now to raise the value of Nippon Broadcasting and its group companies,' Mr. Horie said after learning of the court's decision. Mr. Horie has said he wants the radio broadcaster so he can advertise on its programs and draw listeners to his Internet sites and services. He also said he believed that traditional media and the Internet would inevitably become more closely integrated and he wanted to be at the forefront of the change in Japan. 'I tried to do business with broadcasters over the last five years but they are too slow to make decisions,' Mr. Horie said in a speech this month. 'We have to speed up this process. Of course, everyone would prefer a friendly approach but I felt we don't have time for that friendly approach.' Gaining control of Nippon could also give Livedoor a strong say in the boardroom of Fuji TV, Japan's largest private television network, because Nippon is Fuji's largest shareholder, with a 22.5 percent stake. Media reports have said Mr. Horie has set his sights on increasing his stake in Fuji even further and the network has been beefing up its defenses against a takeover attempt. This week, Fuji said it was prepared to issue up to 50 billion yen in new shares to fend off an unwanted bidder. The company also announced that it would raise its fiscal year-end dividend to 5,000 yen a share from the previously announced 1,200 yen, giving shareholders a strong incentive to hang on to their stocks. But a Livedoor executive suggested Wednesday that the company would take a more conciliatory approach toward Fuji TV than it had in its pursuit of Nippon. Livedoor does not intend to raise its stake in Fuji without the approval of that company's management, Livedoor's senior vice president, Fumito Kumagai, said Wednesday, according to a company spokesman, Koichiro Ohta. Mr. Horie, a college dropout, built Livedoor into one of the country's best-known Internet companies by combining a portal site with online brokerage and banking and a host of other Internet services. The company posted a profit of 3.58 billion yen for the year ended Sept. 30 on sales of 30.87 billion yen. By that measure, the company is still a long way behind its top rival, the Yahoo Japan Corporation, which had sales of 75.78 billion yen in its most recent fiscal year, which ended March 31, 2004. Aside from shaking up corporate Japan, Mr. Horie's takeover bid also promises to change the landscape for mergers and acquisitions in Japan. Although Mr. Horie is Japanese, his aggressive tactics and early success have unleashed fears that a horde of foreign companies might try to buy up Japanese firms using his methods as a model. Although analysts say a wave of such acquisitions is unlikely, ruling-party politicians are nonetheless threatening to delay long-anticipated legal changes that would have allowed foreign companies to buy Japanese companies through stock swaps. On the other hand, many analysts and lawyers say that the attention the battle has generated could lead to a more thorough overhaul of laws governing takeovers that would benefit the industry in the long run. 'This is a very good event to educate Japanese people,' said Nobutoshi Yamanouchi, a lawyer in the Tokyo office of the American law firm of Jones Day. 'Some people don't like to see Japan transforming into a Western-style society but in my opinion in order to have international or global competitiveness, this step is necessary.' Many ordinary Japanese have also applauded Mr. Horie's effort even if they find his aggressive style somewhat distasteful. Polls show that he has broad support for his takeover attempt among both younger and older Japanese. 'I like what's happening,' said Hitashi Suzuki, a 35-year-old employee of a construction company in Tokyo. 'It is very modern and suits the time we live in. I wouldn't say I support Mr. Horie personally, but I think it is good that he fights for what he wants.'

Subject: India Alters Law on Drug Patents From: Emma To: All Date Posted: Thurs, Mar 24, 2005 at 10:14:49 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/03/24/international/asia/24aids.html?pagewanted=all&position= India Alters Law on Drug Patents By DONALD G. McNEIL Jr. India, a major source of inexpensive AIDS drugs, passed a new patent law yesterday that groups providing drugs to the world's poorest patients fear will choke off their supply of new treatments. The new law, amending India's 1970 Patent Act, affects everything from electronics to software to medicines, and has been expected for years as a condition for India to join the World Trade Organization. But because millions of poor people in India and elsewhere - including by some estimates half the AIDS patients in the Third World - rely on India's generic drug industry, lobbyists for multinational drug companies as well as activists fighting for cheap drugs had descended on New Delhi to try to influence the outcome. The law, which passed by a voice vote in Parliament's upper house yesterday after days of wrangling over amendments in the lower house, was in the end not as restrictive as the drug activists had feared. 'It's very disappointing, but it could have been worse,' said Daniel Berman, a coordinator of the global access campaign for the medical charity Doctors Without Borders. 'All generics could have been removed from the market.' Instead, all the generic drugs already approved in India can still be sold, though sellers must now pay licensing fees. There are also provisions allowing companies that make generics to copy drugs in the future. But there are relatively tough criteria for such copying, and activists predicted that prices for newly invented drugs will be much higher, because drug makers will have the same 20-year patent monopolies as they have in the West. As AIDS patients develop resistance to old drugs, new treatments will become less affordable, they said. In addition, it is unclear whether makers of generic drugs in other countries, like Brazil, China and Thailand, will fill any increasing demand for cheaper medicines. But India's governing Congress Party, which sponsored the bill, disputed the contention that prices would soar. 'The government will have enormous powers to deal with any unusual price rise,' said Commerce Minister Kamal Nath. All Western countries grant 'product patents' on new inventions. Since 1970, India has granted 'process patents,' which allow another inventor to patent the same product as long as it was created by a novel process. In pharmaceuticals, that has meant that a tiny tweak in the synthesis of a molecule yields a new patent. Several companies can produce the same drug, creating competition that drives down prices. Before 1970, India's patent laws came from its colonial days, and it had some of the world's highest drug prices. Process patents on drugs, fertilizers and pesticides have extended life expectancy and ended regular famines. In Africa, exports by Indian companies, especially Cipla and Ranbaxy Laboratories, helped drive the annual price of antiretroviral treatment down from $15,000 per patient a decade ago to about $200 now. They also simplified therapy by putting three AIDS drugs in one pill. Dr. Yusuf Hamied, Cipla's chairman, called the new law 'a very sad day for India.' But some other Indian drug makers, along with multinational companies, praised it. The International Federation of Pharmaceutical Manufacturers and Associations, a Geneva-based lobbying group, called the law 'a significant step' that would let India 'take a leading role in global pharmaceutical research and development.' S. Ramakrishna, chief lobbyist for Pfizer India, a subsidiary of the world's largest drug maker, said the bill's passage abandoned 'the utopian concept that every invention should be as free as air or water,' according to The International Herald Tribune. In the United States, Billy Tauzin, president of the Pharmaceutical Research and Manufacturers of America, the lobbying organization for the American drug industry, said the new law would be 'good for India and good for Indian patients,' but cautioned that his group was 'still measuring the impact on the overall bill of several last-minute amendments.' Some multinationals had refused to invest in India without stronger patent protection, and Indian companies that do original research were also eager for it. But Mr. Berman said a 'mailbox' created by the government two years ago in which drug makers could deposit patents they hoped to file when the law was amended had 1,500 proposals from Indian companies - and 7,000 from foreign ones, suggesting the new law would benefit foreign companies more. Under the new law, a maker of generics can apply to copy a patented drug, but only after it has been marketed for three years. In addition, the patent owner can object. Also, the generic's maker must pay a 'reasonable' royalty, although the law does not define reasonable. Two years ago, Mr. Berman noted, the London-based company GlaxoSmithKline demanded 40 percent of the sales proceeds of an AIDS drug it licensed to a South African company. (Under pressure from South African regulators and activists, it later licensed it to three rival companies for only 5 percent.) In 2003, the Swiss drug maker Novartis forced Indian competitors to stop making generic versions of its leukemia drug Glivec, which the Indian companies sold for $2,700 a year. Novartis then priced its version at $27,000 a year, while giving free treatment to a few poor patients. If a drug is desperately needed, the new law allows the government to declare an emergency and cancel its patent. But Mr. Berman said India had never declared such an emergency, and for years resisted admitting that it had an AIDS problem. Most governments, including the United States, have such patent powers, though they use them sparingly. When the Bush administration thought it needed huge supplies of the expensive antibiotic Cipro during the 2001 anthrax scare, it threatened to cancel Bayer's patent if the company did not cut its price. Other countries permit generic versions of AIDS drugs, but none have been as aggressive as Indian companies about getting them approved by the World Health Organization and exporting them. Generics made by companies in Brazil go mostly to Brazilians. China makes generics, but also has problems with counterfeiting and, like India, is under pressure to comply with W.T.O. rules. The Indian bill was amended to prevent 'evergreening,' in which patent owners try to get a new 20-year monopoly by patenting a variant on the same molecule. To win a new patent, the applicant will have to prove the variant works better. An editorial in The Business Standard of India said the law is 'better put together than seemed possible a month or two ago.' But Loon Gangte, who runs a program in India for people with AIDS, criticized the new law, saying: 'I am using generic AIDS drugs because I can afford the price. Since the bill has passed, when I need new drugs, I won't be able to afford them. I could become one of the casualties.'

Subject: The Puzzle of Japan From: Terri To: All Date Posted: Thurs, Mar 24, 2005 at 08:29:24 (EST) Email Address: Not Provided Message: I have a difficult time being gloomy when I read of the end of America or Europe in 2020 or 2040 or 2060. However, Japan is such a stunning puzzle. How is the deflation cycle ever to be broken? Every optimistic report we have is quickly proven foolish. Wherever is consistent Japanese growth to come from? Why have the Japanese not pushed for different economic policy? I surely do not understand, but I believe Paul Krugman was right on Japan from the beginning. The liquidity trap could have been broken with inflation targets, but this is not to be.

Subject: Yen and Dollar From: Terri To: Terri Date Posted: Thurs, Mar 24, 2005 at 08:35:10 (EST) Email Address: Not Provided Message: If the Japanese Yen were to rise in value against the dollar, both America and Japan would benefit. This would mean Japan is done with deflation, and America would benefit from more Japanese demand for exports from America. We can only hope for all Asia and America. I think we must be especially cautious about being optimistic about Japan, for the last 15 years have been so difficult. The fear of Japan with a rising Yen, is a lack of demand from America. So, the guess is the Yen will be protected at least as long as the Yuan is protected by the Chinese.

Subject: You are selling the japanese short Terri From: johnny5 To: Terri Date Posted: Thurs, Mar 24, 2005 at 12:04:21 (EST) Email Address: johnny5@yahoo.com Message: Mogambo and even Krugman admit inflation is easier than deflation to battle - and I am sure the very SMART japanese - who on a world IQ level as a nation are some of the smartest amongst us tried to figure out an escape from thier trap but history PROVES they were not able to escape deflation and you seriously worry me terri with your hopeful optimism that these very intelligent japanese couldn't get out of it - but think krugman can out think that whole nation and get us out of it with inflation targeting. I WANT him too Terri, I don't want my moms 230K west palm beach house and the security that can give her retirement to go up in smoke and lose 80% of its value like property in japan. But we have to learn from history - the very smart japanese couldn't get out - why is there so much hope that krugman and inflation targeting can do it when that whole nation couldn't figure a way out? These conundrums worry me, they seem to worry warren buffet and charlie munger and jim puplava and mogambo and pete as well - all people we should listen too. The MOST important thing though to me, is to understand why YOU and millions of investors like you are so hopeful, because it is also history that with steadfast optimism, even while pete and me are screaming about the sinking titanic and fearful for our impending end of life, some people play the piano and dance in the halls while the ship sank and accepted death gets us all and they wanted happiness at the end. However in the case of our markets, perception is everything and can determine wether the boat sinks or stays floating for a long time, and if there are more terri's - we may can smooth things out or at least let the boat sink slowly while most people bail - but if there are more pete's - well the boat is going down hard and fast.

Subject: Deflation and Inflation From: Terri To: johnny5 Date Posted: Thurs, Mar 24, 2005 at 22:06:54 (EST) Email Address: Not Provided Message: We do not have a problem at all similar to Japan. But, we can learn from Japan, and the mistakes they seem to have made. If deflation was a danger, the Fed has prevented this, not inflation is to be controlled.

Subject: Income and Consumption From: Terri To: All Date Posted: Thurs, Mar 24, 2005 at 08:21:34 (EST) Email Address: Not Provided Message: While individual income variance has increased these last 20 years, consumption growth appears to have remained far steadier than might be expected. The rule seems to be 'do not underestimate the American consumer.' This has amply helped our resilience against periods of slowing growth.

Subject: Federal Reserve Policy From: Terri To: All Date Posted: Thurs, Mar 24, 2005 at 06:21:33 (EST) Email Address: Not Provided Message: Then, is there an international sense that the Federal Reserve will act decisively from here? I would guess so. This may be much of the reason the Fed has been so successful for 25 years. Long term rates have risen moderately, which is what the Fed apparently wished. The dollar has risen in relative value possibly showing international confidence in Fed policy.

Subject: Jap bond buyers find new investments? From: johnny5 To: All Date Posted: Thurs, Mar 24, 2005 at 01:41:28 (EST) Email Address: johnny5@yahoo.com Message: Remember it was posted a few messages down that if the japanese find better investments than US bonds - the game is up - this is very BAD news if it makes the japanese private investors start buying domestic investments. http://biz.yahoo.com/ft/050323/48ca51c2_9bc6_11d9_815d_00000e2511c8_1.html Rise in Japanese property prices fuels optimism Wednesday March 23, 1:40 pm ET By David Ibison in Tokyo Land prices in Japan's big cities started to rise last year, the strongest sign yet that the devastating asset price collapse that followed the bursting of the country's economic bubble in the early 1990s is coming to an end. According to a survey by the Ministry for Land, Infrastructure and Transport, residential prices in central Tokyo rose 0.9 per cent in 2004, the first rise in 17 years. Residential prices in central Osaka and Nagoya also registered positive growth. High property prices were a symbol of Japan's booming economy in the 1980s and it was a matter of pride that the land around the Imperial Palace in Tokyo was at one point worth more than the US state of California. But when the bubble burst property prices plummeted more than 80 per cent, undermining company balance sheets, wiping out many families' wealth and helping plunge the economy into 13 years of stagnation. Hidenobu Nomoto, the chief of the MLIT's land price research division, said the shift in land prices was clear. 'We think the collapse in the economy after the bubble is at an end.' Japanese companies and households remain deeply exposed to the property market and any recovery in prices would be an important first step towards making the country's on-off economic upturn sustainable. 'Stability in land prices is another confirmation that the economy is emerging from the post-1980s bubble trauma. Confidence that prices are not going down any more will make a lot of difference to consumer behaviour,' said Richard Jerram, economist at Macquarie Securities. Consumer spending accounts for about 55 per cent of Japan's gross domestic product. Junichiro Koizumi, the Japanese prime minister, also struck an upbeat note yesterday, telling reporters at a press conference that 'some bright signs can be seen in the economy', including recent increases in bonuspayments. 'We'll strive to spread the upward signs across the nation,' Mr Koizumi said. Big companies had seen their earnings improve and the government now needed to help boost earnings at small and medium-sized firms, he added. The MLIT report showed that, on average, residential property prices in Tokyo were 41 per cent of their peak in 1991, while commercial property prices were 20 per cent of their peak value. The survey pointed out that in Ginza, the upmarket shopping area in central Tokyo, prices rose 10 per cent last year. These figures appear to have been leaked as shares in companies exposed to Ginza property prices have been rising for the last three weeks. Despite strong growth in the cities, the survey said prices nationwide dropped 4.6 per cent, the 14th consecutive year of decline. However, the rate of decline slowed compared with last year's 5.6 per cent.

Subject: Japan's Deflation From: Terri To: johnny5 Date Posted: Thurs, Mar 24, 2005 at 07:25:57 (EST) Email Address: Not Provided Message: If the Japanese Yen were to rise in value against the dollar, both America and Japan would benefit. This would mean Japan is done with deflation, and America would benefit from more Japanese demand for exports from America. We can only hope for all Asia and America. I think we must be especially cautious about being optimistic about Japan, for the last 15 years have been so difficult.

Subject: Re: Jap bond buyers find new investments? From: Ari To: johnny5 Date Posted: Thurs, Mar 24, 2005 at 05:32:27 (EST) Email Address: Not Provided Message: 'Japanese' is the proper term. Please be careful.

Subject: Re: Jap bond buyers find new investments? From: johnny5 To: Ari Date Posted: Thurs, Mar 24, 2005 at 11:40:19 (EST) Email Address: johnny5@yahoo.com Message: Frankly Ari I am getting sick and tired of people that are so easily offended - I tried to type japanese in the subject line, but it would not fit - the board limits how many characters you can put in, I am really growing weary of telling you people I am not out to insult or hurt anyone or offend them and I am beginning to believe there is a real problem with people that are so easily offended and take things so negatively - people that should know without body language and context and face to face communication that BBS and email stuff is much easier to confuse and should give a poster the benefit of the doubt to the positive - not negative. I will give you an example Ari, how many times have you seen speedy gonzales on the looney cartoons on Cartoon Network anymore - you don't - becaue they banned SPEEDY because they thought he was offensive to over sensitive people - well I am 1/8th mexican - I LOVE speedy, so do a lot of mexican and non-mexican people here in tampa - and we are very upset that to cater to the ari's of the world we can't watch speedy or show our children speedy on TV anymore. Please Ari, in the future, try to loosen up and not take things so hard or negatively, I know you want to protect the feelings of the japanese - but if they are going to be offended by one word on one BBS where the subject line is listed - perhaps they have more serious problems than thier feelings?

Subject: What is in a Name From: Ari To: johnny5 Date Posted: Thurs, Mar 24, 2005 at 15:42:36 (EST) Email Address: Not Provided Message: The comments you write interest me and other readers, so do not take offence. There are terms we should avoid using, because they will rightfully offend others. The explanation makes sense, but the mild criticism was not out of place.

Subject: Please Be Careful From: Ari To: Ari Date Posted: Thurs, Mar 24, 2005 at 05:37:18 (EST) Email Address: Not Provided Message: Please be careful.

Subject: Mogombo slams Krugman From: johnny5 To: All Date Posted: Thurs, Mar 24, 2005 at 01:08:12 (EST) Email Address: johnny5@yahoo.com Message: http://www.321gold.com/editorials/daughty/daughty032305.html ....Anyway, I get to thinking about these things, and I wonder how in the hell we got where we are, which is one of the downsides of being stupid, as I am always confused as to how I got where I am. Then I receive a forward from my old budderoo, Phil Spicer, who thought I would be interested in reading an article entitled 'Burning Bridges and Halfway Houses' by Antal E. Fekete, who is the Professor Emeritus at Memorial University of Newfoundland, dated 21 March 2005. Prof. Fekete writes about the idea of the liquidity trap. 'The term originated with Keynes himself,' says the professor, 'who, in the second half of the 1930's, noted that his contra-cyclical prescription to inject new money in the economy through central-bank purchases of bonds in order to combat falling prices wasn't working. In fact, it produced just the opposite effect of what he had hoped. Deflation got worse, not better.' Bummer, huh? Keynes and his stupid little economic theory are a dismal failure, and now everybody looks like a bunch of idiots. Even Kurt Richebacher has a few choice words in a similar vein about this same stuff happening today. 'The U.S. economy has been treated with the most opulent monetary and fiscal stimulus in its own history and also in comparison to the rest of the world. And what did people in America get out of all that artificial stimulus? It is, actually, America's worst recovery by far in jobs and income since World War II or the Great Depression.' What's the problem? Well, Prof. Fekete goes on to write, 'As the ownership of monetary gold was made illegal in 1933, the only competitor to government bonds was removed from the arena. Owners of monetary gold were forced by the strong arm of the government to invest in government bonds - not a very pretty sight in itself, even if the matter ended there. But the matter did not end there. As holders of gold were competing for the limited supply of government bonds, which rightly or wrongly they considered as the safest thing to have second only to gold, bond prices were driven to unprecedented heights and interest rates were plunged to unprecedented depths.' Again, just like today! People today are (and my voice always rises to a high-pitched whine, like some hysterical snot-faced little whining girl when I talk about this anomaly) actually buying bonds, and long-term debt to lock in yields that are less than the rate of inflation! Which is rising! And it is rising at the same time as general interest rates are guaranteed, by the Federal Reserve itself, to keep rising from these historically-aberrant lows! Everybody is piling into bonds as the government is issuing oceans of new bonds, and the Federal Reserve is creating the credit that will be turned into money by everybody borrowing money to buy the bonds, thus creating a supply-demand imbalance that drives up prices, which drives down interest rates, which hands a tidy profit to all the people who borrowed money to buy the bonds, which makes a bunch of OTHER guys say 'Hey! Maybe we ought to borrow some money to buy some bonds, too, so that we can make this easy money!' And so they do! And that worsens the supply-demand imbalance, which makes prices go up more, which makes interest rates go down more, and everybody is making scads and scads of money on this scheme! Weird! Prof. Fekete says, 'Deflation is present in the economy in the first place, in which case it is made worse than it need be by prompting speculators to buy bonds in tandem with the central bank. Interest rates fall and through the mechanism of linkage prices fall, too, as the flow of money from commodities to bonds accelerates. In the worst-case scenario a vicious circle is activated and the economy plunges into depression.' 'The world center for liquidity-trap studies and for the inflation-targeting cabal is the Woodrow Wilson School at Princeton University in New Jersey. Under the leadership of department head Ben Bernanke a team consisting of Paul Krugman, Lars Svensson, and Mike Woodford has been busy investigating the liquidity trap and finding ways to unplug it through inflation-targeting should it get clogged again.' These evil people are the ones who want to destroy you with inflation as a remedy for the mess made by this very stupidity! Gaaahhhh! Then Mr. Fekete links this all to an infamous essay entitled 'Can Deflation Be Prevented?' by Paul Krugman, and written in February, 1999. Mr. Krugman explains their weirdness like it is the most natural thing in the world. 'Yet here we are, with deflation turning out to be a serious problem after all - and with policymakers finding that it is not as easy either to prevent or to reverse as we all thought. The point is that deflation should - or so we thought - be easy to prevent: just print more money. How can we get finance ministers and central bankers, who have spent their whole careers preaching the evils of inflation and the virtues of price stability, to accept the idea that price stability may not be an available option?' How do you get people to get over the silly notion that shooting a bullet into your own brain is a bad idea? Is that what Mr. Krugman wants to know? How do you get people to do something that is irrational and stupid, when every relevant source, in-freaking-cluding all of history, the Bible, and common sense, all say it is irrational and stupid? Well, Hans Sennholz, famous Austrian economist that he is, says that it may be a hard sell, because, like me, he sees it again and again all the way through history. 'The popular notion that an increase in the stock of money is socially and economically beneficial and desirable is one of the great fallacies of our time. It has lived on throughout the centuries, embraced by kings and presidents, politicians and businessmen. It has shattered numerous currencies, inflicted incalculable harm, and caused social and political upheavals. It springs forth, again and again, no matter how often economists may refute it.' While Dr. Sennholz does not mention the Princeton group by name, he obliquely refers to 'American statisticians and economists want to make us believe that America is a new-paradigm exception in this respect, being miraculously able to generate unprecedented productivity growth with zero savings and record-low fixed business investment. The consensus readily believes it. For us, this is macroeconomic rubbish.' Mr. Fekete goes on to lay out more bad news. 'Without any hesitation they took the advice of Krugman, abandoned policies 'conventionally regarded as responsible', unilaterally betrayed their mandate, burnt the halfway house of price stability, and hit the warpath of inflation, euphemistically calling it 'inflation-targeting'.' 'The seriousness of the problem cannot be overstated. A steep rise in interest rates at this juncture would be the horror of horrors. Normally higher interest rates would strengthen the value of the currency as they attracted foreign investors. Not this time. Apart from the problem of pricking all the bubbles in the economy starting with the housing bubble, and ballooning the budget deficit into outer space, there is an even larger and more immediate problem. And that is the effect that steeply rising interest rates have on the value of bonds, widely held at home and abroad. The effect is inevitable and instantaneous. Higher interest rates make bond values collapse.' Now if we have a gazillion dollar's worth of bonds out there, which we do, and there are owners of those bonds, then what is the economic effect of a gazillion dollar's worth of bonds collapsing to those guys? Hahahaha! The only thing left for me to do, to try and grab a little of this elusive limelight, is to insult the Fed and Krugman and Bernanke and all the rest of these crumb-bum losers, but even HERE this Fekete dude is busting my chops! He goes on to say 'Krugman has convinced us that the money-managers at the Fed have got rid of their last scruples, if they ever had any. Paraphrasing him, if you really believe that runaway inflation is now a global threat, you should also believe that only policies lying outside of the realm what is conventionally regarded as responsible will contain that threat. One irresponsible monetary policy deserves another. The contingency plan to prevent a steep rise in interest rates will have to involve a conspiracy between the Fed and the Bank of Japan to punish speculators short-selling the dollar and dollar bonds. There is nothing else left in the Fed's bag of tricks but the check-kiting scheme with the Bank of Japan that could hold back the forces of monetary destruction waiting in the wings.' Then he sums it up in particularly poetic form. 'Never mind that it is 'conventionally regarded' as irresponsible. Never mind that it is illegal. Never mind that it is criminal. Nothing else will defer the day of reckoning.' I guess the lesson is that there may be life left in the stock and bond markets yet, as the Fed is now reduced to these odious, market-manipulating remedies.

Subject: What is the Austrian School? From: Terri To: johnny5 Date Posted: Thurs, Mar 24, 2005 at 08:14:08 (EST) Email Address: Not Provided Message: Though I have tried to understand the Austrian School of economics, I find only a sense that Keynes was wrong and there must be a money supply that is constant as gold. What is the point of throwing away a century of learning? They criticize fiercely but I have no idea why.

Subject: Don't let gold fool you Terri From: johnny5 To: Terri Date Posted: Thurs, Mar 24, 2005 at 11:20:22 (EST) Email Address: johnny5@yahoo.com Message: Over at the silicon investor boards terri they are talking about when SPAIN in the 17th century got a old of GOLD from the new world - and since thier money supply was gold, this caused a serious increase in thier money supply and hurt Spain very badly, so this is why I have a problem with mogambo and others advocating gold - there is historical proof that even when GOLD was the currency, too much currency floating around was BAD.

Subject: Re: What is the Austrian School? From: David E.. To: Terri Date Posted: Thurs, Mar 24, 2005 at 09:39:15 (EST) Email Address: Not Provided Message: Here's a link I haven't read it, I was very interested back when Alan Greenspan thought the risks of either deflation or inflation were about the same. The experience of the last few years has been interesting. The federal reserve has been very successful containing inflation measured by the consumer price index. However, we have had at least three bubbles - stock market, bonds, and real estate. For some reason, the liquidity never finds its way to capital investment. It seems liquidity can be injected, but where it goes cannot. The objective of this liquidity injection I thought was to ensure that the level of the economy didnt drop way below capacity. That objective has been met, but strangely only increasing employment to 2000 levels. Labor market participation of the population is still below 2000 levels. I would very much to understand all of this. Maybe its time to read my link.

Subject: Re: What is the Austrian School? From: Pete Weis To: David E.. Date Posted: Thurs, Mar 24, 2005 at 10:34:03 (EST) Email Address: Not Provided Message: The Austrian school seems to have a number of voids in its economic theories involving things like the the lack of consideration for the effects of large shifts in overall wealth from the broad consumer class to a tiny percentage at the top, the shocks from technological advances (disruptions to job markets) and human behaviour (irrational exuberance, corruption, etc.) to name a few. They prefer the 19th century's laissez faire economics (with some refinements) with its many booms and busts of the business cycle to the governmental intervention of the Federal Reserve which they believe tends to make the booms and busts much larger and more dangerous. I'm sure someone who is a devotee of the Austrian school would say my description of their views is very simplistic and it probably is. But I don't believe it is a very broad body of economic theory and seems to ignore, IMO, some major factors.

Subject: Re: What is the Austrian School? From: David E.. To: Pete Weis Date Posted: Thurs, Mar 24, 2005 at 14:47:06 (EST) Email Address: Not Provided Message: Thanks Pete, that description helps.

Subject: The Article is Wrong From: Ari To: johnny5 Date Posted: Thurs, Mar 24, 2005 at 05:40:03 (EST) Email Address: Not Provided Message: There is no need to insult Paul Krugman. The article is wrong. Mean spirited writing such as this is always wrong.

Subject: Older Workers Please Apply From: Emma To: All Date Posted: Wed, Mar 23, 2005 at 21:30:28 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/03/23/business/23older.html?incamp=article_popular_2&pagewanted=all&position= More Help Wanted: Older Workers Please Apply By MILT FREUDENHEIM In a push to recruit older workers, Home Depot, the hardware chain, now offers 'snowbird specials' - winter work in Florida and summers in Maine. Borders bookstores lure retired teachers to sales jobs with discounts and the promise of reading and discussion groups. Pitney Bowes, the business services company, pays tuition for courses in computer programming as well as spare-time skills like golf and flower arranging. After years of encouraging workers to take early retirement as a way to cut jobs, a growing number of companies are hunting for older workers because they have lower turnover rates and, in many cases, better work performance. Some companies like Wal-Mart are making their pitches at senior centers and others are sending company brochures to churches and community libraries and posting their attractions on Web sites. AARP, the advocacy group for older people, recently put on its Web site links to 13 'featured employers' - including MetLife, Pitney Bowes, Borders, Home Depot, Principal Financial and Walgreens - that are recruiting older workers with offers of health benefits, training and flexible work schedules. More than 71,000 people have used the Web site this month to seek job information. At Home Depot, Ed Wright, 71, a retired electrical contractor, works the early shift from October to May in the electrical products department at the store in Lake Wales, Fla. Then, when the weather changes, he heads north and works part time from June to September in the Home Depot in Tullytown, Pa. 'I had heard you could do that, so I applied for a job here in Florida,' he said. 'It's the best of both worlds.' Mr. Wright is not the only north-south commuter at the Lake Wales store. He said he had colleagues who went to Maine, Connecticut and Colorado in the summer. Cindy Milburn, senior director of staffing at Home Depot, said the company was looking to older workers to fill a labor shortage a decade from now. 'We wanted to plant seeds early on,' she said, to build relationships with groups like AARP and government agencies that help people, including military retirees, find jobs. Conventional wisdom has long held that workers become more costly as they grow older, with more medical problems and more missed workdays. But 'overall costs are not much different based on the age of employees,' said Dan Smith, senior vice president for human resources at the Borders Group. 'Training and recruitment costs are much lower than for younger workers. It all evens out.' Mr. Smith said nearly 16 percent of Borders's current 32,000 employees were 50 or older, compared with only 6 percent six years ago. For one thing, the older workers are much less likely to depart after a few years. The turnover rate for employees 50 and older was one-tenth that of workers under 30, according to Mr. Smith. 'Costs of training, recruitment and learning the job routine,' he said, 'are all much lower than for younger workers.' That is no small matter, especially in retailing, where 60 percent annual turnover, not counting part-time help, is the norm for specialty stores, according to the National Retail Federation, an industry trade group. If part-timers and temporary workers are covered, the turnover rate soars to 110 percent. (The group's survey did not cover department stores and outlet stores.) Even with its loyal older people and a low turnover rate by retailing standards, Home Depot, which has 325,000 employees, hires 160,000 people each year, including part-time and seasonal workers and 20,000 for new jobs as the company adds stores, Ms. Milburn said. Eileen Applebaum, a labor economist at Rutgers University, said the cost of turnover per worker was $2,335, on average, in a survey of representative California employers last year conducted by researchers at Rutgers and U.C.L.A. Simply holding down the turnover rate could mean annual savings in the millions of dollars for large employers. The recruitment efforts for the elderly are reaching a willing audience, as more older people seek work because they need extra cash and health benefits and sometimes because they miss having a 9-to-5 routine with other workers. In the 65-to-69 age group, 'about one-third of men and almost one-fourth of women were working in 2004,' said Joseph F. Quinn, a labor economist and dean at Boston College. 'Already, there has been a dramatic change since the mid-1980's in the labor force participation of older workers.' The percentage of men in that age group still working rose to 33 percent in 2004 from 27 percent in 1994; the percentage of women in that age group working rose to 23 percent from 18 percent. According to AARP, almost one in three workers will be 50 or older within five years. Larry Gershell, 72, for example, was a marketing executive when he retired at 65 after 40 years in book publishing. Within a year, he found a full-time job selling books at a Borders store in Midtown Manhattan. 'I like books; I like to read; I like to know what's going on,' he said. 'I love talking to mothers. I tell them not to worry about their kids who read comic books.' He also likes the relaxed atmosphere. 'It's not stressful,' he said. 'No pain in the belly anymore. When I got home from my office, my wife used to say 'you want to kick the dog.' But we didn't have a dog.' Now he takes home $30 worth of free books every month, a benefit he finds 'marvelous, ' and he also gets Borders's health benefits. At Wal-Mart, which has 220,000 employees 55 and older, store officials are often sent on recruiting missions to churches, senior centers and meetings of local AARP chapters, said Sarah Clark, a Wal-Mart spokeswoman. Older workers are still mostly in sales, office work and management, according to an analysis of Bureau of Labor Statistics data by Jared Bernstein, a labor economist at the Economic Policy Institute. But at Pitney Bowes, a manufacturing company that is also big in business services, almost 1 in 4 employees is over 50. The company is 'very aware of the demographic trends,' said Bruce Nolop, Pitney's chief financial officer. 'It will be very essential to appeal to the older portion of the work force.' Terry Dendy, 56, a large-format preparation-press operator, was recently hired at the company's digital imaging center in Manhattan. Mr. Dendy said he worried about his age when he looked for work after his former employer closed. 'But I had friends in my age category at Pitney Bowes and they told me I should apply,' he said. 'I did, and after that there was no problem.' These recruiting successes, of course, also reflect economic realities as dwindling company-subsidized health coverage for retirees and inadequate savings and pensions force many older people to stay on their jobs or look for other work. Still, as baby boomers age, many are eager to work for benefits beyond the paycheck. 'They don't want to go fishing; they want to stay sharp,' said Jeanne Benoit, principal director of human resources at the Charles Stark Draper Laboratory, a military research contractor in Cambridge, Mass., that creates prototypes for aerospace projects. In industries with labor shortages, like nursing, older workers already have an edge. Nurses, who typically retire at 53, are being recruited at high rates, said Peter Buerhaus, associate dean of the school of nursing at Vanderbilt University. 'They are probably the fastest-aging work force in the country.' In 2002 and 2003, hospitals raised pay scales and hired 130,000 nurses over age 50, which made up more than 70 percent of the 185,000 total hired in those two years, Mr. Buerhaus said. Many of those nurses may well agree with Ellen Van Valen, 67, a Home Depot manager, who says that age has little do with the desire to work. Ms. Van Valen, who is assistant manager for internal operations at the company's store in Stratford, Conn., supervises a group that includes five workers in their 60's. 'The older folks seem to catch on a lot quicker,' she said. 'They're used to life in general.' Ms. Van Valen plans to work full time until she is 75. 'Every day is a learning process,' she said. 'Hey, I could become a store manager down the road, but not right now.'

Subject: Thinking About Interest Rates From: Terri To: All Date Posted: Wed, Mar 23, 2005 at 15:52:14 (EST) Email Address: Not Provided Message: Seemingly the Fed has decided there can be no chance that inflation might be set off by rising commodity prices or a decline in the relative value of the dollar at a time when the Fed might actually want to ease monetary policy. Then, make sure rates are high enough soon enough not to have to make a choice between defending the dollar or the domestic economy. Interesting and sensible. Then, we can assume there will be Federal Funds increases of 50 basis points or even a 75 basis point increase to temper market anticipations. Now, we have a Fed cycle.

Subject: To Buy or Sell TIPS From: Terri To: All Date Posted: Wed, Mar 23, 2005 at 15:01:10 (EST) Email Address: Not Provided Message: Watching inflation protected securities will be interesting. TIPS are being recommended now, but my sense is to sell TIPS. After 5 years of averaging about 10%, take the capital gains, and lower duration. The Vanguard TIPS fund has a duration of 6.9 years. The guess is that TIPS sell off as interest rates rise just as any bond fund with a 6.9 year duration would. Since the Fed will act to limit inflation, this would seem a time not to need inflation protected securities unless we feel the Fed will lose control. Time to learn how TIPS weather a difficult bond market.

Subject: Food For Thought From: David E.. To: Terri Date Posted: Wed, Mar 23, 2005 at 17:51:56 (EST) Email Address: Not Provided Message: VBISX - Vanguard STB YTD Loss thru 3/23 -.96% VIPSX - VanguardTIPS YTD Loss thru 3/23 -0.0% If this seems surprising consider that this might mean that people have been willing to pay more for inflation protection.

Subject: Re: Food For Thought From: Terri To: David E.. Date Posted: Wed, Mar 23, 2005 at 18:50:53 (EST) Email Address: Not Provided Message: David, the year to date figures are not in for this day. TIPS will be down about 2% for the year I would guess. But, there may still be more demand for TIPS than we might guess.

Subject: Re: Food For Thought From: Terri To: Terri Date Posted: Wed, Mar 23, 2005 at 21:33:33 (EST) Email Address: Not Provided Message: David, there was a problem with the Internet feed and many fund year to date calculation are missing. The year to date figures are usually in by 7, but not this day.

Subject: Re: Food For Thought From: David E.. To: Terri Date Posted: Thurs, Mar 24, 2005 at 00:02:32 (EST) Email Address: Not Provided Message: Terri, The date posted was 3/23 - so an update was made for the date but not for the data (or the wrong data was posted). Either way, it is sloppy programming work. I can live with late data, but wrong data is unacceptable. If the data was for yesterday 3/22 - using Yahoo's % delta for today VBISX should be -1.28% VIPSX should be -.88% This is the 23rd - the unposted earnings and inflation adjustment should break in favor of TIPS. IF we have good numbers today I can say that so far, TIPS is outperforming the Short Term Bond Fund.

Subject: Re: Food For Thought From: Terri To: David E.. Date Posted: Thurs, Mar 24, 2005 at 06:12:51 (EST) Email Address: Not Provided Message: http://flagship5.vanguard.com/VGApp/hnw/FundsByName Vanguard did not post year to date returns for a number of funds yesterday. There was a rare problem, and the data will be posted today. The Vanguard TIPS Fund may well prove just what is needed in this bond market. Inflation protected securities have been an excellent investment, but I want bond funds with lower durations. The results in the coming weeks and months will teach us much. Thank you so much.

Subject: Re: Food For Thought From: David E.. To: Terri Date Posted: Thurs, Mar 24, 2005 at 09:48:08 (EST) Email Address: Not Provided Message: I can't get into Vanguard today, folks on morningstar's diehard forum cannot get in either. This is troublesome.

Subject: Slight Internet Problems From: Jennifer To: David E.. Date Posted: Thurs, Mar 24, 2005 at 10:07:43 (EST) Email Address: Not Provided Message: Vanguard is having a problem with the Internet site. All will be well. This will happen on sites. There have been other sites down yesterday and today, but I do not know why.

Subject: Dont worry, its all in your head anyways From: johnny5 To: Jennifer Date Posted: Thurs, Mar 24, 2005 at 10:54:55 (EST) Email Address: johnny5@yahoo.com Message: Whatever happens in virtual land with the data cowboys, be thankful that even if all your electronic dollars go up in smoke you live in a wonderful mostly peaceful society with great libraries and shopping malls and good restaurants. This is not something to concern yourself with, nothing here citizen, move along.

Subject: Investment Bubble Builds New China From: Emma To: All Date Posted: Wed, Mar 23, 2005 at 11:41:18 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/03/23/business/worldbusiness/23invest.html?pagewanted=all&position= Investment Bubble Builds New China By JOSEPH KAHN YANGSHUO, China - Nature spent millennia carving the jagged limestone mountains of Guangxi Province into the fanciful forest of stand-alone peaks so prized by ancient painters and modern tourists. Ren Ping and his crew of a few dozen migrant workers have been at their jobs only a few months, but the elevated superhighway they are building has already burrowed a path through the prehistoric crags. 'We'll go around this one, but we will have to slice through that one over there,' Mr. Ren said over the roar of dump trucks pouring cement. 'Drivers on this road will have the most beautiful view in all China.' Environmentalists are less enthusiastic. But the highway will link mountainous northern Guangxi to the booming Pearl River delta in the southeast. It is the sort of grand development project that elicits official support and opens checkbooks in China's economy, which some critics say has become dangerously dependent on such state-directed spending. After a road-building campaign unmatched by any country except the United States in the 1950's, China has created an extensive network of multiple-lane highways, complete with landscaped verges and well-equipped rest areas. The Communications Ministry announced in January that it planned to pave a further 53,000 miles of intercity highways and urban ring roads within 30 years at a cost of $250 billion. Total mileage is expected to overtake the American Interstate system, the world's biggest, around 2020. The spending has transformed China's landscape, adding roads, bridges, subways and ports - as well as factories, mines, steel mills and power plants - that could provide the foundation for double-digit growth far into the future. But to an extent that is alarming some Chinese and Western economists, such investment itself is a main driver of China's economy, which grew at a 9.5 percent pace last year. The investment binge, like any bubble, could produce unneeded factories and underused highways and power plants, weakening the country's already shaky financial system. 'If China keeps relying on cheap capital to generate growth, sooner or later it will face a major crisis,' said Xu Xiaonian, an economist at the China Europe International Business School in Shanghai. 'Right now, the economy is afflicted by the curse of diminishing returns.' China's leadership agrees to an extent. Officials in Beijing have been trying to cut what they see as unneeded investment projects and reduce growth to a more sustainable pace. Yet in 2004, independent experts who examined government statistics say, investment in such projects represented 45 percent of China's gross domestic product, the broadest measure of the economy. Mr. Xu said the economic payoff from these huge investments had fallen sharply. He estimates that 15 years ago, China generated 50 cents of growth for each dollar it invested in fixed assets - roads, subways, and steel mills and the like. That return has fallen to about 20 cents for each dollar invested, he says. While it is not unusual for a fast-developing country to derive a substantial part of its growth from new investment, no other major country has depended so heavily on fixed investment. The United States, which relies mainly on consumer spending to generate growth, invests about 15 percent of its G.D.P. in fixed assets. Japan and South Korea never invested as much as 40 percent in fixed assets. Today, the share is below 30 percent in both countries. Senior Chinese officials and most private economists agree that investment rates cannot remain at such levels without setting off high inflation, unneeded capacity and fresh piles of bad bank loans. The question is how much investment must come down and whether the reduction will cause a slump in the broad economy. Morris Goldstein and Nicholas R. Lardy, economists at the Institute for International Economics in Washington, wrote in a recent survey that the Chinese investment surge might take a few years to unwind at considerable cost to growth. They said China would have to limit investment to the high 30's as a percentage of the gross domestic product to avoid widespread waste. Yet doing so would probably cause the overall growth rate to dive to perhaps half its current level. 'At the heart of the imbalances in the Chinese economy,' they wrote, 'is an unsustainable investment boom that has been in the making for at least four years and that will probably take at least several years to undo.' Communist Party leaders have said that the economy must expand at least 7 percent a year to create jobs for the huge numbers of urban and rural laborers who would otherwise be unemployed. They worry deeply about slowdowns that could lead to social unrest and potentially weaken the party's rule. Yet top officials also worry about the investment binge. Ma Kai, the country's leading day-to-day economic planner, said at the nation's annual legislative meeting in Beijing that government efforts to control investment would intensify. 'As soon as we make progress addressing overinvestment in one area, it crops up in another area,' he said, citing new bubbles in power generating and real estate. Mr. Ma said the government would aim to slow the increase in overall investment spending to 16 percent this year from 27 percent in 2004. Investment would remain the main driver of growth. Economists say such a controlled slowdown is the only way to ease the economy off its dependence on new capital injections without risking a crash. Arthur R. Kroeber, editor of The China Economic Review, a widely read academic business monthly based in Hong Kong, argues that China can maintain high levels of investment as industrialization spreads inland from the coastal cities. Modernization will take much more time in China than it did elsewhere in East Asia, meaning that government-directed financing could play a big role far into the future, he said. Officials in Guangxi hope that a new network of expressways will attract companies and stimulate the economy there. Though the province is just west of the fast-growing economic center of Guangdong, it remains one of China's poorest. They plan to open 146 miles of expressways this year with total highway spending reaching $1.6 billion. Workers are now blasting a major highway through rocky hillsides and terraced sugar cane fields to link the provincial capital of Nanning to Vietnam in the south. The highway towers 20 feet over sparsely populated villages in its shadow. The elevation prevents peasants and their water buffalo from crossing the tarmac. On the Vietnam side of the border, trucks still crowd a two-lane country road shared with farmers. Construction also began recently on the expressway linking Guilin to Guangzhou. It traverses a hauntingly beautiful mountain range near Yangshuo, one of the country's most popular tourist destinations. 'It is an absolutely perfect model of karst mountains, and this road goes right through the middle,' said Wang Yingke of the Institute of Karst Geology, part of the Chinese Academy of Geological Sciences. Mr. Wang and several other scholars petitioned the authorities to have the road redirected, to no avail. 'They consider the economic factors but nothing else,' he said. Jiang Jihong, an official of the Communications Bureau of the Guangxi government, said local officials took the environment into consideration and adjusted the route to minimize the geological impact. But she said the highway was vital for the area's overall development. Yet some experts say that China's poor inland provinces may need good schools and affordable health care more than elevated expressways. Mr. Xu of the China Europe International Business School said some rural road projects were examples of overeager spending favored by local officials intent on their share of state-backed financing. Despite Beijing's vow to wean the economy from its dependence on such investment, the level has increased, he said, adding, 'There is an addiction to this style of economic management that may be very difficult to overcome.'

Subject: San Francisco's Goldilocks Realty Market From: Emma To: All Date Posted: Wed, Mar 23, 2005 at 11:29:32 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/03/23/business/23prop.html?pagewanted=all&position= San Francisco's Goldilocks Market By TERRY PRISTIN SAN FRANCISCO - Once this city's largest office landlord, the privately owned Shorenstein Company has sold its interests in four properties over the last 18 months, including its flagship Bank of America Center, which is often described as the financial district's best address. Disposing of a substantial portion of its office portfolio here is consistent with Shorenstein's new strategy as it evolves from a local business to a company that invests in commercial real estate throughout the country. The company is also taking advantage of an investment market that seems surprisingly feverish for a city that has yet to recover from the collapse of the dot-com industry. 'Prices are staggeringly high relative to the returns and the underlying fundamentals,' said Douglas W. Shorenstein, the chief executive of his family business, in an interview in his 49th-floor corner office at the Bank of America Center overlooking San Francisco Bay. 'If somebody is willing to pay a lot more than I would pay, then we're a seller.' Shorenstein's role as the city's top landlord has now been assumed by Equity Office Properties, the nation's largest owner of office real estate. But Equity Office has put five of its buildings here on the market, in the hope of either selling them outright or forming joint ventures with other investors. Nearly $2 billion worth of prime office buildings changed hands in 2004, exceeding the 1998 record of $1.92 billion, with some properties drawing as many as two dozen bids. The average price for all buildings in the central business district was $304 a square foot last year, up from $235 a square foot in 2003, according to Reis Inc., a New York research firm. Several buildings have traded for $400 a square foot or more, including 555 California Street, which is no longer the national headquarters of Bank of America but has a roster of blue-chip tenants, including Goldman Sachs. The 52-story reddish-brown granite tower and adjacent buildings were bought by a group of New York investors, led by Mark Karasick and David Werner, for $825 million, or about $487 for each rentable square foot. Mr. Shorenstein's father, Walter, acquired the building from the bank in 1985 and later sold a half interest back to the bank. The investment market here is beginning to resemble that of Washington, where the average trading price last year was $363 a square foot, according to Cassidy & Pinkard, a local real estate services company. But the average vacancy rate in Washington was just 7.5 percent in the fourth quarter of last year. In this city, by contrast, some brokers estimate that the top buildings have a vacancy rate of 19 percent, with most of the empty space on the lower floors. Employment has only just begun growing slowly after four years of job losses. Employment is expected to increase 1.2 percent this year, said Mark Zandi, the chief economist for Economy.com. The spike in commercial real estate prices here has left many real estate specialists scratching their heads. Only two years ago, Tishman Speyer Properties was forced to sell Market Center, two buildings on Market Street that were 83 percent vacant, for $79.5 million, less than half of the $189 million it had paid for the complex in 1999. For the last year and a half, landlords in San Francisco have gained more new tenants than they have lost, but new leases are being signed at 1997 levels, with owners paying $35 or more a square foot to help with remodeling. 'We're still seeing $50 worth of work and a year's worth of free rent,' said Jacque Ducharme, a vice chairman at Studley, a real estate firm that represents tenants. Although rents for the more desirable space on higher floors are slowly inching up - sometimes reaching $40 a square foot - space below is getting $25 to $30. On average, rents are 45.4 percent of what they were at their peak in 2000, according to Moody's Investors Service. 'What we are seeing is a further widening of the spread between rents for view space and nonview space,' said Michael van Konynenburg, the chief executive of Secured Capital, which has represented landlords in several recent high-priced sales. Jeanne R. Myerson, the chief executive of the Swig Company, a private company based in San Francisco that has real estate holdings across the country, has been looking for properties to buy here. But she said that the high prices suggest that many buyers are overly optimistic that there will be enough job growth to drive up rents. 'It's hard to make the numbers work on a lot of the buildings right now,' she said. This is hardly the only real estate market currently attractive to investors, in light of low interest rates, the sluggish stock market and the widespread availability of cheap capital. With a lack of alternative investment vehicles, many people are willing to accept much lower initial returns than they were a few years ago, hoping for greater cash flow in the future. Steel and concrete prices have been rising, adding to the cost of developing new buildings so that any price that is safely below the so-called replacement cost - as much as $450 a square foot in this city - can look like a good deal. In a report issued last week, however, Moody's said the city is the riskiest major office market in the country. The ratings agency warned that many tenants here were still paying high rents negotiated during the technology boom and would expect a sharp reduction when their leases expire. 'The point is that rents could be stable for the next three years, and then cash flow could decline materially,' said Sally Gordon, a vice president and senior credit officer. 'We're alerting people to the fact that you might see an increase in defaults.' Few real estate specialists doubt that this city will rebound in the long run, both because it appeals to highly educated people willing to make sacrifices to live here and because it is hard to build here. An initiative approved in 1986 limits commercial high-rise construction to 875,000 square feet a year. In fact, apart from a jazzy federal building rising at Seventh and Mission Streets, no office buildings are currently under construction, although the city is awash in residential projects and several lower-grade office buildings are being converted into condominiums. Owners with lots authorized for commercial construction say they will not build until they can charge $65 a square foot annually for rent, utilities and services. No longer the financial capital it once was, this city now relies mainly on smaller tenants - advertising agencies, boutique law firms and hedge funds - to fill its office towers. Last year, three-quarters of the companies that signed new leases took 6,500 square feet or less, according to Newmark Pacific, a real estate services company here. Unlike the corporate tenants of the past, who were willing to put their back-office employees on lower floors, many smaller businesses insist on giving everyone access to a view, making it hard to find takers for much of the ordinary space, said Jim Sullivan, an analyst at Green Street Advisors, a research company in Newport Beach, Calif. Because of the growing premium paid for view space, a current owner of Market Center, Divco West Properties, a real estate firm based in Palo Alto, said it was not in a rush to lease the top floors of the building, which is now more than half full. 'We're holding out for better rents on the upper floors,' said Stephen J. Pilch, the chief operating officer. Last year, the city's only sizable new tenant was Gymboree, a children's clothing retailer, which relocated its offices from Burlingame, Calif., to a new building at 500 Howard Street, south of Market Street. The building is in a once-seedy neighborhood, sometimes known as SoMa, that blossomed with new office buildings during the technology boom. In moving to the city, Gymboree sublet space from Sun Microsystems, the building's sole tenant. Though this was a record deal in terms of price per square foot, Monica Finnegan, a managing principal of Newmark Pacific, said it was an aberration because Sun Microsystems had signed an unusually long lease, giving the new owner an assured income stream for the next decade. In 2003, Equity Office Properties sold 500 Howard to the Utah State Retirement System and Cottonwood Partners, a private investment firm, for $119.4 million, or $512 a square foot. Equity Office, which has withdrawn from markets like Philadelphia, is not giving up on this city, although it wants to limit its holdings to properties it considers strategic, especially those with great views, said Jeffrey L. Johnson, the chief investment officer. But Kevin Brennan, a senior vice president at the Staubach Company, which represents tenants, said that the sell-off by Shorenstein and Equity Office should serve as a warning to other potential investors. 'We don't see where the market is going to be tightening anytime soon,' he said.

Subject: Mogambo is back - From: David E.. To: All Date Posted: Wed, Mar 23, 2005 at 10:27:12 (EST) Email Address: Not Provided Message: and 'he is as mad as hell and cant take it any more'. link

Subject: Buy more housing Pete? From: johnny5 To: All Date Posted: Wed, Mar 23, 2005 at 08:28:38 (EST) Email Address: johnny5@yahoo.com Message: A few months ago brookings said this was the growth sector - my mom had a house, she has made much more money recently than a TSM index fund. How many shares of stock will be demanded compared to housing in our future? By SHEILA MUTO Staff Reporter of THE WALL STREET JOURNAL December 13, 2004; Page A10 America is going to need more room. By 2030, the U.S. will need 44% more total built space than existed in 2000 to accommodate population and job-growth projections, according to a new study by the Brookings Institution. The study, expected to be released today, estimates that only about half of the total 427 billion square feet that will be needed for residential and other uses by 2030 is currently standing. About 131 billion square feet of the total will need to be new construction, while 82 billion will be needed to replace the amount lost to disasters, demolition and other reasons. Given that nearly half the space needed in 25 years h as yet to be built, 'it's not too late to change the built environment and make things better, or even a lot better, than what they are now,' said Arthur C. Nelson, the author of the report and director of Virginia Polytechnic Institute and State Universi ty's urban affairs and planning department. That means creating more-compact communities -- where homes, work and recreation can be found closer together and don't require getting into the car as much. Most of the new demand will occur in the South and the West, which together will require 251.5 billion square feet of space in 2030, up from 160.5 billion in 2000, the report by the institution's Metropolitan Policy Program says. About 136.3 billion feet of new and replacement space will be needed in the two regions. The price tag for construction in the U.S. during the period is expected to total more than $20 trillion, assuming construction costs of about $100 a square foot, the report says. Adding infrastructure costs, the total investment in development wil l reach at least $25 trillion. Much of the space needed will be housing. About 109 billion square feet of new and replacement residential space, or nearly 59 million units, will be needed by 2030, the report says. In 2000, about 176.7 billion feet of resid ential space, or nearly 116 million units, existed.

Subject: At the moment.............. From: Pete Weis To: johnny5 Date Posted: Wed, Mar 23, 2005 at 10:30:32 (EST) Email Address: Not Provided Message: very high risk in housing casino. Real estate a good investment probably sometime in the next 10 years - presently a very poor and risky one. Window of opportunity to buy when prices fall will be very large. No need to time a bottom in real estate because it will be a very broad bottom. Good time to cash out - don't worry about missing the last bit of this bubble. This is my opinion for what it's worth.

Subject: Do Not Fight the Fed From: Terri To: All Date Posted: Wed, Mar 23, 2005 at 07:27:35 (EST) Email Address: Not Provided Message: That is the need for now. So, I surely will not do so. But, there is no need for fear where caution will suffice. This is a time to watch the bond market closely. Remember, short duration bond funds protect s portfolio wonderfully.

Subject: A Need for Caution From: Terri To: All Date Posted: Wed, Mar 23, 2005 at 06:14:51 (EST) Email Address: Not Provided Message: There has of course seemed a considerable and growing need for caution, and I am being increasingly cautious, especially so since the Federal Reserve is being increasingly cautious. But, rejecting what NPR just reported, I am not thinking in dour terms such as when Social Security will go 'broke.' When NPR simply reports as news that we will find out today when Social Security will go broke, I understand Social Security will not go broke and turn to classical music. There is reason for caution, but caution should not mean dire concerns.

Subject: Re: A Need for Caution From: johnny5 To: Terri Date Posted: Wed, Mar 23, 2005 at 08:25:08 (EST) Email Address: johnny5@yahoo.com Message: Don't use past promises, expectations or returns to predict future results. NY muni bond holders ate it recently not heeding this advice.

Subject: Re: A Need for Caution From: Terri To: johnny5 Date Posted: Wed, Mar 23, 2005 at 10:02:14 (EST) Email Address: Not Provided Message: The past record is all we have to use to gain a sense of what may be ahead. We think from past to future. Holders of New York tax free bond funds, as all long term bond fund holders, have had a remarkable 5 years and 10 years of returns.

Subject: Re: A Need for Caution From: johnny5 To: Terri Date Posted: Wed, Mar 23, 2005 at 16:46:27 (EST) Email Address: johnny5@yahoo.com Message: I just read on fmsbonds.com that a lot of them paid 115 to 120 and the bonds got called at 100 - so they lost thier butt.

Subject: Bubbles will inflate for a long time From: johnny5 To: All Date Posted: Wed, Mar 23, 2005 at 00:49:12 (EST) Email Address: johnny5@yahoo.com Message: Pete buy more stock and houses! http://www.siliconinvestor.com/readreplies.aspx?msgid=21156730 Mish: Support for my thesis that Japan is the key to global rates. Of Bonds & Zombies By Anatole Kaletsky This week's research comes once again from the GaveKal Ad Hoc Comment publication, however this piece was done by Anatole Kaletsky, a different analyst than the previous reports we have highlighted. This group is located in Hong Kong and I always find their comments on Asia very insightful. The report takes a look at some of the structural players in the U.S. bond market and why their actions may be causing the longer term bond rates to stay low. The largest catalyst surprisingly is Japanese private purchasers of US bonds. The reasons are not the subject of work I have read elsewhere and they will continue to buy until conditions improve in Japan's investment markets. This is a different look at the issue than you see from most economists and why I chose it for this week's Outside the Box. Of Bonds & Zombies By Anatole Kaletsky Two weeks ago we noted that the biggest factor which was holding down the yields in US and European bond markets was the price-insensitive buying by three investors groups: Asian central banks, Western pensions and insurance funds and, most importantly, Japanese private investors. This paper will explore in greater detail the bizarre behaviour of these seemingly brain-dead 'zombie investors', who gobble up whatever paper the US government may throw towards them, regardless of value or price. In the rest of this paper we present some stylised facts, which may not be literally true of any particular investor, but can help in the aggregate to explain the indiscriminate greed of the zombie buyers for overvalued bonds. We then draw some conclusions about the impact of price insensitive bond-buying by the most important group of zombie investors, the Japanese private savers driven to desperation by zero rates. Starting with the Asian central banks, the reasons for zombie buying are obvious. They are buying foreign currencies as an exercise in macroeconomic management (some would call it manipulation) on behalf of their government. As long as maintaining exchange-rate pegs remains the over-riding national goal, Asian governments will continue buying dollars (and euros) and investing their reserves in the corresponding bond markets, regardless of the threat of suffering a capital loss. Western pension and insurance funds have become insensitive to price and valuation for different reasons. Many of the long-term investment institutions, which used to dominate the US and European markets, are actually not in the investment business any more. Under pressure from regulators and accountants, the pension and insurance funds are effectively pulling out of asset management, defining their core business as liability management instead. Pension funds have moved from the asset to the liability business because most corporate treasurers no longer see managing the pension fund as a function designed to generate profits or even to minimise pensions costs. Instead, they see running the pension fund primarily as an accounting exercise, whose main purpose is to 'immunise' the capitalised pension liabilities shown on the company balance sheet. Because pension liabilities are capitalised by using longterm bond yields, the company can minimise its apparent risk by investing the pension fund entirely in bonds, regardless of yield. If bond yields go up, the pension fund will of course suffer a loss; but this loss will be exactly matched by an improvement on the liability side of the balance sheet. In reality, the idea that bonds are a perfect match for pension liabilities is an illusion, since pension payments will increase much faster than implied by the bond yield if inflation turns out to be higher than the market expects. But accountants have decreed that whatever forecast of inflation appears to be embedded in today's bond yields is, by definition, the best available. And who is a mere economist to disagree? Life companies are pulling out of asset management for a different but related reason. From the 1950s until the late 1990s, insurance companies competed (especially in Britain) mainly on the basis of their investment performance, selling 'with-profit' life policies and annuities, which were designed to allow investors to benefit from equity investment returns. In the past decade, however, regulators have limited the life insurers' investment freedom and severely restricted their use of past investment performance in marketing. As a result, the life insurance industry is moving back to its 18th century roots: most life companies now see their main business as providing mortality protection on the basis of statistical demographics, rather than maximising investment returns. Under this business model, the life company's core competence is not asset management but marketing and distribution. If this is so, then buying equities or even trying to time bond purchases by using either fundamental analysis or technical models is a risky diversion from the insurance company's main business. And since all insurance companies are under the same regulatory pressure not to market their policies on the basis of differential investment performance, there is no competitive benefit in taking investment risks. In this new business model, the fund manager's job is not to maximise investment returns, but simply to direct premium payments into the bond market as quickly as the salesmen can collect them - and, of course, to achieve the closest possible match between the expected duration of assets and policy risks. Any attempt to market-time bond purchases, or even to improve returns by varying portfolio duration, is seen by management, shareholders, auditors and regulators as reckless speculation, needlessly exposing the company's balance sheet to risk. Of course, we have grossly oversimplified our descriptions of insurance and pensions fund behaviour. Many of these businesses still believe in managing their assets in an aggressive and imaginative way. At the margin, however, it is clear that the long-term saving institutions are moving in the direction suggested. This can be seen in the Fed's flow of funds statistics, which show that in 2003, bonds accounted for 76% of the insurance industry's net acquisition of financial assets, compared with 41% in 1998. While pension funds were not big bond investors until 2003, according to the Fed statistics, by the first half of 2004, they were investing more than their entire cash flow in bonds. With both insurance companies and pensions funds increasingly focused on liability matching, rather than asset management, it is hardly surprising that more and more insurance companies, like pension funds, are willing to buy bonds robotically, regardless of price. Now let us turn to the most interesting and important cohort of zombie investors: the private savers and retail investment institutions of Japan. We suggested last month that probably the best explanation for today's 'conundrum' of influences global bond yields was the asset-liability matching of Japanese private savers. The argument could be summarized like this: The foreign private sector is a much bigger buyer of US bonds than either the central banks or the domestic investment institutions. Foreign private investors bought $655 bn of US-issued bonds in 2004, almost three times the official bond purchases of $235 bn (see charts below). By far the most important group of foreign private investors have been the Japanese, either buying directly through foreign bond funds or indirectly through Japanese life insurers and trust banks. Why have the Japanese been buying so many US bonds? Let us try to go beyond the two easy explanations: that Japanese banks and insurers act on manipulative 'guidance' from the Ministry of Finance or that they are simply mad. The alternative explanation is that yields of 4% plus on foreign bonds are irresistibly attractive to savers who live in a financial system permanently distorted by zero rates. comparison with Japan's Of course the yield differential between a JGB at 1.5% and a 4.5% Treasury can be wiped out by a currency loss on the principal in a single morning. But what if the Japanese saver doesn't care about the principal value of his investment because he is only interested in maximizing his income return? Begging the indulgence of regular readers, let us repeat the theoretical example we offered in our Five Corners publication last month: Imagine an elderly Japanese retiree, with cash savings of Y100m and suppose for simplicity that the exchange-rate is $=Y100. Suppose, further, that our Japanese saver wants only to secure the best possible pension for his remaining 20 years of life, leaving nothing as a legacy to his children (maybe because he did not have any as is increasingly the case). He can do this by buying an annuity, backed by a bond investment either in yen or in dollars. Looking up the annuity tables we find that a yen annuity, based on a 20-year yen bond yield of 2 per cent, would provide an annual income of 6.1% or Y6.1m. A dollar annuity, based on a 20- year dollar yield of 4.8 per cent, would generate 7.9% or $79,000 currently equivalent to Y7.9m. Thus the Japanese pensioner can increase his initial income by 30% if he buys an annuity in dollars instead of yen. Of course he faces a currency risk, but given the 30% uplift in his annuity payments, he will remain better off as long as the dollar exchange-rate over the next 20 years averages above Y77 (= 61 divided by 79). Assuming a straight-line depreciation of the dollar, that would imply a break-even exchange rate in 2025 of $=Y54. Taking account the time-value of money and the inherent uncertainty about the saver's lifespan, the true breakeven exchange rate is even lower, probably well below Y50. Will the dollar fall below Y50 by 2025? It could happen. The dollar-yen exchange rate did almost exactly halve between 1985 and 2005. But given the demographic and structural characteristics of the US and Japanese economies, betting against another halving of the dollar does not seem completely stupid. So maybe we should not be so contemptuous of Japanese investors who buy overvalued bonds denominated in dollar, provided they intend to hold them to maturity and to leave them unhedged. In reality, of course, this is not be what the 'zombie' investors are doing when they fight for every new Treasury issue - and for every offering of European governments, or corporate and mortgage bonds. In reality, some of the Japanese insurance companies hedge some of these purchases, in which case they are simply playing the relative steepness of the Japanese and foreign yield curves. Others try to manage their currency overlays to generate extra profits (or suffer even bigger losses). Still others use the arbitrage between US and Japanese bond yields, to sell retail savers structured products which offer better terms than could be funded directly in the JGB markets, but rather worse than could be obtained by bearing the whole of the dollar-yen risk. Exploiting the annuity arbitrage which we have described above by creating such structured products, is a very profitable business for retail savings institutions and investment banks in Japan. They do this in different ways - some of the life companies hedge their entire foreign bond holdings, other have reduced their hedge ratios to as low as 15%. Supposing we are even roughly right in identifying these groups of priceinsensitive investors, what are the implications of all this zombie buying of bonds? The zombies' enthusiasm obviously does not mean that bonds are good value, still less that the bear market which began in June 2003 is about to go into reverse. We believe the upward trend in long bond yield will continue at least until they reach 5.5%. The zombie buyers cannot change the basic cycles of macroeconomics any more than King Canute could command the tides. What they can do is slow the trend, extend it over a longer period, and inflict losses on rational investors who quite sensibly want to trade against the zombies, but must mark to market every day. As Keynes said, the market can remain irrational much longer than the rational investor can remain solvent. Our first conclusion, therefore, is that the crash in bond markets which we expected to see on the basis of the past two economic cycles - 1994 and 1983/4 - will be slower and less disruptive than we thought. From a long-term perspective, however, a slow rise in bond yields is probably more ominous than a sharp bounce. Technically, bond yields are creating a huge multi-year base. In terms of economic fundamentals, the bond market's refusal to push long-term interest rates higher will offset the restrictive effects of monetary tightening. As a result, long-term inflationary pressures will intensify, fiscal disciplines on governments will be loosened and all asset prices will be pumped up. Secondly, the present asset inflation - and rolling financial bubbles - will last for a surprisingly long time. If we are right about the dominant role of Japanese private savers among the zombie bond investors, then global liquidity and asset prices will depend less on US monetary policy or the strength of the dollar, than the level of interest rates in Japan. Given the likelihood that Japanese short rates will remain at or near zero for the next two years - and probably until the end of the decade (see Anatole's Notes from his Japan Trip) - this means US and euro rates long rates will remain 'unnaturally' low for a very long time, regardless of what the Fed may do (or say). If this turns out to be true, then the implications for global economic conditions and for equity, property and other asset prices, should be extremely bullish. Essentially what we are saying is that all global asset prices markets will remain severely distorted as long as the main suppliers of excess savings to the world economy - the Japanese private investors - continue to live in a zero-rate environment. If the returns available to Japanese investors domestically remain at or near zero, they will continue to invest in dollar and even euro assets at what seem to be ridiculously low rates. The final question is what could change this situation. The obvious answer is new investment opportunities for the Japanese. Rather than an increase in Japanese interest rates, which remains extremely improbable, the likeliest source of new opportunities would be an improvement in equity (and property?) returns in Japan. If Japanese investors rediscovered their domestic equity market, they might stop their zombie bond-buying and conditions in the world financial markets would be transformed. That this is not just an idle speculation is suggested by the surprising correlations shown in the chart below. The Nikkei and the US bond yield have been moving in tandem for most of the last decade. The correlation of daily movements in these two markets has been 90% since 1990 and 92% since 1996. Intriguingly, the correlation between the Nikkei and the US bond market has been much closer than the correlations between US and Japanese bond markets or between bonds and equities within either Japan or the US. To judge by this correlation, global bond investors should forget their monthly vigils ahead of the US payroll figures and focus instead on equity prices in Japan. If the Japanese economy regains momentum and the Nikkei manages to break through the 12,000 level, trend-following Japanese may suddenly decide they have better opportunities for investment than US or euro-denominated bonds. The bear market in global bonds would then resume in a big way. I hope you enjoyed this weeks look at interest rates and what might be keeping them low. You can find out more about GaveKal Research by going to www.GaveKal.com. Your keeping an eye on the Japanese economy analyst, John F. Mauldin johnmauldin@investorsinsight.com

Subject: The west will be 'junk' status From: johnny5 To: All Date Posted: Wed, Mar 23, 2005 at 00:39:36 (EST) Email Address: johnny5@yahoo.com Message: Rapidly rising pension and healthcare spending will reduce the debt status of the world's richest industrialised countries to junk within 30 years unless their governments move quickly to balance budgets and reduce outgoings, a report published on Monday warns. Standard & Poor's, the credit ratings agency, says if fiscal trends prevail, the cost of ageing populations will fuel downgrades of France, the US, Germany and the UK from investment grade to speculative, or junk, category France by the early 2020s, the US and Germany before 2030 and the UK before 2035. They are currently in the top Triple A category, ensuring they can borrow at low rates. [...] http://news.ft.com/cms/s/3460ab64-9982-11d9-ae69-00000e2511c8.html

Subject: The 'what can you do for me' club From: Pete Weis To: All Date Posted: Tues, Mar 22, 2005 at 22:15:18 (EST) Email Address: Not Provided Message: Now let's see. While Phil Graham's wife is receiving a 6 figure salary for her position on Enron's board of directors, he held the chair of the senate banking and finance committee. He also co-sponsers a bill to repeal the Glass-Steagall Act which prohibited banks from offering both commercial and investment services. Alan Greenspan advises Bill Clinton to put his signature on this bill - a signature which Bill Clinton will dearly regret down the road. Investment bankers waste no time getting involved with sacrificing the interests of their investing clients for the interests of stock option execs at companies receiving investment banking services. After Enron, Phil Gramm decides not to run for another term in the US senate (good decision). Instead he takes a high paying position at UBS, an investment banking institution which was heavily involved with the Enron fiasco. UBS goes on to distinguish itself in the HealthSouth investor ripoff and then on to Parlamat (most recently). Who knows how many other Enrons are out there - guess we'll find out when, as Warren Buffet says, 'the tide goes out' again. Now Phil Gramm is on the short list for the top Fannie Mae position. Also didn't Conseco Inc. (Shea) go bankrupt in 2002 - don't know if Shea was at Conseco at the time. Fannie Considers McDonough, Gramm and Shea as Chief (Update1) March 22 (Bloomberg) -- Fannie Mae, the largest buyer of U.S. mortgages, is considering hiring former New York Federal Reserve President William McDonough as chief executive officer, said people familiar with the company's plans. The government-chartered mortgage finance company has also talked to William Shea, the former chief executive of insurer Conseco Inc., and Phil Gramm, a former Republican senator from Texas, about taking the top post, one of the people said. Fannie Mae has been searching for a chief executive since ousting Franklin Raines in December after the U.S. Securities and Exchange Commission found the Washington-based company broke accounting rules. Concerns that Congress will take steps to rein in growth have prompted the shares to plunge 23 percent this year, wiping out almost $15 billion in market capitalization. Fannie Mae ``has to get a new CEO soon,'' said Marshall Front, chairman of Chicago-based Front Barnett Associates, which holds 463,000 Fannie Mae shares. ``They have to do that in order to restore their strength and credibility because they are in for a fight.'' Brian Faith, a Fannie Mae spokesman, declined to comment. The company named Daniel Mudd, its vice chairman and chief operating officer, interim chief executive after Raines left. Fannie Mae and the smaller Freddie Mac were created by Congress to boost home ownership. The publicly traded companies buy mortgages from banks and bundle them into securities that are sold to investors. Together they control about half the $7.6 trillion mortgage market and have more than $1.7 trillion of debt, second only in the U.S. to the government. Fannie Mae's next leader faces slowing growth, three federal accounting probes and pending legislation in Congress that would create tougher oversight. Earnings may fall this year for the first time since 1985, according to the average estimate of analysts by Thomson Financial. Accounting Oversight McDonough, 70, is chairman of the Public Company Accounting Oversight Board, which was created in 2002 by Congress to oversee the accounting industry after corporate scandals at Enron Corp. and WorldCom Inc. The board is investigating KPMG LLP for its audits of Fannie Mae. The company fired KPMG last year and now uses Deloitte & Touche LLP as its outside auditor. During his time at the New York Fed, McDonough helped calm world markets by presiding over the $3.6 billion bailout of Long- Term Capital Management LP, a hedge fund that collapsed in 1998. New York Attorney General Eliot Spitzer in 2003 called McDonough ``a superstar with absolute integrity.'' Christi Harlan, a spokeswoman for McDonough, said she was unaware of any discussion with Fannie Mae. ``As far as I know he has not talked to them at all,'' she said. Candidates Shea, 57, left Carmel, Indiana-based Conseco in August after helping it emerge from bankruptcy and return to profitability. He is currently on the board of Boston Private Financial Holdings Inc., a fund manager for wealthy investors. Shea didn't return a telephone call for comment. Gramm, 62, now vice chairman of UBS Securities, left Congress in 2002. In 1999, he chaired the Senate Banking Committee when Congress enacted the broadest overhaul of U.S. banking laws since the Great Depression and let banks, insurance companies and securities firms combine. UBS spokeswoman Christine Walton declined to comment on behalf of Gramm. Regulators Fannie Mae has estimated it may have to restate earnings from 2001 until mid-2004 by between $8.4 billion and $10.8 billion. The restatement would focus primarily on errors in accounting for hedging transactions in the company's more than $900 billion portfolio of mortgages and mortgage securities. Fannie Mae's federal regulator, the Office of Federal Housing Enterprise Oversight, last week said it found instances of employees falsifying accounting ledger signatures and improperly changing database records. The company needs a chief executive who ``can come in and instill the right kind of culture'' as well as someone with accounting and regulatory experience, Armando Falcon, the director of Ofheo, said in a March 17 interview. ``Everyone agrees that it is in the company's best interest to get key vacancies filled sooner rather than later,'' he said, adding that Fannie Mae's directors are ``making progress.'' Freddie Mac Lesson David Dreman, chairman of Dreman Value Management, said Fannie Mae's board should move quickly to appoint a chief executive in the same way Freddie Mac hired Richard Syron as its top executive in December 2003 after disclosing it understated earnings by $5 billion. Shares of Freddie Mac have risen 10 percent since January 2004, when Syron took over the top post. Syron was president of the Fed's Boston branch from 1989 to 1994. ``Freddie Mac really cleared ship and did it faster,'' said Dreman, whose firm owns more than 8 million Fannie Mae shares. ``The Fannie Mae board is slow to clear the ship -- it took them five days to fire Raines'' when it became known the company made accounting mistakes that he had earlier denied, Dreman said.

Subject: Keep on rocking in the 'free' Bank From: Pancho Villa To: All Date Posted: Tues, Mar 22, 2005 at 20:15:55 (EST) Email Address: nma@hotmail.com Message: It is time to free the World Bank By Jeffrey Sachs March 22 2005 Democracy begins at home. If the World Bank is to be a leading force in the promotion of good governance in developing countries, its own governance must move beyond backroom politics. The bank is now choosing a president. The first steps of this process have been unsatisfactory, based on the idea that the US can choose the president without competition and with no questions asked. Before the bank is further damaged, there is an urgent need to make amends. In spite of the World Bank being a multilateral institution of 184 member governments, its presidency is widely assumed to be owned by the White House. Europe seems happy to play along, presumably to ensure its own 'ownership' of other international posts. The 150-plus developing countries are relegated to the back benches. The White House's perceived lock on the World Bank presidency is unsatisfactory for three reasons. First, the US has only 16 per cent of the bank's votes and other countries play an ever-larger role in its operations. Behind the scenes, the US has been the biggest brake on increasing the bank's finance for poor countries, and has pushed for debt relief in ways that would weaken bank finances. The US demands to run the bank but on the cheap. Second, the US government stands aloof from the global consensus on economic development. The world has rallied behind the United Nation's Millennium Development Goals, the shared global objectives for cutting extreme poverty, disease and hunger. The US has signed the relevant documents but has refused to champion the goals. The most egregious US lapse lies in foreign assistance. The conservative mantra in Washington is that the US supports the Monterrey consensus (adopted in the March 2002 conference that George W. Bush attended), rather than increased development assistance. The conservatives claim that the consensus is about trade and the private sector, not aid. This is wrong. The Monterrey consensus signatories, including the US, agreed to urge developed countries that have not done so 'to make concrete efforts towards the target of 0.7 per cent of gross national product as official development assistance'. US aid stands at a mere 0.15 per cent of GNP, the lowest ratio of any donor country, around $65bn per year short of the Monterrey target. The US alone is responsible for half of the global financing shortfall in achieving the Millennium Development Goals, according to the recent report of the UN Millennium Project. Yet the Bush administration has so far shown no concrete efforts towards 0.7 per cent. Third, the US has advanced an unlikely candidate for the World Bank position - Paul Wolfowitz. Aside from all else that can be said of Mr Wolfowitz, his positions on crucial issues of global development are unknown. Mr Wolfowitz, after all, has spent a career on military matters and diplomacy, not on development and finance. Europe, in spite of deep concerns, seems likely to accede to the US nomination. Developing countries, dependent on international aid, are wary of speaking out. Yet, the bank's legitimacy will be damaged by a show of unlimited White House power over the appointment. Moreover, the hard-won consensus represented by the Millennium Development Goals may well be put at risk. For these reasons, serious due diligence by the bank's members and executive directors is needed. Mr Wolfowitz and any other candidates put forward should be required to clarify their positions on at least four central issues of global development. This is especially the case given US 'exceptionalism' on these issues. First, does the candidate support the Millennium Development Goals? Would the president make these goals the operational targets of bank programmes? Second, does the candidate endorse the target of 0.7 per cent of GNP in official development assistance from all donor countries? Would the new bank president press the US and other donors to increase aid to 0.7 per cent by 2015, as advocated by world leaders and the report on UN reform by Kofi Annan, the secretary-general. Third, would the candidate champion the call of free-market ideologues to privatise public health, educationand infrastructure, or would he or she agree that increased public finance is vital to ensuring universal access to health, nutrition, water and sanitation, schoolingand family planning? Fourth, does the candidate support a bigger voice and vote for developing countries in the World Bank and International Monetary Fund, as is widely urged? This question is highly pertinent today, as poor countries are being told once again to swallow hard on any appointment that comes down from Washington. Is the World Bank to be truly a bank for the world, or simply the 'American Bank', as one Washington commentator put it last week? The writer, director of the Earth Institute at Columbia University and the UN Millennium Project, is author of The End of Poverty (Penguin Press) http://news.ft.com/cms/s/08036fc8-9b05-11d9-90f9-00000e2511c8.html

Subject: Now For the Fed Cycle From: Terri To: All Date Posted: Tues, Mar 22, 2005 at 17:32:38 (EST) Email Address: Not Provided Message: Possibly we finally have a traditional tightening cycle. The Federal Reserve will raise rates from here as quickly as deemed necessary to slow growth to the point where inflation is not considered a problem. The problem however could well be growth in the labor market. This could mean a sluggish stock market for a while both here and in Europe. We will see if there are any pattern changes in sectors. As for bonds, this finally seems to be the time for shorter durations. Remember, a duration of 2 years means a decline in price of 2% for a percentage point increase in interest rates.

Subject: Re: Now For the Fed Cycle From: Pancho Villa alias Woody Boyd To: Terri Date Posted: Tues, Mar 22, 2005 at 19:17:20 (EST) Email Address: nma@hotmail.com Message: Stephen Cecchetti Interest rates must rise, and quickly What has been true for seven consecutive policy meetings is true today. The Federal Open Market Committee will raise its target interest rate by one-quarter of one percentage point in its meeting today, bringing the federal funds rate to 2.75 per cent. Improved communication – including speedier publication of the committee’s deliberations – has brought us to the point where monetary policy is predictable a few days in advance. The real question, however, is not about today but about what will happen over the next year. How many more interest rate increases are coming? How high should the FOMC go, and how fast should it go to get there? My conclusion is that the US federal funds rate target needs to rise to at least 4 per cent, and the faster it gets there, the better. As 50-basis point increases are rare, this means at least six more 25-point increases. Then, American monetary policy will be “neutral”. The neutral policy rate is the sum of the neutral real interest rate and the inflation objective of the monetary policymakers. The first part, the neutral interest rate, is commonly thought to be in the range of 2-2.5 per cent. This is the rate consistent with the US economy operating at its sustainable, full employment level. Even though the FOMC recently decided to forgo publicly announcing one, we can infer its long-term inflation objective from official speeches and publications. Taken as a whole, these suggest a number of about 1.5 to 2.5 per cent, as measured by the conventional consumer price index. Adding the neutral real rate to the long-run inflation objective yields approximately 4 per cent. That is the minimum for the neutral policy rate today. The experience of the second half of the 1990s reinforces the view that neutral is at least 4 per cent. Back then, with inflation averaging slightly above 2 per cent on an annual basis and economic growth at about 4 per cent, the policy rate stayed at a level close to 5 per cent. That was neutral at the time. Growth and inflation may both be slightly lower today, suggesting a neutral federal funds rate not much below 5 per cent. The FOMC cannot afford to take its time in getting to neutral. The consequences of three years of extremely accommodative monetary policy are now starting to show. The dollar has fallen 15 per cent on a trade-weighted basis, and business confidence is finally rising. As a result, economic slack is declining at the same time as inflation is increasing. The economy is growing fast enough to produce more than 200,000 new jobs per month, well in excess of the 140,000 needed to keep up with population growth. The labour market shows signs of tightening. On the inflation front, after falling consistently for two and a half years, goods prices (excluding food and energy) are rising at an annual rate exceeding 3 per cent. With service pieces rising at a rate of 2.5 per cent, this means the inflation trend is nearly 2.75 per cent. These very rough numbers imply significant risks if policymakers move too slowly. (When the level of income or the interest rate changes, there is first only a small(!) change in the demand for money. Then, over the course of time, the change in the demand for money increases, slowly building up to its full long-run change. There are two basic reasons for these lags. First, there are costs of adjusting money holdings; second, money holder’s expectations are slow to adjust. The costs of adjustment include the costs of figuring out the new best way to manage money and the cost of opening a new type of account if that is needed. On the expectations side, if people believe that a given change in the interest rate is temporary, they may be unwilling to make a major change in their money holdings. As time passes and it becomes clearer that the change is not transitory, they are willing to make a larger adjustment.) As a rule-of-thumb, an interest rate increase will start to dampen inflation 18 months later. That means we can expect inflation to continue to rise for at least one and a half years after policy reaches neutral. At the current pace, inflation could easily rise not only for the remainder of this year, but for much of 2006 also. Assuming that CPI inflation in excess (New Sensation?) of 3 per cent is outside anyone’s comfort zone, the FOMC would be forced to raise interest rates well above neutral in an effort to bring it down. Hopefully, the resulting slowdown in growth would be modest, but these things are difficult enough to calibrate when there could be a full-blown recession. This conclusion makes clear why many people are confused about the fact that 10-year Treasury note yields remain in the neighborhood of 4.5 per cent. Experience of the past 50 years tells us that the 10-year rate is normally at least 125 basis points above the policy rate. With the federal funds target headed to at least 4 per cent with the year, long-term bonds should be yielding well over 5 per cent. And if I am right about the risks to inflation, rates will go even higher, contributing to a general economic slowdown. The job of the FOMC is to manage these risks. The first step should be to use its improved communication structure – including the recent decision to expedite publication of the committee’s minutes – to signal concern, emphasizing that interest rates must continue to rise. Over the next few months, the challenge of controlling inflation requires that policymakers implement the promised increases – possibly even exceeding the current customary practice of raising in incremental quarter point steps. Without such decisive action there is a very real possibility that when Alan Greenspan retires as chairman early next year, he will leave his successor (Ben?) with inflation at levels we have not seen for a decade. No one wants that. The writer is professor of international economics and finance, Brandeis University, and research associate at the US NBER. FT Tuesday March 22 2005 P.S.: Vote for me, Cheers.

Subject: If only we had a vote From: Pete Weis To: Pancho Villa alias Woody Boyd Date Posted: Tues, Mar 22, 2005 at 22:17:37 (EST) Email Address: Not Provided Message:

Subject: Social (In-) Security From: Pancho Villa To: All Date Posted: Tues, Mar 22, 2005 at 14:07:07 (EST) Email Address: nma@hotmail.com Message: Guiseppe Stiglitz Reforms take the security out of Social Security The challenge posed by the impending retirement of the baby boomers and the potential financial problems facing Social Security in the US are widely acknowledged. While George W. Bush has not provided the details of his reforms, it is clear that the president intends to take both “security” and “social” out of Social Security. The programme that has done so much to eliminate poverty among the aged will no longer be up to the task, as individuals are left more vulnerable to the vagaries of inflation and markets. Depending on the exact details of the reform, the “guaranteed” annual income for future retirees may be as low as $5,000-$10,000 at today’s value. Changing from wage to price indexing of benefits, as is proposed, seems innocuous but if productivity continues to grow, and wages grow commensurately, the gap in the living standards between the elderly and the rest will increase. This is a high price to pay. But will the reforms prepare America better for the problems of the baby boomers? The answer is no. There are three key issues. What will happen to the deficit? What will happen to national savings? What will happen to the financial solvency of the remnants of the Social Security system? Individual accounts do little in any way of these three areas, and may make matters worse. Diverting almost one-third of Social Security revenues from the government to private accounts will increase the deficit enormously – by some $1,500bn in the first decade and $5,000bn in the next. Alan Greenspan, Federal Reserve chairman, has warned against increasing the deficit by more than $1,000bn, but Mr. Bush’s supporters say this is just book-keeping – markets already take these implicit future liabilities into account and formal recognition will make no difference. This is nonsense. There are huge uncertainties. The administration’s calculation of the magnitude of the Social Security deficit is barely credible. It uses the remarkably conservative projection for gross domestic product growth of 1.8 per cent. If productivity continues at the pace of the past decade, a more reasonable figure would be almost twice as high. It assumes that the number of migrants is constant; if migration flows continue at current levels, the deficit over the next half-century is greatly diminished, as their contributions are added. There is considerable uncertainty about life expectancies; if America’s increase in obesity continues, life span may even decrease, which, as bad as it is in other respects, would help the solvency of Social Security. There is also uncertainty about the extent of improvements in future government implicit liabilities. Who really believes that in the worst-case scenario there would not be a government bail-out? Most importantly, an explicit deficit has to be financed today – putting enormous demands on global capital markets, raising real interest rates. If all of the money that had been used to finance government borrowing now goes into equities, who will buy US treasuries? To keep interest rates from rising, will the Fed flood the world with liquidity? But this is where the reform’s defenders put forth a second specious argument: savings will be decreased. If they rise enough, there will be no trouble financing the deficit. But the worry is that they will decrease. The best argument on the conservative side, the Barro-Ricardo hypothesis (after David (?) Ricardo, the great British economist, and Robert Barro of Harvard), is that taxpayers understand future tax liabilities, so when government increases borrowing, they increase savings. My own research showed the result was only true under highly restrictive – and unrealistic – assumptions. Even as the US fiscal deficit has soared during the past four years, the household savings rate has plummeted. Under the Barro-Ricardo hypothesis, substituting the concrete upfront deficit for the implicit and uncertain future liabilities would have no effect on national savings. But many Americans are more likely to attach more weight to their highly visible private accounts than to the Social Security benefits they are intended to replace, so national savings are likely to decrease. None of this should be surprising. The Bush reformers wanted to pull a rabbit out of a hat, simultaneously making the aged better off and improving the fiscal position of both Social Security and the government. If, as the reformers believe, markets will work well, the higher returns offered by equities come at a price: higher risk (!!). If there is a problem with Social Security’s solvency, individual accounts do not fix it; and cutting revenues by one-third is fiscal hardly a promising start for restoring fiscal solvency. There is no magic. Either benefits have to be cut or revenues increased, and this is true with or without private accounts. We should not confuse the two issues. If there is a remarkable achievement of the Bush proposals, it is this; they simultaneously undermine the solvency of the Social Security system, worsen the fiscal deficit, diminish the security of the elderly and increase the incidence of poverty. The writer is University Professor at Columbia University and was awarded the Nobel Prize in economics in 2001. FT Monday March 21 2005

Subject: God Returns From: Setanta To: All Date Posted: Tues, Mar 22, 2005 at 14:05:59 (EST) Email Address: Not Provided Message: God Returns 21/03/2005 Investors rarely factor God into their calculation. However, in the years ahead, He is likely to figure prominently in economics, politics andmoney - so we had better get used to Him again. One of the starkest differences in global affairs between the 21st century and the previous one is the return of God to the centre of the political arena. As a result, even the most atheistic investor has to take into account the Almighty and especially His flock,when formulating strategy and tactics. This is a newball game for almost all investors, from the largest institutions to the humblest households because, for a long time, religionwas not a relevant factor in financial markets. The 20th century produced a broad selection of ideologies, but the big and successful ones were the secularones: fascism and Nazism (in their brief but disastrous heyday), communism (which lasted longer, but ultimately collapsed) and liberal capitalism,which is currently running the show. Whatever their respective strengths and weaknesses, these were all rational, in the sense that they recognised the existence of geopolitical and economic interests - their own and those of their enemies. Hitler, for example, invaded Poland in 1939 and Russia in 1941 on the basis of calculated risks, which turned out to be wrong but were, nonetheless, rational. Faith and religious belief were not part of the calculations of these secular ideologies. The irrelevance of religion in the face of this onslaught of secularism was encapsulated in Stalin's dismissal of possible opposition to his policies on the part of the Vatican: “We all know how many divisions the Pope has.” In this, Stalin - and the entire Soviet system - proved to be completely wrong. The Pope's “divisions'‘, including a Polish cardinal who himself went on to become Pope, outlasted and eventually expunged the Soviets from Poland; even the Russian Orthodox church survived the Communists, although in rather poor shape. The Western media, themselves bastions of secular liberalism, have been equally guilty of failing to understand the forces at work beneath the surface of world affairs. Thus, whilst they sought to play up the role of Polish Catholics in hastening the demise of the USSR, they missed the critical contribution of a ragtag guerrilla army in Afghanistan in exposing the advanced decay of the Soviet behemoth. The Afghan resistance to the Soviet invasion, which attracted support fromall over theMuslim world, became the launch pad for a new phenomenon - soon to be labelled by that same media as “Islamic fundamentalism'‘. But this continued to be regarded as something exotic and remote until some of the newmovements' adherents hit New York and Washington on September 11, 2001. This pivotal event effectively ushered in the 21st century by underlining that God and his various believers were back in full strength, after an enforced leave of absence from the global spotlight. The focal point of this return of religion is an updated version of that golden oldie of historical wars of religion, a Christian Muslim conflict called a crusade or a jihad, depending which side you're on. If, however, you are determinedly secular, you can just label it a “clash of civilisations'‘ and if even that is too aggressive for you - as it is for many of us - then it is merely a campaign against terrorism or “militant groups'‘. Well meaning as most pacifists may be, we are objects of ridicule in the eyes of the true believers (“fanatics'‘, to their enemies). This is especially so in the case of people like Osama bin Laden, who are imbued with a sense of divinely-prescribed mission - in his case, to recreate a single caliphate that unites the Muslim world, regains the Muslim lands taken by the infidels (including Spain, southern France and Italy, the Balkans, and of course Israel) and defeats, or at least neutralises, as many as possible of the enemies of Islam everywhere else. The main debate among “Islamic fundamentalist'' groups such as al-Qaeda - conducted quite openly, for instance via numerous internet sites - is whether the first target should be the corrupt Muslim regimes (especially Saudi Arabia and the other states on the Arabian peninsula), or the non-Muslim states (headed by the US and Israel).These are referred to, respectively, as “the near enemy'‘ and “the far enemy'‘, and this debate is hardly academic as far as the outside world is concerned, least of all for investors. If terror strikes are planned for the UK and US, many people could die and serious political and economic consequences would follow. But if the main effort is concentrated on knocking over the ruling families in Saudi Arabia and Kuwait, the price of oil would soar towards $80 or even $100 a barrel and the Western economies would be sent reeling. This is a crucial point because, unlike Stalin, or even Hitler, the bin Ladens of this world pay no heed to what secular people and governments regard as rational thought. This is especially the case if they don't actually run any countries. However, the factor that makes today's terrorist groups far more dangerous than their predecessors is the prospect of their obtaining weapons of mass destruction. Yet for all its potential to wreak havoc, “Islamic fundamentalism'' does not have a monopoly on representing God in this world. Indeed, from the European perspective, the attitude of the hardline elements of the Bush administration - and of its fundamentalist Christian supporters - is no less fanatical and, many would argue, no less potentially dangerous. Bush and his people seek to avoid the term, but there is little doubt that in their own minds they are engaged in a crusade, in the religious sense, to impose their (seemingly secular) values on the rest of the world, especially the Muslim parts of it. Many of the evangelical Christian sects in the US are active in aggressively promoting their beliefs among the “heathens'‘, and their attitudes (but not their actions, fortunately) are no less fanatical than those of their Muslim counterparts. Nor would it be fair to limit the discussion to Muslims and Christians. India's recent governments have been aggressively Hindu and the simmering Hindu Muslim tensions that have always characterized the Indian sub-continent, even during the Raj, have, in recent years, been ratcheted up to nuclear levels. Ironically, this has had a calming influence on both sides, but the struggle between rational and irrational forces in both Pakistan and India, including in the governments and armed forces of both countries, is far from over. This carry-on exists among Jews also. In Israel, there is a clear new brand of messianic fanaticism among some small groups. These may be marginal elements within Israeli society but, once again, intense commitment and total disregard for the consequences - in other words, the “mission fromGod'‘ syndrome, this time in Jewish garb - can help small numbers go a long way. The bottom line: from New York to New Delhi, anyone engaged in making decisions about money needs to recognise that times have changed radically. We know, thanks to recent economic research, that the old assumption that consumers and investors act rationally is not always true. But the really bad news is that even governments and countries cannot be relied upon to act in ways that the market considers rational. Leaders, and especially opposition figures may have their own agenda, which on further examination may turn out to be what they believe is God's agenda. In such cases, not only can you not argue with this kind of thinking, you can't even understand it - unless you are prepared to factor God and his followers into your analysis. www.davidmcwilliams.ie

Subject: Re: God(s) Return(s) From: Pancho Villa To: Setanta Date Posted: Tues, Mar 22, 2005 at 20:46:50 (EST) Email Address: nma@hotmail.com Message: Which one shall I choose? (today) http://www.godchecker.com/ or Paulo?

Subject: What I do Not Know About Investing From: Terri To: All Date Posted: Tues, Mar 22, 2005 at 13:50:06 (EST) Email Address: Not Provided Message: I do not know how to buy international bond funds or international bonds in a simple low cost manner. I do not know how to gauge the risks of international bonds in terms of whether interest rates will be rising or falling in several countries, nor what individual currencies will do against the dollar even if I suspect the dollar will lose value in time. So, I choose the relative simplicity of international stock funds or stocks and I lean to value as usual. I do not know how to use the options markets effectively, with safety and low cost, nor do I have any idea why I would use a bear market fund since I have no idea when there will be a bear market and I assume most of the time there will not be a bear market. Again, till I learn how to use such vehicles, I am content looking for long term value.

Subject: Re: What I do Not Know About Investing From: David E.. To: Terri Date Posted: Tues, Mar 22, 2005 at 15:11:18 (EST) Email Address: Not Provided Message: Keep it simple always works. Good post!

Subject: Re: What I do Not Know About Investing From: Pancho Villa To: David E.. Date Posted: Tues, Mar 22, 2005 at 19:27:37 (EST) Email Address: nma@hotmail.com Message: 'Less is more'

Subject: Traditional Principles From: Terri To: All Date Posted: Tues, Mar 22, 2005 at 13:22:52 (EST) Email Address: Not Provided Message: Though I am rather optimistic, I do not think we need to worry too much about a difficult market period if we follow principles that began to be set in place from the days of Ben Graham and are supplemented by Buffett and Malkiel and Bogle and Siegel. We look to buy diverse companies at values that are fair or better given earnings prospects, and we wait as long we we must till we find such companies or funds of such companies. The need is value value value. Though even if we can not determine value, we can happily index and own most of our market and other markets for extended times. We balance stock market risk if we feel the need to with bond funds or bonds. When we can own hundreds of investment grade bonds, with limited duration periods, and have a secure income flow, there is significant security for us beyond stocks. We can worry, but intelligently.

Subject: Battling Insects, Parasites and Politics From: Emma To: All Date Posted: Tues, Mar 22, 2005 at 13:01:50 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/03/22/health/policy/22case.html?hp=&pagewanted=all&position= Battling Insects, Parasites and Politics By DONALD G. McNEIL Jr. SOMJI, Nigeria - The reason for all the excitement, one public health doctor after another trooping into her mud-walled room to have a look, was that Patience Solomon had correctly hung her new royal blue mosquito net over the bed she shared with her 2-year-old son, James. Mosquito nets are not terribly complicated, as long as you have something to suspend them from - in Mrs. Solomon's case, a hand-hewn rafter just at head-knocking height beneath her corrugated iron roof. Permeating the nets with insecticide does take a little concentration. A state health worker had just given a demonstration beneath the village's central baobab tree: take half a Coke bottle full of water and a big enamel bowl, mix in the sachet of white powder, dunk the net, and let dry. Remember to rinse out the bowl before making food in it. (If you forget, it's not a disaster; the lambdacyhalotrin is more lethal to bugs than to children.) Mosquito nets are technically very simple but in their own mundane way, in rural Africa, they are highly political objects. Somji, a hot, dry collection of mud compounds in the sorghum and millet fields of Nigeria's central plateau, is one of the special weapons and tactics laboratories in the global struggle over mosquito net policy - a 'piggybacking village.' 'This is the first place in the history of the country where we're combining the distribution of bed nets with the distribution of drugs,' said Dr. Emmanuel Miri, chief of Nigerian operations for the Carter Center in Atlanta. The drugs are for lymphatic filariasis, a disease caused by eight-inch worms that ball up and nest in the lymph glands, clogging them until victims' legs swell to the thickness of an elephant's. There is no cure for the leg, nor do the worms die, but, given once a year to everyone in the village, the drugs Mectizan and Albendazole, donated by Merck and GlaxoSmithKline, kill the worms' microscopic progeny as they circulate in the blood. Unable to reproduce, the infestation dies out when the adult worms shrivel up of old age, in about five years. But there is an exception: the drugs cannot be given to children under 5 or to pregnant women. Normally, they go unprotected, hoping to shelter under the umbrella of 'herd immunity' created when the rest of the village is de-wormed. (When herd immunity works, the uninfected have benefited from a combination of preventive medicine and dumb luck.) But pregnant women and children under 5 are also the most likely to die of malaria. And malaria, like lymphatic filariasis, is spread by mosquitoes. James had already had malaria once, Mrs. Solomon said. Asked what she gave him for it, she produced a bottle whose label she could not read. It turned out to be a local brand of Tylenol, meaning that James had already had a serious stroke of luck with one fatal disease. The Carter Center, a health and peace organization founded by former President Jimmy Carter, has been handing out de-worming drugs in Nigeria since the 1980's. It has no budget for mosquito nets. But Roll Back Malaria, a World Health Organization campaign started in 1998, does, has some money because malaria is relatively 'hot' at the moment, thanks to the Global Fund to Fight AIDS, Tuberculosis and Malaria. So in Somji, the two programs are piggybacking, meaning everyone in each family should get either Carter drugs or a W.H.O. net. But that requires juggling layers of bureaucracy, since the W.H.O. sends its donation through the Nigerian federal government, which filters the nets down to state governments, which send out workers to do demonstrations. In the two central states where the program is centered, Niger and Plateau, three million people get the drugs. The two states received only 60,000 nets. (Nigeria has more than 100 million people, and no national program.) What will happen when those run out? 'That is why we are begging you people to come to our aid,' said Rachel Titi Bitrus, the net-dunking Health Ministry demonstrator. 'We pray maybe we will get some more.' Equally good nets are sold at roadside markets, but they are several hours away on foot and cost from $6.50 to $14, she said, adding, 'Many complain that that is too dear.' Big donors and their consultants are deeply divided on whether mosquito nets, like condoms, should be distributed by 'social marketing' in which donated goods are not distributed free, but advertised as rival brands with catchy names and sold for nominal sums. Some economists argue that poor Africans value and use only things they have paid for. Others retort that such schemes benefit only the 'richest of the poor,' like city dwellers who can afford cigarettes, while the poorest poor - peasant farmers in dirt-track villages like Somji, who bear the greatest burden of mosquito diseases - die for lack of items the West can mass-produce for pennies. Officials from the United States Agency for International Development favor social marketing of nets; those from the Centers for Disease Control and Prevention oppose it. Unicef favors it; W.H.O. opposes it. And even if the macroeconomic disputes are resolved, there are micro problems. Somji is a two-hour drive from the regional capital, Jos, but Mrs. Bitrus has only occasional use of a truck. The Carter Center program relies on a network of volunteers from thousands of tiny villages, the kinds of places where ownership of a bicycle or a radio puts the owner in an upper-income bracket. 'The same guy who used to ride his bike to pick up a box of meds now has to somehow pick up a ton of bed nets,' said Dr. Frank O. Richards Jr., a parasitologist at the C.D.C. who advises the Carter Center. 'They've got to figure that out. ' Dr. Richards was watching the volunteers juggle the new complexities. With pigs rooting at their feet, they stood outside a compound, called out each resident by name, and spooned out pills. One 5-year-old gagged on his fat Albendazole tablet. 'Let him chew it! Tell him he can chew it!' Dr. Richards shouted, trying to get his words translated from English to Hausa to the village language. 'What about the baby?' he asked aloud, when the volunteers had dosed a nursing mother and said they were finished. 'He's supposed to get a net,' he muttered. 'This is the crucial thing. They didn't even think about babies before.' The volunteers explained that they wanted to do that later in the day. Their data-recording system consisted of two lined primary school notebooks, one for pills and one for nets, and doing both at once would sow confusion. Hence the eventual excitement about Mrs. Solomon. The successful hoisting of her net - made in Kenya, paid for in Geneva, arranged for in Atlanta, demonstrated in Somji - was no simple matter. The next move, Dr. Richards said, would be a surprise visit in a few weeks. Now that nets had value, he said, 'we'll want to see if the right people are using them - or if all the fathers are sleeping under them.' As the team climbed into its trucks to leave, a loud argument broke out. A visitor from another village was shouting at a Carter Center volunteer, accusing him of handing out nets free here while dignitaries were watching, but charging his village 80 cents each. Dr. Miri stepped out of his truck, questioned the volunteer, fired him on the spot and asked the village chief to pick another. The team left; the politics went on.

Subject: Corruption Tarnishes China's Growth From: Emma To: All Date Posted: Tues, Mar 22, 2005 at 13:00:29 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/03/22/business/worldbusiness/22corrupt.html?pagewanted=all&position= Wave of Corruption Tarnishes China's Extraordinary Growth By DAVID BARBOZA SHANGHAI - China has been shaken by a series of large-scale bank robberies in recent years, but they are not the Bonnie-and-Clyde type. These are inside jobs: top executives, branch managers, loan officers and thousands of everyday employees have been running off with billions in customers' money. Consider what has happened in just the first two months of 2005. First, a branch manager at the Bank of China disappeared with more than $100 million in cash. A few weeks later, dozens of employees of another commercial bank were arrested for conspiring to steal nearly $1 billion. And then midlevel officials of the China Construction Bank fled with about $8 million. There is no word yet whether any of the money has been recovered. But the chain of events underlines an ugly byproduct of China's aggressive embrace of a freewheeling, get-rich-quick form of capitalism: a long-running wave of corporate and government corruption scandals. The financial scandal watch gained new prominence last week with news reports that Zhang Enzhao, the head of the China Construction Bank, resigned after a lawsuit accused him of having accepted a $1 million bribe from an American company, Alltel Information Services. The bank later issued a statement saying he resigned for 'personal reasons.' The scandals are by no means limited to banks. Since the early 1990's, China's modern robber barons have focused on all manner of state-run companies. Brokerage houses, government-controlled investment management firms and dozens of state-owned companies have been looted of billions, according to government investigators. The official media are filled with accounts of executives and public employees accused of embezzling money and sometimes gambling away those funds at border casinos. With China awash in speculative money intended to fuel its economic boom, many corporate executives have turned greedy, and even low-level employees are engaging in self-dealing transactions and learning how to funnel millions of dollars into offshore accounts. 'Corruption is pervasive in China,' said Larry Lang, a professor of finance at the Chinese University of Hong Kong. 'A lot of state-owned companies have been simply stripped clean.' Few experts say that the scandals will slow China's roaring economic growth anytime soon. But economists and government officials worry that the glaring examples of fraud, bribery and embezzlement could badly hinder the development of the nation's banking and financial systems, which desperately need to be modernized for China to become a full-fledged economic superpower. In the last four years, at least 25 government officials have been sentenced to death for accepting bribes and kickbacks. Hundreds more are serving lengthy prison terms. But every month, the number of fraud cases seems to mushroom. Two weeks ago, the government announced that 58,000 people had been punished for misappropriating money or making unauthorized loans at just two of the big four state-owned banks. In 2003 alone, officials said that the equivalent of nearly $8 billion was pilfered from state-owned enterprises. In many ways, the corruption scandals offer a telling glimpse into the darker side of China's remarkable ascent. Though the economy is soaring, incomes are rising (per-capita income grew to $1,100 in 2003, the last year figures are available) and foreign investment continues to flood into the coastal provinces, China's finances are in a mess. The benchmark Shanghai stock index is down about 40 percent over the last four years. Nearly half the nation's 130 brokerage houses are insolvent. And the biggest banks are weighed down by enormous debts. 'The financing system that supports China's economic growth is very fragile,' said Sun Lijian, a professor at Fudan University in Shanghai. 'People are often impressed by the look of cities like Beijing and Shanghai, or with the G.D.P. growth every year. But without a strong financing system, China's economic growth is unhealthy.' Experts say that weak regulation and oversight, deep-seated government corruption and poor risk-management practices are to blame for allowing fraud artists and looters to run off long before investigators discover that anything is amiss. 'The incompleteness of the legal system provides an environment in which some people are willing and able to take chances to do illegal things,' said Zhou Chunsheng, a Beijing University professor. One industry plagued by scandal is also the one that holds everyone's cash: the state-run banks, which had bad loans valued around $204 billion last year, according to McKinsey & Company, the consultants. Part of this results from greed at the top. In recent years, two high-ranking executives who worked at the Bank of China were sentenced to long prison terms for economic crimes. And in 2002, the Bank of China discovered that $500 million was missing from accounts after three of its bankers fled the country. Hoping to prepare for foreign competition, some of the largest banks are trying to revamp their operations and tighten controls. The government helped by dipping into its huge foreign currency reserves last year to wipe out some $22.5 billion in bad loans at the Bank of China and the China Construction Bank. Some of the worst-performing loans were taken over by state asset management companies. But they, too, are in trouble. In January, the government said four big state-run asset management companies engaged in illegal practices that involved $800 million. Brokerage firms are in worse shape, with at least $20 billion in debt on their books. Many were poorly managed and undercapitalized when they began dealing in shares for investors in the 1990's, experts say. But for a while, those problems were masked by rising stock prices. When prices began to fall in 2001, a lot of brokerage houses ran aground - accused of gambling with investors' funds, investing in pet real estate projects that devoured money, and siphoning off large amounts into private or offshore accounts. With lawsuits piling up, more than a dozen brokerage firms have been seized by regulators in the last two years. Part of the problem, experts say, is the poor state of the stock markets, which many liken to casinos. The Shanghai and Shenzhen stock exchanges, where 1,300 companies are listed, most state-run, are just over a decade old. Traders and experts complain about ineffective regulations, trading restrictions, a lack of transparency with listed companies and a disconnection between corporate profits and stock prices. 'Here, earnings are irrelevant,' said Song Fengming, a professor at Qinghua University in Beijing. 'Even if the performance is the worst, the stock price can still go up. And vice versa. Investors think the market is an A.T.M. machine.' In the last year, regulators have pressed hard to shore up the flagging stock market. Nonetheless, over the last four years, the Shanghai Stock Exchange has the worst-performing major stock index in the world. That the economy could be sizzling hot and the market sharply lower during much of the last few years is an oddity not lost on industry officials or small investors. 'Why is G.D.P. going up and the stock market going down?' asked an official at Gold State Securities who insisted on being identified only as Li. 'That's why investors won't come here.' Few investors seem to trust public companies created out of state enterprises. In one of the latest examples of fraud, three senior executives, including the chairman and chief financial officer at the Yili Corporation, a big dairy company, were arrested on suspicion that they had embezzled $50 million. Can fraud here compare to cases in the United States, like those of Enron or WorldCom? The American companies were bigger, but analysts say that corporate fraud in China is far more routine and pervasive than in the West. 'The concept of an arm's-length transaction or arm's-length dealings are relatively new concepts in China,' said Chen Zhiwu, a finance professor at the Yale School of Management. According to a study conducted by Beijing University, about 16 percent of the companies listed on the Shanghai and Shenzhen exchanges over the last decade were subjected enforcement actions like fines or trading suspensions compared with 2 percent in the United States. Professor Song at Qinghua University said he abandoned a research project with Standard & Poor's to rate state-owned companies because so many financial statements were not believable. Until that changes, China will find it tough to join the economic front ranks. 'If China doesn't have a strong and stable financial system,' said Din Jianping at the Shanghai University of Finance and Economics, 'the economy of the entire country won't be very stable.'

Subject: The Return of Latin America's Left From: Emma To: All Date Posted: Tues, Mar 22, 2005 at 12:58:52 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/03/22/opinion/22Vargas_Llosa.html The Return of Latin America's Left By ÁLVARO VARGAS LLOSA Oakland, Calif. THE left is in power in Argentina, Brazil, Chile, the Dominican Republic and Venezuela. With this month's inauguration of Tabaré Vázquez as president of Uruguay, this trend will likely continue. The year 2006 could bring a similar leftward shift in Mexico and Peru, while in Bolivia the Socialist opposition has been setting much of the political agenda since the fall of President Gonzalo Sánchez de Lozada in 2003. Although this movement is hardly homogeneous (there are major differences between Venezuela's Hugo Chávez, Chile's Ricardo Lagos and Brazil's Luiz Inácio Lula da Silva), the continental pattern is clear. Behind this tilt is popular frustration with the failures of the 1990's, a decade of reform under governments of the right that were supposed to catapult the region toward development. Despite the success of many of these governments in curbing inflation, that development failed to happen. Instead of decentralization and the creation of a free, competitive economy and strong legal institutions open to all, crony capitalism and authoritarianism grew. Countries replaced inflation with new taxes on the poor, high tariffs with regional trading blocs, and, especially, state monopolies with government-sanctioned private monopolies. The courts were subjected to the whims of those in power, widening the divide between official institutions and ordinary people - one reason recent surveys in Latin America have pointed to such widespread disillusionment with democracy. This frustration opened the doors of power to the left. With some exceptions like Venezuela, this new left is trying to avoid the worst mistakes of the old, especially 1980's-style hyperinflation and open war against foreign investors. Some of the results are impressive: investment is picking up in Brazil, economic growth reached 8 percent in Argentina last year, and a Socialist president in Chile has overseen a big decrease in poverty (only 18 percent of the population, according to the Inter-American Development Bank, is below the poverty line in that country). Politically, despite a few authoritarian spasms in places like Argentina, the new governments are playing by democratic rules. It would be a mistake, however, to think that all these governments need to do is stay the course. Unless Latin America's leftist governments are willing to deepen reform, the continent is unlikely to break free of its recurring cycle of economic stagnation and political disillusionment. The good news, however, is that left-of-center governments in other parts of the world have put such reforms into place and lived to tell the tale. Latin America's rebound owes a great deal to favorable international circumstances, from low interest rates in the United States to heightened demand for commodities by China and India. After experiencing little or no growth between 1998 and 2003, the region's economies have benefited from the high price of oil (Argentina, Ecuador, Mexico, Venezuela), minerals (Peru) and other commodities like soybeans (Argentina, Brazil). But investment levels are still low: 15 percent to 17 percent of gross domestic product in the majority of countries, compared with roughly 25 percent in East Asia over the past two decades. With the exception of Chile, poverty is not diminishing. Last year the region had a net capital outflow of $77 billion, which is not surprising considering that foreign investment has not yet returned with force; that is in part a result of social unrest in the Andes but also of the perception that many of the structural reforms promoted in the 1990's have yet to be achieved. In order to compete with economies that have undergone reform in East Asia and Europe, Latin America's left must dismantle corporatist states that hamper enterprise among those who are not close to government and, through legal privilege, mock the notion of equality before the law. Many companies that were privatized in the 1990's (telephone service in Mexico and Argentina, and electricity in Peru) still have effective monopolies and are in cahoots with regulators. Getting rid of these privileges could help to persuade the poor to embrace the idea of economic freedom. Significantly reducing high sales taxes that were set in times of fiscal profligacy would lift a burden from the poorest citizens. Slashing the bureaucratic requirements that force citizens to spend up to 80 percent of their annual income if they want to set up a private company would also help to empower would-be entrepreneurs. Even more important, decoupling the judicial and the political spheres (for example, by reversing an expansion of Argentina's highest court that was undertaken by a former president to pack the bench) could begin a vital legal reform process in which all citizens are given real legal protection. Such measures could turn current growth into sustained progress. More fundamentally, by reconciling human rights and free markets, two notions that have been sadly at odds across the continent, they could enfranchise millions. Further reform is the best way to meet the current social unrest and prepare for when the prices of Latin American commodities go down or interest rates in the United States go up - a likely prospect if China's growth slows and deficits in the United States keep rising. Other left-of-center role models for reform abound, from New Zealand to Ireland, Estonia and Lithuania. Ultimately, the real challenge facing Latin America's left is to avoid the temptation of being too conservative.

Subject: Simplicity From: Terri To: All Date Posted: Tues, Mar 22, 2005 at 10:50:08 (EST) Email Address: Not Provided Message: We have the opportunity to invest in Berkshire Hathaway, as do a number of mutual fund managers. Otherwise however we must learn from the few times Warren Buffett or Charles Munger present ideas in depth, and we must not think we can imitate because we can not do so. We have no idea what foreign currencies are held by Berkshire Hathaway, nor do we know how they are held. There is no reason to believe there are short positions against the dollar, thoguh there may be. We can buy foreign currency or foreign bonds or fereign stocks, or buy American companies with foreign holdings or American companies that do much of the business abroad. We can even speculate in foreign securities, if we think we know enough. For me, simplicity is usually the proper answer.

Subject: Long term unemployed From: Pete Weis To: All Date Posted: Tues, Mar 22, 2005 at 10:15:21 (EST) Email Address: Not Provided Message: Unemployment plateau: Many jobless for longer 20% out of work for over 27 weeks Jonathan J. Higuera The Arizona Republic Mar. 22, 2005 12:00 AM They hear the stories about how the economy is turning around, and they truly want to believe it. Some are even cautiously optimistic that a job with their name on it is just around the corner. But until that happens, they are part of an unprecedented trend. For the past 29 months, one-fifth of the nation's jobless people captured in federal statistics have been out of work for more than 27 weeks, which qualifies them as 'long-term unemployed.' And unlike previous periods, many of those job seekers have college degrees and solid professional experience. 'People are just inundated with resumes,' said Carol McHugh, a 49-year-old former systems engineer, who took a buyout offer in 2003 after 13 years at Verizon. 'So you just have no idea whether yours hits their desk or the trash can.' Although the severance package was good, the search for new employment has been longer and harder than McHugh imagined. 'It's hard when you're someone who has been sought out for jobs,' she said of her job search. 'I think I have a good background, a college degree and worked for some good companies. I've traveled and lived on the road for my job and even relocated. Now at 49 I can't find a job.' Likewise, Alan Elsroad, 53, didn't expect to be out of a job for longer than six months when his position as a sales engineer/account manager was eliminated by Qwest Communications in April 2001. He had worked for the company that eventually became Qwest for 28 years, starting as a cable splicer. 'One of the common things I hear from companies is that I'm overqualified for positions,' he said. 'But companies are putting a price tag on me before they even discuss salary. My salary needs today are entirely different than in 2000.' While there have been periods when the share of long-term unemployed has been higher, it has never remained above 20 percent for so long, economists note. And when the jobless rate shrank, as it has lately, the share of long-term unemployed traditionally shrank along with it. That hasn't been the case this time around. 'It could be the case there is some structural change going on in the economy,' said Sylvia Allegretto, an economist at the Economic Policy Institute, a think tank in Washington, D.C. 'But it's definitely related to weak jobs growth.' Many of the folks facing hardships are professionals who thought they had done everything right in nurturing their careers, said George Fleming, whose Phoenix firm, Momentum Coaching Resources, offers career transition consulting. But the nature of the economy and the incessant corporate cost-cutting has taken its toll. It doesn't help that the Valley doesn't have many corporate headquarters, a traditional source of good jobs. 'Job searches are getting shorter, but I'm also seeing the number (of job seekers) coming into a search has not abated,' Fleming said. Lan Smith, 34, and her husband made a carefully thought-out decision to relocate to Phoenix from London four years ago. For two years, she worked as a national sales representative for America West Airlines. But she was laid off last year and hasn't landed a new job since. Even with a master's degree from Kingston University in England, she has found the job market to be tough. 'Every month I listen to what the government is saying about the economy getting better, but their statistics don't capture the big picture,' she said. 'I've met many people who have been out of work for more than six months and their unemployment benefits have run out. So they've fallen off the face of the Earth as far as the government is concerned.' Scott Wales, 45, a former controller for a manufacturer, Rexam Beverage Can, envisioned a six-month time frame to find a comparable job to the one he was let go from in February 2002 when a new management team was brought in. Armed with solid experience and a master's degree in business administration from Northwestern University, he figured the odds were on his side for quick re-entry into the labor force. Instead, the search has dragged on to the point that he's now doing temporary contract work. 'I never thought it would take this long,' he said. 'I figured I'd be back in play by the summer of 2003.' He has gotten close a few times, but in the end, he says, the employer opted for a 'more economical' candidate. Therein lies a big issue for job seekers: How much of a pay cut will they accept? Wales felt strongly about maintaining his salary range at or near what he was making at his old job - mid- to high $70,000s. Although he's willing to go down $10,000 for the right opportunity, he's not willing to go much below that. 'If I dropped down to $50,000 a year, it would be where I was when I moved to the Valley 16 years ago,' he said. 'I don't think my value has stayed at that level.' Arlene Larsen, vice president at Right Management Consultants, which works with laid-off workers on career transition and employment opportunities, said salary requirements are personal decisions made by the job seeker and are largely driven by personal circumstances. But even when job seekers are willing to significantly lower their expectations, employers can still be skittish about hiring them. 'Companies are often reluctant to hire them because they think they will leave as soon as a better job comes up,' she said. Employers still hold all the cards, job seekers say. Judy Moore, 49, says she and her husband moved here last summer with a nest egg from the sale of their Los Angeles home. So her unemployment hasn't yet led to desperation. She knew it would be difficult to continue her career as a freelance assistant director here, but she figured her master's in public administration specializing in arts/entertainment management would lead to a position. 'The job market here doesn't really know what to do with someone like me,' she said. 'They make it seem like you did something wrong.' Employers seem to be looking for someone who has most, if not all, the skills for the available job. Training is not part of the plan for many. 'If they are 80 percent close and we see they have the aptitude to fill the gap, then they become desirable people to contact,' said Alan Castillo, president of Castillo Technologies, a government contractor in Tempe that provides information technology services to the military. That competitive environment coupled with the impersonal nature of the job hunt has many job seekers at wit's end. 'The worst thing is not getting any feedback at all,' said McHugh, the former Verizon employee. 'Companies used to say thank you for your resume. They don't seem to do that. I guess they don't have the manpower or they don't want to spend the money.'

Subject: Keep interest rates low From: Terri To: Pete Weis Date Posted: Tues, Mar 22, 2005 at 12:08:45 (EST) Email Address: Not Provided Message: Work is the real problem for the economy from my perspective, and that is why I do not fault the Federal Reserve for keeping interest rates low. My only fear is that rates may rise enough to further limit job creation. There to me is far more of a problem than inflation or debt.

Subject: Detailed look at warrens letter From: johnny5 To: All Date Posted: Tues, Mar 22, 2005 at 08:17:00 (EST) Email Address: johnny5@yahoo.com Message: Johnny is gonna assume warren is smarter than him, and invested in a way that as Pete says, anticipates a falling dollar and market - warrens own words BEAR out that he wants little part of the us dollar or market for awhile. ....From a reputational standpoint, Charlie and I run a clear risk with our foreign-exchange commitment. But we believe in managing Berkshire as if we owned 100% of it ourselves. And, were that the case, we would not be following a dollar-only policy. http://www.berkshirehathaway.com/2004ar/2004ar.pdf ...Therefore, yearly movements in the stock market now affect a much smaller portion of our net worth than was once the case, a fact that will normally cause us to underperform in years when stocks rise substantially and overperform in years when they fall. ....Additionally, I found very few attractive securities to buy. Berkshire therefore ended the year with $43 billion of cash equivalents, not a happy position. ...In one respect, 2004 was a remarkable year for the stock market, a fact buried in the maze of numbers on page 2. If you examine the 35 years since the 1960s ended, you will find that an investor’s return, including dividends, from owning the S&P has averaged 11.2% annually (well above what we expect future returns to be). But if you look for years with returns anywhere close to that 11.2% – say, between 8% and 14% – you will find only one before 2004. In other words, last year’s “normal” return is anything but. ....The wind-down of Gen Re Securities continues. We decided to exit this derivative operation three years ago, but getting out is easier said than done. Though derivative instruments are purported to be highly liquid – and though we have had the benefit of a benign market while liquidating ours – we still had 2,890 contracts outstanding at yearend, down from 23,218 at the peak. Like Hell, derivative trading is easy to enter but difficult to leave. (Other similarities come to mind as well.) Gen Re’s derivative contracts have always been required to be marked to market, and I believe the company’s management conscientiously tried to make realistic “marks.” The market prices of derivatives, however, can be very fuzzy in a world in which settlement of a transaction is sometimes decades away and often involves multiple variables as well. In the interim the marks influence the managerial and trading bonuses that are paid annually. It’s small wonder that phantom profits are often recorded. Investors should understand that in all types of financial institutions, rapid growth sometimes masks major underlying problems (and occasionally fraud). The real test of the earning power of a derivatives operation is what it achieves after operating for an extended period in a no-growth mode. You only learn who has been swimming naked when the tide goes out. ....What Charlie and I would like is a little action now. We don’t enjoy sitting on $43 billion of cash equivalents that are earning paltry returns. Instead, we yearn to buy more fractional interests similar to those we now own or – better still – more large businesses outright. We will do either, however, only when purchases can be made at prices that offer us the prospect of a reasonable return on our investment. ...But as I argued in a November 10, 2003 article in Fortune, (available at berkshirehathaway.com), our country’s trade practices are weighing down the dollar. The decline in its value has already been substantial, but is nevertheless likely to continue. Without policy changes, currency markets could even become disorderly and generate spillover effects, both political and financial. No one knows whether these problems will materialize. But such a scenario is a far-from-remote possibility that policymakers should be considering now. Their bent, however, is to lean toward not-so-benign neglect: A 318-page Congressional study of the consequences of unremitting trade deficits was published in November 2000 and has been gathering dust ever since. The study was ordered after the deficit hit a then-alarming $263 billion in 1999; by last year it had risen to $618 billion. Charlie and I, it should be emphasized, believe that true trade – that is, the exchange of goods and services with other countries – is enormously beneficial for both us and them. Last year we had $1.15 trillion of such honest-to-God trade and the more of this, the better. But, as noted, our country also purchased an additional $618 billion in goods and services from the rest of the world that was unreciprocated. That is a staggering figure and one that has important consequences. ....The mention of trillions numbs most brains. A further source of confusion is that the current account deficit (the sum of three items, the most important by far being the trade deficit) and our national budget deficit are often lumped as “twins.” They are anything but. They have different causes and different consequences. ....In the article I wrote for Fortune 16 months ago, I warned that “a gently declining dollar would not provide the answer.” And so far it hasn’t. Yet policymakers continue to hope for a “soft landing,” meanwhile counseling other countries to stimulate (read “inflate”) their economies and Americans to save more. In my view these admonitions miss the mark: There are deep-rooted structural problems that will cause America to continue to run a huge current-account deficit unless trade policies either change materially or the dollar declines by a degree that could prove unsettling to financial markets. Proponents of the trade status quo are fond of quoting Adam Smith: “What is prudence in the conduct of every family can scarce be folly in that of a great kingdom. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage.” I agree. Note, however, that Mr. Smith’s statement refers to trade of product for product, not of wealth for product as our country is doing to the tune of $.6 trillion annually. Moreover, I am sure that he would never have suggested that “prudence” consisted of his “family” selling off part of its farm every day in order to finance its overconsumption. Yet that is just what the “great kingdom” called the United States is doing. ....Our spendthrift behavior won’t, however, be tolerated indefinitely. And though it’s impossible to forecast just when and how the trade problem will be resolved, it’s improbable that the resolution will foster an increase in the value of our currency relative to that of our trading partners. Terri it is not wise to bet against Jeff Gordon when he is racing against 40 grandma millies in their mini van who don't have a clue - while he is very experienced - he says the dollar is very unlikely to have a soft landing - why do you think he is wrong?

Subject: Excellent From: Terri To: johnny5 Date Posted: Tues, Mar 22, 2005 at 08:44:04 (EST) Email Address: Not Provided Message: This is excellent. Thank you so much.

Subject: Safety and Bond Funds From: Terri To: All Date Posted: Tues, Mar 22, 2005 at 06:26:50 (EST) Email Address: Not Provided Message: During the 1970s, the dollar was pressured enough by speculators that we abandoned the gold standard. There was a fierce bear stock market and interest rates generally rose as inflation became more of a problem. Nonetheless, there were fine domestic stock and bond investments. Though history does not repeat, the 1970s can be instructive if we expect difficulties ahead. Long term investment in value stocks and bonds, as in value stock funds and bond funds was successful through the 1970s.

Subject: Vangaurd does not sell international bond funds? From: johnny5 To: Terri Date Posted: Tues, Mar 22, 2005 at 08:34:28 (EST) Email Address: johnny5@yahoo.com Message: I have xom personally and vanguard international stock value fund for my mom thanks to you Terri - where can she buy an international bond fund for further diversification - vanguard does not seem to offer this?

Subject: Duration From: Terri To: Terri Date Posted: Tues, Mar 22, 2005 at 07:24:57 (EST) Email Address: Not Provided Message: The critical point to remember with bond funds is the meaning of duration, for the funds adjust to rising interest rates according to durations. A 2 years duration fund will adjust to an interest rate increase in less than 2 years. Bonds funds balance a portfolio and keep us ahead of inflation, especially along with stock funds.

Subject: Choices From: Terri To: All Date Posted: Tues, Mar 22, 2005 at 06:02:29 (EST) Email Address: Not Provided Message: The choices in Vanguard investing are domestic and international stocks and domestic bonds. The problem we can set for ourselves is how to use such choices for reasonable appreciation and safety. Possibly safety is of prime concern these days. Can we invest safely even if we expect economic difficulties with a mixture of ordinary stock and bonds funds?

Subject: Limited Choices From: johnny5 To: Terri Date Posted: Tues, Mar 22, 2005 at 08:31:32 (EST) Email Address: johnny5@yahoo.com Message: Here they say international bonds are best - but vangaurd only has domestic bonds so where can I buy foreign bond funds terri? http://www.diansfundfreebies.com/audio3/lavine159.html Overseas Investments Benefit From Decline In Dollar - Alan Lavine and Gail Liberman Think the U.S. dollar is still on the decline? It's already down more than 25 percent in value since 2002. Many analysts say yes. A trade and government budget deficit should cause it to drop more in relation to other foreign currencies. One way to benefit is to invest in international stock and bond funds which purchase securities with foreign currency. The value of the investment increases when the currencies strengthen. Owning international funds also helps you diversify. One of the easiest ways to benefit from the falling value of the U.S. dollar may be through international bonds. Nasri Toutongi, manager of the Hartford Total Return Bond Fund, expects overseas bonds to register total returns of at least 12 percent this year. Historically, changes in foreign currency values have played a larger role than interest rates on the total return of overseas bonds. Nearly half of last year's foreign bond fund total returns were due to the decline in the dollar. 'We expect the dollar to decline by another 10 percent against the euro due to the current (U.S. trade) and budget deficits,' Toutongi says. 'We see opportunities in foreign government bonds, particularly western European bonds. They offer safety and can benefit from currency appreciation. 'While we expect yields on U.S. bonds to rise due to the strong economy and an increase in the Federal Reserve rate, we expect western European government bonds will decline in yield.' He cites U.S. monetary policy coupled with the weak economy as chief reasons. Toutongi believes that bonds represent a better way to benefit from the decline in the dollar than stocks. That's because bonds move more directly in line with economic factors, such as interest rates, government deficits, and trade imbalances. Stock prices, on the other hand, can be affected by more factors, such as news about a company or whether the stock is undervalued or overvalued. If you want to invest in foreign bonds, it's often best to stick with a professionally managed mutual fund. Investors pay a pay a big mark-up when they buy individual foreign government bonds. Bond funds get better prices due to large block purchases. In addition, bond fund managers can hedge against currency losses when the dollar begins to gain strength. Toutongi favors German, French and Italian government bonds that mature in two years. The bonds yield 2.5 percent. He also likes Australian bonds, which yield more than 5 percent. Although Japanese bonds sport low yields of up to 1 percent, the yen should also strengthen against the dollar.

Subject: Consolidating Assets From: Terri To: All Date Posted: Tues, Mar 22, 2005 at 05:53:53 (EST) Email Address: Not Provided Message: Vanguard easily has more than 100 mutual and exchange traded index funds. There is a discount brokerage. The company is highly conservative and manages more than 700 billion dollars in assets. My objective is to learn about and understand this single company, and invest with the company. However, I an always learning about other possibilities. There are advantages in learning and ease and tools of management and cost in consolidating assets.

Subject: Vanguard versus Berkshire From: johnny5 To: Terri Date Posted: Tues, Mar 22, 2005 at 07:31:46 (EST) Email Address: johnny5@yahoo.com Message: How has warren in all but 6 years out of 40 beat those vanguard teams and their indexes and the sp500? Him and munger must not understand that market timing is gonna cost them money and MPT will save them even if there is no more value to be had in the markets and they are way overpriced. Really Terri, I appreciate all you are saying, but no one has given me even a spec of a reason why warren is dead wrong to time the US dollar and markets and why he is gonna lose. That is like saying jeff gordon is gonna lose the next race between him and 40 grandma millies in minivans. Warren is one of the best investors of all time - he says get out while you can, he says he wishes he could get out more than he is but being in charge of so many companies and sitting on boards and having so much dollars - he has to stay invested at a level he wished he didn't.

Subject: There is no Competition From: Terri To: johnny5 Date Posted: Tues, Mar 22, 2005 at 08:41:44 (EST) Email Address: Not Provided Message: Then, we can buy Berkshire Hathaway A or B shares. We can all invest with Berkshire Hathaway. There is no competition with a Vanguard index fund if we feel Berkshire Hathaway is proper, since we can invest in either setting.

Subject: Re: There is no Competition From: johnny5 To: Terri Date Posted: Tues, Mar 22, 2005 at 08:50:59 (EST) Email Address: johnny5@yahoo.com Message: He does say he has derivatives he has yet to unwind, and that he is not as flexible as he wants to be in diversifying away from the dollar because of committments to the US companies he has. Even though berkshire does have foreign currency exposure - their inability to diversify even more heavily than they are now - which he would like - may make certain international investments in int stocks and bonds a better bet for the next 10 years than berkshire. Certainly though if the choice was between vangaurd sp500 and berkshire a or b, berkshire with their greater international diversification would be a serious choice to consider. Vanguard seems to have a good international stock value fund that is trending upwards along with all international funds they offer compared to the poorer performance of thier other types of funds. Now where do we buy international bond funds?

Subject: Investing and Speculating From: Terri To: All Date Posted: Tues, Mar 22, 2005 at 05:45:14 (EST) Email Address: Not Provided Message: Words we use are important. Investing should be distinguished from speculating. The point of investing is to find fairly priced assets or assets that are priced so that earning streams will allow for a fair appreciation of value over time. Speculation is buying assets with little regard for value because we think we know the direction of a market. Bearish investing is a contradiction in terms because it supposes America will experience economic difficulties for a longer period of time than may ever have happened before. So, I try to find fairly priced assets and buy for the long run. I do not speculate, because I find no reason to think I can time a market.

Subject: Warren Buffet is a market Timer? From: johnny5 To: Terri Date Posted: Tues, Mar 22, 2005 at 07:24:05 (EST) Email Address: johnny5@yahoo.com Message: Warren says no more value to be had - at current prices that stocks and dollar are really BAD investments - why does he keep shorting our dollar and diversifying away from it - what a fool he must be to not understand that MPT and enough time he will make money and for him to try and market time the US dollar and stocks is going to cost him a ton - he doesn't know the future - the us stocks and dollar can go up in value way beyond any fundamentals - that darn warren, he has got me and pete all worked up and wanting to diversify out the dollar and gonna cost him and us money - what a bad guy.

Subject: Warren Buffet is Not a Market Timer From: Terri To: johnny5 Date Posted: Tues, Mar 22, 2005 at 07:27:57 (EST) Email Address: Not Provided Message: Please read the Berkshire Hathaway letter to shareholders.

Subject: Re: Warren Buffet is Not a Market Timer From: johnny5 To: Terri Date Posted: Tues, Mar 22, 2005 at 07:38:29 (EST) Email Address: johnny5@yahoo.com Message: I have terri, here is the link, and even in those 6 years out of 40 he is posting after tax berkshire versus pretax sp500 - so its really better than what they present - what point are you trying to make? That he is one of those lucky few that just randomnly win and flips a coin and gets heads 10 times? http://www.berkshirehathaway.com/2004ar/2004ar.pdf The S&P 500 numbers are pre-tax whereas the Berkshire numbers are after-tax. If a corporation such as Berkshire were simply to have owned the S&P 500 and accrued the appropriate taxes, its results would have lagged the S&P 500 in years when that index showed a positive return, but would have exceeded the S&P in years when the index showed a negative return. Over the years, the tax costs would have caused the aggregate lag to be substantial.

Subject: Cspan3 tonight 11:58 pm - British Fall From: johnny5 To: All Date Posted: Mon, Mar 21, 2005 at 19:59:27 (EST) Email Address: johnny5@yahoo.com Message: 11:58 pm 0:57 (est.) Speech Empire: Lessons for Global Power Council on Foreign Relations Niall Ferguson , Oxford University Walter Russell Mead , Council on Foreign Relations British historian Niall Ferguson discussed his book Empire: The Rise and Demise of the British World Order and the Lessons for Global Power, published by Basic Books. Mr. Ferguson argued that the British Empire was one of the world's greatest modernizing forces responsible for the spread of capitalism, parliamentary democracy, communications technology, and raising the level of education around the globe. He also said that at its peak the empire was taken apart by the shifting global climate and other global empires seeking to expand. The author talked about the modern United States and its view in the global community in terms of being an empire. He also responded to questions from members of the audience. The event was moderated by Mr. Mead.

Subject: Fed attempts to control asset prices? From: Pete Weis To: All Date Posted: Mon, Mar 21, 2005 at 09:38:34 (EST) Email Address: Not Provided Message: We commented on this board about whether or not the Fed attempts to affect asset prices: The Bubble Cycle is Replacing the Business Cycle Maybe there's a 'New Economy' after all. ericjanszen [Trident Capital] | POSTED: 03.16.05 @00:16 Let's put to rest the myth that the Fed is blind to asset bubbles and never intentionally acts to prick them. The truth can be obtained by anyone with an internet browser and a few hours on their hands to read the voluminous Fed Open Market Committee (FOMC) meeting minutes. In the FOMC meeting minutes from March 22, 1994, Greenspan says (my emphasis in italics): 'When we moved on February 4th, I think our expectation was that we would prick the bubble in the equity markets. What in fact occurred is that, as evidence of the dramatic shift in the economic outlook began to emerge after we moved and long-term rates began to move up, we were also clearly getting a major upward increase in expectations of corporate earnings. While the stock market went down after our actions on February 4th, it has gone down really quite marginally on net over this period. So what has occurred is that while this capital gains bubble in all financial assets had to come down, instead of the decline being concentrated in the stock area, it shifted over into the bond area. But the effects are the same. These are major capital losses, which have required very dramatic changes in the actions and activities on the part of individuals and institutions.' 'So the question is, having very consciously and purposely tried to break the bubble and upset the markets in order to sort of break the cocoon of capital gains speculation, we are now in a position—having done that and in a sense succeeded perhaps more than we had intended—to try to restore some degree of confidence in the System.' To try to restore some degree of confidence in 'the System,' as Greenspan calls it, the Fed injected liquidity in 1994 that restored function to a dysfunctional banking system and rescued the bond market. But what cures one bubble sows the seeds of new ones. As Martin Mayer said in his book The Fed: 'The truth is that liquidity, the only significant weapon remaining in the central bank's arsenal as decision making moves to the markets, will not necessarily go where you want it to go when you need it to go there.' The 1994 liquidity injection kicked off the largest and longest period of real estate appreciation in US history and launched the late 1990s stock market bubble in the bargain. Five years later, in June 1999, the Fed appears to have moved to prick the new stock market bubble in the same purposeful manner as in 1994, except you won't find the same explicit discussion about pricking bubbles in the minutes of the June 30 FOMC meeting notes. The only reference to asset bubbles comes from the President of the Federal Reserve Banks of Boston, Cathy E. Minehan, during the previous month's meeting (emphasis added): 'We recently held a meeting of the Bank's Academic Advisory Council which, as you all know, includes two or three Nobel Prize winners and people from Harvard, MIT, Yale, and so forth. The discussion focused on issues related to productivity growth, labor market tightness, and asset market bubbles. The group was lively, to say the least. But some consensus was reached on the need for action that might take the wind out of asset markets, even in the absence of tighter monetary policy, perhaps through increased margin requirements or increased supervisory oversight on credit extended, particularly in the day trading operations.' She also commented on 'excesses and imbalances' in the 'stock markets, real estate markets, corporate and personal debt.' If there was concern around the FOMC in 1999 about real estate excesses, you have to wonder what the FOMC thinks today. The median home price in California is up 123 percent since then. That's close to the median home price increase for the US in the previous 20 years, from 1980 to 1999. We won't know for a while what committee members think because the full minutes of FOMC meetings are released after a five-year lag, but two things appear to have changed since 1994. First, there has been an apparent shift in the policy of talking about bubbles openly in committee meetings. Second, the Fed now appears to wait until the latest bubble has become considerably more egregious than the previous one. But otherwise the responses and results are the same. Nine months after the Fed began to withdraw liquidity from the markets (starting in June 1999), the bubble popped in March 2000. The Fed then beat the previous post-bubble Fed rate cut record of 4% in 14 months, from 6% to 2%, that followed the 1929 crash. Between January 2001 and June 2003, the Fed flushed the System with liquidity once again as the Fed Funds Rate target was cut from 6.5% to 1%. After more than four years of post stock market bubble collapse reflation, with short term interest rates kept below the rate of inflation, it appears that liquidity once again did 'not necessarily go where you want it to go,' resulting in the creation of bubbles in several asset classes. Unique to this bubble period, several asset classes that have historically been counter-cyclical, such as bonds and equities, are all rising in tandem. Now we have: A Housing Bubble A Bond Bubble A Private Equity Bubble A Hedge Fund Bubble A Commodities Bubble An Art Bubble All asset classes can't rise together forever. These bubbles too will eventually collapse. Then it's reflation time again. Ever since markets overran the Fed in the creation of money and credit in the late 1970s, the Fed has overseen a series of bubble booms and bubble busts. Market professionals, especially hedge fund managers, have learned how to position themselves to profit from these boom and bust cycles. Speculators are now well-trained and will be standing by; ready, willing, and able to turn the next post-bust liquidity flow of money their way. To thwart this moral hazard, the Fed has the option of disappointing speculators by failing to supply the guaranteed cash. But with such a high level of corporate and household debt, and capacity globally at historical highs, the Fed runs a very real risk that the real economy will fall into a deflationary depression. This standoff is the great economic and capital markets conundrum of our time, and the steady replacement of the Business Cycle with the Bubble Cycle is the unintended consequence. The multiple bubbles we are living with now are likely to burst as a result of the Fed current tightening cycle that started in June 2004. If the pattern of the last two tightening periods holds for this cycle, there is reason to expect that at least some of these bubbles will pop sooner rather than later. How will the capital markets respond to the next post-bubble river of new money? My expectation is that the reflation effort that follows the bursting of the housing, bond, and dollar bubbles that formed during this reflation cycle are more likely to result in a period of high inflation than following previous cycles. The reasons for this are more political than economic. In my next blog, we'll take a stab at predicting how that might unfold. You may be thinking that this is no way to run a railroad. I leave you with the paragraph that concludes Martin Mayer's book The Fed, which suggests why politicians, who are in a position to address the problem of the bubble cycle before it becomes an even bigger problem, are not motivated to examine the issue carefully today (emphasis added): 'Having won supervisory control over the entire financial services industry, the Fed must bring into the light where the markets can see them continuously the now hidden maneuverings of the private banking empires, the derivatives dealing, the over-leveraging that accompanies over-reliance on diversification and probability. And the Fed has never believed in sunshine as a disinfectant. The tragedy for all of us would be if the Fed's and the Treasury's and the Congress's reverence for people who make a lot of money left us unprotected against some sudden revelation of the truth that becomes obvious only in hindsight, that a lot of them don't know what they're doing.'

Subject: Re: Fed attempts to control asset prices? From: Jennifer To: Pete Weis Date Posted: Mon, Mar 21, 2005 at 10:51:29 (EST) Email Address: Not Provided Message: This helpful case about the Federal Reserve considering asset prices in forming interest rate policy, taken from the minutes of the 1994 meetings was made by a shrewd poster on Brad DeLong's web site and on our website as well.

Subject: Re: Fed attempts to control asset prices? From: johnny5 To: Pete Weis Date Posted: Mon, Mar 21, 2005 at 10:28:50 (EST) Email Address: johnny5@yahoo.com Message: Pete I am still heavy in xom, are you still heavy in oil and bearx? Perhaps instead of my mom moving into one of these master planned community houses, she should buy a big piece of vacant land and put a little trailer on it and grow some oranges and potatoes like my grandfather did (the nursing home is gonna get his land and small farm). The places with good food around here in clearwater are getting very very expensive to eat at. There are the cheap buffets - but their quality of food has went down significantly over the past several years. It has been many moons since I worked the farm and I really am not excited about the prospect, but if all us poor are going to get poorer while madonna and trump and bush take more of the pie I feel to be running out of options. I remember reading the poor farmers in argentina moved to the city, got rich, went from rural agriculture to urban city life, then things crashed and they had to move back on the farms but instead of owners like they once were, as workers being paid a pittance.

Subject: Re: Fed attempts to control asset prices? From: David E... To: johnny5 Date Posted: Mon, Mar 21, 2005 at 13:46:44 (EST) Email Address: Not Provided Message: Bearx was my education. Supposedly correlated negatively at 1:-2 to S&P500 when I bought. Correlation quickly disappeared and became 1:-1. My cheap insurance against a fall in SP500 disappeared and became a zero sum game. Stupid stupid move on my part because that meant I didnt make money on either SP500 and Bearx. So I was stuck with an uncovered opportunity cost.

Subject: Index put options From: johnny5 To: David E... Date Posted: Mon, Mar 21, 2005 at 17:04:18 (EST) Email Address: johnny5@yahoo.com Message: When you buy a house and car you get insurance, more people should buy it for their stocks too no? I was considering bearx, but may do this collar put option strategy. Protective Collar with S&P 500 (SPX) Options The protective S&P 500 collar strategy provides downside protection through the use of index put options, and finances the purchase of the puts through the sale of short index call options, in effect trading away some upside potential. By simultaneously purchasing put options and selling call options with differing strike prices and the same expiration (the strike price of the put is lower than that of the call), a collar often can be established for little or no out-of-pocket cost. http://www.cboe.com/Strategies/pdf/Strat-P2.pdf

Subject: I don't own BEARX From: Pete Weis To: johnny5 Date Posted: Mon, Mar 21, 2005 at 22:13:58 (EST) Email Address: Not Provided Message: Conservative investments which hedge the dollar drop are my cup of brew. A recent Wall Street Journal article stated that three month New Zealand CD's are presently paying over 5% yield and benefit from a falling dollar. While natural resource companies are making great profits and are probably good long term investments, any global recession could see atleast a temporary drop in demand for resources so there is risk after such a large runup in these stocks.

Subject: Benson on Everbank From: johnny5 To: Pete Weis Date Posted: Tues, Mar 22, 2005 at 03:52:57 (EST) Email Address: johnny5@yahoo.com Message: Benson said short of a hedge fund foreign asset position, getting into the foreign CD's at everbank was good for the little guy. http://www.sfgroup.org/ in his 'borrow and run from the dollar' article ...If you have a few million dollars to protect, you should be in a position to find a hedge fund that can borrow a few billion from your local money center bank, and run a major sophisticated foreign asset position. If you are a small investor, there are still some things you can do. It is possible to open foreign currency accounts offshore. (If you do open a foreign account, however, you must inform the IRS when you file taxes because Big brother needs to know!) For instance, HSBC does offer a Euro account to American citizens out of the Channel Islands. Moreover, Everbank (www.everbank.com) offers U.S. bank deposits in foreign currencies that are FDIC insured. So I got into a conversation with some people at the M* diehards board about that specific new zealand CD at everbank: Here were some responses. http://socialize.morningstar.com/NewSocialize/asp/FullConv.asp?forumId=F100000015&convId=139859 I could never get a final answer on the foreign tax credit question relating to these foreign cd's and have not had time to call everbank to get an answer from them. I appreciate what you are saying about MPT David E, but Mr. Buffet is still short the US dollar I believe, and until he goes long and stops his shorting, we would be foolish to not try and duplicate this greatest of investor's advice and actions. Articles by Mr. Hoye on commodities says the dollar will not drop further than 80, it is 82 today I think. This confuses me, mr. hoye sounds very smart, but so is warren buffet, and one says the dollar is going down further and invested accordingly, the other says it has stopped its decay. Betting against buffet or not taking his advice seems like a foolish choice to me.

Subject: Re: Index put options From: David E.. To: johnny5 Date Posted: Mon, Mar 21, 2005 at 21:53:25 (EST) Email Address: Not Provided Message: Don't forget to factor in the 'plunge protection' team. Maybe that is why Bearx was unsuccessful. The 'plunge protection' team is a possibly mythical organization that uses government contractor money to prevent plunges in the stock prices. I don't know if the team exists. But I do think it is stupid to buy insurance. That is not Modern Portfolio Theory. Insurance is market timing. It is not investing, investing is buying stuff that you know will appreciate, not stuff that is an expense. Rely on correlations to reduce your portfolio risk. Instead of trying to do special 'hedge fund' stuff, just concentrate on basic investing. Diversify - and don't accept more risk than you can handle. Keep it simple, fancy stuff like 'collars' might leave you with an empty bag. Use a lot of TIPS for most of your inflation protection. TIPS are a multipurpose tool that will cover inflation and deflation risks. The inflation coverage is obvious, the deflation coverage is government backed money that is easily accessible. As prices deflate, the time to buy will arrive, and having something to buy with is a very good thing, and that is what government bonds will do. A smaller portion of your portfolio should be invested in US and foreign equity securities. This part of your portfolio is for growth potential and inflation protection. You have stocks to cover you if the collapse turns out to be a minor pinprick and stocks go on to decent average returns. You have bonds to cover you if the stock collapse is a bursting bubble. Modern Portfolio Theory. Both asset classes will have returns, possibly lower than expected, but eventually will show positive returns.

Subject: Re: Index put options From: johnny5 To: David E.. Date Posted: Tues, Mar 22, 2005 at 04:10:50 (EST) Email Address: johnny5@yahoo.com Message: Lets assume 70%bonds/30%stocks MPT applied to an english investor in the south seas bubble, or an Irish investor during tulip mania? A Japanese investor in 1989 buying domestic stocks and bonds or MPT applied to an american investor 1929 buying domestic stocks and bonds would have given them what kind of returns for the next 10-20 years? I honestly do not know the answer, would they have been OK? How about 70B/30S MPT for an argentinian investor recently or say a thai investor during their 97 financial crisis - would these groups have survived their respective problems being invested 70/30 domestic bonds/stocks with only 20 years time frame to recover? What about a german investor 70/30 during the hyperinflation of the weimer republic - would he have done OK? If so, then I will have to concur with David E, if not - what other investments could these people have made to protect their wealth from these problems that wiped out a lot of people and there was not enough time to recover such a drastic loss? About the PPT, there was speculation on some of the diehard boards about these caribbean magic money guys. http://www.321gold.com/editorials/orlandini/orlandini032105.html ...I know we're closer to the end of the game than we are to the beginning due to the size and frequency of the lies being generated by the Bush regime. This last week, the markets rallied when it was announced that foreign governments had once again returned to the bond pits and were buying US debt at close to a record pace. Bonds, the dollar, and the stock market all rallied on the great news. A closer look at the numbers reveals a different reality. It seems that something called 'Caribbean Money Centers' accounted for more than $23 billion worth of these purchases. Having lived most of my life in Latin America, and being quite familiar with the Caribbean, I'm here to tell you that you should not use the phrase 'money center' in the same sentence with the word 'Caribbean.' To put this in its proper perspective, Enron was a product of Caribbean money center manipulation and we all know how that turned out. The U.S. economy is just a larger Enron. David in the past we had economic hit men to manipulate things to the US advantage - we don't seem to have that same power anymore, our ability to manipulate the markets seems to be waning - it will go on until it can't. If we can't convince chavez and putin to take US green paper for oil and more follow their lead, the game is up.

Subject: Re: Index put options From: David E.. To: johnny5 Date Posted: Tues, Mar 22, 2005 at 15:47:33 (EST) Email Address: Not Provided Message: The 1929 scenario is a good one. Breaking even took 25 years with a 100% stock portfolio. I agree stock prices are high & the risk of decline is high. You should set your portfolio stock allocation at the place where the risk of losing say 75% of your stock investment is balanced with the fear that you might miss out on further gains in stock prices. For me, that point is 30% stocks. Remember that success is not necessarily measured by keeping 100% of your portfolio in a 1929 level event. You could be delighted with only a 30% loss. The majority of folks will experience 70% losses and greater. Don't use a tapemeasure created during the greatest economic boom our country has seen.

Subject: Excellent Thoughts From: Terri To: David E.. Date Posted: Tues, Mar 22, 2005 at 17:36:07 (EST) Email Address: Not Provided Message: Excellent thoughts.

Subject: Thinking & Knowing From: Pete Weis To: David E.. Date Posted: Mon, Mar 21, 2005 at 22:26:45 (EST) Email Address: Not Provided Message: 'investing is buying stuff that you know will appreciate' I've only ever been able to find stuff I think will appreciate. Where is this stuff which we 'know' will appreciate. For instance if I buy TIPs which yield 5-6% and the dollar drops 10% or more against a basket of currencies and 20% or more in a year against a commodity index, have I lost money or made money? Sorry David, but I couldn't resist.

Subject: Re: Thinking & Knowing From: David E.. To: Pete Weis Date Posted: Tues, Mar 22, 2005 at 02:36:01 (EST) Email Address: Not Provided Message: No worries, it depends on your time scale. Over 20 plus years I hope this will all work out. I hope my point was clear though, that buying insurance is not investing, just another expense to subtract from possibly meager returns.

Subject: Re: Thinking & Knowing From: Pete Weis To: David E.. Date Posted: Tues, Mar 22, 2005 at 09:45:44 (EST) Email Address: Not Provided Message: 'buying insurance is not investing, just another expense to subtract from possibly meager returns.' I think Charles Munger would probably agree with you.

Subject: How do you defend the dollar? From: johnny5 To: David E.. Date Posted: Tues, Mar 22, 2005 at 04:42:52 (EST) Email Address: johnny5@yahoo.com Message: Now what makes the dollar have value and be demanded David? 1) Commodities - especially oil trade in it, well that is changing, Putin, Chavez, the middle east, others are deciding to stop trading certain things in the US dollar and go to other currencies - bad for the dollar demand. 2) Taxes - Investors could count on the US gubbment to increasingly tax the US citizens to pay for the debt - well that is changing too - tax cuts to the rich that can most afford it, working class already taxed out and going to get reduced entitlements for more taxes - taxes cannot expand to infinity in this most wealthiest of nations (before our debt problems and consumption binge) - so dollar demand SHOULD decline because of that - but I do not think investor sentiment has priced this in. 3) Asian diversification: They are buying hard assets with their US dollar - IBM, Noranda etc - they want GOODS and resources, not dollars. 4) monetary inflation: http://www.321gold.com/editorials/orlandini/orlandini032105.html What the chart doesn't show is that during his tenure, Mr. Greenspan has printed more dollars than all the other Federal Reserve Chairmen put together. It also doesn't quite capture the fact that the monetary growth seems to be gathering speed. For the week ending March 7, 2005, the M-3 increased another $31.5 billion and that's more than $160 billion since the last week in January. If this pace continues, we are on the road to a staggering trillion dollars plus growth in the money supply for 2005. Impressive to say the least! This German-like solution to America's economic woes has brought about more than its share of unintended consequences including but not limited to a series of bubbles that cross the American landscape. The bond, stock, commodity, and real estate bubbles are just a few that come to mind. You blow bubbles in order to maintain the illusion of prosperity and the problem is, once you begin to inflate, it's almost impossible to stop. The distortions that are normally relieved by natural corrections don't occur and pressure builds. Sooner or later holes begin to appear in the economic dike and the only solution left is to print more and more money at a faster rate. I might add that it's a self-defeating solution to an age old problem and it is also the Achilles heel to any paper currency regime. Your money is just paper. Paper has little value and it's easy to obtain unlike gold or silver which have to be located and excavated at great economic cost, not to mention human sacrifice. The printing press is the panacea (always loved that word) that all governments and politicians eventually turn to in order to maintain power. The implementation of paper money almost always begins with fiscal responsibility and good intentions, and it almost always ends in war and the collapse of social order. The United States is somewhat closer to the latter at this point in time. War is what you turn to when all else fails and you need to unify the people and justify further expenditures in an all out effort to stave off the dogs of Depression. A depression that would have been nothing more than a normal recession if things had been allowed to run its natural course. Unfortunately, in an instant gratification society, no politician can stay in power exercising fiscal responsibility if the cost is a recession. Sacrifice someone else's tomorrow so I can have a good today, thank you very much. That mentality is what gets you wars in Iraq and Afghanistan, record trade and current account deficits, a non-existent manufacturing base, a dollar that purchases less in real terms every day, and a man like George Bush as your president. 5) Assets: What does america make anymore, GM is down, US schools and colleges aren't getting the foreign students they used too so we aren't turning out the science liek we used too - they just cut the NSF and NASA budgets by a lot - so manufacturing and education are better elsewhere, we still grow food and have a lot of land, but most of the stuff I see in publix is imported fruits and vegetables, florida farmers can't compete with the boys from brazil. 6) US military - we all must pay for the police to keep our society safe - but what if that policeman goes bad and instead of keeping order in your city or world, becomes the very theiving thug he was hired to protect you from? I think most of the world does not wish to fund american military expansion anymore and how much more debt can we go into so that we can fund it? The 'world police' don't do much for the little guys in poor countries if oil or commodities aren't involved - hmm I wonder why? http://www.321gold.com/editorials/orlandini/orlandini032105.html US$ - Along with bonds, I can't think of a worse long term investment. A long time ago, one of my clients asked me to define a 'dollar.' The normal text book definition is that it's a store of wealth, but I came up with something a bit different. A dollar is nothing more and nothing less than debt. There can be no other explanation. As debt, and due to the fact that the Fed is printing more and more debt with no consideration as to the consequences, I believe that holding dollars is the single worst long term investment you can make today. Below we have a one-year chart of the dollar and it's not such a pretty picture: We can clearly see that the trend is down and the US$ Index is currently trading at 82.10, just two point off the twenty year low of 80.00. The dollar peaked back in 2001 at just over 121.00 and has down nothing but fall since then with occasional rallies that always seem to die off when they touch the 14-month moving average. I have been short the US$ Index for almost all of that decline and I have been long the Swiss Franc for all of it. I see no reason to change. Once the dollar index declines below 80.00, I suspect the game will be over and the real selling will accelerate as everyone comes to the conclusion that the jig is up. Above we see a series of trading ranges that go back nine months. The question now becomes: will the bottom band of the present range hold? No one knows the answer and it may very well hold for now, but sooner or later, the dam will burst. Warren Buffet said there is no more good deals in the USA, there is no more value to buy, and to him I believe value is future earnings and income - I am reading the inability of companies to sustain current HUGE earnings - so warren must feel after this one time shot, future earnings and income are going to be very very poor for a long time coming, I agree. He is shorting the US dollar or seriously diversifying out of our currency - the MAIN question to ponder then is well if the US dollar is so bad - are the other currencies and thier same domestic problems so much better? Mises had a lot to say about this - he said NO - when the reserve currency and all the little currencies start competing for demand - inflation will wipe them all out in the end and they will ALL lose a lot of value next to commodities. He believed gold was the best brakes for this wild craziness - but I think oil is the best underpin - not gold. I can't eat gold, but oil makes cheap food the saving grace of billions.

Subject: Re: How do you defend the dollar? From: David E.. To: johnny5 Date Posted: Tues, Mar 22, 2005 at 15:22:52 (EST) Email Address: Not Provided Message: Short duration allows you to liquidate quickly and economicall so a person can move into rapidly developing opportunities. That is why my foreign equity is greater than US equity.

Subject: A New Deal Legacy From: Emma To: All Date Posted: Mon, Mar 21, 2005 at 08:41:24 (EST) Email Address: Not Provided Message: There is considerable danger that the Social Security debate, which is critical, will mask the pronounced deterioration of Medicare's resources is proposed and provisionally passed tax cuts come to being. There seems to be a determination in Congress that either Social Security or Medicare or Medicaid must be severely limited. There is no reason for such limitations other than a wish to set aside the legacy of the New Deal, a legacy of all social benefit programs that have assured middle class America.

Subject: Re: A New Deal Legacy From: magistre To: Emma Date Posted: Mon, Mar 21, 2005 at 18:12:43 (EST) Email Address: magistre@mail2blues.com Message: There is considerable danger that the Social Security debate, which is critical, will mask the pronounced deterioration of Medicare's resources is proposed and provisionally passed tax cuts come to being. There seems to be a determination in Congress that either Social Security or Medicare or Medicaid must be severely limited. There is no reason for such limitations other than a wish to set aside the legacy of the New Deal, a legacy of all social benefit programs that have assured middle class America. --- The whole debate covers-up the real problem: The 'raiding' of the trust-fund by Congress. You want to solve the problem make it secure,keep the funds in the trust-fund and deposit the surplus into interest bearing savings accounts where it can draw interest.

Subject: Failure of new deal promise by Krugman From: johnny5 To: Emma Date Posted: Mon, Mar 21, 2005 at 09:42:34 (EST) Email Address: johnny5@yahoo.com Message: The new deal looks to be dying - according to krugman technology killed it. Turn off your computer and start writing more paper letters. That will give postmen and lumberjacks more work. http://www.pkarchive.org/global/EuropeJobless.html ...The failure of that promise may be summarized by two words: jobs and wages. For a generation after World War II, the economies of the West offered both--that is, there were jobs for the great bulk of those who wanted them, and those jobs paid wages whose purchasing power rose steadily for just about everyone. Since the early 1970s, however, the economies of North America and Western Europe have not delivered that kind of broad prosperity.(1) In the United States, the problem is essentially one of wages: Most people who seek jobs still get them, but an increasing fraction of our workers receive wages that both they and the rest of us regard as poverty-level. In Europe, wages at the bottom have declined less, but in their place long-term unemployment has consistently risen. On both sides of the Atlantic, there is now a growing sense that many people are in effect economically disenfranchised, shut out of the prosperity that one might expect in what are still wealthy societies. Ironically, the rise of poverty and unemployment in the Western world over the last 20 years has taken place in a time of spectacular technological progress. That progress has not quite resulted in the productivity growth that one might have expected, yet the economies of the advanced countries are by any measure substantially richer and more productive than they were in 1970. The economic troubles of the West therefore present a paradox of growing misery in the face of growing wealth. What is the source of the paradox? Here is a simple hypothesis: Modern technology in effect mandates much wider disparities in earnings among workers than we have experienced in the past. In the United States, where markets are left relatively untrammeled by concerns about justice or fairness, the result has been a startling polarization of the earnings distribution. In Europe, where collective bargaining and the much heavier hand of the welfare state have limited income inequality, the same forces have manifested themselves instead in growing unemployment. ...In 1970, few doubted that this picture of economic progress would continue. Critics of modern capitalism, like economist John Kenneth Galbraith, argued that Western prosperity was hollow or misguided, that it led to meaningless jobs and pointless mass consumption, but they rarely questioned the system's ability to continue creating jobs and raising real wages. Even the persistent poverty problem in the United States seemed to have more o do with social dysfunction than with economics per se. It would have been a great surprise to almost everyone to learn how badly things would go. In particular, few would have foreseen the picture we now face: ....So where is the crisis? The answer is that it is in society and ultimately in politics. On both sides of the Atlantic, economic forces are more and more tending to split society in two: into those who have good jobs and whose standards of living continue to rise and those who are faced either with falling incomes or the prospect of a more or less permanent life on the dole. Even an economist can see that such a split demoralizes those on the bottom and coarsens those on the top. The ultimate effect of growing economic disparities on our social and political health may be hard to predict, but it is unlikely to be pleasant.

Subject: Re: Failure of new deal promise by Krugman From: johnny5 To: johnny5 Date Posted: Mon, Mar 21, 2005 at 09:55:22 (EST) Email Address: johnny5@yahoo.com Message: Screw the little guy, let all us richies get richer! THE SOCIAL FACTOR Let me make a shocking declaration given my profession: The essential reason for caring about the disturbing trends in Europe and America is social, rather than strictly economic. Consider the position of someone in, say, the top fifth of the income distribution in either the United States or Europe--a description that surely applies to most readers of this article. Does the growth in poverty in America or of mass unemployment constitute any direct threat to the living standards of that individual? The answer in the United States is a clear no: There is no strictly economic reason why we cannot continue to have a growing economy even while a substantial fraction of the population is experiencing declining standards of living. Economic theory suggests no particular connection between equity or justice and growth, and no evidence exists that income inequality has any large effects on the rate of economic growth, positive or negative.

Subject: Re: Failure of new deal promise by Krugman From: Pete Weis To: johnny5 Date Posted: Mon, Mar 21, 2005 at 22:37:53 (EST) Email Address: Not Provided Message: What is the date of this piece?

Subject: Re: Failure of new deal promise by Krugman From: johnny5 To: Pete Weis Date Posted: Tues, Mar 22, 2005 at 03:00:38 (EST) Email Address: johnny5@yahoo.com Message: http://www.pkarchive.org/global/EuropeJobless.html Summer of 1994, certainly much truer now the deficits and entitlement cuts than the good times back then.

Subject: Krugmans Ice Age From: johnny5 To: All Date Posted: Mon, Mar 21, 2005 at 07:47:26 (EST) Email Address: johnny5@yahoo.com Message: http://www.pkarchive.org/theory/iceage.html The more I look at the amazing rise of the U.S. stock market, the more I become convinced that we are looking at a mammoth psychological problem. I don't mean mammoth as in 'huge' (though maybe that too), but as in 'elephant'. Let me explain. If you follow trends in psychology, you know that Freud is out and Darwin is in. The basic idea of 'evolutionary psych' is that our brains are exquisitely designed to help us cope with our environment - but unfortunately, the environment they are designed for is the one we evolved and lived in for the past two million years, not the alleged civilization we created just a couple of centuries ago. We are, all of us, hunter-gatherers lost in the big city. And therein, say the theorists, lie the roots of many of our bad habits. Our craving for sweets evolved in a world without ice-cream; our interest in gossip evolved in a world without tabloids; our emotional response to music evolved in a world without Celine Dion. And we have investment instincts designed for hunting mammoths, not capital gains. Imagine the situation back in what ev-psych types call the Ancestral Adaptive Environment. Suppose that two tribes - the Clan of the Cave Bear and its neighbor, the Clan of the Cave Bull - live in close proximity, but traditionally follow different hunting strategies. The Cave Bears tend to hunt rabbits - a safe strategy, since you can pretty sure of finding a rabbit every day, but one with a limited upside, since a rabbit is only a rabbit. The Cave Bulls, on the other hand, go after mammoths - risky, since you never know when or if you'll find one, but potentially very rewarding, since mammoths are, well, mammoth. Now suppose that it turns out that for the past year or two the Cave Bulls have been doing very well - making a killing practically every week. After this has gone on for a while, the natural instinct of the Cave Bears is to feel jealous, and to try to share in the good fortune by starting to act like Cave Bulls themselves. The reason this is a natural instinct, of course, is that in the ancestral environment it was entirely appropriate. The kinds of events that would produce a good run of mammoths - favorable weather producing a good crop of grass, migration patterns bringing large numbers of beasts into the district - tended to be persistent, so it was a good idea to emulate whatever strategy had worked in the recent past. But now transplant our tribes into the world of modern finance, and - at least according to finance theory - those instincts aren't appropriate at all. Efficient markets theory tells us that all the available information about a company is supposed to be already built into its current price, so that any future movement is inherently unpredictable - a random walk. In particular, the fact that people have made big capital gains in the past gives you absolutely no reason to think they will in the future. Rational investors, according to the theory, should treat bygones as bygones: if last year your neighbor made a lot of money in stocks while you unfortunately stayed in cash, that's no reason to get into stocks now. But suppose that, for whatever reason, the market goes up month after month; your MBA-honed intellect may say 'Gosh, those P/Es look pretty unreasonable', but your prehistoric programming is shrieking 'Me want mammoth meat!' - and those instincts are hard to deny. And those instincts can be self-reinforcing, at least for a while. After all, whereas an increase in the number of people acting like Cave Bulls tended to mean fewer mammoths per hunter, an increase in the number of modern bulls tends to produce even bigger capital gains - as long as the run lasts. Any broker can tell you that in the last few months the market has been rising, despite mediocre earnings news, because of fresh purchases by ever more people distraught about having missed out on previous gains and desperate to get in on the action. Sooner or later the supply of such people will run out; then what? OK, OK, I know that this isn't supposed to happen. Sophisticated investors are supposed to take the long view, and arbitrage away these boom-bust cycles. And maybe, just maybe, the market is where it is because wise and far-seeing people have understood that the New Economy can produce growing profits forever, and that the rise of mutual funds has eliminated the need for old-fashioned risk premia. But my sense is that people who try to take a long view have been driven to the edge of extinction by the sheer scale of recent gains, and that the supposed explanations you now hear of why current prices make sense are rationalizations rather than serious theories. The whole situation gives me the chills. It could be that I just don't get it, that I'm a Neanderthal too thick-skulled to understand the new era. But if you ask me, I'd say that there's an Ice Age just over the horizon.

Subject: Re: Krugmans Ice Age From: Terri To: johnny5 Date Posted: Mon, Mar 21, 2005 at 08:33:03 (EST) Email Address: Not Provided Message: These are excellent posts. Keep track of the dates of writing for conditions continually change and Paul Krugman is generally responding to the times. But, the lessons should serve us now and in future.

Subject: Krugmans Monetary Fable From: johnny5 To: johnny5 Date Posted: Mon, Mar 21, 2005 at 07:53:05 (EST) Email Address: johnny5@yahoo.com Message: This does not apply to the USA and our dollar or does it? http://www.pkarchive.org/theory/coyle.html ...Another possible answer was to reimpose exchange controls, so as to limit the vulnerability of economies to speculative attack. The reasons for avoiding such controls were as strong as ever; but countries that had maintained controls on capital movement had been noticeably less savaged by crisis than those that had not. Perhaps, in an imperfect world, the costs of controls were a price worth paying. The worst thing to do, of course, was to put off making a choice: to try to defend a currency of suspect credibility with high interest rates, producing a recession and budget crisis that inevitably led investors to worry - despite all denials by the government - that capital controls might be the next step. And yet of course, politics and human nature being what they are, that is what most countries did when the crises came. (Less forgivably, it is also what the GMF, time and again, advised them to do). And so the world lurched from crisis to crisis; and they all lived unhappily ever after.

Subject: The fall of the baby sitting co-op From: johnny5 To: All Date Posted: Mon, Mar 21, 2005 at 07:39:09 (EST) Email Address: johnny5@yahoo.com Message: Too many coupons Terri, As posted by krugman: http://www.pkarchive.org/theory/BabySittingCantAvoidRecessions.html Once there were too many coupons in circulation, people became eager to go out, but it became hard to find baby sitters; as people realized that coupons often could not be used, they became even less willing to baby-sit in order to earn them. What does all this have to do with the business cycle? the baby-sitting co-op was, in effect, a miniature macroeconomy; its problems were simplified versions of the problems faced by the U.S. economy as a whole. In particular, the downward spiral the co-op experienced when there were too few coupons in circulation was a recession -- no more, no less. when America as a whole experiences a slump, the details are more complex, but the principle is the same. And Federal Reserve Chairman Alan Greenspan is simply the man who controls the number of coupons, otherwise known as the money supply. And here is the crucial point: the managers of the co-op almost never got it right. They did experience a brief 'golden age' when the supply of coupons was neither too large nor too small; but that was luck, not skill, and it didn't last. And if the people trying to manage such a tiny, simple, relatively unchanging economy could not get it right, how can we possibly imagine that the task of keeping that vast, complex, ever-changing organism we call the American economy growing smoothly will be any easier? The job can be done well or badly -- and so far Greenspan has done it pretty well -- but no mere mortal can do it perfectly. So here is an ironclad forecast: There will be more recessions in the future. Making that forecast isn't hard. In fact, it's childishly simple. Originally published, 1.30.97

Subject: No middle ground, soaring inflation, huge deflatio From: johnny5 To: All Date Posted: Mon, Mar 21, 2005 at 07:03:43 (EST) Email Address: johnny5@yahoo.com Message: http://www.pkarchive.org/japan/nomiddle.html Rumors suggest that the Bank of Japan may actually be considering adopting some form of inflation targeting, with a positive upper bound. This is good news, because it means that the Japanese are finally starting to understand the nature of their situation. But do they still get it? I am not sure, because the numbers being floated are almost surely too low. And in that case perhaps they still don't get it - because the basic logic of a liquidity trap says that the choice facing a country in such a trap is between a significant positive rate of inflation and grinding deflation. There is no middle ground. ...The point is simple, but apparently hard to grasp. Suppose that the equilibrium real interest rate - the rate at which savings and investment, including net foreign investment, would be equal at full employment - is negative. (As I have tried to explain, in Japan: still trapped , that is what a liquidity trap is all about). And suppose also that prices do not fall quickly in the face of unemployment. Then if the expected inflation rate is too small to allow a low enough real interest rate - if, for example, the economy 'needs' a minus 3 real interest rate, and expected inflation is only 1 percent - the actual result will be an underemployed economy, and hence continuing slow deflation.

Subject: Money and bonds both going down? From: johnny5 To: johnny5 Date Posted: Mon, Mar 21, 2005 at 07:12:28 (EST) Email Address: johnny5@yahoo.com Message: http://www.pkarchive.org/theory/thinking.html Literally from the beginning of IS-LM analysis, however, Hicks realized that monetary policy might in principle be ineffective under 'depression' conditions. The reason is that the nominal interest rate cannot be negative - otherwise, cash would dominate bonds as an asset. So at an interest rate near zero the demand for money must become more or less infinitely elastic, implying that the leftmost parts of the LM curve must actually be flat. And suppose that the IS curve happens to intersect LM in that flat region, as it does in Figure 1 . Then changes in the money supply, which move LM back and forth, will have no effect on interest rates or output; monetary policy will be ineffective. An alternative way to state this possibility is to say that if the interest rate is zero, bonds and money become in effect equivalent assets; so conventional monetary policy, in which money is swapped for bonds via an open-market operation, changes nothing. But if the moneys value is going down, and money and bonds are identical - where do you invest? Am I confused again?

Subject: Re: Money and bonds both going down? From: johnny5 To: johnny5 Date Posted: Mon, Mar 21, 2005 at 07:18:18 (EST) Email Address: johnny5@yahoo.com Message: Krugman continues: I think that it is fair to say that for around two generations - from the point at which it became clear that the 1930s were not about to reemerge, to the belated realization circa 1997 that Japan really was back in a 30s-type monetary environment - nobody thought much about the deeper logic of the liquidity trap. But once it became clear that the Bank of Japan really did consider itself unable to increase demand in an economy that badly needed it, it also became clear (to me at least) that the theory of the liquidity trap needed a fresh, hard look. I started with a preconception: that the idea of the liquidity trap was basically a red herring, that surely a determined central bank could always reflate the economy. Partly this preconception represented wishful thinking: having engaged in sometimes bitter arguments with 'vulgar Keynesians' (e.g. the journalist William Greider (1997)) who believed that spending is always good and saving always bad, I was reluctant to concede that there might be circumstances under which they were right. But it also reflected my intuition - which turned out to be wrong - that the apparent possibility of such a trap in the IS-LM model was an artifact of that model’s intellectual corner-cutting.

Subject: Krugman on Crises & Multiple equilibria From: johnny5 To: All Date Posted: Mon, Mar 21, 2005 at 06:34:42 (EST) Email Address: johnny5@yahoo.com Message: Some claim China was spared the asian financial crises because their currency was not open to speculation. http://www.pkarchive.org/crises/crises.html ... 'but Soros and others correctly suspected that when push came to shove the british government would choose employment over the exchange rate. In order to have prevented such an attack, the British government would have had to change not its policies, but its preferences.' Now what is Bush going to do, save the dollar or save jobs? To save jobs, the dollar must take a DRASTIC fall even from this point no? Chinese workers get 60 US cents an hour compared to our 10 US dollars per hour? How far would the US dollar have to fall to get us competitive again and stop the bleeding of jobs? GM just announced a lot of cuts. Krugman goes on to say... http://www.pkarchive.org/crises/OilNonCrisis.html Oilrich countries found it hard to spend the new wealth generated by high prices, so they attempted to save for the future-believing wrongly that the best way to do that was to leave the oil in the ground. The initial result was that higher oil prices reduced supply and drove prices still higher-but eventually it became clear that oil in the ground wasn't that good an investment after all, and the bubble burst. --so if this is true - then drilling ANWR is good?, it is not an investment for the future to leave it alone?!? krugman continues: ...So what's the right story? Nobody knows-and we're not likely to find out. You see, when oil prices dropped after 1985, interest fell off. Grants to study the economics of energy dried up; ambitious economists shifted to other topics. Never mind that the rise and fall of oil prices was one of the most spectacular and puzzling events in economic history; as soon as oil was cheap again, the subject was dropped. And that is a shame. History is the main laboratory for economic theory; a theory of markets that can't explain the energy crisis is probably not much good for anything else. Moreover, as the saying goes, history may not repeat itself, but it does rhyme. Anyone who thought that the banking crises and liquidity traps of the 1930s carried no lessons for the modern world has had a rude awakening in the past year and a half, as Asia has experienced a minor-key replay of the Great Depression. Wanna bet that one of these days the energy crisis will seem equally relevant? http://www.pkarchive.org/crises/opec.html ....For example, one might well believe that the discount rate is lower when countries are cash-abundant, and that this makes the future penalty for cheating that raises current income but risks the eventual collapse of the high-price regime loom larger. ...There is another parallel with the energy crisis: now that the Asian crisis is past, people are quickly losing interest in it. It should, I believe, be viewed as an object lesson both in the importance of multiple-equilibrium stories in economics and in the potential instability of markets. But the profession is quickly turning aside to other questions, and reinterpreting the crisis – if we think about it at all – in more comfortable, less scary terms. I guess crucial puzzles in economics never get resolved; they just fade away. --- Now in the simplistic economic classes I took, the supply demand curves didn't have 3 equilibrium points like krugman presents here for oil - suppose there are multiple equilibria for oil, homes, and interest rates in relation to inflation concerns?

Subject: Thinking of a Dollar Problem From: Terri To: All Date Posted: Mon, Mar 21, 2005 at 06:20:20 (EST) Email Address: Not Provided Message: Suppose the dollar were to decline rapidly. The most worrisome resulting problem I can think would be a rise in interest rates as international investors or central banks bought little American debt. The Federal Reserve could quickly begin to lower interest rates, but there might be a worry about resulting inflation.

Subject: Monetary Policy and Multiple Equilibria From: johnny5 To: Terri Date Posted: Mon, Mar 21, 2005 at 06:42:36 (EST) Email Address: johnny5@yahoo.com Message: These 'economic puzzles' that krugmans brings to light confuses me, http://www.econ.duke.edu/~uribe/bsu.pdf Here is a paper on monetary policy and multiple equilibria - I am going to read it and see if I can try to get my head around some of these puzzles like krugman instructs - can any of you help me to understand these 'wierd' supply/demand curves? Have these 'puzzles' been unraveled since 99 when krugman shined the light on them? - am I not understanding again?

Subject: Re: Monetary Policy and Multiple Equilibria From: Terri To: johnny5 Date Posted: Mon, Mar 21, 2005 at 07:28:30 (EST) Email Address: Not Provided Message: I will explain during the day, as best I can.

Subject: Social Security as Dramamine From: Terri To: All Date Posted: Mon, Mar 21, 2005 at 05:54:53 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/03/20/business/yourmoney/20view.html? March 20, 2005 Social Security as Dramamine By DANIEL GROSS JUDGING by the polls, President Bush's plan to transform Social Security from an insurance program that guarantees a minimum income into something more closely resembling a 401(k) investment program isn't going very well. A poll published by The New York Times on Wednesday showed that only 30 percent of Americans approved of the way Mr. Bush was handling Social Security. Partisan politics are doubtless at work. But economics could help explain the public's reluctance, too. Volatility - the degree to which the value of an asset deviates above or below the general trend - is a concept with which investors are familiar. Some stocks can prove more risky - or more rewarding - than others because they rise or fall by a greater degree than the market as a whole, while others tend to track the overall market's performance closely. But the concept of volatility is less well understood when it comes to income. As we learn more about income volatility in the information age, some scholars say, Social Security - an insurance program designed for the industrial age - may be even more essential. Income volatility has long been a hallmark of the American economy. Compared with those of workers in other developed countries, the earnings of Americans tend to bounce around drastically from year to year. And that's not necessarily bad. 'People don't realize that income volatility and income mobility are the same thing,' said Peter Gottschalk, professor of economics at Boston College and a pioneer in the study of income volatility. People who start out at the bottom of the income ladder frequently wind up at a higher rung. Conversely, just because you earn $300,000 this year doesn't mean you'll be making that much 10 years from now. The economist Joseph A. Schumpeter, who coined the term 'creative destruction,' described the upper strata of society as a hotel in which the guests are always changing. Income volatility is the mechanism through which guests check in and check out. After mining data from the Panel Study of Income and Dynamics, a database produced by the University of Michigan that tracks the incomes of the same families over a 40-year period, scholars have concluded that incomes are much less stable - i.e., much more volatile - today than they have been in the past. 'There has unequivocally been general upward-trend income volatility since at least 1975,' said Bruce A. Moffitt, the Krieger-Eisenhower professor of economics at Johns Hopkins University, who, with Professor Gottschalk, wrote one of the first papers on income volatility in the 1990's. 'It accelerated in the 1980's, turned down in the early 1990's, and then accelerated into the end of the 1990's.' According to a measure of volatility constructed by Jacob S. Hacker, a Yale political scientist, which tracks the five-year moving average of family incomes, income volatility rose 88 percent between 1978 and 2000. 'The problem in the past few decades,' Professor Moffitt said, 'is that volatility has risen while real incomes haven't risen.' What's more, income volatility has grown significantly for those who can afford it least. A series of articles last year in The Los Angeles Times, written by Peter G. Gosselin, who worked closely with Professor Moffitt and other scholars, reported that in the 1970's, income for middle-class Americans tended to fluctuate by 16 percent a year. But in the 1980's and 1990's, middle-class incomes fluctuated an average of 30 percent. For those whose earnings placed them in the bottom fifth, income volatility rose from 25 percent in the early 1970's to 50 percent in recent years. Because of other longstanding trends in the economy, strong income volatility can wreak greater havoc now than it did in the past. 'The old view among economists was that income volatility didn't affect consumption much,' said Raj Chetty, an economist at the University of California, Berkeley. It was generally thought that when families' incomes fell sharply and unexpectedly, they would borrow, tap into savings or send a second adult (frequently a mother) into the work force rather than sharply reduce consumption. But, Professor Chetty said, 'that no longer seems to be the case today.' Why? Many families already rely on two incomes. What's more, fixed commitments have risen as a percentage of total income. In her book, 'The Two-Income Trap,' Elizabeth Warren, a bankruptcy specialist at the Harvard Law School, found that the typical American household in the early 1970's spent about 54 percent of its income on big fixed expenses - home mortgage, health insurance, car, child care - with the rest left over for discretionary spending. By the early part of this decade, however, the typical family was spending 75 percent of its income on these large fixed costs. 'They're spending much more of their income on things that can't be cut back quickly,' said Professor Warren. 'If you lose income suddenly, you can't decide to sell off one bedroom or decide to cover only half of your family' with insurance. THE factors that functioned as internal shock absorbers for families have weakened. And so, too, have external buffers. Over the last three decades, the percentage of workers covered by defined-benefit pension plans and employer-provided health insurance - guarantees that provide ballast for fluctuating incomes - has declined. Add this to the trend of rising volatility - especially for people in the lower and middle income levels - and it's easy to understand the reluctance to transform a government program that guarantees seniors an income. 'Social Security provides a vital kind of insurance,' Professor Hacker said. 'The real issue lurking behind this debate is whether we should have a program that provides the bedrock protection against economic risk.'

Subject: Paul Krugman on Present Cost From: Terri To: All Date Posted: Mon, Mar 21, 2005 at 05:44:03 (EST) Email Address: Not Provided Message: http://delong.typepad.com/sdj/2005/03/paul_krugman_on.html#comments March 20, 2005 Paul Krugman on the '$600 Billion a Year' Number Paul Krugman tries his hand at showing what's wrong with the Bush-Lieberman 'waiting a year to fix Social Security costs $600 billion' number: Bruce Willis, Asteroids, and Unfunded Liabilities Sometimes you really have to wonder. It should be obvious that the Social Security Administration’s estimate of the growth of unfunded liabilities says nothing – nothing at all – about the cost of delaying a “fix”, whatever that might mean. But it seems that even many economists – to say nothing of Joe Lieberman – don’t get it. So here’s an example, to illustrate the point. Suppose that an asteroid is bearing down on our planet. If nothing is done, it will strike in 2019, inflicting $20 trillion in losses. At a nominal interest rate of 5 percent, that’s a present value of $10 trillion. If we do nothing about the asteroid, by next year the present value of the future losses from the asteroid strike will be $10.5 trillion. So the “unfunded liability” from the asteroid strike rises by $500 billion a year. Suppose that there is a way to fix the problem: we can send Bruce Willis into space to blow up the asteroid. So here’s the question: if we wait a year to send Bruce Willis into space, does that cost $500 billion? Of course not: it could cost either more or less. If waiting a year means that we’ve lost our last chance to stop the asteroid, it costs $10 trillion – the full present value of the avoidable losses the asteroid would inflict. On the other hand, if Bruce Willis can still blow up the asteroid next year (or any year before 2019), there is no cost at all to waiting. In fact, if waiting increases the Willis expedition’s chances of success, there’s a benefit to delay. In other words, the $500 billion increase in the present value of the future costs from the asteroid says nothing about the costs of delaying action. All it says is that the future is getting closer. The same is true for Social Security. The future is getting closer, so the unfunded liabilities of Social Security are rising in present value (though not as a percentage of GDP). This says nothing at all about the cost of delaying a “fix.” Those costs, if there are any, depend on the nature of the fix. And it’s hard to see any costs of delaying the Bush version of a fix. After all, the problem is that in the absence of changes in the system, at some future date Social Security may have to pay reduced benefits. The only thing the Bush plan does to help the system’s finances is – guess what – reduce future benefits. Why does waiting a year to announce benefit cuts that won’t happen for several decades have any cost? One last point. Lieberman defends himself by saying that unfunded liabilities do too grow $600 billion a year. But that’s not what he said earlier: he said that each year we delay costs $600 billion, which isn’t at all the same thing. Paul is, of course, right. There is no real economic cost associated with delay by itself: the $600 billion per year number is just a standpoint-of-valuation and choice-of-units effect. There is a real economic cost associated with delay only if delay robs you of the opportunity to undertake the most efficient and effective Plan A and forces you to adopt an inferior Plan B for fixing the problem instead. That's not the case here.

Subject: Stock Market Valuation From: Terri To: All Date Posted: Sun, Mar 20, 2005 at 22:13:01 (EST) Email Address: Not Provided Message: Pete has been warning us to be careful about earnings news. Well, Pete was more right than I would have wished. I expect the true price earning ratio is above 20%, especially because we are not yet accounting for options fully. That will come after July.

Subject: Washington's Fiscal Meltdown From: Emma To: All Date Posted: Sun, Mar 20, 2005 at 20:54:07 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/03/20/opinion/20sun1.html?ex=1111467600&en=dea1dd27904b7958&ei=5070 Washington's Fiscal Meltdown Before leaving town for a two-week spring break, Congress indulged in its own form of March Madness. The Republican majority in the House and the Senate passed budget blueprints for 2006 that slash domestic spending by upwards of $150 billion over the next five years. Yet they still managed to increase the projected deficit by more than $125 billion over the same period (and by more than $1 trillion through 2015). How is it possible to produce that much red ink while slashing spending? Easy. Just cut revenue by giving huge tax cuts to - surprise, surprise - high earners and wealthy investors. The lawmakers will not make any final decisions until they cobble their separate proposals into one official budget later in the year, but the early signs are all bad - pointing to the least sensible tax cuts for the least needy recipients with no thought to the exploding deficit. Of all the favors they are determined to dispense, tax cutters in both the House and Senate are most intent on extending the special low tax rates for dividends and capital gains, through 2010. The preferential rates are not scheduled to expire until 2008, but lawmakers want to act now, apparently to spare their constituents worry about the future. And who are those fretful constituents? In 2005 alone, almost half of the tax savings from dividend and capital gains rate cuts will go to investors who make more than $1 million a year, the top 0.2 percent of the income ladder. Nearly three-quarters of the tax benefits will go to those making more than $200,000, about the top 3 percent. The cost to everyone else in the form of forgone revenue will be $23 billion. Also remarkable for their largess are two high-end tax breaks that would increase the amount well-heeled taxpayers would be allowed to write off for dependents and other expenses. They were enacted in 2001, but have been delayed. Now the budget proposals let them take effect. Once again, almost all of the tax savings would go to that lucky 3 percent of filers with incomes above $200,000. The lost revenue would amount to $95 billion over 10 years. In this particular piece of fiscal insanity, even the usual Republican argument - that letting a temporary tax break expire is the same thing as a tax increase - does not apply. These two changes have not even taken effect yet, so who would miss them if they never materialized? If you're President Bush, however, getting these two provisions is the tax policy equivalent of going all the way to Baghdad. The president's father originally allowed the deduction limitations on wealthy filers as part of the 1991 budget, the one that violated Bush père's 'no new taxes' pledge and, in so doing, helped to end his chances for re-election. The wealthy would also be on the receiving end of two new tax-sheltered savings plans favored by President Bush: the retirement savings account and the lifetime savings account. These were not embraced by name by the Congressional budget leaders. But Congress could easily include them in the final budget, since they will not start losing revenue - about $30 billion a year - until much later, when investors cash them in tax-free. The accounts would allow a couple to shelter $20,000 annually, as well as $5,000 for each of their children, on top of however much they may already be investing in other tax-favored plans. None of this will be any help to the vast majority of average Americans, who do not even take full advantage of current I.R.A.'s. And then there is the 11th-hour tax cut slipped into the Senate proposal. It would repeal an income tax on Social Security benefits that applies to the wealthiest 20 percent or so of beneficiaries and whose revenue is dedicated to the Medicare hospital trust fund. The repeal would accelerate the fund's projected insolvency by four years, to 2015 from 2019. Now there's a plan! Give the best-off elderly a tax break and put all of the elderly who may have to go into the hospital at greater financial risk. When you step back and look at it, the collective tax-cutting psyche of Mr. Bush and his partisans appears to border dangerously on the grandiose. How else to explain their relentless profligacy in the face of the unprecedented Bush-era swing from budget surplus to deficit, the unmistakable long-term trend of a rich-get-richer, poor-get-poorer income distribution, the ballooning costs of war, the weaker dollar, rising oil prices and record deficits in trade and investment - which now require the United States to borrow $2.1 billion a day from abroad? It's time for the people, the ultimate referees in a democracy, to call a timeout.

Subject: Leaning to Value From: Terri To: All Date Posted: Sun, Mar 20, 2005 at 20:26:57 (EST) Email Address: Not Provided Message: http://www.pbs.org/wsw/tvprogram/#retail Jeremy Siegel is teaching us, as we might have suspected that leaning to value stocks makes long run sense. This does not mean traditional value stocks only, but well priced growth stocks with stable earnings projections when they are indeed well priced. Though history does not repeat itself, the 1970s can be instructive. Investors who held value stocks or had income enough to buy well priced growth stocks after the bear market fared well through the difficult period.

Subject: Bond Funds Adjust From: Terri To: All Date Posted: Sun, Mar 20, 2005 at 19:55:40 (EST) Email Address: Not Provided Message: Should there should be either a decline in the international value of the dollar or an increase in domestic inflation. Interest rates would surely rise if inflation picked up and possibly rise if the dollar declined in value. What then happens to bond funds? As interest rates rise, the prices of bonds fall, so bond funds lose share value. However, as share value is lost the yield on a bond fund will increase. The extra yield will in time compensate for the lower share price. The time it takes to compensate will be a little less than the duration period for the fund. So, there might be a decline in the value of the dollar or even a pick up in inflation and a bear market in bonds. But, yields of bond funds adjust and in intermediate or short term duration bond funds an investor is reasonably protected. Investors in the Vanguard Long Term Investment Grade Bond Fund made money during the 1970s, though the dollar fell, there was rising inflation, and a bear market in bonds.

Subject: Toward a Unified Theory of Black America From: Emma To: All Date Posted: Sun, Mar 20, 2005 at 16:11:59 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/03/20/magazine/20HARVARD.html?pagewanted=all&position= Toward a Unified Theory of Black America By STEPHEN J. DUBNER Roland G. Fryer Jr. is 27 years old and he is an assistant professor of economics at Harvard and he is black. Yes, 27 is young to be any kind of professor anywhere. But after what might charitably be called a slow start in the scholarly life, Fryer has been in a big hurry to catch up. He was in fact only 25 when he went on the job market, gaining offers from -- well, just about everywhere. He abruptly ended his job search by accepting an invitation to join the Society of Fellows at Harvard, one of academia's most prestigious research posts. This meant he wouldn't be teaching anywhere for three years. The Harvard economics department told Fryer to take its offer anyway; he could have an office and defer his teaching obligation until the fellowship was done. Now that he is halfway through his fellowship, the quality and breadth of Fryer's research have surprised even his champions. ''As a pure technical economic theorist, he's of the first rate,'' says Lawrence Katz, a prominent labor economist at Harvard. ''But what's really incredible is that he's also much more of a broad social theorist -- talking to psychologists, sociologists, behavioral geneticists -- and the ideas he comes up with aren't the 'let's take the standard economic model and push a little harder' ideas. He makes you think of Nathan Glazer or William Julius Wilson, but with economic rigor.'' Henry Louis Gates Jr., the Harvard humanities scholar, says that Fryer is ''destined to be a star. I mean, he's a star already, just a baby star. I think he'll raise the analysis of the African-American experience to new levels of rigor and bring economics into the mainstream area of inquiry within the broader field of African-American studies.'' When he presents a paper, Fryer is earnest and genial and excitable, sometimes carrying on like a Southern preacher. While he denies that his work is united by a grand thesis -- he is a scientist, he explains, devoted to squeezing truths from the data, wherever that may lead -- he does admit to having a mission: ''I basically want to figure out where blacks went wrong. One could rattle off all the statistics about blacks not doing so well. You can look at the black-white differential in out-of-wedlock births or infant mortality or life expectancy. Blacks are the worst-performing ethnic group on SAT's. Blacks earn less than whites. They are still just not doing well, period.'' To Fryer, the language of economics, a field proud of its coldblooded rationalism, is ideally suited for otherwise volatile conversations. ''I want to have an honest discussion about race in a time and a place where I don't think we can,'' he says. ''Blacks and whites are both to blame. As soon as you say something like, 'Well, could the black-white test-score gap be genetics?' everybody gets tensed up. But why shouldn't that be on the table?'' Fryer said this several months ago, which was well before Lawrence H. Summers, the president of Harvard, wondered aloud if genetics might help explain why women are so underrepresented in the sciences. Summers -- who is also an economist and a fan of Fryer's work -- is still being punished for his musings. There is a key difference, of course: Summers is not a woman; Fryer is black. Fryer well appreciates that he can raise questions that most white scholars wouldn't dare. His collaborators, most of whom are white, appreciate this, too. ''Absolutely, there's an insulation effect,'' says the Harvard economist Edward L. Glaeser. ''There's no question that working with Roland is somewhat liberating.'' Glaeser and Fryer, along with David M. Cutler, another Harvard economist, are the authors of a paper that traffics in one form of genetic theorizing. It addresses the six-year disparity in life expectancy for blacks versus whites, arguing that much of the gap is due to a single factor: a higher rate of salt sensitivity among African-Americans, which leads to higher rates of cardiovascular disease, stroke and kidney disease. Fryer's notion that there might be a genetic predisposition at work was heightened when he came across a period illustration that seemed to show a slave trader in Africa licking the face of a prospective slave. The ocean voyage from Africa to America was so gruesome that as many as 15 percent of the Africans died en route, mainly from illnesses that led to dehydration. A person with a higher capacity for salt retention might also retain more water and thus increase his chance of surviving. So it may have been that a slave trader would try to select, with a lick to the cheek, the ''saltier'' Africans. Whether selected by the slavers or by nature, the Africans who did manage to survive the voyage -- and who then formed the gene pool of modern African-Americans -- may have been disproportionately marked by hypertension. Cutler, a pre-eminent health economist, admits that he thought Fryer's idea was ''absolutely crazy'' at first. (Although the link between the slave trade and hypertension had been raised in medical literature, even Cutler wasn't aware of it.) But once they started looking at the data, the theory began to seem plausible. Fryer has published only a handful of papers so far, all of them written with senior colleagues. A bet on Fryer is, at this point, a bet on potential. But his voice is bold enough to have drawn critics already. Some black economists say he is simply too hard on blacks. ''Part of his work tries to dismiss the influence of racism,'' says William Darity Jr., who teaches at Duke and the University of North Carolina. Darity points to ''An Economic Analysis of 'Acting White,''' a paper in which Fryer explores the mechanism by which high-achieving black students may be antagonized, and held back, by their low-achieving peers. ''The inclination to look for an explanation based on some sort of group-based dysfunctionality is an instinct I don't have,'' Darity says. While most of Fryer's colleagues consider him blazingly smart, he constantly belittles his own intellect. ''I have to think hard when somebody says, 'World War I,' because I don't know what years those were,'' he says. ''But I work hard, harder than anyone. That's what I can control.'' Last summer, he told me he was vexed by the sight of a silver Volkswagen Jetta in the parking lot outside his office. It was there when he showed up every morning, and it was still there when he left at night. Weeks later, he sent me a relieved e-mail message: ''The Jetta was not working harder than me -- rather, they were on vacation.'' He works so hard because his career goal is so audacious. Fryer's heroes are not contemporary economists like Glenn Loury or James Heckman or Gary Becker, even though he admires their work on racial issues and has been mentored by all three of them. Nor are his models the estimable crowd of Afro-American scholars assembled at Harvard by Gates, who happens to be Fryer's next-door neighbor. There is only one forebear whom Fryer aspires to emulate: W.E.B. DuBois, the fiercely interdisciplinary black scholar and writer who helped to pioneer the field of ethnography. ''The problem of the 20th century,'' DuBois said, presciently, in 1900, ''is the problem of the color line.'' In Fryer's view, DuBois alone had the appetite to rigorously round up the facts and concepts and emotions that constitute race and then crack them open one by one. Separated by a century, their missions are identical: to study -- and maybe even help fix -- the condition of being black in America....

Subject: A Unified Theory of Black America - 1 From: Emma To: Emma Date Posted: Sun, Mar 20, 2005 at 16:13:59 (EST) Email Address: Not Provided Message: I met Fryer just over a year ago through a collaborator we share, the economist Steven D. Levitt of the University of Chicago. One paper that Fryer and Levitt wrote suggested that the gap in early test scores between black and white schoolchildren is largely caused by the fact that most black children attend worse schools. The second paper, a sort of sequel to Fryer's work on ''acting white,'' explored the rift between black and white cultures, asking in particular whether black parents who give their children a name like DeShawn or Imani hinder their children's career prospects. In person, Fryer gives the appearance of coming from a middle-class background, some kind of Cosby kid all grown up. But as I spent more time with him, it became obvious that that wasn't remotely the case. He began to tell me stories about his past that -- although I didn't know it then -- he didn't share with people in his ''new life,'' as he called it. It was unclear why he had finally decided to talk, and to me. It may have been that the project that brought Fryer, Levitt and me together was the sort of grisly work -- a research project concerning the inner workings of the Ku Klux Klan -- that tends to produce a bond. It may have been that he was simply weary of holding the two chapters in his life so far apart. Regardless, I soon became as fascinated with Fryer's life as I was impressed with his work. One morning, as we sat on a bench in Central Park in New York, he talked about his childhood in Daytona Beach, Fla. When he was a boy, he sometimes lived there with his grandmother Farrise, whom the family called Fat. She was a schoolteacher and a disciplinarian. But Fat's sister Ernestine, who lived nearby, ran a looser household, and Fryer preferred to hang out there. His older cousins had gold teeth and gold jewelry and, always, the latest Karl Kani track suits, in maroon or bright red, with matching suede Champion sneakers. On the weekends, Ernestine's husband, Lacey, cooked up a batch of pancakes. Lacey was a retired postal worker and a past president of the local N.A.A.C.P. chapter. At the same time, Lacey and Ernestine and some of their children were running one of the biggest crack gangs in the area. They would drive down to Miami to buy cocaine and then turn it into crack in their kitchen. As a boy, Fryer used to watch. In a frying pan -- the same one Lacey used for pancakes -- they mixed the powdered cocaine with water and baking soda, then cooked off the liquid until all that remained were the little white rocks. The family processed and sold as much as two kilograms of cocaine a week. One day when Fryer was planning to visit Lacey and Ernestine -- Ernestine told him she would be making pork chops -- he decided to stop by the dog track first. He wasn't old enough to bet, but he loved to watch the greyhounds run. When he got to his aunt's house, it was surrounded by federal agents. Almost everyone in the family was sent to prison. Lacey got a 30-year sentence and died in prison; Ernestine was sentenced to a little more than three years. Fryer's favorite cousin, Wendy, got a long term; his cousin Vaughn got a shorter sentence, but upon his release he went back to selling crack and was murdered. Fryer loved Vaughn and Wendy. ''They seemed like pretty decent people,'' he said. ''If you had put them in the schools that a lot of these people came up in'' -- here he gestured toward the apartment buildings that border Central Park -- ''they probably would have been fine.'' How many of his close family members, I asked him, had either died young or spent time in prison? He did a quick count: 8 of 10. ''Suppose you can separate people into two camps: geneticists and environmentalists,'' he said. ''Coming up where I came up, it's hard not to be an environmentalist.''

Subject: A Unified Theory of Black America - 2 From: Emma To: Emma Date Posted: Sun, Mar 20, 2005 at 16:14:38 (EST) Email Address: Not Provided Message: As a graduate student, Fryer was enamored with the most theoretical realm of economics, studying arcane mathematical questions that kept him a safe distance from his past. But he has since crossed over to the empirical side of his science, which emphasizes real-world information. Most of his current projects involve huge troves of data that he is able to dissect with a particularly knowing eye. While this work may play more to his strengths, it also requires him to revisit his background in a manner that is anything but theoretical. He is writing one paper about mixed-race children (trying to tease out the influence of environment versus genes), another about historically black colleges (he suspects that graduates might pay for their racial loyalty in the form of lower career earnings, but are in general happier) and another tentatively titled ''Bling-Bling'' (which, he says, ''explores the consumption patterns of blacks versus whites''). There are also papers on colorblind affirmative action and the devastating impact of crack cocaine on black Americans. In addition to his economics-department office, he maintains another office at the Society of Fellows and a third at the National Bureau of Economic Research; he keeps at least seven research assistants busy. Claudia Goldin, an economist colleague at Harvard, is among those who marvel at Fryer's creativity and his energy. ''You're running a factory,'' she told him. His most ambitious project, which grew out of his belief in the power of environment, is an experiment designed to see if incentives can inspire minority students to improve their grades. For all the talk about education reform, Fryer says, he feels that one party is being overlooked: the students themselves. ''I'm troubled by the fact we're treating kids as inanimate objects,'' he says. ''They have behavior, too. They respond to incentives, too.'' Fryer recently ran a pilot experiment with third graders at P.S. 70 in the Bronx. If a child achieved a certain score on her reading test or improved by a certain percentage, she got a small prize. In some classrooms, every student competed for herself; in others, each kid was assigned to a group of five. Fryer is trying to find out whether the individual or group incentives work better. He suspects the latter -- ''because no stigma of being the smartest kid applies.'' But the P.S. 70 data was inconclusive. At a dinner party held by Larry Summers, Fryer met Joel Klein, the chancellor of New York's public schools, and explained his project to him. Klein asked Fryer if he might be interested in expanding his incentive experiment into 15 or so low-achieving schools. At P.S. 70, the rewards had been pizza parties or field trips. This time around, Fryer planned to give cash -- $10 per good test for third graders and $20 for seventh graders. Now it was time to sell the idea to the principals of those 15 schools. On a Tuesday afternoon in October, Fryer met the principals in the library of an elementary school in Harlem. All but one of them were black. Fryer usually wears Polo jeans, a button-down shirt and chunky black shoes. Today he was dressed for church, maybe even the pulpit: charcoal Brooks Brothers suit, crisp white shirt, black Cole Haans and a dazzling tie of white and mauve checks. He began by reciting a list of statistics that illuminate the gulf between blacks and whites. ''These facts bother me,'' he said. ''The achievement gap is not only disturbing; it's alarming. I'm here to try to understand and close the achievement gap.'' The principals began to grill him. Even if the kids do respond to the cash incentives, one principal asked, what happens next year, when they aren't getting paid? Won't students in other grades be resentful? What will parents think when their kids start receiving cash in the mail every few weeks? Fryer addressed each issue as best he could. But one question kept coming back at him: if we start paying students to test well, aren't we sending the message that learning is not its own reward? Although the exchange flustered him, Fryer had by meeting's end persuaded the principals to take part. Afterward, though, he took no joy in his success. He knew there were still plenty of bureaucratic hurdles ahead. What's more, he is not given to bragging. Typically, the first words out of his mouth after any presentation are ''they hated it.'' Long ago, Fryer made a vow that he would always be so hard on himself that it wouldn't hurt when others were hard on him. He told me this one night at his house in Cambridge. He and wife, Lisa, a graduate student in elementary education, were showing me his childhood photo album. It was one of the saddest photo albums you will ever see. A few baby pictures, then a picture from Pee Wee football and then . . . nothing until high-school graduation. Where was Roland Fryer during all those years? Or, really, where were the people who should have been snapping pictures of him?

Subject: Sound Advice, Past the Shouting From: Emma To: All Date Posted: Sun, Mar 20, 2005 at 15:31:01 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/03/20/business/yourmoney/20crame.html Sound Advice, If You Can Get Past All the Shouting By PAUL B. BROWN WHETHER he is appearing on CNBC, or writing for the TheStreet.com, the financial Web site he co-founded, James J. Cramer always seems to be trying to cram the most words - especially adjectives - into the smallest space. He has raised the hyperbolic rat-a-tat approach of communicating to an art form. He follows that tack in his third book, 'Jim Cramer's Real Money: Sane Investing in an Insane World' (Simon and Schuster, April 2005, $26). And that's too bad. Because buried underneath the hype ('I want you to be rich. Really rich') and the bluster ('Here's what the people on Wall Street don't want you to know') is a solid investing book that could be of great benefit to many people, especially those who already have a solid background in investing fundamentals. The problem is that before you get to terrific advice - such as, if you want to invest in individual stocks, be prepared to spend an hour a week every week doing research about each equity you own - you must get through all the chest thumping and attendant froth. Mr. Cramer makes repeated mentions of his success in running a hedge fund, in a former business life. We will have to take him at his word. Managers of hedge funds, private mutual funds for wealthy investors, are not required to broadly disseminate their performance. He constantly plugs both his Web site and newsletter, and he even reprises bits from his syndicated radio show. But if you are willing to put up with all that, you are more than rewarded. For example, Mr. Cramer presents an easy-to-understand chart that tells investors what to buy or sell, based on where we are in an economic cycle. When the economy starts to slow, and growth in the gross domestic product is approaching zero, you should think about buying housing and auto stocks, in anticipation of a pending Federal Reserve cut in interest rates designed to spur the economy, Mr. Cramer says. At the top of the economic cycle, when the Fed is likely to raise interest rates in an attempt to prevent inflation, you want to sell the stocks of companies in capital-intensive industries - like paper and chemicals - and buy more 'defensive' stocks, like pharmaceutical companies and supermarkets. Similarly, Mr. Cramer offers sound advice tied to the old investment adage, 'buy and hold.' 'I can say with confidence that an unmodified program of buying and holding stocks will definitely smash your nest egg worse than a McDonald's cook whipping up a fresh batch of egg McMuffins,' Mr. Cramer writes. 'Just buying and holding Sunbeam, Enron, WorldCom, Dome Petroleum and Lucent, each at one time the most heavily traded stock of its era, was a recipe for certain disaster.' Mr. Cramer prefers a 'buy and homework' strategy. You buy a stock and then do the aforementioned hour of research a week to see if you want to buy more, hold on or sell. Throughout, Mr. Cramer offers many investment rules: ¶You don't have a profit until you sell. If you bought a stock at $20 a share, and it now trades at $30, you haven't made 50 percent on your money yet. ¶'Own the best in breed. It's worth it.' If you are convinced you need to own a computer chip maker, buy Intel instead of Advanced Micro Devices, despite Intel's higher multiple. The same holds true in consumer stocks, Mr. Cramer writes. You want Procter & Gamble, not Colgate-Palmolive. Over the long term, he says, the better company will give you the higher return. ¶Sitting on the sidelines with cash can be fine. 'Lots of times the market just stinks and you want to have cash,' Mr. Cramer writes. 'It is a perfect hedge, as opposed to shorting the market, because if the market keeps going higher far longer than anyone thought it would, such as what happened in 1999, you could face devastating losses.' Sound ideas all. Still, even without the all the hype and bluster, there are legitimate reasons to question some of his advice. For example, Mr. Cramer argues that it is perfectly fine to speculate with a significant part of your portfolio - even with the money earmarked for your retirement. In fact, he encourages speculation, albeit limited, based on the premise that you will do it anyway. Besides, if you do it well - and Mr. Cramer offers advice on minimizing risks, like buying all the leading stocks in an emerging field like nanotechnology, instead of trying to project the eventual winner or winners - you have a chance for substantial rewards. And so he writes: 'I want to see speculation for a portion of an older individual's portfolio, albeit only a name or two - a small percentage to keep you interested. Given the nature of the potential losses, I don't want someone who is going to need the money for retirement to speculate with more than a fifth of his portfolio.' That 20 percent figure - no matter how much homework you do - is going to strike some people as awfully high. CONVERSELY, Mr. Cramer's assertion that you can have a diversified equity portfolio with just five stocks will strike most professionals as insufficient. The conventional wisdom is you need 8 to 13 stocks, or more, to be diversified. But, to his credit, Mr. Cramer is quick to assert the need to turn your portfolio over to investment professionals if you don't have the time to do the necessary research yourself. And the speculation component aside, one of his constant refrains is that the older you are, the more conservative you need to be with your investments since you won't necessarily have time to recover from any devastating losses. The net takeaway: Once you get past the bombast, this is a very good book. Maybe next time, Mr. Cramer will remember it is hard for people to understand what you are saying when you yell....

Subject: The Investing Problem From: Terri To: All Date Posted: Sun, Mar 20, 2005 at 14:43:52 (EST) Email Address: Not Provided Message: The problem we have is how to invest carefully in a rather dangerous time. I take warnings seriously, and worry about real estate prices here and abroad, and about high bond prices, and dollar weakness. Notice, I leave out stocks because they seem reasonably priced if price earning ratios have justly risen. Because I want to invest with simplicity, I am looking primarily to Vanguard. But, all I learn is helping. The object is value if value means we can pay reasonable prices for assets.

Subject: The Dollar From: Terri To: All Date Posted: Sun, Mar 20, 2005 at 14:33:33 (EST) Email Address: Not Provided Message: There are 2 ways in which the dollar can lose value. The dollar can lose value against several international currencies or the dollar can lose value at home through inflation. Currencies often lose and gain value internationally, though several currencies such as China's and Malaysia's are pegged to the dollar. The dollar has lost value against several currencies these last 2 years, and is likely to lose more since we have little household saving and a structural government deficit that will grow. Eventually international investors and central banks will be less willing to accept dollars. A currency decline could well be harsh, for interest rates would rise unless the Fed intervened. However, as long as there is limited inflation here, a loss in value of the dollar at home is not going to happen. That the dollar is not going to collapse abroad, though it seems likely to lose value will be sure as long as there is limited inflation here. Now, am I saying we have no problems? Surely not. Am I feeling smugly content? No, I am worried. I am however trying to gauge how worried I should be :)

Subject: Well north of 20 From: Pete Weis To: All Date Posted: Sun, Mar 20, 2005 at 13:51:49 (EST) Email Address: Not Provided Message: March 20, 2005 GRETCHEN MORGENSON What? They Never Heard of WorldCom? WHAT a week. Bernard J. Ebbers, founder of WorldCom, got to add felon to his already colorful curriculum vitae. Maurice R. Greenberg, dictator in chief at American International Group, the global insurance giant, was toppled after almost 40 years at his post. The Federal Reserve told Citigroup it could not make any major acquisitions until it cleaned up its compliance act. And General Motors laid a big, scary earnings egg. Isn't it nice to know these incidents are anomalies and that most American companies are chugging along, reporting good solid earnings? Sure would be. But contrary to popular belief, the quality of corporate earnings is on the slide again and, as a result, Richard Bernstein, chief United States strategist at Merrill Lynch, is advising investors to tread carefully. 'There is an impression that the quality of earnings has improved dramatically,' he said. 'That is true relative to the worst levels of post-bubble reporting, but relative to history, the absolute quality of earnings is quite poor.' And getting poorer. Mr. Bernstein reaches this depressing conclusion by analyzing the difference between the earnings that Standard & Poor's 500 companies have reported under generally accepted accounting principles and operating earnings, the figures companies typically trumpet because they do not include write-offs and other unusual items. The difference between the two figures, Mr. Bernstein says, is the G.A.A.P. gap. And it is widening. In the most recent period - the fourth quarter of 2004 - the gap was 13.7 percent. In other words, operating earnings were on average 13.7 percent higher than reported earnings. While that figure is well down from the 40 percent gap reached in 2002, it is much higher than the long-term, pre-bubble average of 6.7 percent. The result: while stock valuations may not be so high as they were before the bubble burst, the quality of earnings appears to be worse. Of course, none of this might matter if investors bought stocks based on G.A.A.P. earnings. But too many buy shares based on what companies report in their press releases and on their quarterly conference calls, which are often heavily skewed to earnings before the bad stuff. 'The fact is, stocks trade on press releases, on what the headline number is,' Mr. Bernstein said. 'And on the conference calls, companies talk about whatever numbers they want to talk about. Investors should still be very skeptical of the quality of earnings.' Mr. Bernstein said that he thought the recent downturn in earnings quality began, not surprisingly, a couple of quarters ago, when the profit surge started to subside. 'If times are good, companies are not under pressure to keep their growth profile up,' he said. 'In tough times, when you get a cyclical company that has been coined by the Street as a growth company, it feels pressure to keep up that profile.' That's when the earnings games usually begin. By focusing on operating earnings, rather than on more stringent reported figures, companies try to steer investors away from mistakes such as asset write-downs or restructuring charges. But these factors reflect bad choices by managers - such as overpriced acquisitions - and should definitely not be excluded from investors' analyses. 'The difference between operating and reported earnings is an indication of how well executives are managing the balance sheet of their company,' Mr. Bernstein said. This is often lost on investors who pay little heed to the balance sheet. The five companies with the widest gap between reported earnings and operating income currently, according to the Merrill Lynch analysis, are: Eastman Kodak; Georgia Pacific, a paper products company; Rowan Companies, an oil drilling concern; Ford Motor; and Clorox. Mr. Bernstein said the vast majority of companies with the biggest gaps between reported earnings and operating income are of lesser-quality, those whose common stocks are ranked B or below by S.& P.; among the five with the widest gap, all are rated B or below except Clorox, which is rated A. So investors can often limit their exposure to earnings shenanigans by sticking with high-quality issues. But such a strategy won't offer full protection. As Mr. Bernstein noted, 22 percent of the companies with the largest gaps between reported and operating earnings were rated B or better by S.& P. Mr. Bernstein said he thought the earnings games would be curtailed sharply if the Securities and Exchange Commission required that all company communications with investors reflected figures computed in accordance with generally accepted accounting principles. Then there would be no confusion among investors about what a particular company really earned in a quarter. 'The reason you have G.A.A.P. is so investors have consistent clear information,' Mr. Bernstein said. 'The U.S. has always prided itself on having the most transparent financial markets. 'But over the past 5 to 10 years, the U.S. market has become more opaque, and foreign markets have become more transparent. That has huge implications for the economy as a whole and for the cost of capital.'

Subject: Time Out From: johnny5 To: All Date Posted: Sun, Mar 20, 2005 at 13:39:25 (EST) Email Address: johnny5@yahoo.com Message: I used the wrong word when I said collapse - I should have instead said crash Terri, I am sorry for the mistake - crash was the meaning I was intending to get accross - not collapse. Germany had hyperinflation, thier dollar did not collapse, it just wasn't worth very much. What buffet and other predict is a collapse or a quick fall, not a collapse. Washington's Fiscal Meltdown Published: March 20, 2005 Before leaving town for a two-week spring break, Congress indulged in its own form of March Madness. The Republican majority in the House and the Senate passed budget blueprints for 2006 that slash domestic spending by upwards of $150 billion over the next five years. Yet they still managed to increase the projected deficit by more than $125 billion over the same period (and by more than $1 trillion through 2015). How is it possible to produce that much red ink while slashing spending? Easy. Just cut revenue by giving huge tax cuts to - surprise, surprise - high earners and wealthy investors. The lawmakers will not make any final decisions until they cobble their separate proposals into one official budget later in the year, but the early signs are all bad - pointing to the least sensible tax cuts for the least needy recipients with no thought to the exploding deficit. Of all the favors they are determined to dispense, tax cutters in both the House and Senate are most intent on extending the special low tax rates for dividends and capital gains, through 2010. The preferential rates are not scheduled to expire until 2008, but lawmakers want to act now, apparently to spare their constituents worry about the future. And who are those fretful constituents? In 2005 alone, almost half of the tax savings from dividend and capital gains rate cuts will go to investors who make more than $1 million a year, the top 0.2 percent of the income ladder. Nearly three-quarters of the tax benefits will go to those making more than $200,000, about the top 3 percent. The cost to everyone else in the form of forgone revenue will be $23 billion. Also remarkable for their largess are two high-end tax breaks that would increase the amount well-heeled taxpayers would be allowed to write off for dependents and other expenses. They were enacted in 2001, but have been delayed. Now the budget proposals let them take effect. Once again, almost all of the tax savings would go to that lucky 3 percent of filers with incomes above $200,000. The lost revenue would amount to $95 billion over 10 years. In this particular piece of fiscal insanity, even the usual Republican argument - that letting a temporary tax break expire is the same thing as a tax increase - does not apply. These two changes have not even taken effect yet, so who would miss them if they never materialized? If you're President Bush, however, getting these two provisions is the tax policy equivalent of going all the way to Baghdad. The president's father originally allowed the deduction limitations on wealthy filers as part of the 1991 budget, the one that violated Bush père's 'no new taxes' pledge and, in so doing, helped to end his chances for re-election. The wealthy would also be on the receiving end of two new tax-sheltered savings plans favored by President Bush: the retirement savings account and the lifetime savings account. These were not embraced by name by the Congressional budget leaders. But Congress could easily include them in the final budget, since they will not start losing revenue - about $30 billion a year - until much later, when investors cash them in tax-free. The accounts would allow a couple to shelter $20,000 annually, as well as $5,000 for each of their children, on top of however much they may already be investing in other tax-favored plans. None of this will be any help to the vast majority of average Americans, who do not even take full advantage of current I.R.A.'s. And then there is the 11th-hour tax cut slipped into the Senate proposal. It would repeal an income tax on Social Security benefits that applies to the wealthiest 20 percent or so of beneficiaries and whose revenue is dedicated to the Medicare hospital trust fund. The repeal would accelerate the fund's projected insolvency by four years, to 2015 from 2019. Now there's a plan! Give the best-off elderly a tax break and put all of the elderly who may have to go into the hospital at greater financial risk. When you step back and look at it, the collective tax-cutting psyche of Mr. Bush and his partisans appears to border dangerously on the grandiose. How else to explain their relentless profligacy in the face of the unprecedented Bush-era swing from budget surplus to deficit, the unmistakable long-term trend of a rich-get-richer, poor-get-poorer income distribution, the ballooning costs of war, the weaker dollar, rising oil prices and record deficits in trade and investment - which now require the United States to borrow $2.1 billion a day from abroad? It's time for the people, the ultimate referees in a democracy, to call a timeout. http://www.nytimes.com/2005/03/20/opinion/20sun1.html?th

Subject: Re: Time Out From: Emma To: johnny5 Date Posted: Sun, Mar 20, 2005 at 22:16:25 (EST) Email Address: Not Provided Message: Thank you for posting this, Johnny. I noticed and then forgot you had done so :)

Subject: Message Board Cleaning From: Bobby To: All Date Posted: Sun, Mar 20, 2005 at 10:54:15 (EST) Email Address: robert@pkarchive.org Message: I had to clean the message board since it reached the threshold of 700 messages, after which it would begin eating old messages. I'm sorry to interrupt the conversations everyone was having. You can find your old posts on the Message Board Archive. Again, sorry for the inconvenience. Message Board Archive www.pkarchive.org/MBArchive.html