Subject: The Alpha Currency is the Dollar From: Emma To: All Date Posted: Sun, Feb 27, 2005 at 14:37:19 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/02/27/business/yourmoney/27advi.html The Alpha Currency? It's Still the Dollar By WILLIAM J. HOLSTEIN FEARS that the dollar could go into a free fall because of big budget and trade deficits are overblown, says Henry Kaufman, known for his longtime work as an economist at Salomon Brothers, where he was often bearish about American economic prospects. Now 77, he is an independent consultant and is on the board of Lehman Brothers. Here are excerpts from a recent conversation: Q. As someone who has been bearish in general, why are you positive about the dollar? A. 'Positive' is a little bit of an overstatement. I believe the dollar will remain the key reserve currency for the foreseeable future. The United States is the dominant world power, and with world power goes leadership of the currency. If you go back to the British Empire or the Dutch or the Spanish, you'll find that world power also means a dominant currency. We have an economy that is performing far, far better than the other industrialized countries. Therefore, profits here are better than they are in most places around the world. Our interest rates are competitive. Q. But the Bush administration, despite some statements to the contrary, seems intent on expanding government deficits. Isn't that sending a bad signal? A. The immediate issue is, 'Who is going to finance the American budget deficit?' Let me give you a couple of numbers. Japan will continue to buy about $200 billion of U.S. government debt a year. They have a large export surplus to the United States. China, which also has a large surplus, will also probably buy about $100 billion. Thirdly, the Federal Reserve is a buyer for monetary reasons, and that will account for $50 billion to $75 billion. Lastly, other buyers have emerged over the past year, namely some of the oil-producing countries. The price of oil has increased very dramatically. That money cannot readily be spent by producers such as Saudi Arabia and Qatar. Therefore, you have to put them in for $50 billion to $75 billion of purchases of American securities. So there isn't very much left for the time being for domestic investors to finance. Q. But it appears there is a deeply felt sense in the administration that a cheap dollar will spur American economic growth and reduce the debt to the rest of the world. A. If it becomes an outspoken approach by the administration, that would be quite dangerous. Talking down your own currency when you're the key reserve currency and when you are dependent on foreign sources of money would ultimately create problems. The secretary of the Treasury, as well as the president, should always articulate that 'we are in favor of a stable currency.' They should never even whisper the idea that 'if the dollar goes down, that's all right with us.' Q. What do you think of the quotation attributed to Vice President Dick Cheney that 'Reagan proved deficits don't matter'? A. That is an incorrect observation by the vice president. Deficits do matter over the long term. There are times in the business cycle in which the U.S. Treasury competes very heavily against the private sector. When that occurs, it escalates interest rates. It puts pressure on inflation. It's a dangerous approach. Q. In its heart of hearts, do you think the Bush administration agrees with you? A. I think a number of people in the administration probably believe so. I believe a number of people in the Federal Reserve believe so. But whether the inner sanctum of the administration will say that a stable dollar is a key consideration, that may be questionable. We are just in a fortuitous situation today, meaning this year and probably next year, in which the size of the budget deficit doesn't matter for the immediate future. But ongoing budget deficits of this order of magnitude over time will matter. Q. A Chinese official was quoted as saying that his government was not happy with the dollar's weakness. Do you think the Chinese or Japanese could shift their holdings elsewhere? A. I doubt that very much. Both China and Japan are big exporters to the United States. I believe that the Chinese and Japanese, down deep, realize that if they shifted from the American dollar to the euro, it would endanger their export drive to the United States. Q. So what is your prognosis for the dollar? A. I think there is going to be reasonable stability with occasionally a little bit of a give in the value of the dollar. Q. Do you think a decline in the value of the dollar sharply stimulates our exports? A. I do not. It takes much longer this time around for the decline in the dollar to have a significant impact on our trade. It involves a number of countries such as India and China that provide goods and services to us at a very low labor cost. To turn that around, that will require a really significant decline in the value of the dollar. That's not about to happen. Q. In your lifetime, have you seen a time of such huge fiscal and trade imbalances? A. Not really. Today, there is an enormous international disequilibrium. For the near term, it is in the best interest of all the participants to maintain it. Q. What could trip that disequilibrium into an economic disaster for the United States? A. We could have a massive terrorist attack. The price of oil could ratchet very high. No. 3, if Europe and Japan lifted economic activity significantly, that would turn things around and put more pressure on the United States.

Subject: Hoyt Book for the history buffs From: johnny5 To: All Date Posted: Sun, Feb 27, 2005 at 14:35:55 (EST) Email Address: johnny5@yahoo.com Message: http://www.beardbooks.com/one_hundred_years_of_land_values_in_chicago.html One Hundred Years of Land Values in Chicago: The Relationship of the Growth of Chicago to the Rise of Its Land Values, 1830-1933 By Homer Hoyt 2000/09 - Beard Books 1587980169 - Paperback - Reprint - 452 pp. US$34.95 A meaningful addition to the social and economic history of Chicago from 1830 to 1933. Category: Real Estate Early American Land Companies: Their Influence on Corporate Development Land Title Origins: A Tale of Force and Fraud From the back cover blurb: A source of invaluable data and analysis for students of urban land economics, One Hundred Years Of Land Values In Chicago was the first comprehensive study of land values in a large city over a long period of time. The author successfully wove in the social and economic history of Chicago as well. The book covers the years 1830-1933, a period of dizzying growth during which Chicago grew from a cluster of a dozen log huts at the site where the Chicago River meets Lake Michigan, to a booming city of 211 square miles and a population of almost 3.5 million. Over those hundred years, ground value grew from a few thousand dollars to more than $5 billion. What a century it was! Chicago rode a roller-coaster ride of the railroad boom, the Civil War, the Great Chicago Fire, the first skyscrapers, the First World's Fair, the First World War, and the Great Depression. The book is exhaustively researched, with 103 maps showing land values of specific sections in various years; the evolution of the railroad; the growth of public transportation (from horse car lines and street-car lines to elevated lines); sewer construction; the distribution of buildings of various heights; population densities; residential areas by predominant ethnic groups, among others. There are 103 data tables as well, including employment and wage figures; mortgage rates and amounts; property sales and rents; and various comparisons with cities of similar size. Review by Gail Owens Hoelscher From Turnarounds and Workouts, August 15, 2001 This book represents the first comprehensive study of land values in a large city over a long period of time. The author's goal was to trace cyclical fluctuation in land values in an American city, in the expectation of contributing to the policy debate on taxing real estate investments. He managed to achieve much more, however. Indeed from the viewpoint of land values, he offers a fascinating general history of Chicago through the early 1930s. He very skillfully interweaves the city's social and economic history into its land economic history and interprets the interrelationships among them. The book covers the years 1830-1933, a period of dizzying growth, during which time Chicago grew from a cluster of a dozen log huts at the site where the Chicago River meets Lake Michigan, to a booming city of 211 square miles and a population of almost 3.5 million. Over those hundred years, ground value grew from a few thousand dollars to more than $5 billion. And what a century it was, a roller coaster of the railroad boom, the Civil War, the Great Chicago Fire, the first skyscrapers, the first World's Fair, World War I and the Great Depression. The reader is immediately struck by the sheer size of the research project the author designed and undertook. He examined thousands of actual real estate sales and compared them with the appraisals and opinions of real estate dealers. He researched and had drawn 103 maps showing land values of specific sections of the city in various years; the evolution of the railroad; the growth of public transportation (from horse-car lines and street-car lines to elevated lines); sewer construction; the distribution of buildings of various heights; population densities; and residential areas by predominant ethnic group, among others. There are 103 data tables as well, including the value of various buildings in different years; construction of infrastructure; number and types of registered vehicles; employment and wages; mortgage rates and amounts; property sales and rents; and various comparisons with cities of similar size. The author defines a real estate cycle as 'the composite effect of the cyclical movements of a series of forces that are to a certain degree independent and yet which communicate impulses to each other in a time sequence, so that when the initial or primary factor appears it tends to set the others in motion in a definite order.' He found that in Chicago during the period studied, these forces, in the order in which they appeared , were population growth; rent levels, and operating costs of existing buildings and new construction; land values; and subdivision activity. He divides these forces into 20 'events,' all the way from the first, 'gross rents begin to rise rapidly;' through to the sixth, 'volume of building is stimulated by easy credit;' the eleventh, 'lavish expenditure for public improvements;' the seventeenth, 'banks reverse their boom policy on real estate,' leading to stagnation and foreclosures; the nineteenth, 'the wreckage is cleared away;' and finally, 'ready for another boom.' One Hundred Years of Land Values in Chicago is a source of invaluable data and analysis on the subject of urban land economics, and is equally fascinating from the standpoint of American history. The author notes that 'with all its kaleidoscopic neighborhoods and its babble of tongues... with all its rough edges and its bluntness, Chicago is a city with a unique and magnetic personality.' And well worth reading about. Homer Hoyt was one of the early well respected real estate theorists who developed the theory that communities will tend to grow toward their largest neighboring city, all other things being equal. My Hoyt was overjoyed with the application of his theory in a modern setting and donated funds to establish the Homer Hoyt Center at Florida State University, which is now known as the Homer Hoyt Program in Land Economics and Finance. List of Illustrations xxiii List of Tables xxvii Part I. History of the Relation of the Growth of Chicago to the Rise in its Land Values, 1830-1933 Chapter I. The Canal Land Boom, 1830-42 3 Chapter II. The Land Boom of the Railroad Era, 1843-62 45 Chapter III. The Land Boom That Followed a Panic, a Civil War, and a Great Fire, 1803-77 81 Chapter IV. The Land Boom of the First Skyscrapers and the First World's Fair, 1878-98 128 Chapter V. The Land Boom of a New Era That Followed a World War, 1898-1933 196 Part II. Analysis of the Relation of the Growth of Chicago to the Rise of its Land Values Chapter VI. The Relation Between the Growth of Chicago and the Rise of Its Land Values 279 Chapter VII. The Chicago Real Estate Cycle 368 Appendixes Appendix I. The Chicago Land Market 427 Appendix II. Methods Employed in Determining Chicago Land Values, 1830-1932 460 Appendix III. Statistical Tables 470 Bibliography 497 Index 503

Subject: Coming Generational Storm - a reveiw From: David E.. To: All Date Posted: Sun, Feb 27, 2005 at 12:12:44 (EST) Email Address: Not Provided Message: by Paul Krugman. Sweet reason makes the storm clear. link http://www.nybooks.com/articles/17771

Subject: Real Estate and REITs From: Jennifer To: All Date Posted: Sun, Feb 27, 2005 at 07:01:07 (EST) Email Address: Not Provided Message: A way to invest fluidly in real estate is through REITs. REITs generally specialize in particular markets or market segments. The REIT Index can be bought as can individual REITs, though the index has the diversification. REIT research is in order.

Subject: REITs From: Terri To: Jennifer Date Posted: Sun, Feb 27, 2005 at 07:12:55 (EST) Email Address: Not Provided Message: REITs have had strong gains since 2000. How the REIT Index fairs as the Federal Reserve continues to raise short term interest rates will be important to notice.

Subject: Real estate in inflation or deflation From: Dorian To: All Date Posted: Sun, Feb 27, 2005 at 06:10:55 (EST) Email Address: Not Provided Message: So far I have not been able to find any serious flaw in my conclusion that of all possible investments in the economic uncertainty which lies ahead, real estate in markets which haven't already inflated beyond common sense looks like the best investment. If the dollar falls, which is virtually certain, it won't affect real estate or more likely will increase its value. If there is deflation, people will still need a place to live and the less expensive properties will if anything be in greater demand. Interest rates will no doubt have to go up, but I remember in the late 70's when inflation and interest rates rose past the double digits that real estate gained in value - in fact it created a bubble in real estate - despite the high interest rates. The problem is that real estate in most major markets has already appreciated to dangerously high levels, but if you can see out markets which have not yet over-inflated, and in cities which have economies which won't be wiped out by major economic upheavals, then I think lower end real estate will be the safest investment. The major drawback is that real estate much harder to invest in than stocks and bonds, and not something which everyone will want to get involved with. Dorian

Subject: Re: Real estate in inflation or deflation From: David E.. To: Dorian Date Posted: Sun, Feb 27, 2005 at 12:07:28 (EST) Email Address: Not Provided Message: Hi Dorian, here is another view. Diversification is key, don't pick one asset class, especially don't pick one end of an asset class and especially don't focus on lower end. It is possible that demand for lower end will not increase as you expect. There are other choices besides moving to the lower end, many will decide to take in boarders and stay in their high end houses. And some could decide to move into RV's. It is not a lock that demand for lower end will increase. There is no such thing as a perfect investment that will always be better than anything else. Be careful with your money.

Subject: Hud's demographic projections From: johnny5 To: David E.. Date Posted: Sun, Feb 27, 2005 at 13:09:58 (EST) Email Address: johnny5@yahoo.com Message: Long paper but a good read http://www.huduser.org/Publications/PDF/demographic_trends.pdf This paper addresses current and projected changes in the nature of the nation’s population and its households that will affect the demand for housing.1 Perhaps the most important change is that, for the first time in history, we are looking at a population that will have roughly equal numbers of people in every age group. (The age picture of the country is looking more like a pillar than the classic pyramid.) Although the nation’s population continues to grow at all ages, the largest growth is in the population that has largely completed its child rearing. Other things equal, this shift should in itself increase the proportion of the population that owns, rather than rents, its housing. Households are a better predictor of changes in housing demand than population, and the nation’s increasingly [MR1] diverse age structure is changing its household composition. In particular, household size is shrinking, as married couples without children (in the home) and single-person households each outnumber “traditional family” households. Among other things, this trend is undermining old assumptions about age-based choices of city versus suburban housing. Not too many years ago, housing professionals thought almost exclusively about the housing needs and preferences of families with children. (Indeed, houses were generally referred to as “family” houses.) Now they need to understand the needs and preferences of several different household types, not just for housing construction but also including preferences for refitting a current home to meet the needs of a new, post-child-rearing household configuration and avoid a move from a cherished home or valued neighborhood. Building flexibility into housing financing is another implication, given the increasing numbers of householders at different stages of the life course. Financing has traditionally been designed for young couples acquiring a home they might live in for most of their adult lives (and has been based on the assumption that their income would increase over the life of the mortgage). But longer lives are creating new life stages, as well as multiple household types for a given individual over a lifetime. A broader range of households also raises several policy issues. For example, people have a tendency to share preferences and lifestyles according to their broad age group and family situation. On the one hand, that implies a “balkanization” of neighborhoods that could be harmful to maintaining a viable community. On the other hand, it implies that “mixed” neighborhoods could be riven by disputes over such classic issues as noise, appearance, and use and support of community resources, like parks. In the past, differences in affordability assured a certain homogeneity of tastes among those living in a given neighborhood. In the future, housing policymakers may have to be more proactive in managing age-based differences and establishing consensus-based standards. Finally, households are not becoming equally diverse everywhere in the country. First, tabulations of 2000 census results for The Brookings Institution show that growing cities are adding population faster than households, and declining cities are losing population faster than households.12 This seeming conundrum largely reflects the dominance of young adults among interstate movers. As they leave their parents’ households, many choose new cities with vibrant job markets. They have their children in the new location, thus swelling the population. As a result, the traditional married with children families are a growing segment in many parts of the South and West, while they are now outnumbered by single-parent families in northern and midwestern cities, where population has declined significantly. In sum, the nation’s two major demographic changes—shifts in the population’s age and racial composition—have already created appreciable differences in the nation’s household picture. In an overall sense, the nation’s traditional household is increasingly minority, while the nation’s majority population increasingly lives in nontraditional households. Perhaps the most important implication for housing comes from the industry’s traditional focus on families with children. The survival of most adults to older ages has increased the share of older, childless adult households, and the increase in the minority population via immigration and higher fertility rates has increased the minority share of younger adult households. Consequently, households with children in them are increasingly minority. The effects of this shift are already being seen in changing character of familiar locations. The 2000 census found that cities where growth reflected large numbers of recent immigrants were particularly likely to develop a more “suburban” character via strong growth in the numbers of married couples with children. Meanwhile, suburbs around the country became more “urban,” as nonfamily households, especially young singles and elderly people living alone, came to outnumber traditional families in their populations. Given the obvious differences in household type and income by lifestage, the intersection of trends in age and racial and ethnic origin suggest that housing analysts need to understand each large age/race/income/household segment within their particular housing market. Such an understanding will enable them to identify needs and preferences that are shared, and thus constitute a large market, and distinguish those needs and preferences that need special treatment.

Subject: Real Estate and REITs From: Terri To: Dorian Date Posted: Sun, Feb 27, 2005 at 07:17:52 (EST) Email Address: Not Provided Message: The problem is how to invest intelligently in real estate markets beyond your home market or apart from a major market. REITs, even our own REIT, would be an answer. Then, research on REITs is needed.

Subject: Homer Hoyt Reits From: johnny5 To: Terri Date Posted: Sun, Feb 27, 2005 at 07:53:15 (EST) Email Address: johnny5@yahoo.com Message: These guys help my dad out. http://www.hoyt.org/has/main.html The Hoyt REIT Model The Homer Hoyt Institute (HHI) and Hoyt Advisory Services (HAS) have developed a proprietary model (the Hoyt REIT Model) for investing in real estate investment trusts (REITs). For the last several years, the Institute has invested a substantial portion of its endowed funds in REITs. The cumulative return on those funds has greatly exceeded the return on the NAREIT index. Because of the success of its investment program using the Hoyt REIT Model, the Institute, through HAS, has decided to make the Model available for commercial applications. The professional services available include: Portfolio Analysis and Construction Planning, including: Market Entrance Strategies and Growth Strategies Market Research and Analysis, including Feasibility Studies and Public Offering Analysis Merger and Acquisition Analysis Further information on the Hoyt REIT Model is available on this site, or at www.reitnet.com. You may also contact Hoyt Advisory Services directly.

Subject: A Sham? From: Jennifer To: johnny5 Date Posted: Sun, Feb 27, 2005 at 13:01:38 (EST) Email Address: Not Provided Message: I would be more than careful with whoever these folks are. This has all the feel of a sham.

Subject: Re: A Sham? From: johnny5 To: Jennifer Date Posted: Sun, Feb 27, 2005 at 13:17:28 (EST) Email Address: johnny5@yahoo.com Message: Why do you feel they are a SHAM jennifer? I was under the impression they were one of the more respected organizations. Here is some more info - I will keep digging for you so we can get more educated - perhaps I am wrong: http://www.hoyt.org/asi/ Homer Hoyt Advanced Studies Institute (ASI) The Weimer School of Advanced Studies in Real Estate and Land Economics Established in 1982, the Weimer School is a unique and effective forum for fostering academic work that improves the quality of decision making in real estate and land economics. Through open discussion of evolving research, the real estate body of knowledge is expanded and focused on applications for industry. Academic, business, and government leaders share their knowledge, experience, and ideas to influence relevant research. This unique interactive program provides post-doctoral education for leading educators, and concentrated study of current academic thought and research for leading executives who have major research responsibilities. The Weimer School has financed research studies by faculty members of the nation's most prestigious real estate programs, including: University of California/Los Angeles, University of California/Berkeley, University of Georgia, University of Florida, Southern Methodist University, University of Wisconsin, University of Connecticut, University of Pennsylvania, The Ohio State University, University of Illinois, University of North Carolina, Indiana University, University of Texas/Austin, and University of Michigan. Most Weimer School Fellows are faculty members in major university real estate programs and researchers with organizations such as the American Enterprise Institute, the Federal Home Loan Mortgage Corporation, U.S. League of Savings Institutions, and the Joint Center for Housing Studies/Harvard University. An important feature of the Weimer School is the opportunity it affords academics and industry experts to learn from each other. Guest lecturers have represented some of America's most important companies including: Goldman Sachs & Company, U.S. Gypsum Corporation, Tramell Crow, LaSalle Partners, Landauer Associates, Inc., Arthur Andersen & Company, Strouse Greenberg & Co., MGIC, and Wachovia Corporation. Further confirmation of the quality of the Weimer School's programs and personnel came by way of a U.S. News and World Report survey of the nation's best departments in colleges and schools of business. The top five real estate programs in 1997 are as follows: University of Pennsylvania (Wharton), University of California at Berkeley (Haas), University of Wisconsin at Madison, Massachusetts Institute of Technology, and The Ohio State University. All five programs are associated with the Weimer School - as sources of Weimer School Fellows, home institutions of faculty members, and/or recipients of research grants from ASI. All of the five programs are represented on the Weimer School faculty.

Subject: Right From: Jennifer To: johnny5 Date Posted: Sun, Feb 27, 2005 at 14:17:19 (EST) Email Address: Not Provided Message: Johnny, this look fine now. The links I used were strange, I should have tried others. Right you are.

Subject: Re: Right From: johnny5 To: Jennifer Date Posted: Sun, Feb 27, 2005 at 14:29:59 (EST) Email Address: johnny5@yahoo.com Message: http://www.areuea.org/publications/ THE journal for real estate economics - hoyt group *a major sponsor* has been trying to bring more respect to real estate in academia - although this is my dad's field - being the stingy bastard that he is I am sure he would not throw money away with people that are scammers. I have so much reading to do on these journals myself. Hoyt himself was an early pioneer in city development. http://www.revision-notes.co.uk/revision/180.html http://www.ribbonrail.com/grizzlyflat/florida/florida3.htm Dick received a B.S.in 1981 in Economic Geography (locational and transportation theory) and a M.S. in Land Use and Resource Management in 1982, also in the Department of Geography at Florida State. Dick's Masters Thesis was the Applicability of the Homer Hoyt Sector Theory to Tallahassee. Homer Hoyt was one of the early well respected real estate theorists who developed the theory that communities will tend to grow toward their largest neighboring city, all other things being equal. My Hoyt was overjoyed with the application of his theory in a modern setting and donated funds to establish the Homer Hoyt Center at Florida State University, which is now known as the Homer Hoyt Program in Land Economics and Finance.

Subject: Complete Right From: Jennifer To: johnny5 Date Posted: Sun, Feb 27, 2005 at 15:47:30 (EST) Email Address: Not Provided Message: Johnny, you are completely right. Thank you for correcting me. HOmer Hoyt is a real estate think tank and advisor on real estate, and the more I look the more interesting the work is.

Subject: Re: A Sham? From: johnny5 To: johnny5 Date Posted: Sun, Feb 27, 2005 at 13:24:39 (EST) Email Address: johnny5@yahoo.com Message: They sure have lots of smart people to be a SHAM don't they?? http://www.hoyt.org/asi/faculty.html Faculty members of the Weimer School include: Dr. Dennis R. Capozza Ross Professor of Real Estate Finance University of Michigan Business School Dr. John M. Clapp Professor Department of Finance University of Connecticut Dr. Peter F. Colwell (Faculty Emeritus) Professor of Finance, ORER Prof. of RE Director, Office of Real Estate Research University of Illinois Dr.Robert H. Edelstein Co-Chairman & Real Estate Development Chair Professor Fisher Center for R. E. & Urban Economics University of California-Berkeley Dr. Jeffrey Fisher Professor Center for Real Estate Studies Indiana University School of Business Dr. James Follain Housing Economics and Fin. Research Freddie Mac Dr. Patric H. Hendershott Professor University of Aberdeen Dr. G. Donald Jud (Faculty Emeritus) Department of Finance University of North Carolina-Greensboro Dr. David C. Ling William D. Hussey Professor Warrington College of Business University of Florida Dr. Stephen Malpezzi Associate Professor Center for Urban Land Econ. Research University of Wisconsin-Madison Dr. Norman Miller West Shell Professor University of Cincinnati Dr. Hough O. Nourse (Faculty Emeritus) Retired, The University of Georgia Dr. Henry Pollakowski Editor Journal of Housing Economics Massachusetts Institute of Technology Dr. John M. Quigley Chancellor's Professor of Economics and Public Policy Department of Economics University of California - Berkeley Dr. Ronald L. Racster Professor Emeritus Director, Center for Real Estate Education and Research The Ohio State University Dr. Lynne B. Sagalyn Professor University of Pennsylvania Dr. Maury Seldin Realtor Chair Professor Emeritus The American University Dr. Halbert C. Smith Professor Department of Finance, Insurance, & Real Estate University of Florida Dr. Kerry Vandell Tiefenthaler Chair and Director Center for Urban Land Economics Research University of Wisconsin-Madison Dr. Susan M. Wachter Professor of Real Estate and Finance, Real Estate Dept. Chairperson Wharton Real Estate Department University of Pennsylvania Dr. John C. Weicher (Faculty Emeritus) Senior Fellow HUD Dr. John E. Williams Dean Morehouse College http://www.hoyt.org/asi/awards_manuscript.html American Real Estate Society Manuscript Prize Winners sponsored by HOMER HOYT ADVANCED STUDIES INSTITUTE I. 'Thinking out of the Box' category -- awarded for best research paper presented at the American Real Estate Society Annual Meeting: 2004 Dr. Seow Eng Ong National University of Singapore 2003 Dr. Roger J. Brown San Diego State University 2002 Dr. Theron R. Nelson University of North Dakota Dr. Susan Logan Nelson University of North Dakota 2001 Dr. G. Donald Jud The University of North Carolina - Greensboro Dr. Dan Winkler The University of North Carolina - Greensboro 2000 Dr. Richard A. Graff Electrum Partners II. 'Best' research paper -- published in the Journal of Real Estate Research 2004 Portfolio Implications of Apartment Investing Randy I Anderson, Richard McLemore, Philip Conner and Yougou Liang JRER vol. 25 No. 2-2003 p. 113 - 131 2003 Time, Place, Space, Technology and Corporate Real Estate Strategy Karen M. Gibler, Roy T. Black and Kimberly P. Moon JRER vol. 24 No. 3-2002 p. 235 - 262 2002 The Stock of Private Real Estate Capital in the United States James D. Shilling and Yu Yun Jessie Yang JRER vol. 22 No. 3-2001 p. 243 - 270 2001 Office Rent Determinants During Market Decline Barrett A. Slade JRER vol. 20 No. 3-2000 p. 357 - 380 2000 Real Estate Cycle and Their Strategic Implications for Investors and Portfolio Managers in the Global Economy Stephen A. Phyrr, Stephen E. Roulac and Waldo L. Born JRER vol. 18 No. 1-1999 p. 7 - 68 1999 (tie) Ownership Structure and the Value of the Firm: The Case of REITs H. Swint Friday, G. Stacy Sirmans, and C. Mitchell Conover JRER vol. 17 , No. 1-1999 p. 71-90 and Stationarity and Co-Integration in Systems with Three National Real Estate Indices F.C. Neil Myer, Mukesh K. Chaudhry, and James R. Webb JRER vol. 13 no. 3-1997, pages 369-381

Subject: Re: Homer Hoyt Reits From: Terri To: johnny5 Date Posted: Sun, Feb 27, 2005 at 10:15:16 (EST) Email Address: Not Provided Message: Carefully look to the Vanguard MSCI REIT Index for comparison. If a company that markets investment advice can show that the advice has even kept up with the index over a meaningful time period, then the company may be worth using. I wonder whether there will be such evidence, if so there would likely be a fund offered with a long public record.

Subject: More problems From: johnny5 To: All Date Posted: Sun, Feb 27, 2005 at 00:56:48 (EST) Email Address: johnny5@yahoo.com Message: http://qrc.depaul.edu/djabon/cpi.htm#6 6. Problems with the CPI The CPI is widely used as a cost of living index, but technically it is not. The CPI measures the average change over time in the prices paid by urban consumers for a relatively fixed market basket of goods and services. A cost of living index would measure changes over time in the amount that consumers need to spend to reach a certain utility level or 'standard of living.' The CPI completely ignores important changes in taxes, health care, water and air quality, crime levels, consumer safety, and educational quality. Furthermore, the experience of any individual may vary dramatically from what the CPI indicates, because an individual's purchasing patterns may differ considerably from the standard market basket. Families with children have considerably different buying patterns than elderly households, for example. The CPI does not even attempt to represent the experience of people living in rural areas. Even accepting these limitations of application, the CPI has some possibly serious limitations in measurement. The limitations fall into two broad categories. Sampling errors The CPI measures the prices of only a sample of items from a sample of outlets in a sample of cities. The items are chosen by the use of the Consumer Expenditure Survey (CES). The interview portion of the survey, conducted quarterly from 5000 households, collects data on expenditures, assets, liabilities, incomes, large item purchases and household expenses. The diary portion of the CES (also administered to 5000 households) asks each sample household to make a complete record of all expenses for a two-week period. Another survey, the Point of Purchase Survey (POPS), is used to determine which outlets are used for prices. The Point of Purchase Survey is administered 16,800 individuals each year. It determines how much consumers spend for different classes of items and also how much they spend at each of the places from which the items were bought. Even after one has chosen a sample of items and a sample of outlets, one much choose which particular models or brands will be priced and on which day of the month prices will be sampled. An attempt is made to represent sale days and nonsale days in their proper proportions. The cities are sampled as well; the largest cities are always included and an attempt is made to choose samples from cities of intermediate and small sizes. This complex stratified sampling has errors simply because one cannot record the price of every item purchased by every household in every urban area. Non-sampling errors More significant than sampling errors are possible sources of systematic error. Most of these errors are thought to bias the CPI upward, so that the CPI would tend to report more inflation than consumers are really experiencing. Substitution bias Substitution bias refers to the fact that consumers respond to price changes by substituting relatively cheaper goods for goods that have become more expensive. For example as the price of beef rises, families may substitute chicken for beef. The households' market baskets change (perhaps with no decline in utility) keeping expenditures down, but the CPI reports inflation of the original market basket. For example, suppose in one month the price of beef is $1 per pound and the price of chicken is $1 per pound, and that the household consumes 1 pound of each for a total expenditure of 2 pounds. Next suppose the next month the price of beef rises to $1.50 and the price of chicken remains the same. The fixed market basket would report an expenditure of $2.50 (1 pound of each again), a 25% inflation rate. In fact, the household may cut back to 0.5 pound of beef and 1.5 pounds of chicken with an expenditure of 0.5*1.50 1.5*1=$2.25, yielding a 12.5% inflation rate. Complicating matters is that utility of each situation may well be different. Substitution bias can occur within item categories (e.g., consumers might substitute red delicious apples for granny smith apples when the price of granny smiths rise) and across item categories (e.g., consumers might substitute oranges for apples if the price of apples rises). The former is called lower level substitution bias, the latter high level substitution bias. Formula Bias Formula bias refers to a subtle problem relating to the fact that the initial quantities for items in the market basket were determined by dividing the current expenditure by the current average price. If the item happened to be on sale as of the point in time when they were first priced, that item would be systematically overweighted in the market basket and would bias the CPI upward because the prices of sale items tend to rise in subsequent months. The Bureau of Labor Statistics has developed a method called 'seasoning' to adjust for this bias. New Outlet Bias The opening of a new discount outlet may give consumers the opportunity to purchase the same goods at a lower price. The current CPI ignores these price changes. To take the price changes totally into account would bias the CPI downward, since purchasing at discount stores tends to be accompanied with lower levels of service; discount stores tend to have less knowledgeable sales staff, less variety, less convenient store hours, less liberal return policies. However, some economists believe that ignoring outlet switching effects altogether biases the CPI upward because price differentials are not totally offset by differences in service quality, especially as discount stores have taken advantage of more efficient technologies of distribution. For example, Wal-Mart, a discount chain., has the most sophisticated distribution system of any retailer. That Wal-Mart has become the largest retailer in the US suggests that consumers do not consider the Wal-Mart's lower prices to be offset by inferior service. Quality Change Bias The Bureau of Labor Statistics does make an attempt to adjust for quality changes. If a product is 10% 'better', and its price rises by 15%, the Bureau of Labor Statistics will attempt to record a price increase of approximately 5%. For example, median rent from 1976 to 1993 for all rental occupied units increased 2.92 times. The CPI rental index ratio for the same period was only 2.46. This difference means that the Bureau of Labor Statistics had factored in improvements in rental units at rate of approximately 1% per year. However, some economists believe that the Bureau of Labor Statistics systematically underestimates quality improvements, thereby biasing the CPI upward. For example in the case of rental units, from1970 to 1993 time period, the mean number of rooms in rental units increased by 9.7%; the mean number of rooms per person increased by 27%. The mean number of bathrooms increase by 23.3%. The fraction of all units containing central air conditioning increased from 10.8% to 41.7%. The number of rental units with dishwashers increased dramatically, and the quality of the refrigerators, stoves or oven/cooktop combinations, and garbage disposals increased considerably. Other categories whose quality improvements may not be completely factored in are apparel, new and used cars, and professional medical services. New Product Bias New products and new models of existing products tend to have a 'product cycle.' A typical new product is introduced at a relatively high price with low sales volume. Improvements in manufacturing techniques and higher sales volumes usually allow prices to be reduced and quality to improve. Later, when the product 'matures,' the price will tend to increase more rapidly than average. This pattern can be seen with many familiar products such as microwave ovens, VCR's, and cellular telephones. As with quality changes, the Bureau of Labor Statistics has methods to continually incorporate new products into the market basket, because the interval between the major revisions of the market basket (approximately ten years) is too long. However, there tends to be lag between introduction of a new product and its inclusion in the market basket, so that new products tend to be included later in their product cycles. The result is that the CPI might be biased upward. Time of Month Bias The Bureau of Labor Statistics does not collect prices on weekends and holidays when certain items are disproportionately put on sale in certain outlets. There is some evidence that the fraction of purchases made on weekends and holidays has increased as well. This effect would make the CPI less representative of the average consumer and bias it upward. In 1996, the Senate Finance Committee appointed a advisory commission to study the consumer price index. Its chairman was Michael J. Boskin of Stanford University, and the report became widely known as the Boskin Report. The report recommended downward adjustments in the CPI of 1.1% broken down as follows: Estimates Of Biases In The CPI-Based Measure Of The Cost Of Living (Percentage Points Per Annum) from the Boskin Report Sources of Bias Estimate Upper Level Substitution 0.15 Lower Level Substitution 0.25 New Products/Quality Change 0.60 New Outlets 0.10 Total 1.10 Plausible range (0.80-1.60) If the CPI is biased upward, it has numerous undesirable consequences. Many government programs have mandatory cost of living adjustments based on the CPI. The increases in the past would have been too high. Tax brackets are adjusted upward using the CPI; if the CPI is biased upward, tax brackets would have been adjusted too high, leading to less tax revenue. The higher payments and lower revenues would contribute to a higher national debt. An inaccurate CPI also gives citizens an incorrect view of the state of the US economy as well.

Subject: Pirce Hedonics: A Critical Review From: johnny5 To: johnny5 Date Posted: Sun, Feb 27, 2005 at 01:49:24 (EST) Email Address: johnny5@yahoo.com Message: http://www.newyorkfed.org/research/epr/03v09n3/0309hult.pdf The new debate began in early 1995, when Federal Reserve Chairman Alan Greenspan testified before the Senate Finance Committee that he thought that the CPI was biased upward by perhaps 0.5 to 1.5 percentage points per year. This remark did not surprise specialists who understood the technical difficulties involved in constructing accurate price indexes, but it created a small sensation in the political arena. Here at last was a chance to get around one of the most difficult issues in the debate over balancing the federal budget: what to do about the social security program. Here was a way to reduce expenditures to balance the federal budget and rescue the social security trust fund from insolvency in the next century. The beauty of it all was that the solution did not involve raising new taxes or changing benefit formulas. Instead, the solution involved “fixing” a biased method of adjusting social security benefits for the effects of price inflation, .....The NRC panel did not provide unanimous support for the underlying philosophy of the CPI as a pure cost-of-living index, and, in its own words, differs from the Stigler and Boskin et al. reports in this regard (National Research Council 2002, p. 3). The report’s Recommendation 4-2 noted that the “BLS should continue to expand its experimental development and testing of hedonic methods.” On the other hand, Recommendation 4-3 of the report cautioned against immediately expanding the use of hedonics in constructing the CPI itself: “Relative to our view on BLS research, we recommend a more cautious integration of hedonically adjusted price change estimates into the CPI.” The report explained the apparent disconnect between the two recommendations by pointing to a “concern for the perceived credibility of current methods,” adding that “while there is an established academic literature on estimating hedonic functions, researchers are much less experienced using them across a wide variety of goods” (National Research Council 2002, pp. 6-7). ....The absence of explicit criteria is not surprising because the political economy of statistical measurement is largely terra incognita in the practice of economics. However, the NRC panel report forces the debate in this new direction. ....The upward shift in the hedonic function indicates that inflationary pressures dominate any cost-reducing product innovation, but from the data in the exhibit it is not possible to separate the two effects (or even tell if product innovation has occurred). variety. A problem arises if the variety disappears from the sample. When this happens, a replacement must be found, and if a new variety is selected, whose observed price is , then the BLS must consider the possibility that some part of the observed price increase may be because of a change in quality.4 At this point, the BLS must decide if the new variety is a comparable or noncomparable substitute. If it is comparable, and are deemed to be equivalent and the observed price ratio is not adjusted for quality. If this is wrong and the new variety is really a noncomparable substitute, the ratio overstates the true rate of pure price increase when .5 More generally, the price ratio is the product of a pure price term and a quality term. ....The portrait of price hedonics painted in the preceding section is rather flattering, particularly when compared with competing alternatives. What, then, accounts for the conservative Recommendation 4-3 from the NRC panel and an ambient skepticism on the part of some users? One of the leading developers and practitioners of price hedonics, Triplett, found it necessary to devote an entire article to the analysis and refutation of common criticisms of the hedonic method (Triplett 1990). I believe that a large part of the problem reflects a lower degree of confidence in data that are imputed using regression analysis. Price estimates collected directly from an underlying population are generally regarded as “facts.” When the price is inferred using regression techniques, it becomes a “processed” fact subject to researcher discretion. ....The resulting price estimates involve a sampling variance and a potential for bias and are no different in this regard than estimates obtained using regression analysis. There is, however, an important difference from the standpoint of perceived credibility. The CPI sample is constructed directly from the population of consumption goods in retail outlets whose prices are “facts on the ground.” Full enumeration of the population is conceptually possible, lending verisimilitude to the sampling process. The perceived credibility of the researcher discretion involved in regression analysis is not so well anchored. The old saw about statistical regressions applies here: “If you torture Mother Nature long enough, she will ultimately confess to anything you want.” This quip reflects a widely understood but seldom emphasized truth about applied econometrics: researchers rarely complete their analysis with the very first regression they try. The first pass-through of the data often produces unsatisfactory results, such as poor statistical fits and implausible coefficient estimates. Rather than stop the analysis at this point, researchers typically use the same data to try out different functional forms and estimation techniques, and drop weak explanatory variables until plausible or satisfactory results are obtained (or the project is abandoned). The NRC panel report cites instances of these practices during the incorporation of price hedonics in the CPI program (National Research Council 2002, p. 142). ...The first general issue is that price hedonics is subject to the problem of all product differentiation models: where does a good stop being a variety of a given product class and become a product on its own? It is intuitively reasonable to group all Toyota Corollas in the same class and treat different equipment options as characteristics. Is it as reasonable to group included near-substitutes such as Toyota Camrys or all Toyota passenger cars into the same product class? Perhaps the product classes should be functional—subcompacts, compacts, luxury sedans, suburban utility vehicles—regardless of brand. Theory gives only the following guidance: items should be grouped according to a common hedonic function. For example, if equation is the correct specification, all items in the hedonic class must have the same list of characteristics and the same -coefficients. This implied grouping seems reasonable for different configurations of a Toyota Corolla, but increasingly less so as the range of included items is expanded. It should be possible to test for homogeneity of items included in a hedonic class, but it is not clear how often this is actually done. Dummy variables for different brands within a given class can be used in some cases, but this is essentially an admission that some important characteristics are missing or that the -coefficients differ in at least one dimension. This problem is attenuated in the CPI because the items included in the matched-model design are rather narrowly specified. However, although the narrowness of matchedmodel item specifications helps with the problem of heterogeneous -coefficients, it exacerbates the problem of “representativeness.” Learning a lot about inflation and quality change in one narrowly defined class like Toyota Corollas may not be indicative of the experience of the broader class of automobiles. A second general class of issues involves the selection of characteristics. Hedonic theory suggests that a characteristic should be included in the analysis if the characteristic influences consumer and producer behavior. This implicitly assumes that consumers and producers have the same list, which is far from obvious (Pakes 2002). The consumer may be interested in performance characteristics such as top speed and acceleration, while the seller may focus on product attributes like engine horsepower, and the design engineer on technical characteristics like valve design. Furthermore, different consumers may base their spending decisions on different sets of characteristics or assign different weights to them, meaning that the -coefficients in equation 1 are really not fixed parameters, but weighted averages. As a result, estimated parameters may not be stable over time, and the implied estimates of price and quality may shift simply because of changes in the mix of consumers Another concern is the problem of separability and “inside” and “outside” characteristics. The -coefficients in equation 1 may be unstable over time for another reason: the characteristics defining one good are not separable from the characteristics defining other goods. This is a well-known result in aggregation theory and is hardly unique to price hedonics. But the hedonic hypothesis is a form of aggregation and the stringent conditions for separability may fail. In this case, a change in some characteristic outside the set of “insidethe- hedonic-function” characteristics may cause the relation between the inside elements to shift, leading to a change in the -coefficients.7 A similar problem can arise when some of the relevant characteristics are left out of the regression analysis. The problem of missing inside characteristics and nonseparability with respect to outside characteristics can be subjected to econometric tests. However, the truth is that the selection of characteristics is heavily influenced by data availability, and it is not clear how much progress can realistically be expected to occur when dealing with these conceptual issues. Choice of appropriate functional form is the third general class of problems often raised in critiques of price hedonics. The three most common forms—linear, semi-log, and loglog— do not allow for a very rich set of possible interactions among characteristics. Important complementarities often exist, for example, between microprocessor speed and storage capacity. One does not substitute for the other at a given price in most applications. Expanding an automobile’s performance to racecar levels involves an increase in many characteristics, not just a very large increase in horsepower alone. This suggests the use of more flexible functional forms such as the trans-log. Furthermore, as noted in the preceding section, innovations in product quality can take the form of extensions of the length of the hedonic function over time, and this is hard to capture with the usual functional forms. Pakes derives an alternative interpretation of the hedonic function in which price equals marginal cost plus a market power term that depends on the elasticity of demand for the characteristic. This is the Pakes-I result, and it is surely correct for many of the goods for which price hedonics is employed. However, the implications of this result are novel to the point of heterodoxy: Hedonic regressions have been used in research for some time and they are often found to have coefficients which are “unstable” either over time or across markets, and which clash with naive intuition that characteristics which are generally thought to be desirable should have positive coefficients. This intuition was formalized in a series of early models whose equilibrium implied that the “marginal willingness to pay for a characteristic equaled its marginal cost of production.” I hope [the preceding] discussion has made it amply clear that these models can be very misleading [author’s emphasis]. The derivatives of a hedonic price function should not be interpreted as willingness to pay derivatives or cost derivatives; rather they are formed from a complex equilibrium process (Pakes 2002, p. 14). This view clashes strongly with the conventional view, which is summarized in the National Research Council (2002) report in the following way: Strange-looking variable coefficients could be indicative of larger problems—including omission of key value indicators, characteristic mismeasurement, and functional form issues (p. 142). Furthermore, It is hard to know when a hedonic function is good enough for CPI work: the absence of coefficients with the “wrong” sign may be necessary, but it is surely not sufficient (p. 143). These results represent a potential paradigm shift in the field of price hedonics. They have yet to be vetted by the specialists in the field, but some or all of each proposition is likely to survive scholarly scrutiny.8 There are a number of issues to be resolved, such as the problem of cross-sectional stability. The same mechanism that causes the hedonic coefficients to be unstable over time may also cause them to be unstable in a cross-section of consumer prices drawn from different locations and different types of retail outlets. In this case, the movement along the hedonic function at any point in time may not be possible. This, and other issues, await further debate. The Political Economy of Price Hedonics There is a saying in tax policy that “an old tax is a good tax.” This does not follow from any deep analytical insight into optimal tax theory, but from the pragmatic observation that taxation requires the consent of the governed. The public must accept and respect the tax, and this does not happen automatically when a tax is introduced. There is typically a learning curve as people adjust their behavior in light of new tax incentives, and gainers and losers are sorted out. The tax matures as affected groups negotiate changes and as unforeseen consequences become apparent and are dealt with. A similar argument leads to the proposition that “old data are good data.” Old data, like old taxes, involve learning by the public and by policymakers about a new set of facts, and both may involve large economic stakes. In the case of CPI reform, the Boskin Commission estimated that the cumulative effects of a 1 percentage point per year bias would have added $1 trillion to the national debt between 1997 and 2008. If price hedonics were completely successful in eliminating the Boskin Commission’s quality bias, the growth rate of the CPI would fall by about 25 basis points to 60 basis points per year, with an attendant reduction in cost-of-living payments to individuals.9 In addition, cost-of-living adjustments to social security, federal civilian and military retirement, supplemental security income, and other programs are not the only dimension of policy affected by this line of argument, because the CPI is used to index income tax parameters, Treasury inflation-indexed bonds, and some federal contracts. Moreover, a revision to the CPI also changes the metric that policymakers use to gauge the rate of inflation. They have to assess how much of the change in measured inflation is the result of underlying inflationary pressures and how much is the result of the new methods. This reflects a fundamental truth about the policy process: policy decisions (indeed, most decisions) must be made with imperfect information. There is learning over time about the nature of the data and the useful information they contain. Chairman Greenspan’s 1995 comment about his perception of a bias of 0.5 to 1.5 percentage points in the CPI is a case in point. The expanded use of price hedonics thus looks different to users who are interested in the “output” of the technique than to expert practitioners who are interested in developing the technique per se. Put differently, there is a policy-user learning curve that is different from the researcher learning curve. However, the two curves are related. The weaker the professional consensus is about a technique, the lower the level of confidence is in the technique’s consequences and in its acceptance by the public and policymakers. This is the essence of the “perceived credibility” standard.10 This line of argument has implications for the use of price hedonics in the CPI. Perceived credibility is linked to the degree of professional consensus, and Pakes (2002) has pretty much upset whatever consensus had existed. It will doubtless take time to sort out the propositions advanced by Pakes, and this alone justifies the conservatism of the NRC’s Recommendation 4-3. More research is needed on the robustness of price hedonic results to changes in assumptions about functional forms and characteristics and about the circumstances under which parameter instability and “wrong” signs occur. Monte Carlo studies, in which the true value of the parameters is known in advance, could be a useful way of understanding the pathology of the hedonic technique and assessing the accuracy of this technique and its ability to forecast the CPI, both in absolute terms and relative to other quality-adjustment methods. Research at the frontier should be innovative and challenging, aimed at convincing peer researchers. However, this is not the way good policy is made. Policy ultimately relies on the consent of the public, not the vision of convinced experts. Changes in official statistical policy therefore should be conservative and credible, and the research agenda must include a component aimed at building confidence that the benefits of change outweigh the costs. Accordingly, the National Research Council panel is right to insist on a conservative approach to the increased use of price hedonics in the CPI. However, the research community is also right to insist that this technique is the most promising way to account for changes in product quality in official price statistics. Researchers would also be right to point out that part of the credibility issue with hedonics is about the switch to the new technique, and not just about the technique itself. Had the BLS used price hedonics more extensively in the past rather than the more commonly used quality-adjustment methods, hedonics would probably have evolved by now to the point of perceived credibility. Indeed, if positions were reversed and the link, overlap, and class-mean methods were offered as substitutes for an entrenched hedonics methodology, the debate would be very different.

Subject: Core Inflation Measurement From: johnny5 To: All Date Posted: Sat, Feb 26, 2005 at 23:54:54 (EST) Email Address: johnny5@yahoo.com Message: Not only are we strugglinh here in America - the euro boys are too :( http://www.dallasfed.org/research/papers/1999/wp9903.pdf The notion of core inflation has played an important role in the deliberations of monetary policymakers for the past twenty-five years. However, despite the central role of this concept, there is still no consensus on how best to go about measuring core inflation. The most elementary approach, and the one that is probably the most widely used, consists of simply excluding certain categories of prices from the overall inflation rate. This is the so-called “Ex. food and energy” approach to core inflation measurement, and it reflects the origin of the concept of core inflation in the turbulent decade of the 1970’s. More recently, however, there have been a variety of attempts to put the measurement of core inflation on a more solid footing. The newer approaches have two key features in common. First, they adopt a more statistical rather than behavioural approach to the problem of price measurement. And second, they invoke an alternative, monetary, concept of inflation, as opposed to the traditional microeconomic cost of living concept, as the guiding theory. This paper critically reviews various approaches to measuring core inflation. I do so by linking these approaches in a single theoretical framework, the so-called stochastic approach to index numbers. I evaluate the competing merits of the different approaches, and argue that a common shortcoming is the absence of a well-formulated theory of what these measures of inflation are supposed to be capturing. The notion that they somehow better capture the “monetary” component of inflation, or the component of inflation that ought to be of primary concern to central bankers, is of questionable validity. ...Eurostat can legitimately motivate the exclusion of certain categories of prices from the HICP. The category that has attracted the most attention by it omission is the costs of owner occupied housing. ...These calculations raise the question of what it is we want a core inflation statistic to measure. If the object we are pursuing is a true cost of living index, then it is not clear that we should be eliminating the effects of tax increases from our price measure. Furthermore, the reasoning above is only partial equilibrium. A proper treatment of the effects of indirect taxes on a measure of the price level would require a detailed general equilibrium analysis of the effects of the tax increase that would go well beyond current practice.2 While it is possible that some of the costs of inflation are captured by changes in the cost of living, some of them may require a much broader measure of market transactions. One conclusion from this line of reasoning is that for the purposes of monetary policy what is needed is not a microeconomic theory of the cost of living, but a macroeconomic theory of the cost of inflation. Thus we can interpret various measures of core inflation as attempts to better measure this more appropriate measure of inflation for monetary policy purposes. ....Note that so far nothing has been said about which prices to include in the calculations. The prices to be averaged in arriving at a measure of inflation could be just consumer prices, or could include the prices of all GDP transactions or the prices of all transactions (including intermediate transactions) or could even include the prices of assets. Fisher (1920) argued that when it comes to constructing a measure of the purchasing power of money we ought to look at as many prices as possible: “Perhaps the best and most practical scheme [for the construction of an index number] is that which has been used in the explanation of P in our equation of exchange, an index number in which every article and service is weighted according to the value of it exchanged at base prices in the year whose level of prices it is desired to find. By this means, goods bought for immediate consumption are included in the weighting, as are also all durable capital goods exchanged during the period covered by the index number. What is repaid in contracts so measured is the same general purchasing power. This includes purchasing power over everything purchased and purchasable, including real estate, securities, labor, other services, such as the services rendered by corporations, and commodities.” (Fisher, 1920, 217-218) It is interesting to note that the preamble to the European Council Regulation governing the calculation of the HICP which will form the basis for assessing inflation developments in the euro area notes that “• it is recognised that inflation is a phenomenon manifesting itself in all forms of market transactions including capital purchases, government purchases, payments to labour as well as purchases by consumers.” (European Commission, 1998) Once we have abandoned the cost of living as the guiding concept for inflation measurement for monetary policy purposes 6 See Diewert (1995). 9 there is no reason for confining our attention to changes in the prices of final consumer goods. Changes in the prices received by producers, changes in the prices of intermediate goods and changes in the prices of existing assets all carry information about monetary inflation. ...But why do we need to confine ourselves to looking to budget shares for weights? The use of budget shares as weights is best motivated by an appeal to the (atemporal) theory of the cost of living index. Yet implicit in the notion of core inflation that ought to be of primary concern to monetary policymakers is the idea that such inflation is inherently different to inflation as measured by the cost of living index. Thus the weighting scheme that is optimal from the perspective of constructing a cost of living index may no longer be optimal from the perspective of measuring inflation for the purposes of monetary policy. ...A weighting scheme that might be more appropriate for monetary policy purposes would weight prices by the strength or quality of the inflation “signal” they provide. Indeed this is the approach that implicitly underlies the “Ex. food and energy” or “Ex. indirect taxes” approaches to estimating core inflation that are used by many central banks and statistical agencies. In these approaches we attach zero weight to certain prices on the (unstated) grounds that they convey zero information about core inflation. Formally, 0 = i w if 2 2 ~ s s > i where 2 ~ s is some “unacceptably high” level of variability in short term price changes. It is worth noting that there is no justification for such a practice from the perspective of the theory of the cost of living index. The rationale for excluding certain prices from an estimate of core inflation must lie other than in the theory of the cost of living index. That is, choose weights for the various individual prices that are inversely proportional to the volatility of those prices. A weighting scheme along these lines has been investigated by Dow (1994), who termed the resulting measure of inflation a Variance Weighted Price Index, and by Diewert (1995), who termed the resulting measure of inflation Neo-Edgeworthian. Wynne (1997) reports the results of applying a scheme along these lines to US CPI data. The advantage of employing a variance weighting scheme to calculate core inflation is that we do not discard potentially useful information about core inflation that may be contained in food and energy prices, or whatever categories are excluded. The “Ex. food and energy” approach to estimating core inflation is further compromised by the fact that it requires that we make a once and for all judgement about what the least informative categories of prices are for estimating core inflation. A variance weighting scheme such as the above allows weights to change over time as the volatility of different categories of prices changes over time. Yet another weighting scheme was proposed informally by Blinder (1997). Starting from a definition of core inflation as the persistent or durable component of inflation, Blinder suggests that when it comes to calculating core inflation, individual price changes should be weighted by their ability to forecast future inflation. Blinder argues that central bankers are a lot more concerned about future inflation than they are about past inflation, and that when thinking about the measurement of core inflation as a signal extraction problem, future inflation is the object about which we are seeking information via current signals. Thus core inflation is defined in terms of its ability to predict future headline inflation. At present there have not been any attempts to operationalize this approach.10 ...Perhaps a more serious shortcoming of these models is that they fail to take account of persistence in both individual price changes and the inflation rate. Some of the dynamic models that have been proposed in recent years seek to remedy this problem, and succeed to varying degrees. We will start by looking at the Dynamic Factor Index (DFI) model proposed by Bryan and Cecchetti (1993) and Cecchetti (1997). This model is of interest for many reasons, not least of which is the fact that it is the only model that attempts to combine information on both the cross-section and time series characteristics of individual price changes in deriving a core inflation measure. Monetary theory tells us that, under a fiat monetary standard, the price level is ultimately determined by the stock of base money outstanding relative to the demand for it. Therefore the appropriate measure of M in the system above is a measure of the base money stock. However, the assumption of stationary velocity of base money is probably at odds with the data for several, if not all, industrialised countries. First and foremost before choosing a measure of core inflation we need to specify what it is we want the measure for. Do we want a measure of core inflation to answer the question “What would the inflation rate have been if oil prices (or indirect taxes) had not increased last month?” If so, then none of the approaches reviewed above will help. This question can only be answered in the context of a full general equilibrium model of the economy. Furthermore if the measure of inflation we are interested in is the cost of living, then it is not clear why we would ever want to exclude the effects of oil price increases or indirect taxes. Thus it must be the case that when measuring core inflation we have some other inflation concept in mind. Ideally a central bank would be most interested in a measure of inflation that measured the rate of decline in the purchasing power of money. Unfortunately there is no well developed and generally agreed upon theory that can serve as a guide to constructing such a measure. Thus in practical terms we left with the options of constructing a core inflation measure so as to better track the trend inflation rate (somehow defined) in real time, or what in many circumstances may amount to the same thing, forecast the future headline inflation rate.

Subject: More academic papers From: johnny5 To: johnny5 Date Posted: Sun, Feb 27, 2005 at 00:12:54 (EST) Email Address: johnny5@yahoo.com Message: http://www.dnb.nl/dnb/bin/doc/sr063_tcm13-36668.pdf Since the oil crises of the 70’s the term core inflation has played an important role in the monetary policy debate. In particular at central banks various estimators have been developed to measure what is sometimes called core, permanent, underlying or monetary inflation. Although there is no consensus in the literature on what core inflation actually is, all approaches intend to provide an inflation measure which is more informative for monetary policy than the change of the official consumer price index. There are several reasons why the CPI is not an ideal measure of inflation for monetary policy purposes. Firstly, the CPI is a noisy signal of the inflationary pressures in an economy. For example, seasonal influences, changes of the indirect tax rate, or purely relative price changes affect the CPI, but do not call for monetary policy action. Finally, central banks cannot control inflation as measured by the CPI. At least in the short run the CPI reacts to nearly every shock impinging on the economy and not only to variations of the money stock, for which the central bank is responsible. Since credibility is crucial to central bank performance, it would be desirable to have an operational inflation concept which only reflects price level movements for which the monetary authority is accountable. Such a concept would not only be interesting for the public, but also for central banks, because it would enable the early detection and correction of control errors. Motivated by one or more of these arguments, a host of methods has been developed to estimate core inflation. Most of these methods, however, lack a clear definition of what they are supposed to measure, which specific quantity in the population they should estimate. The methods suggested are either based on cross-sectional information, i.e. the distribution of individual price changes with respect to some reference period, on univariate or multivariate time series or on pooled cross-sectional and time series data 3. Cross-sectional methods attempt to refine the CPI, aiming to eliminate its transitory move-ments and to increase the signal-to-noise ratio. Three different types of inflation measures rely on purely cross-sectional information. The most well-known type encompasses price indices that simply exclude allegedly volatile components, such as seasonal food or energy prices. A more sophisticated class of measures contains the various trimmed mean estimators. These measures do not a priori exclude specific commodities from the price index once and for all, but remove those commodities of which the observed price change relative to the previous period is an ‘outlier’ 4. The weighted median belongs to this class of inflation measures. Finally, there are price indices which use the full cross-sectional information but aggregate the price changes with weights which are inversely related to their volatility. Clearly, since the weights of these price indices are not derived from budget shares, the scope of these inflation measures is not restricted to consumer prices 5. We will argue that our general equilibrium model provides a reasonable interpretation of empirical data. Furthermore, we will show that the standard battery of tests applied to the time series generated by our model does not reject the testable implications of the different SVAR models. In this sense, our simulation study yields results which are relevant for actual monetary policy. THey conclude svars aren't currently applicable to monetary authorities.

Subject: Re: More academic papers From: johnny5 To: johnny5 Date Posted: Sun, Feb 27, 2005 at 00:53:59 (EST) Email Address: johnny5@yahoo.com Message: CPI can really lack some useful information when you exclude f&e http://www.bankofengland.co.uk/workingpapers/wp242.pdf This paper examines a range of measures of core inflation for the United Kingdom, both conceptually and empirically, setting out their motivation and highlighting their potential limitations. No single measure performs well across the board, but a compromise conclusion on the usefulness of measures of core inflation is that each one may provide a different insight into the inflation process. There can be value in looking at a range of measures, as long as one bears in mind what information each type of indicator is best at providing. When all measures are giving the same message then, in a sense, monetary policy makers can reasonably consider that these measures are providing a reliable guide to inflationary pressures. It is when the measures start to diverge that policymakers need to take a much closer look at the reasons for those divergences. path, save perhaps for some unavoidable and unforecastable error. If we were to perform Marques et al’s tests on a measure of core inflation, it would fail conditions (ii) and (iii). That is, CPI inflation would not be attracted to the measure of core inflation since it follows the exogenously prescribed path, but core inflation would be attracted to CPI inflation.(18) This finding would cause us to reject this measure of core inflation as useful in providing forward-looking information about the future path of CPI inflation, even though it might well be useful in setting policy. Thus, failure in the tests does not necessarily mean that a measure of core inflation is not informative—it may just be that the effects of past policy mean that Marques et al’s tests do not help us make that judgment. In addition, because the differential between targeted and core inflation is likely to be some function of the stance of monetary policy, at least in the short run, the tests may be vulnerable to the Lucas critique. That is, if policy were to be based on some estimated relationship between core and targeted inflation, that relationship may change and become misleading as a guide to the future.

Subject: Inflation, Renats or Housing From: Terri To: All Date Posted: Sat, Feb 26, 2005 at 21:32:11 (EST) Email Address: Not Provided Message: We know there is a lack of connection between rents and real estate prices, we know how much housing costs contribute to the consumer price index. So change the way we calculate the index by using not rentals but housing cost, and there is inflation. Lots of inflation. This is what the Economist has done, and this is disturbing. Housing costs are 30% of the Consumer Price Index, and while rents are rising at a moderate pace housing prices are rising at a rapid pace. Then, is there inflation?

Subject: Inflation, Rents or Housing [cont.] From: Terri To: Terri Date Posted: Sat, Feb 26, 2005 at 21:50:41 (EST) Email Address: Not Provided Message: While I have no argument about the way the Consumer Price Index is calculated, the possibility that the current divergence between rents and housing prices has become so large that core inflation is much higher than we record may have to be considered. Of course, this would apply to other country statistics as well. In any event, I am a step closer to worrying about inflation.

Subject: Re: Inflation, Rents or Housing [cont.] From: Pete Weis To: Terri Date Posted: Sun, Feb 27, 2005 at 13:01:23 (EST) Email Address: Not Provided Message: I think the point to ponder about housing costs is the tendency for so many of us to take on mortgages at or near the limit of what the mortgage industry will allow. The mortgage industry has allowed dramatically higher mortgages as a percentage of gross income in recent years and they allow the borrower to service them with initially low (sometimes rediculously low) monthly payments. With many of these loans, the payments will rise after the begining years even if rates don't rise. If rates do rise than the situation becomes even worse. Folks have been willing to take on this high risk of not being able to service their mortgage payments a few years down the road because they believe their home will continue to rise in value rapidly and they don't want to be left behind. Mortgage brokers are willing to loosen requirements and invent very risky interest rate schemes because it is the only way to keep the golden egg rolling with home prices going up much faster than paychecks. Besides they are able to pass the risk on to bond holders and home owners. The government is not and has not been inclined to step in and regulate this mess because it has been the one thing which has kept our economy afloat over the last few years. So the question becomes - how much longer can this last and will it be long enough before something comes along to finally lift middle class wage earners out of their funk or......

Subject: Energy Stocks in the S&P From: Terri To: All Date Posted: Sat, Feb 26, 2005 at 17:10:50 (EST) Email Address: Not Provided Message: http://www.barra.com/Research/SectorWeights.aspx Notice that in Janaury 1980 the S&P weights was 20% energy stocks, where now after all the run of prices the weights is 7%. The economy has indeed changed. Financial servcies are now 22%, while in 1980 they were 5.4%. Technology and telecommunications went from 17% in 1980 to 18% now. So we have gone from being energy drives to finance driven in a sense.

Subject: Paul Krugman's Note on Oil From: Terri To: Terri Date Posted: Sat, Feb 26, 2005 at 20:19:51 (EST) Email Address: Not Provided Message: http://www.wws.princeton.edu/~pkrugman/oil.html April 9, 2002 A QUICK NOTE ON OIL If you want to get slightly scared about the economic implications of Middle East conflict, here's a useful chart from an Energy Information Agency report from a few years back. It shows how the strategic importance of OPEC, and of the Persian Gulf in particular, declined dramatically after the oil crises of the 1970s; that's why there weren't any more crises for 20 years. But now, through inattention, laziness, and greed, we've revived that strategic centrality. And no, drilling in ANWR is no answer. At peak, more than 10 years from start, it would produce a bit more than 1 percent of the world total. Take a look at the chart and see if that would make much difference. Conservation is the only way to make big inroads on this vulnerability in the medium term. And alternative sources of energy are the only long-term answer.

Subject: Good post Terri From: Pete Weis To: Terri Date Posted: Sun, Feb 27, 2005 at 12:34:14 (EST) Email Address: Not Provided Message: This is such an extremely important issue to the world economy. We must aggressively develop alternatives and we need to buy ourselves time with a real commitment to conservation.

Subject: Safety Above All From: Terri To: All Date Posted: Sat, Feb 26, 2005 at 16:29:19 (EST) Email Address: Not Provided Message: Suppose you invest an entire portfolio in the Vanguard GNMA fund. The yield is 5%, the duration 2.5 years. A 2 percentage point increase in mortgage rates would lower the price of the fund about 5%, but the yield would begin to rise toward 7%. In less than than 2.5 years, you would have earned about 5% annually. GNMAs are government insured. Where is the long term risk? A 50% stock index and 50% Bond Index fund portfolio strikes me as nicely protected against risk. Try the Value Stock Index if you wish. Try the Europe Index if you wish. A 40% stock index and 60% bond index portfolio is even more risk averse. A 60% stock portfolio of course and you are adding risk. What would you have? There are ways to invest with long term safety.

Subject: Re: Safety Above All From: Pete Weis To: Terri Date Posted: Sat, Feb 26, 2005 at 19:04:12 (EST) Email Address: Not Provided Message: 'GNMAs are government insured. Where is the long term risk?' The risk is in the dollar in which they are denominated. Anyone who has invested in GNMA's and gotten 5% nominal returns over the last 2 years has actually lost at least 5% or more each year since the dollar has lost 10% or more against a 'basket' of currencies. In fact it has lost considerably more than that against many of the 'necessary' personal expenditures in life such as food, housing, energy, gas for the suv, insurance of every sort and sending your kid to college. The phony core CPI number the government puts out there is used to pump up the GDP number and for validation of negative real interest rates - I would call it a 'Snow' job foisted on the public by the Bush administration. So we need to remember that if we are invested in US dollar denominated investments, we need to make at least a 10% nominal (perhaps more) per annum gain if we are to break even with a 0% real return on investment. Am I wrong on this?

Subject: How to be Most Secure From: Terri To: Pete Weis Date Posted: Sat, Feb 26, 2005 at 19:36:49 (EST) Email Address: Not Provided Message: Interesting argument. I have not found any academic study criticizing the way we measure prices, but I will attend at once if I do. Of course, I hold the Europe Index as a dollar hedge. Australia Index as well. I hold the Value Index and the energy and health care funds as as hedges against inflation. But, bond fund have been terrific investments. The return of the Vanguard Long Term Bond Index these 5 years ending Janaury 31, 2005, was 10.9% annually. This is superb regardless of the dollar or inflation. The GNMA example is a fine example. Inflation is moderate, and if you wish to make a secure 5% there is the opportunity. If it becomes more expensive to travel to London, so what? The dollar gained in value from 1993 till 2001, now the gains have reversed. Should a highly conservative investor trail inflation for a while, but still have a reasonable nominal return, all will be well. Interest rates adjust to price changes. I understand the nagging doubts, for this is not Robert Rubin's economy, and we are trying to compensate, but there are ways to be secure with a most conservative domestic portfolio. Remember the duration of the GNMA portfolio is just 2.5 years.

Subject: Academic studies From: johnny5 To: Terri Date Posted: Sat, Feb 26, 2005 at 23:10:09 (EST) Email Address: johnny5@yahoo.com Message: http://ideas.repec.org/p/fip/feddwp/99-03.html#related http://ideas.repec.org/p/fip/feddwp/99-03.html This paper reviews various approaches to the measurement of core inflation that have been proposed in recent years. The objective is to determine whether the European Central Bank (ECB) should pay special attention to one or other of these measures in assessing inflation developments in the euro area. I put particular emphasis on the conceptual and practical problems that arise in the measurement of core inflation, and propose some criteria that could be used by the ECB to choose a core inflation measure http://www.bankofengland.co.uk/workingpapers/wp242.pdf

Subject: Short and Long Term From: Terri To: All Date Posted: Sat, Feb 26, 2005 at 14:20:00 (EST) Email Address: Not Provided Message: Cyclical or secular, I really do not know the difference. An investor who held the Long Term Bond Index from 2000 has gained 10.9% annually these 5 years. Such an investor should be quite pleased. An investor with a conservative stock portfolio has been gaining for 28 months, and made up most or all the losses of the bear market. The Large Cap Value Stock Index is positive for these 5 years, the Mid Cap Index is positive, the Small Cap Index is positive. Gains have been substantial. The REIT Index has flourished, as have the Vanguard Health Care and Energy funds. The Europe Stock Index is positive over the past 5 years. With a conservative portfolio an investor should be most pleased, and should be well protected in furute.

Subject: Risk Protection From: Terri To: Terri Date Posted: Sat, Feb 26, 2005 at 15:04:45 (EST) Email Address: Not Provided Message: The Vanguard GNMA fund has a yield of 5.03% and a duration of 2.5 years. The bonds are government insured. What more could be asked for risk aversion? The really is minimal risk in any of the short term bond funds, and the yields are reasonable. The Fed intend to continue to raise interest rates, but there is little to worry about with a short term bond fund. The Inflated Protected Bond Fund has a longer duration, and I still do not know how the fund will behave if long term interest rates rise sharply.

Subject: Bond Funds as Protection From: Terri To: All Date Posted: Sat, Feb 26, 2005 at 14:02:18 (EST) Email Address: Not Provided Message: Suppose there is to be a bear market. There simplest recourse to the bear market of 2000 to 2002 was bond funds. The S&P Stock Index lost 1.9% annually these last 5 years from January 31, 2000 to January 31 2005. However the Vanguard Long Term Bond Index gained 10.9% annually during this period. While bond funds were weaker in the 1973 to 1974 bear market, they still were positive for the period. Rising interest rates may bring about a bear market, but there is little likelihood that rates will rise in the course of a bear market. An investor can choose to balance stock risk in a portfolio with any proportion of bonds. The bond funds chosen can be high in interest rate sensitivity as long term funds or low as short term funds. The beauty of diversifying with bond funds is they allow an investor not to have to worry about always timing the market while always being invested.

Subject: Question? From: Pete Weis To: Terri Date Posted: Sat, Feb 26, 2005 at 14:23:00 (EST) Email Address: Not Provided Message: What's the chance of rates staying low (regardless of a bear market) if fiscal policies cause large budget deficits and a current account deficit remains high in tandem? Typically, in a bear market economy tax revenues decrease making the budget deficit more severe. Either taxes must be increased on the wealthiest who suffer very little from a consumption point of view during such periods, or government spending must be slashed, or our political leaders will continue to borrow to the max. Under our present administration which scenario is most likely? What does this mean for our currency and our interest rates? Can we load up on cake and ice cream and expect to lose weight? Are consequences a thing of the past?

Subject: Federal Reserve Protection From: Terri To: Pete Weis Date Posted: Sat, Feb 26, 2005 at 14:36:22 (EST) Email Address: Not Provided Message: The Federal Reserve can and will protect the economy. There is scant general inflation, and should economic growth slow significantly for any reason the Fed can and will reverse course and begin to lower short term interest rates. Though the Fed will continue to slowly raise short term interest rates for a while, with a nicely growing economy there is leeway. Slow enough growth and the Fed will reverse course. We grew at 3.8% last quarter, which gives the Fed leeway. The Fed has made it clear the economy will not be harmed to stem the trade deficit or relative dollar value decline. Government budget deficits will be a problem for quite a while, but they do not preclude low interest rates. This is not to say in the least there is no danger, just to argue there is a Fed recourse.

Subject: Not much room for lowering From: Pete Weis To: Terri Date Posted: Sat, Feb 26, 2005 at 15:39:13 (EST) Email Address: Not Provided Message: Besides lowering rates risks further damage to confidence in the dollar. Alan Greenspan is discovering a disconnect between the fed rate and long term rates. Long term rates seem to be more dependent on the willingness of foreign central banks to absorb more dollar risk and bond investors belief that foreign central banks will continue to buy US debt. The fed rate doesn't seem to have much effect on long term rates and Greenspan seems to be worried about this. Greenspan has dropped his 'measured rate increase' terminology precisely because he has become more concerned by the twin deficits and dangers to the dollar. He may not (at least publically) be as worried as Paul Volker but he seems to be leaning more in Volker's direction. So I read the dropping of this terminology to mean - if necessary they might raise rates more aggressively to prevent a financial crisis. Risking a recession caused by steeper rates is preferabled to a financial crisis/collapse. One is a serious problem the other is a disaster. I think one could argue that this is the worst predicament a fed chairman has ever faced, since this is the greatest risk to the dollar in history.

Subject: There is Lots of Room From: Terri To: Pete Weis Date Posted: Sat, Feb 26, 2005 at 15:50:30 (EST) Email Address: Not Provided Message: Alan Greenspan and other Federal Reserve governors have been clear that the economy will not be harmed for the sake of the value of the dollar. I can not imagine otherwise. What if the dollar were to fall in short order 15 to 20%? The same happened in England and France in 1991-1992, with no ill effects beyond a brief attempt to stem the loss in value. We do learn, and we will not try to defend the dollar as the Bank of England tried to defend the Pound. The disaster is sacrificing the economy for the dollar and it will not be done, for the Fed governors have told us this, and the policy would be harmful as Keynes knew many years ago. There is lots of room to lower rates should that be needed. Right now we are growing well, the dollar is fine, the bond and stock markets are fine, so there is no near term worry.

Subject: What if There is a Bear Market? From: Terri To: All Date Posted: Sat, Feb 26, 2005 at 13:46:39 (EST) Email Address: Not Provided Message: The longest bear market of the past 60 years ended in October 2002, and lasted from 26 to 30 months depending on the index used to measure. So, a bear market of more than a year is seldom seen and seen only once in 60 years. The answer however to protecting against a bear market has been and seems to be bond funds.

Subject: Value Stocks From: Terri To: Terri Date Posted: Sat, Feb 26, 2005 at 16:03:39 (EST) Email Address: Not Provided Message: Notice that large and small cap value stocks held up remarkably well in both the 2000-2002 and 1973-1974 bear market periods. Valuation and dividends matter in difficult markets.

Subject: Think you may be.... From: Pete Weis To: Terri Date Posted: Sat, Feb 26, 2005 at 14:04:07 (EST) Email Address: Not Provided Message: getting mixed up by cyclical bear markets vs. secular bear markets. 2000-2002 was either the longest and deepest cyclical bull market in history or it was the begining of a secular bear market (which is what I believe). The following is from an outfit which profits from investors staying in the markets and they are much more bullish than I. However, they provide a good explanation of bear markets (the stats regarding bear market periods were in table format so you have to jump back and forth line up the data): Will the Bear Be With Us a Long Time? This article is written by Dennis Tilley, director of research at Merriman Capital Management. A former aerospace engineer who has developed market timing systems for many years, Dennis has updated and improved virtually every timing system in use by MCM. by Dennis Tilley Director of Research Recently, I was watching the Suze Orman show on CNBC when a caller asked: “What is a secular bear market?” Apparently more and more investors are wondering about this, and I’ll use this article to address the topic. More important, I’ll talk about what investment strategies are effective in a secular bear market. There are no universally accepted rules for defining a secular bear market. But in very general terms, it’s a long time, perhaps 10 to 20 years, characterized by below-average stock market returns. Contrast this with a cyclical bear market, which typically lasts from a few months to a year. The four most recent cyclical bear markets didn’t last long: three months in 1987, four months in 1990, 10 months in 1994 and two months in 1998. The current bear market has lasted longer than these four combined. More and more commentators are claiming we are now in the beginning stages of a secular bear market. But in truth, it’s simply too soon to know. The last secular bear market in the United States was from 1966 to 1982. Japan continues to struggle through a severe secular bear market that started in 1990. Figure 1, showing the performance of the S&P 500 Index from 1929 to 1999, is divided into four time periods: two secular bear markets and two secular bull markets. Note that during the secular bear markets (1929 to 1941 and 1966 to 1981), the annualized returns for the index were significantly lower than its long-term average of 10.6 percent. Figure 1 Stock market returns (in percent) 1929-1999 1929-1941 1942-1965 1966-1981 1982-1999 Type of Market Total Period Secular Bear Secular Bull Secular Bear Secular Bull Length in Years 71 yrs 13 yrs 24 yrs 16 yrs 18 yrs Annualized Return of S&P 500 10.6 (2.4) 15.7 6.0 18.5 Inflation Index (CPI) 3.3 (0.8) 3.1 7.0 3.3 S&P500 Real Return 7.1 (1.6) 12.2 (0.9) 14.7 The 1966-1981 annualized return of 6.0 percent may not seem so bad in the current stock market climate. But adjusted for inflation, it represents a loss of 0.9 percent per year. While the protracted length of a secular bear market can be extremely discouraging, those with the fortitude to stick with their investments over the long term have eventually reaped the rewards of their patience. The two secular bull markets shown in this table produced exceptional returns for even longer periods of time. A secular bear market doesn’t mean stocks go straight down over a long period. Figure 2 shows the Dow Jones Industrial Average and S&P 500 since 1962. Though the period from 1966 to 1981 was a secular bear market, stocks went up and down in many cyclical bull and bear markets. But all the zigging and zagging did not lead to ever-higher stock prices. Still, the zigs and zags were often prominent enough that nimble investors could take advantage of them. The stock market is partly a creature of psychology. Near the end of a typical secular bull market, stocks are widely regarded as the best way to get rich. (Does that sound like late 1999?) But near the end of a typical secular bear market, many investors are looking at other asset classes to achieve their financial goals – bonds, real estate, gold and commodities. Strategies for a secular bear market The bad news may be the possibility of a new secular bear market. But the good news is that investors can maximize their chances for preservation and growth in such an environment with two strategies: diversification and timing. Because investors can’t see very well into the future, there’s simply no substitute for proper asset diversification. That means having significant exposure to international stocks as well as U.S. stocks, to small-cap stocks as well as large-cap ones and to value stocks as well as growth stocks.

Subject: Planning Planning From: Terri To: Pete Weis Date Posted: Sat, Feb 26, 2005 at 16:50:39 (EST) Email Address: Not Provided Message: The board will be gone soon, but we will begin again. What is necessary is to have definite plans for ourselves. Worry, and plan. I worry, and plan and you help wonderfully. This essay is useful, but when will these guys cite sources and date their work?

Subject: 1973 - 1974 From: Terri To: Pete Weis Date Posted: Sat, Feb 26, 2005 at 14:45:20 (EST) Email Address: Not Provided Message: There are all sorts of stories and games with data to show that investors made no money from 1966 to 1981, and even if they did they really did not because of inflation. Phooey. Stock dividends were above 4% through the period, and when added to index returns show there were gains through the period and while inflation was a problem stock returns compensated nicely for inflation. Money was made in stocks, and bonds and real estate through the period from 1966 to 1981. The need was for a conservative or diversified portfolio. We can better and more easily diversify now.

Subject: You are an absolute.... From: Pete Weis To: Terri Date Posted: Sat, Feb 26, 2005 at 15:50:49 (EST) Email Address: Not Provided Message: stalwart! It will be interesting if you begin to change your mind over time. Hey, maybe somehow we get through this economic minefield - the Chinese begin to shop at some store which sells many American goods or we develop enough products which consumers in emerging economies must have. I just don't see how we can live off all this borrowing and our housing market for many more years. You must believe we can, however.

Subject: Being Realistic From: Terri To: Pete Weis Date Posted: Sat, Feb 26, 2005 at 16:14:45 (EST) Email Address: Not Provided Message: Though I do wish economic policy were otherwise, I have been hearing about the dread of debt year after year after year, and I am sure not going to wait for debt to finally emerge as an investing problem. Rather I will invest cautiously and happily, for there are fine ways to do so. I do wish professional bears would offer more useable advice, but where? So, we learn. I try to be a realist.

Subject: Bill Gross From: David E.. To: Terri Date Posted: Sat, Feb 26, 2005 at 20:12:07 (EST) Email Address: Not Provided Message: Bill Gross's column this month covers every investor's dilemna. The possibility that Japan and China will stop buying treasuries is the Sword of Damocle's over our heads. Everything will be great until the sword drops. But remember, in 1996 Greenspan talked about Irrational Exuberance. That was 9 years ago - and no real pain yet. There is a possibility that the bubble won't burst. You have to decide where to place yourself on the continum of risk. Balance the risk you will miss out on capital gains against the risk of suffering capital losses.

Subject: Crying wolf........ From: Pete Weis To: Terri Date Posted: Sat, Feb 26, 2005 at 16:26:00 (EST) Email Address: Not Provided Message: gets the inevitable result.

Subject: Caution From: Terri To: Pete Weis Date Posted: Sat, Feb 26, 2005 at 16:45:18 (EST) Email Address: Not Provided Message: There is ample reason for caution, but then we can be cautious. Look to Japan and we can take heart at how the economy has held up since 1990, no matter the endless policy mistakes. Not a pleasing example, but the Japanese are living through this period of anemic growth quite nicely. I would have it otherwise, but it is comforting. We can learn from the Japanese. I wish Paul Krugman would write more on Japan.

Subject: Politician tells economist to...... From: Pete Weis To: All Date Posted: Sat, Feb 26, 2005 at 12:07:23 (EST) Email Address: Not Provided Message: mind his P's & Q's. Its very comforting to know that we have such level headed and knowledgeable politicians in this world to counter these 'alarmist' economists. Australian PM rejects as alarmist warning that US deficits risk crash Thu Feb 24, 7:44 PM ET SYDNEY (AFP) - Australian Prime Minister John Howard dismissed as 'alarmist' a warning by the government's chief economic adviser that the United States was heading for a financial crash that could ravage the global economy. Secretary to the Treasury Ken Henry said Thursday the United States' current account and budget deficits were creating imbalances in savings and investment that could lead to a sharp fall in the US dollar and a bond market sell-off. Addressing a private meeting of Asian treasurers in Sydney, Henry likened a flood of money pouring into the United States to support its twin deficits to the stockmarket's dotcom bubble of the late 1990s, saying it could push up US and world interest rates. It was 'worryingly reminiscent of Federal Reserve (news - web sites) chairman Alan Greenspan (news - web sites)'s warning in 1996 of irrational exuberance in US stocks,' Henry said. He said it would damage US economic growth, cutting Chinese exports of manufactured products to US markets and threaten the world economy, including the boom in Australian mineral exports to China. But Howard said any talk of a world economic crash was alarmist. 'There are a lot of people who think the American budget deficit is too high,' he told a Melbourne radio station. 'I certainly would like to see the American budget deficit reduced ... but it's too alarmist to talk about a crash.' He said the outlook presented to the cabinet this week by Reserve Bank governor Ian MacFarlane was of 'pretty strong world growth' and Australia's budget was protected by the general strength of the economy and because the government ran budget surpluses. The International Monetary Fund (news - web sites) (IMF (news - web sites)), which is responsible for the stability of the global economy, has also warned that a current account deficit like that of the United States could not be sustained indefinitely. IMF managing director Rodrigo Rato told the Foreign Policy Association in New York Wednesday that while current account deficits were not in themselves necessarily undesirable, 'What is undesirable, however, is an unsustainable deficit.'

Subject: If it does get worse? From: johnny5 To: Pete Weis Date Posted: Sat, Feb 26, 2005 at 12:15:28 (EST) Email Address: johnny5@yahoo.com Message: I-bonds? Bank CD's? Low expense ratio bear funds? More XOM? Where do you go Pete? More vanguard precious metals? Where is Pete and family gonna go to escape the bear chasing him in the forest? Johnny5 is in ibonds (can only get 30K a year) and some dividend paying dow's and adding xom but thinking about getting into some short term cd's at countrywide.

Subject: Re: If it does get worse? From: Pete Weis To: johnny5 Date Posted: Sat, Feb 26, 2005 at 16:24:30 (EST) Email Address: Not Provided Message: I'm not an investment guru. I'm invested in a way which benefits from a falling dollar - some of it more speculative, but most of it very conservative. A well managed fund which has performed rather well over the last 5 years - through stock market bust and dollar tribulations is PERMANENT PORTFOLIO. TEMPLETON GLOBAL INCOME FUND and PRUDENT BEAR GLOBAL INCOME FUND are conservative hedges against dollar droppage. I invest in precious metals funds such as Vanguard's and Tocqueville and have invested in a junior called Novagold since before it was sold on the AMEX - these are speculative and no one should invest in precious metals if they can not deal with the volatility. My wife and I have invested in oil companies for many years and are probably overweight in oil - I believe long term (the next 10 years) they will likely have higher and higher profits although they could suffer setbacks in a broad market downturn and a recession (they'll weather it better). Commodity funds such as PIMCO's have high fees but have been well worth it. State Street Natural Resource fund has been a good investment. These are a few, but anyone who takes investment advice from me and doesn't do the research themselves, takes the responsibility of any losses upon themselves.

Subject: Benchmarks From: Terri To: Pete Weis Date Posted: Sat, Feb 26, 2005 at 17:37:43 (EST) Email Address: Not Provided Message: Well done. Remember you can benchmark against the Vanguard-MSCI Indexes I post. http://flagship2.vanguard.com/VGApp/hnw/FundsVIPERByName http://www.msci.com/us/indexperf/index.html Sector Indexes 12/31/04 - 2/25/05 Energy 21.6 Financials -2.5 Health Care 1.1 Info Tech -5.1 Materials 5.9 REITs -5.1 Telecoms -3.6 Utilities 4.3

Subject: Women's Voices in Rwanda From: Emma To: All Date Posted: Sat, Feb 26, 2005 at 11:21:25 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/02/26/international/africa/26rwanda.html?pagewanted=all&position= Women's Voices Rise as Rwanda Reinvents Itself By MARC LACEY KIGALI, Rwanda - The most remarkable thing about Rwanda's Parliament is not the war-damaged building that houses it, with its bullet holes and huge artillery gashes still visible a decade after the end of the fighting. It is inside the hilltop structure, from the spectator seats of the lower house, that one sees a most unusual sight for this part of the world: mixed in with all the dark-suited male legislators are many, many women - a greater percentage than in any other parliamentary body in the world. A decade after a killing frenzy left this tiny Central Africa country in ruins, Rwanda is reinventing itself in some surprising ways. Women make up 48.8 percent of seats in the lower house of Parliament, a higher percentage than in the legislative bodies in countries like Sweden, Denmark, the Netherlands and Norway, known for their progressive policies. The rise of women stems in part from government initiatives aimed at propelling them to the upper ranks of politics. But their numbers do not necessarily add up to influence. They are more a reflection of the demographics and disillusionment spawned by the killing spree that left 800,000 or more people dead, though some lawmakers are trying to use their new place in government to enhance the lot of women in what remains a deeply patriarchal land. 'Before the genocide, women always figured their husbands would take care of them,' said Aurea Kayiganwa, the coordinator of Avega, a national organization representing Rwanda's many war widows. 'But the genocide changed all that. It forced women to get active, to take care of themselves. So many of the men were gone.' At the end of the ethnic warfare of the 1990's, women greatly outnumbered men - some estimate the ratio as 7 to 1 - a result of the wanton killing of so many men and the escape of so many others involved in the carnage. During the rebuilding of the country, then, women's anguished voices were difficult not to hear, and they became what was seen as a powerful and credible force for reconciliation. 'I used to see politics as something bad,' said Athanasie Gahondogo, a member of Parliament and executive secretary of the Forum for Rwandan Women Parliamentarians. 'It's what caused our problems and made me a refugee for so long. But now I want to have a seat at the table.' Women were a tiny percentage of those jailed for taking part in the strife between the Tutsi, who make up about 15 percent of the population, and the Hutu, who represent nearly all of the rest. One study put the portion of women involved at just 2.3 percent. A minister of family and women's affairs in the old government, Pauline Nyiramasuhukon, is on trial on genocide charges at the International Criminal Tribunal in Arusha, Tanzania, but the heinous charges attributed to her, including inciting others to rape Tutsi women, are considered by many here to be an aberration when it comes to women. 'There's a widespread perception in Rwanda that women are better at reconciliation and forgiveness,' said Elizabeth Powley, who has studied Rwandan women's political rise for Women Waging Peace, an organization based in Cambridge, Mass. 'Giving them such prominence is partly an effort at conflict prevention.' During the drafting of the country's new postwar Constitution, 30 percent of the seats in the two house of Parliament were designated for women. But an unexpected thing happened in October 2003 when voters went to the polls to elect a Parliament for the first time since the war. They chose even more women than many male politicians expected. 'Some men even complained that women were taking some of the 'men' seats,' said Donnah Kamashazi, a representative in Rwanda for the United Nations Development Fund for Women. Six of the 20 seats in the Senate are held by women, meeting the 30 percent set aside. But in the lower house, which has 80 seats, women won 39, 15 more than the number reserved for them. Taken together, women make up 45 percent of the two chambers, just below the 45.3 percent in Sweden's single-chamber Parliament. The political representation of Rwandan women is not limited to the legislative arena. There is a female chief justice of the Supreme Court, several female cabinet members, a female head of the influential National Unity and Reconciliation Commission and a female deputy police chief, to name but a few of the prominent women in Rwanda's political world. All that said, women continue to suffer profoundly in today's Rwanda. 'I try to forget what happened in 1994,' said one of the suffering ones, Cécille Mukampabuka, 64, whose leg was shattered and who lost much of her family back then. 'I would go mad if I didn't try to forget. But I can't ever forget. It's not over yet for me. I'm still suffering.' Rwanda remains a male-dominated land, far more than the gendersensitive numbers would suggest. Patriarchal traditions remain strong in the home, where experts say women continue to suffer from spousal abuse and where the notion that the man is the lord of the manor thrives. A female senator disclosed to colleagues recently that she still deferred to her husband during official functions in her home so as not to question his supremacy there. And the uppermost reaches of government remain the preserves of men. In Rwanda, President Paul Kagame, the former rebel leader whose forces quelled the mass killing of Tutsi and moderate Hutu in 1994, holds a firm grip on power, and loyalty to him remains a prerequisite for political survival, no matter one's sex. Criticism of any aspect of governing in Rwanda, including the country's promotion of women, is done at one's own risk. Recently, when the head of a women's organization questioned the effectiveness of the country's female legislators in solving women's problems and likened them to flowers, which look good but do little else, she was condemned and threatened. Shortly afterward, she fled the country. 'It was bad research,' complained Odette Nyiramirimo, an influential senator and former cabinet minister. 'She was calling the women stupid. She used the word flower to describe them. I think she was wrong.' Ms. Nyiramirimo and other women in politics here acknowledge that Parliament does not play an overly confrontation role with the executive branch, an outgrowth, they say, of the divisive politics of the country's past. Only a handful of pieces of legislation have originated in Parliament in recent years, for instance, and little if anything that Mr. Kagame suggests is rejected, or even substantially altered, before adoption. Women also agree that it has taken some time for the female legislators to get their feet wet in politics. During a recent afternoon of political debate, it was clear that the proceedings were being dominated by men. But women are making inroads. Legislation passed in 1999, before the current influx of women, liberalized the rules restricting inheritance for women, which were a major force in keeping women poor. Penalties for child rapists have been toughened, an outgrowth of the brutal treatment that women and girls suffered in 1994. 'Men are watching us,' Ms. Nyiramirimo said. 'They wonder if we'll rise up to a higher level. We're learning fast, because we have to. We say to each other that we can't be as good as the men - we have to be better.' Ms. Nyiramirimo said the true test of women's success would be how much they changed the lives of rural women, those who do not tool around the capital in chauffeur-driven vehicles and do not spend their time debating the issues of the day. 'Women in leadership are doing the little they can, but the problems are as big as the sea,' said Mrs. Kamashazi of the United Nations Development Fund for Women. 'Sometimes you just say, 'Oh, my goodness.' ' Rwanda remains a desperately poor country, where social indicators like life expectancy, child mortality and literacy lag significantly behind most of the world. Much of the day-to-day toil falls squarely on the shoulders of the nation's war-weary women. 'I grew up in a rural area, and every morning before school I had to get up early and fetch water at the river,' Ms. Nyiramirimo recalled. 'It was so painful to balance it on your head. Every time I go to my village I see girls and women still doing it.' One initiative she hopes to push her colleagues to adopt is a program to import donkeys, which are common in other parts of Africa but rather rare here. They would be bred and then distributed to villages to help relieve the loads women must bear. Talk of putting 1994 in the past is difficult for many women across Rwanda, who find themselves poor and alone, or who suffer from AIDS contracted during a violent rape then, or who are now raising many children who are not their own but who were orphaned in the killing spree. One of them is Winfred Mukagirhana, 46, who was raped repeatedly in 1994 and like so many other Rwandan women is now dying of AIDS. She lost her husband and four of her five children in 1994. Her lone surviving boy, who was 12 back then, is now an emotionally disturbed young man who cannot get the brutal attacks that he witnessed out of his head. 'What can the government do for me?' she asked, saying she could not feel much satisfaction from the statistics on women's progress that have put Rwanda so high compared with other countries in the world. 'My life is over. I'm almost dead.'

Subject: Re: Women's Voices in Rwanda From: johnny5 To: Emma Date Posted: Sat, Feb 26, 2005 at 12:30:09 (EST) Email Address: johnny5@yahoo.com Message: So sad, she has lost all hope, maybe we will invent a cure for her disease and give her a new lease on life.

Subject: Re: Women's Voices in Rwanda From: Emma To: johnny5 Date Posted: Sat, Feb 26, 2005 at 17:54:45 (EST) Email Address: Not Provided Message: Thank you.

Subject: Building contractors, electricians,... From: Pete Weis To: All Date Posted: Sat, Feb 26, 2005 at 11:18:16 (EST) Email Address: Not Provided Message: plumbers, carpenters, mortgage brokers, real estate agents, appraisors, residential insurance brokers, etc. still doing well. They, along with Home Depot, have become the heart of our economy: washingtonpost.com Foreign Investment's Flip Side U.S. Trade Deficit Swells Along With Consumption, Debt By Paul Blustein Washington Post Staff Writer Friday, February 25, 2005; Page A01 Every other night or so, the calls start pouring in from Asia to the homes of Peter Leonard and several traders he supervises at Nomura Securities in New York, jolting them awake sometimes as often as five times a night. The calls come from places such as Tokyo, Shanghai, Hong Kong and Singapore, where investors want to buy U.S. mortgage-backed securities, which are essentially giant packages of mortgages on thousands of American homes. Such sleep disturbances have roughly doubled in the past year, according to Leonard, reflecting the sizzling demand among Asian money managers for a piece of the U.S. mortgage market. The interrupted slumber of Nomura's New York mortgage traders is one small facet of the rapidly rising flow of foreign money into U.S. financial markets. This torrent of capital from overseas has become indispensable fuel for the U.S. economic engine, helping to keep interest rates low. But the influx of capital has an ominous flip side -- the ballooning U.S. trade deficit, which soared 24 percent in 2004, to $617.7 billion. The dollars spent by Americans on Japanese cars, Chinese televisions and other imported goods end up in the hands of foreigners, who plow them into U.S. Treasury bonds and other securities like the ones sold by Leonard and his fellow traders. Therein lies a serious worry for many economists: As the deficit mounts, so does America's overall indebtedness to foreigners, which now totals about $3 trillion. That would be less troubling if the money streaming in from overseas were helping to finance a boom in productive assets such as factories and machinery. But to the contrary, economic data show historic highs in the proportion of U.S. spending on consumption and housing. Not only is the United States piling up debt, it is doing so while consuming at record levels. 'It's like, 'I'm going to Bermuda with the credit I'm racking up on my credit card,' rather than, 'I'm going to school and putting my school books on my credit card,' ' said Catherine L. Mann, a scholar at the Institute for International Economics. That dark perspective is at odds with the position often taken by Bush administration officials, among others, about the trade deficit (or current account deficit, as its broadest measure is called). The gap, according to the administration, should be viewed in a more positive than negative light, given the eagerness with which foreigners supply funds to the United States. As Treasury Secretary John W. Snow put it in an op-ed piece in the Financial Times a few months ago: 'The deficit reflects foremost the strengths of the U.S. economy -- high productivity, strong U.S. growth relative to growth abroad, and the relative attraction of investing in our robust, dynamic economy, which has the deepest and most resilient capital markets in the world.' America's attraction for foreign capital can be readily discerned in the streets of Washington, where a number of buildings have been sold to foreigners in recent months. A group funded by Middle Eastern investors recently bought 901 F St. NW for $56 million, German money was behind the purchase of 2100 M St. NW for $95 million, and other foreign investors bought a portfolio of properties, including 5225 Wisconsin Ave. NW, for a sum in the $200 million range, according to Bill Collins of Cassidy & Pinkard, a real estate services firm involved in some of the transactions. A survey of global real estate investors last year showed that the United States continues to rank as the No. 1 country for 'stable and secure' property investments, with Washington as foreign investors' top city. But the administration's critics see plenty of reason to be uneasy about the trade deficit, which is approaching 6 percent of gross domestic product as measured by the current account, the highest percentage of any major industrial country in modern times. 'There's always the question when you look at a current account deficit -- is it a sign of strength, because capital is pouring into your country, or is it a sign of concern?' Lawrence H. Summers, Snow's predecessor during the Clinton administration, told a panel at the World Economic Forum in Davos, Switzerland, last month. 'If you look behind the 6 percent of GDP deficit, there's a lot to make you worry,' because foreign money 'is financing consumption, not investment' in plants and equipment. Furthermore, he added, much of the investment by businesses in the United States is going into real estate, which does not generate the production of goods for export that are needed to help shrink the trade gap. At some point, he warned, sentiment among foreign investors could turn against America's deteriorating fundamentals, triggering a sharp sell-off in U.S. stocks and bonds that would threaten to throw the economy's expansion into reverse. 'Will those risks ever come home to roost? One can't predict with great confidence,' said Summers, who is now president of Harvard University. 'Will they come home very soon? Probably not. If you keep taking them, will they eventually catch up with us? I worry that they will.' An analysis by economists at Goldman, Sachs provides data to bolster Summers's point: Consumption and spending on residential buildings are a much larger share of the U.S. economy 'than has historically been the case,' the firm noted in a report to clients last month. Taken together, spending on consumer goods and housing has totaled nearly 76 percent of GDP in the past couple of years, compared with an average of about 69 percent of GDP over the past half-century. Given that the trade deficit is also at an all-time high, 'these imbalances place the economy on a path that is ultimately unsustainable,' the report said. Among the factors helping to spur spending on housing is the same factor causing sleep deprivation among the Nomura traders -- the surge in demand from Asia for U.S. mortgage-backed securities, which has been led by China's central bank. As Asians buy these packages of mortgages from U.S. financial institutions, they effectively add to the pool of capital available for Americans to finance their homes. 'If you think about it, there are a lot of homeowners who are having money lent to them by Beijing,' said Steven Abrahams, a senior managing director at Bear, Stearns & Co. who specializes in the mortgage market. 'These are big, complex markets, but the involvement of the non-U.S. investor in the mortgage market has certainly helped keep mortgage rates lower than they would be without their presence. It means that American homeowners end up paying a little less to own a home.' That is no cause for worry, maintained Arthur B. Laffer, one of the gurus of the supply-side economics movement. 'You would clearly rather have capital lined up on our borders trying to get into our country than trying to get out,' Laffer wrote in an article on the Wall Street Journal's editorial page last month. 'Growth countries, like growth companies, borrow money, and the U.S. is the only growth country of all the developed countries. As a result, we're a capital magnet. . . . That's why we have such a large trade deficit.' But other economists argue that it all depends on how the influx of capital is used. The large trade gap the United States ran in the late 1990s posed relatively little concern because the money being borrowed from abroad was helping to fund a major surge in investment by business, said Nouriel Roubini, an economist at New York University. In 1999 and 2000, spending on buildings, structures and equipment -- the portion not spent on residential housing -- was about 13.5 percent of GDP. By contrast, in 2002 through 2004, that figure fell to about 10.25 percent of GDP. Also crucial, Roubini and others contend, is the type of capital the country is attracting. Direct investment by foreigners in U.S. companies and operations -- the building of auto plants in the South, for example, or the takeover of Chrysler Corp. by Daimler-Benz AG -- has dropped precipitously. In 1999 and 2000, foreign direct investment averaged about $300 billion annually; in 2003, it shriveled to about one-tenth that amount, and in 2004, it rebounded only to $91 billion in the first three quarters. Replacing much of the private foreign capital during the past few years has been the purchase of hundreds of billions of dollars in U.S. Treasury bonds by foreign central banks, especially Japan's and China's. Their buying of Treasurys has been motivated in large part by financial operations aimed at keeping their currencies from rising, thereby ensuring that their nations' exports remain competitive. 'Far from saying the external deficit is a sign of strength, given that it is going primarily to finance consumption, it is primarily a sign of weakness,' said George Magnus, chief economist with UBS Investment Research in London. 'And given that roughly half of the financing has come from foreign central banks, it's a classic sign of weakness.' Administration officials counter that the data for the past few months suggest that all these worrisome factors are starting to create a trend in a healthier direction. 'Investment growth has been quite strong in the U.S. over the past year,' said Kristin J. Forbes, a member of the Council of Economic Advisers, noting that although business spending on plants and equipment still isn't where it was in the late 1990s, the previous period was inflated somewhat by the technology bubble. As for capital inflows, she added, the most recent figures show that 'over two-thirds of the inflows have come through private purchases, not official sources like central banks.' Economists like Magnus remain unimpressed. 'A lot of people think this is courting some sort of financial crisis at some point,' he said. 'When that will happen, of course, is hard to say.'

Subject: Re: Building contractors, electricians,... From: Terri To: Pete Weis Date Posted: Sat, Feb 26, 2005 at 11:37:06 (EST) Email Address: Not Provided Message: A useful article. Real estate, commercial and residential, have been the ultimate big ticket items for this economy. Lowering interest rates has a different effect on different industries, and is especially effective for real estate. So we have a real estate boom that kept us from a deep and long recession and is helping the recovery. Since fiscal policy has only been marginally stimulative the Fed has had little choice in interest rate policy. Hopefully, if price movements have been too severe as many argue, the gradual Fed tightening will calm the real estate market but not lead to a recession.

Subject: Conservative Investing From: Terri To: All Date Posted: Sat, Feb 26, 2005 at 10:15:08 (EST) Email Address: Not Provided Message: There are bull markets and bear markets, but the direction of the American stock market as a while was gradually higher through a difficult century. Every stock market in a developed country has risen over 60 years. The most serious problem is currently found in Japan, for here is a bear market that has been 15 years in the making. Japan however is the exception and there is no reason to believe any other developed market will prove remotely as difficult. So, the general investment response should be to be bullish. There are times for increased conservatism, but a conservative portfolio balance is easily obtained between stocks and bonds. Professional or skilled investors may well try hedging, but using a bear fund seems costly and a way to insure losses over time.

Subject: Beautiful Minds From: johnny5 To: Terri Date Posted: Sat, Feb 26, 2005 at 11:59:01 (EST) Email Address: johnny5@yahoo.com Message: I think many agree that the secular bear is coming - when he will get here is anyone's guess - bear funds except for just one or 2 are very expensive and costs matter a lot. http://www.321gold.com/editorials/mauldin/mauldin022605.html Initially, Garber, Dooley and Folkerts-Landau suggested the new system of fixed and quasi-fixed exchange rates would last a generation, until China's agricultural labor surplus was absorbed in a new urban industrial sector. More recently, Peter Garber backed off a bit, but he still maintained that the new Bretton Woods system would last another eight years. Michael Mussa has suggested it will not last another four years. We believe it may have difficulty lasting for another two years. '...we [that is, Roubini and Setser] argue that there is a meaningful risk the Bretton Woods 2 system will unravel before the end of 2006.' Even demographer Mr. Dent predicts a bear in 2009 after dow 40K. http://www.prudentbear.com/funds_pbfund_perform.html Timing the market is often analyzed to be a loser's game - but if you could have ridden the cheaper bear funds on the way down and the vanguard index funds on the way up your returns would allow for much earlier retirement. I was an individual stock picker from 96-2000 - I did well until the end - HAHA - then from dec 2000 til dec 2003 I used this strategy http://www.dogsofthedow.com/dogyrs.htm with an etrade account. I had some problems with etrade, switched over to scottrade and have now mostly been making monthly purchases of exxon and chevron. I don't have to get out at the top Terri, I have been looking at the 6 and 12 month cd's at countrywide and bought i-bonds the past 2 years. I have sustained losses in the past and can't afford large ones anymore. My dad has real estate in south georgia and west florida, in both those towns the big new businesses are home supply stores (home depot, lowes) and car dealers - the new car dealerships being built are kia, honda, nissan, isuzu, hyundai, and subaru - the american car lots look older and run down. The housing renovation market is built out, the asian car market is built out - what are the new big businesses gonna be in these 2 cities - I don't see any. Some of the larger restaurant chains have started to close stores and these cities are where you have a lot of retirees that only eat out and sit home and watch tv. Demographically baby boomers are tied to thier jobs right now - but when thier jobs end - either through recession or retirement - they can leave those freezing climates and come to sunny florida or arizona. Globally retirees can leave unstable political areas or poorer areas and move to the USA where we have all the great malls and shopping. What is so great about our country is exemplified right here in my little city near the beach - wether mexican, asian, latin, canadian, european - within 5 miles I have all these choices in food and products and people and culture - I ate german last week from real germans, scottish the day after from real scots, mexican the next from real mexicans, chinese from the chinaman etc etc - who wants to retire in mexico where you only get one culture and one people and the diversity is very low in most parts of the country and thier legal system is not innocent until proven guilty? Most of the rich baby boomers I talk too tell me thier plans - travel (oil and energy) eat good and have a house in switzerland or ontario or west palm beach or all three and move between them. They will have nice cars, new cellphones, and go to lots of events with all thier new free time. In the trailer park here in florida the poorer retirees have old run down trailers and ride bicycles, they don't eat out at expensive places much and thier biggest bills are AC and Cable after rent. They all play a lot of bingo and take a lot of red yeast rice pills.

Subject: Wal-Mart and Unions In Canada From: Emma To: All Date Posted: Sat, Feb 26, 2005 at 09:24:16 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/02/26/business/worldbusiness/26walmarts.html Wal-Mart Told to End Intimidation in Canada By IAN AUSTEN OTTAWA - Wal-Mart Canada was ordered by Quebec's labor relations board on Friday to stop intimidating workers at a store in the midst of an organizing drive. The decision involves three cashiers at a store in the Quebec City suburb of St. Foy and is the second unfair labor practice ruling against Wal-Mart in Quebec since September. Earlier this month, Wal-Mart Canada, a unit of Wal-Mart Stores Inc., announced that it would close a store in Jonquiére, Quebec, where employees had unionized and were trying to negotiate the first collective agreement with the retail giant in North America. The board ordered Wal-Mart to immediately stop 'intimidating and harassing' the cashiers in St. Foy. But it imposed a relatively light penalty: Wal-Mart must post the decision in the store's lunchroom for 30 days. Nevertheless, Jossée Lemieux, president of Local 503 of the United Food and Commercial Workers' Union, said the decision was significant. 'Wal-Mart cannot violate the fundamental rights of its employees without paying any consequences,' Ms. Lemieux said in a statement. Andrew Pelletier, a spokesman for Wal-Mart Canada, which is based in Mississauga, Ontario, said the company took issue with the board's finding that its managers intimidated employees. But Mr. Pelletier added that Wal-Mart would not challenge the ruling. 'We feel the appropriate thing to do is not appeal,' Mr. Pelletier said. 'We want to comply and just move forward in St. Foy.' The labor board found that the three workers experienced varying forms of intimidation. One was taken into an office by the manager and an assistant manager who demanded the names of union sympathizers. Another was threatened with a negative job evaluation if she supported the union drive. In the third case, a manager suggested that the cashier retract a recently signed union card.

Subject: Indonesia and Oil Prices From: Emma To: All Date Posted: Sat, Feb 26, 2005 at 09:20:16 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/02/26/business/worldbusiness/26oil.html?pagewanted=all&position= OPEC Member Burdened by High Oil Prices By KEITH BRADSHER and JAD MOUAWAD JAKARTA, Indonesia - What's good for OPEC is no longer good for one of its smallest members and its only representative from Asia. While most oil ministers, from Saudi Arabia to Venezuela to Libya, say high prices are here to stay, one oil minister may be trying to talk prices down. Purnomo Yusgiantoro, the minister of energy and mineral resources for Indonesia, said that a rough consensus had formed among oil ministers from the Organization of the Petroleum Exporting Countries that oil prices were too high. 'It has got to be lower than what we see today, because even OPEC doesn't like to see the high oil price,' Mr. Purnomo said in an interview. That consensus may not be as widely shared as Mr. Purnomo says. There are growing indications that OPEC's larger producers are actually getting more comfortable with higher oil prices. That puts Indonesia in a unique - and increasingly odd - position that reflects how its standing within OPEC has changed as Indonesian oil production declines and domestic consumption grows. For the last two years, Indonesia has not been able to meet its share of production assigned by OPEC, which stands at 1.4 million barrels a day. The country produced an average of 1.1 million barrels a day in 2004, down from 1991's average of 1.6 million barrels a day, according to figures compiled by the United States Energy Information Administration. And while the world's producers struggled last year to meet runaway demand, Indonesia suffered the final infamy for a member of the oil-exporters' club: during the last four months of 2004, the country had to import some oil. Now, the government is considering leaving OPEC. Paradoxically for an oil producer, the high international prices are hurting Indonesia's public finances because the government subsidizes its domestic fuel sales, fixing a lower price at home than on the international market. With rising costs, Mr. Purnomo said that the cabinet planned to announce a 29 percent increase in retail prices for gasoline and diesel fuel on Monday night. The measure, he acknowledged, will be unpopular and is likely to prompt protests. But these concerns are far from the minds of Mr. Purnomo's counterparts within OPEC, who are getting bolder in their public comments about where they think prices are headed. On Thursday, Ali al-Naimi, Saudi Arabia's oil minister, said he thought prices would remain at $40 to $50 a barrel in 2005. His remarks echoed a similar message from the last meeting of OPEC ministers, in January, when many said prices of $50 a barrel were not hurting the world economy. Acknowledging such sentiments, Mr. Purnomo cautioned that OPEC ministers would not necessarily agree to increase production at their next meeting, on March 16 in Isfahan, Iran. International oil demand tends to drop each spring, he said, and OPEC oil ministers will be wary of adjusting supply before seeing how big this year's drop may be. Mr. Purnomo said he personally would like to see a drop in Indonesian crude oil prices by late spring to $35 a barrel, the price assumed in the national budget for calculating the cost of domestic gasoline and diesel subsidies. Indonesian crude trades at a slight discount to the much more heavily traded West Texas Intermediate and Brent crudes. In New York, crude oil futures for April delivery rose 10 cents to $51.49 a barrel. Prices have risen 44 percent in the last year. The increase in retail prices of gasoline and diesel in Indonesia is aimed at cutting the high cost of subsidizing domestic consumption and freeing more oil for export. Gasoline now costs 75 cents a gallon in Indonesia, while diesel costs 68 cents. Last year, the government spent $6.8 billion on subsidies, a seventh of all government spending. Mr. Purnomo's comments, made in a 45-minute interview in his high-ceilinged, elegant receiving room, are nonetheless important both in terms of a rare willingness to speak so publicly about Indonesia's position and his assessment of the consensus among other oil ministers.

Subject: Indonesia and Oil Prices - 1 From: Emma To: Emma Date Posted: Sat, Feb 26, 2005 at 09:20:39 (EST) Email Address: Not Provided Message: Current world oil prices, Mr. Purnomo said, are so high they are starting to feed inflation in industrialized countries, driving up the cost of construction equipment and other capital goods oil exporters need to buy overseas. The Indonesian government announced plans last month for huge spending increases for roads, pipelines and other infrastructure projects, including $11 billion for energy-related projects. OPEC ministers are not likely to adopt a new target range for oil prices, as this is a step that still requires considerable study, he said. OPEC set a price range, or band, of $22 to $28 a barrel in 2000 but abandoned it on Jan. 30 at the meeting in Vienna. A panel of top OPEC officials led by Saudi Arabia is studying whether to introduce a new price range, but this is unlikely to produce any specific action soon, Mr. Purnomo said. 'OPEC now is removing the price band for the time being.' Mr. Purnomo predicted that the increases in fuel prices could result in street demonstrations, but said that the government would not retreat. While government officials have said they would increase prices 30 percent to 40 percent, Mr. Purnomo is the first to specify a day for the announcement and the first minister to specify the amount. He said the 29 percent increase was 'an arithmetic average' of increases for various grades of gasoline and diesel, and declined to give specific increases by refined product. The proceeds from higher prices will be used for schools, hospitals and poverty programs, he said. Prices for kerosene, now at a quarter of world levels here, will not be changed for political reasons, he said. The poor commonly use kerosene for cooking. Mr. Purnomo said he had just received a preliminary report from an international oil company suggesting the discovery of a major new oil field in Indonesia. Declining to say what oil company had made the find or where the field was located, Mr. Purnomo said the new field looked as though it could be similar in size to the large Cepu field in eastern Java that Exxon Mobil wants to develop. Mr. Purnomo said two wells had already struck oil and had found an underground reservoir of oil roughly 300 meters thick, or 1,000 feet. More wells need to be drilled to assess the geographical area that the reservoir underlies, he said. Exxon Mobil estimates that the Cepu field could produce 170,000 barrels a day, which would increase Indonesian oil production by a fifth. Exxon Mobil has been unable to begin production at Cepu for the last three years because of a dispute with the Indonesian government over how to share the revenue from the field. Maman Budiman, the vice president for planning, commercial and public affairs at Exxon Mobil Oil Indonesia, said in an interview here on Wednesday that the company asked the newly elected government of President Susilo Bambang Yudhoyono in December to open negotiations after a preliminary deal fell through last summer, but had received no reply. Mr. Purnomo said that he personally wanted to see Cepu go into production as quickly as possible, but that the issue was up to Pertamina, the government-owned oil company, and the ministry of state-owned enterprises. Mr. Purnomo made headlines on Feb. 6 when he told a parliamentary committee that he would form a team to review whether Indonesia should pull out of OPEC, a move advocated by populists here so as to save Indonesia's nearly $2 million in annual dues. OPEC officials in Vienna declined this week to comment on Indonesia's review. While Mr. Purnomo indicated a reluctance to pull out of OPEC, he noted that the final decision would have to be made by the Indonesian cabinet. But in Friday's interview, the first he has granted to domestic or international media since that statement, Mr. Purnomo said that Indonesia's Ministry of Foreign Affairs opposed any withdrawal because it would hurt relations with Indonesian allies in the Mideast. Some in the government also feel that as one of the oldest members of OPEC, Indonesia should be wary of withdrawing. Perhaps most important, it is not clear that Indonesia will lose its status as an oil exporter, Mr. Purnomo said. Recent discoveries should add 300,000 barrels a day to Indonesia's annual production over the next several years, offsetting declines of 16 percent a year from existing Indonesian oil fields and permitting the country to maintain overall production above a million barrels a day in the coming years, he said. By comparison, output dipped to 950,000 barrels a day in December, a level Mr. Purnomo ascribed to some fields temporarily closing or reducing output for a variety of reasons.

Subject: Conservative Investing From: Terri To: All Date Posted: Sat, Feb 26, 2005 at 07:25:19 (EST) Email Address: Not Provided Message: Whether the year will continue positive for stocks and bonds we can not tell. We simply know where we have been. The bull market began in October 2002 and in time it will end, but I have no guess at all as to when it will end. Since the market has been rewarding conservative investors, I prefer to be conservative. But, I have no interest in trying to time the market for I do not know how.

Subject: Stabilty in Markets From: Terri To: All Date Posted: Sat, Feb 26, 2005 at 06:40:09 (EST) Email Address: Not Provided Message: There was a mild decline in stocks and bonds for a day this week, because of concern that the central bank of Korea might sell off American debt. The decline lasted a day, and Korean and other Asian central bankers denied there would be any such sell off. The week ended with almost every prime stock market ahead in domestic currency and dollars for the year. The lone domestic currency exception was Hong Kong which is mildly negative. Japan is negative only in dollars. American stocks turned positive. Long term bond interest rates remain low and the dollar is stronger than when the year began. What is striking is the continued positive stability of international markets.

Subject: Re: Stabilty in Markets From: johnny5 To: Terri Date Posted: Sat, Feb 26, 2005 at 10:39:41 (EST) Email Address: johnny5@yahoo.com Message: They don't have to sell off the debt - just stop buying at ever increasing levels like they have been no? After the depression lots of people didn't have work so they watched a lot of larry, moe and curly. Buffet is ahead of the game if we have a huge deflation - all these currently occupied people are gonna sit home and watch thier comcast cause they have nothing else to do. Plus all the retirees about to stop working will want to watch thier comcast too. http://www.321gold.com/editorials/mauldin/mauldin022605.html 'Thirdly, a Chinese revaluation would have no perceptible impact on the US trade imbalance because Chinese wages are so far below America's that even a 30% or 50% revaluation of the RMB (Renminbi), would not be enough to send labour intensive industries back to the US.

Subject: USA only accounts for 16% global growth From: johnny5 To: All Date Posted: Fri, Feb 25, 2005 at 20:58:59 (EST) Email Address: johnny5@yahoo.com Message: Is there a bull out there that sees some new holy grail catalyst? Warren Buffet is buying cable - he must see a lot of previously employed people sitting at home on their butt watching the tv. http://www.morganstanley.com/GEFdata/digests/20050225-fri.html ...Courtesy of the dollar’s decline, the US contribution to world GDP growth averaged only 16% over the 2003-04 period — down dramatically from the 98% share recorded over the 1995 to 2005 interval (all calculations expressed at market exchange rates). Will the growth come from the warlords in africa like Carly Fiorina postulated? Will china's space program give us the growth? European car markets? Saudi bio-science? New oil discoveries? What is going to drive the growth now that america has shot it's wad? Simple demographics as dent says taking us to Dow 40K?

Subject: threat to commercial aviation From: johnny5 To: All Date Posted: Fri, Feb 25, 2005 at 18:34:54 (EST) Email Address: johnny5@yahoo.com Message: Why does denmark need stingers? U.S. Says 'Thousands' of Missiles Missing By ROBERT BURNS, AP An Afghan guerrilla handles a U.S.-made Stinger missile in late 1987 or early 1988. The U.S. has agreements with several countries to destroy shoulder-fired missiles. WASHINGTON (Feb. 25) - It has been known for years that thousands of light and lethal shoulder-fired missiles are in black-market circulation. What is not known is exactly who has them and whether many have fallen into the hands of terrorists or criminals. A worrisome puzzle, it explains why the United States and Russia signed an agreement Thursday to cooperate in destroying surplus Soviet-era SA-7s and other portable anti-aircraft missiles. The smallest of these are durable, relatively cheap and easy to smuggle. The United States also has understandings with several other countries, including Nicaragua, Bosnia, Cambodia and Liberia, for Washington to provide technical assistance or money to destroy anti-aircraft missiles. The State Department estimates that about 1 million shoulder-fired anti-aircraft missiles have been produced worldwide since the 1950s. The number believed to be in the hands of 'nonstate actors,'' such as terrorist groups, is 'in the thousands,'' the department says. 'What's driving this is concern about the threat to commercial aviation,'' said Wade Boese, research director at the private Arms Control Association. A single successful missile attack on a passenger plane could paralyze the airline industry, at enormous economic loss, he said. There has been only one known attempt against a commercial airliner outside of a war zone. In November 2002, two surface-to-air missiles barely missed an Israeli charter airliner taking off from the airport in Mombasa, Kenya, with tourists returning to Israel. Osama bin Laden's al-Qaida network claimed responsibility for the attempt. The U.S.-Russian agreement signed by Secretary of State Condoleezza Rice and Defense Minister Sergei Ivanov calls for sharing information about exports of these missiles to third countries. Of note, Boese said, is the absence of a commitment by either Washington or Moscow to halt the exports. The United States began selling its Stinger shoulder-fired missile to foreign countries in 1982. The CIA secretly transferred an estimated 2,000 to Afghanistan mujahedeen rebels in the mid-1980s, and they were used to down hundreds of Soviet helicopters and transport aircraft. When the war against the Soviets ended in 1989, the CIA began offering to buy back the Stingers for as much as $150,000 apiece. In his book 'Ghost Wars,'' author Steve Coll wrote that as recently as 1996 the CIA estimated there were about 600 Stingers still unaccounted for in Afghanistan. There also are an unknown number of SA-7 and other types of shoulder-fired missiles in the hands of insurgents in Iraq. A study published last year by the Government Accountability Office, the investigative arm of Congress, said the U.S. government's records on exports of shoulder-fired missiles are 'neither complete nor reliable.'' The GAO said the Army and the office within the Pentagon that manages arms transfers have conflicted figures on missile exports. One says 7,551 Stingers have been sold abroad since 1982 and the other puts the figure at 8,331. One says Egypt bought 89; the other says Egypt bought none. The biggest buyer over the period was Taiwan, with more than 2,200, followed by Denmark with 1,140; Japan with between 871 and 1,025, and Italy with as many as 885.

Subject: The Bull Market Continues From: Terri To: All Date Posted: Fri, Feb 25, 2005 at 15:29:41 (EST) Email Address: Not Provided Message: The international bull market continues. Market gains internationally seem suddued because of the strong dollar, but almost every market is positive in local currency and most are positive in dollars. The American market has turned positive as well. Long term bonds continue to hold value. Energy is the leading sector, but materials and utilities and health care are gaining strength. REITs are somewhat weak. Large cap value continues to lead large cap growth.

Subject: Davos - where are the catalysts? From: johnny5 To: Terri Date Posted: Fri, Feb 25, 2005 at 18:20:33 (EST) Email Address: johnny5@yahoo.com Message: Global Savings Disparities in relation to sustained global growth: rtsp://video.c-span.org/15days/e022405_wef.rm 47 minutes into it Stephen Roach gives them some good questions - how do we specifically get the US deficit down without tax increases or spending cuts in the military - Robert Zoellick (US trade representative) didn't seem clear to me. And can europe help global growth and can the ECB do anything to stimulate european domestic demand - Jean-Claude Trichet didn't seem to say much either. Carly Fiorina was in the panel too complaining about too much regulation and too many meetings with legislators, lawyers and accountants - and then later says growth is gonna come from south africa. I don't see the citizens putting down the hoe's and machine guns and beating back the people stealing the shirts off thier backs to get on the internet and chat it up on thier new HP laptop at the pkarchive BBS. She is unemployed at this point :( She said 5 years ago they all had pie in the sky anticipations about growth for at least 10 years. Robert talked about cutting 'all' domestic subsidies and how that relates to europe - but keynes said in his currency union paper that domestic subsidies were good for all domestic consumption needs and you only cut subsidies for the exports I believe. Walter Kielhoz (credit swiss group) kept saying 'pushing on a rope' and no revolution like in technology 10 years ago and making money in the financial industries was going to be very hard from here on out and he doesn't see how the industry will do it and said there is no more catalysts for growth opportunity in the global markets like tech was before - he seemed the realist of the bunch. And then that poor japanese guy head of IBM japan sitting there while everyone said japan was really letting the rest of the world down - I felt sorry for the guy - he needed a stiff saki. http://www.cspan.org/VideoArchives.asp?z1=&PopupMenu_Name=Economy/Fiscal&CatCodePairs=Issue,EF; Programs 1-10 of 70 World Economic Forum Panel on Global Economy from Davos, Switzerland Robert Zoellick, then-U.S. Trade Representative, participates in a discussion of the Global Economy at this year’s World Economic Forum in Davos, Switzerland. Carly Fiorina, former Chair and Chief Executive Officer, Hewlett-Packard Company, and Matthew Winkler, editor-in-chief of Bloomberg USA, also take part. 2/24/2005: DAVOS, SWITZERLAND: 1 hr. 10 min.

Subject: National Index Returns From: Terri To: All Date Posted: Fri, Feb 25, 2005 at 14:32:51 (EST) Email Address: Not Provided Message: http://www.msci.com/equity/index2.html National Index Returns [Dollars] 12/31/04 - 2/23/05 Australia 2.9 Canada 0.6 Denmark 3.7 France 1.4 Germany -1.6 Hong Kong -1.9 Ireland 2.8 Japan -3.0 Norway 5.8 Sweden -0.9 Switzerland 0.7 UK 3.1

Subject: Vanguard no longer offering metals? From: johnny5 To: All Date Posted: Fri, Feb 25, 2005 at 13:39:34 (EST) Email Address: johnny5@yahoo.com Message: Why Terri? What a racket!! They show it online but you can't even buy it - why BOGLE - we TRUSTED you! http://www.siliconinvestor.com/readmsgs.aspx?subjectid=54696&msgnum=24414&batchsize=10&batchtype=Next I would like to present this years 'DOM FOCKER' AWARD (you had to see the movie http://www.meetthefockers.com/index.php ) to the American Century Mutaul fund group. http://www.americancentury.com/index.jsp American Century in their infinite wisdom, overrode the vote of it's shareholders and dissolved their 'Global Natural Resources Fund' 11 months ago and even returned the money in form of a check to it's shareholders. They cited the reason as the fund isn't performing...never mind it was one of the few funds they offer that was even with the Y2K. You can only imagine how it would have performed over the last 11 months. Similar funds are up as much as 60-70% over the same time period. Vanguard closed it's one and only precious metals fund because it was getting too scary for them, and then later I was kicked out because they said my 403b wasn't supposed to have let buy those shares in the first place. It still shows up online as one of the funds I can buy, although if I try, it rejects it. Clowns...

Subject: Vanguard offering metals and materials From: Ari To: johnny5 Date Posted: Fri, Feb 25, 2005 at 15:56:27 (EST) Email Address: Not Provided Message: Vanguard is offering both precious metals and materials funds.

Subject: Vanguard Returns From: Terri To: All Date Posted: Fri, Feb 25, 2005 at 12:06:02 (EST) Email Address: Not Provided Message: http://flagship3.vanguard.com/VGApp/hnw/FundsByName Vanguard Returns 12/31/04 to 2/24/05 S&P Index is -0.7 Large Cap Growth Index is -2.0 Large Cap Value Index is 0.6 Mid Cap Index is 0.1 Small Cap Index is -2.4 Small Cap Value Index is -2.6 Europe Index is 2.1 Pacific Index is -1.3 Energy is 14.1 Health Care is 0.7 REIT Index is -6.8 High Yield Corporate Bond Fund is 0.9 Long Term Corporate Bond Fund is 2.2

Subject: Sector Returns From: Terri To: Terri Date Posted: Fri, Feb 25, 2005 at 12:06:36 (EST) Email Address: Not Provided Message: http://flagship3.vanguard.com/VGApp/hnw/FundsVIPERByName Sector Indexes 12/31/04 - 2/24/05 Energy 18.8 Financials -3.5 Health Care 0.1 Info Tech -5.8 Materials 4.3 REITs -6.8 Telecoms -4.2 Utilities 2.5

Subject: 2 way street From: johnny5 To: Terri Date Posted: Fri, Feb 25, 2005 at 12:48:34 (EST) Email Address: johnny5@yahoo.com Message: Johhny5 versus Warren Buffet: http://finance.yahoo.com/q/bc?t=3m&s=CMCSA&l=on&z=m&q=l&c=xom Don't forget your bear index funds Terri http://biz.yahoo.com/p/tops/bm.html Why doesn't vanguard offer these yet? Man if I could get a bear fund with vanguard expense ratio's I would cream my pants! http://finance.yahoo.com/q?s=RYAIX This bear fund seems to have the best expense ratio - no loads - no 12b1 fees. YTD Return*: 6.69%

Subject: Free Money floating in the air! From: johnny5 To: All Date Posted: Fri, Feb 25, 2005 at 09:56:37 (EST) Email Address: johnny5@yahoo.com Message: http://yro.slashdot.org/yro/05/02/25/1256254.shtml?tid=158&tid=126 VISA To Push RFID Credit Cards VISA To Push RFID Credit Cards Posted by Zonk on Friday February 25, @08:46AM from the tossing-your-money-into-the-aether dept. BobPaul writes 'ZDNet is running an article about VISA's plan to incorporate RFID tags into Credit Cards so that 'consumers need only wave credit and debit cards within a few inches of a reader to complete a purchase. And for purchases of less than $25, no signature is required.' VISA claims their system is very secure, stating that 'Each transmission between card and reader has a unique code that cannot be reused even if it is intercepted,' but isn't that very similar to how TI's car RFID system was made?' One of the comments: What protects consumers from fraudulent merchants waving some kind of electronic cash-sucking wand by your back pocket which contains your wallet which contains your RFID Visa card? There's no mention of this in the article at all! It's a standard scam now for an unscrupulous merchant to charge millions of people a small amount of money fraudulently with the hopes that the vast majority won't even notice. Imagine what they will do when all they have to do is walk around a mall waving something at people purse's and backpockets!

Subject: Keynes on currency settlements From: johnny5 To: All Date Posted: Fri, Feb 25, 2005 at 07:51:05 (EST) Email Address: johnny5@yahoo.com Message: Keynes thoughts on the subject: http://www.eco.utexas.edu/~hmcleave/368keynesoncutable.pdf The idea underlying my proposals for a Currency Union is simple, namely to generalise the essential principle of bank ing, as it is exhibited within any closed system, through the establishment of an International Clearing Bank. This principle is the necessary equality of credits and debits, of assets and liabilities. If no credits can be removed outside the banking system but only transferred within it, the Bank itself can never be in difficulties. It can with safety make what advances it wishes to any of its customers with the assurance that the proceeds can only be transferred to the bank account of another customer. Its problem is solely to see to it that its customers behave themselves and that the advances made to each of them are prudent and advisable from the point of view of its customers as a whole. In only one important respect must an International Bank differ from the model suitable to a national bank within a closed system, namely that much more must be settled by rules and by general principles agreed beforehand and much less by day-to-day discretion. To give confidence in, and understanding of, what is afoot, it is necessary to prescribe beforehand certain definite principles of policy, particularly in regard to the maximum limits of permitted overdraft and the provisions proposed to keep the scale of individual credits and debits within a reasonable amount, so that the system is in stable equilibrium with proper and sufficient measures taken in good time to reverse excessive movements of individual balances in either direction. Many countries, including ourselves, will find a difficulty in paying for their imports, and will need time and resources before they can establish a re-adjustment. The efforts of each of these debtor countries to preserve its own equilibrium, by forcing its exports and by cutting off all imports which are not strictly necessary, will aggravate the problem of all the others. On the other hand, if each feels free from undue pressure, the volume of international exchange will be increased and everyone will find it easier to re-establish equilibrium without injury to the standard of life. Now this can only be accomplished by the countries whoever they may turn out to be, which are for the time being in the creditor position, showing themselves ready to remain so without exercising a pressure towards contraction, pending the establishment of a new equilibrium. There are one or two other ways of effecting this. For example, U.S.A. might redistribute her gold. Or there might be a number of bilateral arrangements having the effect of providing international overdrafts, as for example an agreement by the Federal Reserve Board to accumulate, if necessary, a large sterling balance at the Bank of England. The objection to particular arrangements of this kind is that they are likely to be influenced by extraneous, political reasons and put specific countries into a position of particular obligation towards others; and also that the distribution of the assistance between different countries may not correspond to need and to the actual requirements as they will ultimately develop. It should be much easier, and surely more satisfactory, to persuade the U.S. to enter into a general and collective responsibility, applying to all countries alike, that a country finding itself in a creditor position against the rest o f the world as a whole should enter into an obligation to dispose of this credit balance and not to allow it meanwhile to exercise a contractionist pressure against the world economy and, by repercussion, against the economy of the creditor country itself. This would give us, and all others, the great assistance of multilateral clearing, whereby (for example) we could offset favourable balances arising out of our exports to Europe against unfavourable balances due to the U.S. or South America or elsewhere. I cannot see how we can hope to afford to start up trade with Europe (which will be of vast importance to us) during the relief and reconstruction period on any other terms. It has been suggested that we should mainly depend on the restriction or prohibition of imports as a means of preserving equilibrium in the international balance of payments. When the Bank of England felt that our gold and dollar resources were falling dangerously low, instead of raising the Bank rate to attract foreign funds or restricting domestic credit to cause a deflation of incomes, or depreciating the exchange to stimulate a more favourable balance, the Bank would notify the Board of Trade that another £25 million or £5o million or £ 100 million of imports must be cut off. Perhaps this would be the worst method of control of all, since it would have no obvious or direct tendency to reverse the forces which had led up to the dangerous situation and so permit of removal of the restrictions later on. Apart from this, the opposite remedy is surely the right one. If, indeed, we lack the productive capacity to maintain our standard of life, then a reduction in this standard is not avoidable. If our price levels are hopelessly wrong, a change in the rate of exchange is inevitable. But if we possess the productive capacity and the difficulty is the lack of markets as a result of restrictive policies throughout the world, then the remedy lies in expanding opportunities for export by removal of restrictive pressure, not in contracting imports. I believe that there is great force in Prof. Hansen's contention that the problem of surpluses and unwanted exports will largely disappear if active employment and ample purchasing power can be sustained in the main centres of world trade. The proposal differs from the existing state of affairs by putting at least as much pressure of adjustment on the creditor country, as on the debtor. This is an attempt to return to the state of affairs which existed in the nineteenth century when a favourable balance in favour of London and Paris, which were the main creditor centres, immediately produced an expansionist pressure in those markets, but which has been lost since New York succeeded to the position of main creditor, aggravated by the break-down of international borrowing credit and by the flight of loose funds from one depository to another. I did not contemplate that the sanction, proposed in the first version of this scheme, by which creditor balances in excess of a stipulated amount were confiscated, would ever come into force in practice. For obviously it would always be t6 the interest of the country concerned to find some way of dealing with the surplus other than that. The object of this and of further provisions was to make sure that some other way could be found. The main point is that the creditor should not be allowed to remain passive. For if he is, an impossible task is laid on the debtor country, which is for that very reason in the weaker position, so that the evils with which we are familiar are very likely to ensue. By making possible rules as to when changes in the rates of exchange of a national currency are allowed or prescribed, it much increases the efficacy of small changes such as 5 or io per cent. In the first place, it makes the creditor contribute to the change by appreciating his currency, which countries, left to themselves, will very seldom do. In the second place, it protects any permitted change from being neutralised by an unjustified competitive depreciation elsewhere. Thus the new system should make possible undertakings not to use protective expedients except when they are required. There should be a general agreement amongst members of the Union to the following effect against every version of discriminatory action: (1) No tariffs or preferences* exceeding 25 per cent ad valorem; * The formula I prefer for preferences is that they are permitted up to a figure of 25 per cent between members of political and geographical groups, (2) No export subsidies either direct or by supplying exporting manufacturers with raw material etc. at prices below the prices at which they are available (apart from differences in cost of transport) for export; (3) No import quotas or prohibitions; (4) No barter agreements; Keynes’ 2nd Draft on Int’l Currency Union 6 (5) No restrictions on the disposal of receipts arising out of current trade. This forswearing of discriminatory policies would apply to all states subject- (1) to their being allowed three (or five) years in which to bring the new policy into full effect; (2) to their being allowed, if they wish to do so, to fall back on the forbidden protective devices in the event of their central bank becoming a Deficiency Bank. It should be noted that no rule is proposed against subsidies in favour of domestic producers for domestic consumption, with a countervailing levy when such subsidised goods are exported. This is a necessary safety-valve which provides for protective expedients called for on political, social and industrial grounds. Such subsidies would become the approved way of giving purely domestic protection to an industry which for special reasons ought to be maintained for domestic purposes only. But control of this kind will be much harder to work, especially in the absence of a postal censorship, by unilateral action than as part of a uniform multilateral agreement by which movements of capital can be controlled at both ends. We should, therefore, urge the United States and all other members of the Currency Union to adopt machinery similar to that which we have now gone a long way towards perfecting in this country. This does not mean that the era of international investment should now be brought to an end. On the contrary, the system proposed should greatly facilitate the restoration of international credit for loan purposes in ways to be discussed below. The object, and it is a vital object, is to have a means of distinguishing (a) between movements of floating funds and genuine new investment for developing the world's resources; and (b) between movements, which will help to maintain equilibrium, from surplus countries, to deficiency countries and speculative movements or flights out of deficiency countries or from one surplus country to another. There is no country which can, in future, safely allow the flight of funds for political reasons or to evade domestic taxation or in anticipation of the owner turning refugee. Equally, there is no country that can safely receive fugitive funds which cannot safely be used for fixed investment and might turn it into a deficiency country against its will and contrary to the real facts. The following general principles are, therefore, essential: (i) All remittances must be canalised through central banks and the resulting balances cleared by them through the International Clearing Bank. (ii) No remittances in respect of the outstanding capital of existing or future assets owned by non-residents shall be made except under licence of both the central banks concerned. (iii) The ownership of such assets may be freely shifted between non-residents, and non-residents may exchange one investment for another within a country. (iv) The net current income of such assets may be freely remitted together with an annual amortisation of capital not exceeding (say) 5 per cent. (v) The offer of investments or assets to non-residents to be newly acquired by them shall require the approval of both the central banks concerned. (vi) Floating and liquid funds, apart from those required to finance current trade through bills and acceptances and in connection with current banking business approved by the central bank concerned (much as in this country under present conditions) shall only be lent and borrowed between central banks. These rules would not preclude the issue of general licences of indefinite duration by agreement between the central banks concerned. Moreover, membership would be thus established as a privilege only open to those who conformed to certain general principles and standards of international economic conduct. I conceive of the management and the effective voting power as being permanently Anglo-American. Thus it would be preferable, if it were possible, that the members should, in some cases at least, be groups of countries rather than separate units. But this provision is not essential to the scheme. We might start with mixed modes, and it might sometimes be better to begin with separate units with the intention of encouraging subsequent combination rather than to force premature inter-arrangements for which those concerned were not ready. For we have to face the fact that the pooling of balances within a limited area as against the rest of the world represents a high degree of mutual trust and dependence and might be difficult without a single central bank and uniform currency and banking within the whole group. In the second place a greater surrender of sovereign rights must be in order in the post-war world than has been accepted hitherto. The arrangements proposed could be described as a measure of financial disarmament. They are very mild in comparison with the measures of military disarmament which, it is to be hoped, the world will be asked to accept. (3) The Bank might set up an account in favour of the supranational policing body charged with the duty of preserving the peace and maintaining international order. If any country were to infringe its properly authorised orders, the policing body might be entitled to request the Governors of the Clearing Bank to hold the Clearing Account of the central bank of the delinquent country to its order and permit no further transactions on the account except by its authority. This would provide an excellent machinery for enforcing a financial blockade. (4) The Bank might set up an account in favour of international bodies charged with the management of a Commodity Control, and might finance stocks of commodities held by such bodies, allowing them overdraft facilities on their accounts up to an agreed maximum. By this means the financial problem of holding pools and `ever-normal' granaries would be satisfactorily solved. B.2. A central bank whose Clearing Account has been in debit for more than a year by an amount exceeding a quarter of its index-quota shall be designated a Deficiency Bank. A Deficiency Bank shall be allowed to reduce the value of its national currency in terms of grammor by an amount not exceeding 5 per cent within any year. A Deficiency Bank may borrow from the Clearing Account of a Surplus Bank (see below) .on any terms which may be mutually agreed. B.3. A central bank whose Clearing Account has been in debit for more than a year by an amount exceeding a half of its index-quota shall be designated a Supervised Bank. A Supervised Bank may be required by the Governors of the Clearing Bank Keynes’ 2nd Draft on Int’l Currency Union 13 to reduce the grammor value of its national currency by amounts not exceeding 5 per cent in any year; to hand over in reduction of its deficiency any free gold in the possession of itself or its Government; and to prohibit outward capital transactions except with the permission of the Governors, who may also disallow at their discretion any other requirement from it for foreign exchange. A Supervised Bank may be requested by the Governors to withdraw from the system in which event its debit balance shall be transferred to the Reserve Fund (see below) of the Clearing Bank. B.4. A Central Bank whose Clearing Account has been in credit for more than a year by an amount exceeding a quarter of its index-quota shall be designated a Surplus Bank. A Surplus Bank may increase the exchange value of its national currency by an amount not exceeding 5 per cent within any year. A Surplus Bank shall grant a general licence for the withdrawal of foreign-owned balances and investments within its jurisdiction. A Surplus Bank may make advances to the Clearing Account of a Deficiency Bank. B.5. A central bank whose Clearing Account has been in credit for more than a year by an amount exceeding a half of its index-quota shall be required by the Governors of the Clearing Bank to increase the exchange value of its national currency by 5 per cent, and the requirement shall be repeated after any subsequent year in which the average credit balance has increased by a further 10 per cent of its index-quota since the previous upward adjustment. Would keynes think today we have kept our credits and debits within a reasonable amount?

Subject: Waking up homeless in America From: johnny5 To: All Date Posted: Fri, Feb 25, 2005 at 07:34:05 (EST) Email Address: johnny5@yahoo.com Message: Foreign Investment's Flip Side U.S. Trade Deficit Swells Along With Consumption, Debt By Paul Blustein Washington Post Staff Writer Friday, February 25, 2005; Page A01 Every other night or so, the calls start pouring in from Asia to the homes of Peter Leonard and several traders he supervises at Nomura Securities in New York, jolting them awake sometimes as often as five times a night. The calls come from places such as Tokyo, Shanghai, Hong Kong and Singapore, where investors want to buy U.S. mortgage-backed securities, which are essentially giant packages of mortgages on thousands of American homes. Such sleep disturbances have roughly doubled in the past year, according to Leonard, reflecting the sizzling demand among Asian money managers for a piece of the U.S. mortgage market. The interrupted slumber of Nomura's New York mortgage traders is one small facet of the rapidly rising flow of foreign money into U.S. financial markets. This torrent of capital from overseas has become indispensable fuel for the U.S. economic engine, helping to keep interest rates low. But the influx of capital has an ominous flip side -- the ballooning U.S. trade deficit, which soared 24 percent in 2004, to $617.7 billion. The dollars spent by Americans on Japanese cars, Chinese televisions and other imported goods end up in the hands of foreigners, who plow them into U.S. Treasury bonds and other securities like the ones sold by Leonard and his fellow traders. http://www.washingtonpost.com/wp-dyn/articles/A51650-2005Feb24.html http://www.321gold.com/editorials/daughty/daughty022305.html Thomson Financial, an information firm in New York, says that 'A boom in foreign purchases of US firms, now seen as a bargain, may have started. Last year, 1,126 US businesses were sold to foreign buyers, up from 1,032 in 2003 and 980 in 2002.' This is how Thomas Jefferson came to say something about how fiat money will ruin us and that we will, and I am quoting from memory 'Wake up homeless on the continent their forefathers gave them.' They will have strong money and we will have weak money, and thus they can buy us, lock, stock and barrel. ...Ron Paul asked Greenspan whether a gold standard would prevent the government from amassing such huge debts. He replied, 'I think we have been remarkably successful, in my judgment mimicking much of what the gold standard does I think in that context so far we have maintained a stable monetary system.' ...Then he REALLY goes bananas when he says, 'I do not think that you could claim that the central bank is facilitating the expansion of expenditures in this country' Hahahaha! I am laughing so hard in contempt and rage I am spitting up blood! What a lying moron!

Subject: Laura we can From: johnny5 To: All Date Posted: Fri, Feb 25, 2005 at 06:42:01 (EST) Email Address: johnny5@yahoo.com Message: When a country lives on borrowed time, borrowed money and borrowed energy, it is just begging the markets to discipline it in their own way at their own time. Honey, I Shrunk the Dollar By THOMAS L. FRIEDMAN Published: February 24, 2005 http://www.nytimes.com/2005/02/24/opinion/24friedman.html? have just one question about President Bush's trip to Europe: Did he and Laura go shopping? If they did, I would love to have been a fly on the wall when Laura must have said to George: 'George, do you remember how much these Belgian chocolates cost when we were here four years ago? This box of mints was $10. Now it's $15? What happened to the dollar, George? Why is the euro worth so much more now, honey? Didn't Rummy say Europe was old? If we didn't have Air Force One, we never could have afforded this trip on your salary!' The dollar is falling! The dollar is falling! But the Bush team has basically told the world that unless the markets make the falling dollar into a full-blown New York Stock Exchange crisis and trade war, it is not going to raise taxes, cut spending or reduce oil consumption in ways that could really shrink our budget and trade deficits and reverse the dollar's slide. This administration is content to let the dollar fall and bet that the global markets will glide the greenback lower in an 'orderly' manner. Right. Ever talk to someone who trades currencies? 'Orderly' is not always in the playbook. I make no predictions, but this could start to get very 'disorderly.' As a former Clinton Commerce Department official, David Rothkopf, notes, despite all the talk about Social Security, many Americans are not really depending on it alone for their retirement. What many Americans are counting on is having their homes retain and increase their value. And what's been fueling the home-building boom and bubble has been low interest rates for a long time. If you see a continuing slide of the dollar - some analysts believe it needs to fall another 20 percent before it stabilizes - you could see a substantial, and painful, rise in interest rates. 'Given the number of people who have refinanced their homes with floating-rate mortgages, the falling dollar is a kind of sword of Damocles, getting closer and closer to their heads,' Mr. Rothkopf said. 'And with any kind of sudden market disruption - caused by anything from a terror attack to signs that a big country has gotten queasy about buying dollars - the bubble could burst in a very unpleasant way.' Why is that sword getting closer? Because global markets are realizing that we have two major vulnerabilities that this administration doesn't want to address: We are importing too much oil, so the dollar's strength is being sapped as oil prices continue to rise. And we are importing too much capital, because we are saving too little and spending too much, as both a society and a government. 'When people ask what we are doing about these twin vulnerabilities, they have a hard time coming up with an answer,' noted Robert Hormats, the vice chairman of Goldman Sachs International. 'There is no energy policy and no real effort to reduce our voracious demand of foreign capital. The U.S. pulled in 80 percent of total world savings last year [largely to finance our consumption].' That's a big reason why some '43 percent of all U.S. Treasury bills, notes and bonds are now held by foreigners,' Mr. Hormats said. And the foreign holders of all those bonds are listening to our debate. They are listening to a country that is refusing to raise taxes, and an administration talking about borrowing an additional $2 trillion so Americans can invest some of their Social Security money in stocks. If that happened, it would almost certainly weaken the dollar, further depreciating the U.S. Treasury bonds held by all those foreigners. On Monday, the Bank of Korea said it planned to diversify more of its reserves into nondollar assets, after years of holding too many low-yielding and depreciating U.S. government securities. The fear that this could become a trend sparked a major sell-off in U.S. equity markets on Tuesday. To calm the markets, the Koreans said the next day that they had no intention of selling their dollars. Oh, good. Now I'm relieved. 'These countries don't have to dump dollars - they just have to reduce their purchases of them for the dollar to be severely affected,' Mr. Hormats noted. 'Korea is the fourth-largest holder of dollar reserves. ... You don't want others to see them diversifying and say, 'We'd better do that, too, so that we're not the last ones out.' Remember, the October 1987 stock market crash began with a currency crisis.' When a country lives on borrowed time, borrowed money and borrowed energy, it is just begging the markets to discipline it in their own way at their own time. As I said, usually the markets do it in an orderly way - except when they don't.

Subject: Guckert Story From: http://www.lasun.net To: All Date Posted: Thurs, Feb 24, 2005 at 23:52:25 (EST) Email Address: johntully@gmail.com Message: THE JAMES GUCKERT/ JEFF GANNON, FAKE REPORTER IN THE WHITE HOUSE QUESTION IS MOOT! BY JOHN TULLYTHE LOS ANGELES SUNFEB 23 A weekend journalism-school reporter, using a fake name, was given access to the President of the United States at White House press briefings before he even worked for any news organization. He claims that he has seen a confidential, so-called C.I.A. document which reveals the name of former Ambassador Joseph Wilson's wife and shows her recommending him for the trip to Niger to investigate yellowcake uranium sales to the Iraqis. It turns out that Secret Service has been waving James Guckert by the guardhouse for two and a half years and once inside, he became Jeff Gannon. He wrote for a fake website, Talon News, run by Republican strategist Bobby Eberle and the organization GOPUSA. To understand how something like this could Not be a story, that this could happen to begin with, is to understand how The District of Columbia really runs. However, one can only watch and wait as the laws of physics begin to rear their ugly head. Try as they might and for whatever reason, The Mainstream Media (as good of a description as any) just can't keep this monster down. Howard Kurtz, the longtime and wise sage media critic with The Washington Post, trusted by little old Quaker ladies in Cleveland Park D.C. and lobbyists alike, just could not figure out what the big fuss was all about and immediately chalked it up to over-eager WWW types and their preoccupation with the salacious part of the story.Oh that.The Great Diversion and the reason why non-political junkies in America are apparently not talking about this story is that this fella' publicly advertised his services as a male prostitute on numerous sites on the Internet and registered and launched numerous gay male pornographic websites. Really. CNN's Aaron Brown, so brilliant in his earlier years on the old ABC overnight news program, pooh-poohed the scandal as a bit of 'so what'. On Wolf Blitzer's 'Hard News' program, Mr. Guckert/Gannon was treated almost softly, as if not to upset. The New York Times finally ran the story, deep in the back pages on Friday, Feb 11th, more than a week after website journalists began to fully reveal this fake journalist's deceptions.The shockjock mentality came out instantly in the groupthink mainstream media with a curious mix of apathy and frat-boy jokes. There was no outrage to be outraged over.Meanwhile , writers on web sites like The Daily Kos, David Brock's Media Matters and John Aravosis's America Blog, among others, had been doing their own journalism and found out that Mr. Guckert was not who or what he appeared to be. They started their dig after witnessing a press briefing by the President back in late January. A strange reporter asked a clearly partisan question / pronouncement that, among other things, stated that the Democrats were 'divorced from reality'. They got dirt all right. Columnists Frank Rich and Maureen Dowd finally had to write cute pieces about the mess nearing the end of last week. Katie, Matt, and The Today Show eventually did a quick three- minute story in the first hour last Wednesday. Radio man Don Imus couldn't get anyone to bite and wondered aloud about the titillating aspect of the thing. This was now more than ten days since the story had broken, or hadn't broken. No one was even discussing, outside of the Web, the nasty business of the C.I.A. memo that Mr.Guckert had claimed to have seen or knew about right there on Mr. Blitzer's show. Links to web sites where Mr. Guckert solicited clients for sex were widely available at the very same time Mr. Blitzer was tripping all over himself to give Mr. Guckert an Easypass.Ultimate Washington insider Mary Matalin, Vice President Cheney's sometimes consultant, told Imus that she just wished Ms. Dowd would just come in from the cold and get with the program. Why did President Bush and Scott McClellan, the President's spokesman, call on Mr. Guckert/Gannon so often in those two and a half years and how could other reporters not write about Talon News and GOPUSA 's illegitimacy? Veterans of the White House beat sometimes don't see a question for years. Was he a plant? But just like the high school sophomores that they are, the Washington press corps have hemmed and hawed and giggled their way for weeks now through a real-live genuine scandal unfurling at the White House. Waving their collective finger, they dismissed the whole affair in full. It was simply The Bloggers and their liberal retribution for the Rather/CBS assassination and a lurid fascination with the X-rated angle thrown in for good measure. Now the simply idiotic Bush-Tapes story, along with a long weekend and a brilliant fake-outrage campaign over a congressman's comments about Karl Rove, is threatening to bury forever a story that the entire profession of journalism would like to pretend was never born to begin with. Everyone seems to be looking around at each other and tsk-tsking the lack of outrage on each other's part, as if to say 'This is terrible. Someone do some real reporting. 'Someone did - as Mr. Bush would say, on the 'Internets'. Stay Tuned. FOR IMMEDIATE RELEASE (I need people to link to me btw) HTTP//:WWW.LASUN.NET johntully@gmail.com The Los Angeles Sun www.lasun.net

Subject: Soylent Green - new use for the old? From: johnny5 To: All Date Posted: Thurs, Feb 24, 2005 at 19:02:06 (EST) Email Address: johnny5@yahoo.com Message: Graveyards may lose business to this in the future: $80 a barrel Oil http://www.fortune.com/fortune/smallbusiness/articles/0,15114,1018747,00.html SMALL & GREEN A Turkey In Your Tank Could poultry scraps be the next big source of fuel oil? By Ellyn Spragins One solution to america's energy crisis just may be gobbling away at a poultry farm near you. Changing World Technologies has developed a working system to convert turkey guts and scraps into fuel oil. But CWT's tribulations show how hard it is for even the most innovative green company to compete in the energy business. CWT's improbable alchemy is based on an idea that scientists have been kicking around for three decades: mimicking the earth's process for creating oil and gas. By subjecting organic materials to extreme heat and pressure, CWT produces in minutes what the planet takes thousands of years to make. The company says its process works on tires, various hazardous wastes, and plastic as well as heavy metals. The key question is whether the end products are pure enough and cheap enough to compete with other biofuels and petroleum. Until recently it seemed that turkey fuel would score big on both counts. CWT saw opportunity in the mad cow scare of December 2003. Expecting U.S. authorities to ban the feeding of animal offal to livestock—a practice linked to mad cow disease—CWT and ConAgra formed a joint venture that built a $30 million plant in Carthage, Mo. The venture assumed that nearby turkey processors would provide lots of free turkey waste. Last year the Carthage plant began selling its output to a Midwestern manufacturer, which buys it for roughly $40 a barrel (25% less than conventional fuel) and uses it to run its plant. The Carthage factory now produces 400 barrels a day. That's a drop in the ocean of U.S. oil consumption, currently running around 20 million barrels a day. But making more turkey fuel isn't as hard as nailing down its costs. It turns out that feeding animals to animals remains standard practice in the U.S., despite a modest tightening in the regulations last year. So instead of being free, turkey leftovers cost $30 to $40 a ton, a hefty expense considering that one ton of turkey yields just two barrels of oil. And turkey fuel has so far been excluded from biofuel tax breaks. In October, Congress passed a bill that gave biodiesel, which is also derived from biological material, such as soybean oil and animal fat, but has a different chemical composition, a tax incentive that translates into a $1-a-gallon break on production costs. 'The good news is that the government finally gave an incentive for producing fuel from waste,' says CWT chairman and CEO Brian Appel. 'The bad news is that it narrowly defined the kind of fuel receiving the incentive.' As a result of those two setbacks, CWT's production costs have doubled, to nearly $80 a barrel, a crippling blow given that conventional diesel sells for about $50 a barrel. CWT is staying afloat, thanks to a $10 million grant from the U.S. Department of Energy. But the company's next operation is likely to be in Europe, where food processors will pay to have CWT dispose of animal offal and where most governments offer tax incentives to biofuel producers. Appel is negotiating to license CWT's technology to Irish Food Processors, one of Europe's largest, which plans to build a biofuel facility by the end of 2006.

Subject: Flexible Investing From: Terri To: All Date Posted: Thurs, Feb 24, 2005 at 17:18:43 (EST) Email Address: Not Provided Message: While high price/earning ratios for the S&P Stock Index have limited gains or presaged losses, the market has been at high p/e levels for long periods. This presents the problem of having to not invest in stocks for long periods if p/e is the guideline. An investor who relied on p/e ratios would have been out of the market since 1997. The question that needs to be asked however is can suitably priced stocks be found even in a market in which general prices are high? I would suggest so. At the peaks of the general market in 1999 and 2000, there were reasonably priced sectors such as energy, health care and REITs. These sectors as a whole were reasonably priced, so that an investor did not have to buy individual stocks but could buy the entire sector in a fund. Tne need is not to let a single measure blind us to an entire market.

Subject: Re: Flexible Investing From: johnny5 To: Terri Date Posted: Thurs, Feb 24, 2005 at 18:01:51 (EST) Email Address: johnny5@yahoo.com Message: Now you are back to stock picking or US sector picking - not global asset allocation right? What if your us centric stocks are all going to tumble no matter the sector - would it not be prudent to withdraw from the entire US market - sectors and all? What sectors have the fairest valuations? Hussman had more to say: I frequently present calculations of probable long-term stock returns by making a few assumptions about long-term peak-to-peak growth in earnings and various future P/E multiples. I generally base these P/E ratios on peak-earnings. The price/peak-earnings multiple is the ratio of the S&P 500 to the highest level of earnings attained to date, even if current earnings on the index have declined below that peak. I constructed this in order to filter out the uninformative spike in the P/E ratio that occurs when earnings plunge during recessions. The price/peak earnings ratio is equal to the raw P/E when earnings are at a new high, as they are today, and is otherwise lower than the raw P/E. This makes it a conservative measure of market valuation, so very high levels properly merit concern. Based on newly released quarterly earnings figures, the S&P 500's price/peak earnings ratio is nearly 20. Consider that level from a long-term perspective. Except for the reckless and unsustainable valuations at the 2000 peak, the current multiple has been observed only at the 1929, 1972 and 1987 market extremes and at the late 1960's market extremes. While the market plunges beginning in 1929, 1972 and 1987 are well-known, those mid-1960's valuations deserve some context as well. The Dow first approached 1000 in late 1965. It reached a durable low in 1982, seventeen years later, at 777 – a level it first achieved in January 1964. Investors forget these things if they ignore the data long enough.

Subject: 'Toys' or 'Noise' ? From: Pancho Villa alias Green-go To: All Date Posted: Thurs, Feb 24, 2005 at 17:09:58 (EST) Email Address: nma@hotmail.com Message: Dollar scare reveals fragile support Underlying weakness makes the dollar vulnerable to rumor Crisis over? Not really. For sure, the market overreacted to reports that the Bank of Korea wanted to reduce the share of dollars in its portfolio. What the Korean actually said was that they want to diversify out of low-yielding US Treasuries into higher yielding securities, which could include riskier US assets as well as non-US government bonds. And they intend to do so by diversifying the flow of reserves, not the $200bn stock. But while Tuesday's sell-off was founded on error, it nonetheless exposed the underlying weakness of the US currency. If the mighty dollar can be rocked by a single paragraph in a report to the Korean parliament something is amiss. That something is the dependence of the dollar on a handful of Asian central banks, which between them control $2,400bn reserves. These reserves are already large relative to the size of the Asian economies, and getting bigger by the day. As they grow so does the incentive to guard against capital loss from further dollar depreciation. Very obviously, if all the Asian central banks were to start selling their stock of dollars the US currency would plunge. But such a generalised rout would also force the Asian currencies to appreciate against the dollar. If either Japan or China were to sell dollars, the effect would probably be the same. However, the first mid-sized country to bail out of the dollar might be able to get a good price for its assets and maintain its bilateral exchange rate, encouraging others to follow. But even if Asian central banks do not sell their stock of dollars, the US currency is not safe. With private appetite for US assets inadequate and volatile, the US relies on continued purchasess by central banks to fund its current account deficit and aquisition of foreign assets by US residents. If their appetite dims, unless private flows sore, the dollar will still fall (and keep on doing so until the change in the relative price of imports and exports narrows the current account deficit to a sustainable level.) Diversification might not succed in its objective of minimising capital loss. It all depends on what currency one diversifies into. The euro is no longer obviously cheap. If and when Asia revalues the euro could even fall against the dollar. In this case the capital loss would be greater on euro holdings than on dollars. Asian countries need more Asian assets. Again, in aggregate they cannot obtain them without forcing up their currencies, though individual countries acting alone could do so. In the end the only sure way to limit capital loss is to stop intervening and allow currencies to rise. The yen and Korean won have appreciated significantly since 2002. But while others remain pegged, such appreciation disrupts intra-Asian exchange rates and trade. The optimal solution is a coordinated revaluation, led by China. But while the Chinese economy thrives and inflation stays under control, Beijing has little incentive to agree.

Subject: Sparks to light a powder keg? From: johnny5 To: Pancho Villa alias Green-go Date Posted: Thurs, Feb 24, 2005 at 17:30:21 (EST) Email Address: johnny5@yahoo.com Message: How were tensions right before the assassination that started world war I? http://www.321energy.com/editorials/chapman/chapman022305.html February 23, 2005 War Jitters! Last week jittery waves crawled through the markets when Iranian television reported that an explosion occurred near its only nuclear reactor. The stock markets briefly roiled and oil prices jumped. Initially it was feared that a missile had hit, fired either by Israel or the United States both of who are accusing the Iranian government of secretly developing nuclear arms. Washington denied knowledge of the blast and Iranian television later reported it was a fuel tank falling from a plane and then later said it was because of a blast linked to the construction of a nearby dam. Either way the message was clear to the markets. A real strike in Iran could shake the world. A bomb of a different sort fell on Tuesday when South Korea announced that its Central Bank will diversify its currency reserves. There is talk that other central banks will back away from the US$ as well. Indeed there is evidence to suggest that this action is already underway and if that is correct then the demise of the US$ as the world’s reserve currency is already underway. This economic bomb hit the US$, then the stock markets and later oil markets soared over $51 and Gold soared $7 over $430. South Korea, who has one of the largest foreign exchange reserves in the world, has to be taken seriously. Later South Korea issued a note that the plan to diversify their foreign exchange reserves was not new and didn’t say specifically that they would sell the US$. Certainly with $200 billion in US Treasuries they are not going to do that without seriously disrupting the bond market. Markets steadied on Wednesday so the message was effectively damage control. Some other economic bombs lurking in the background are the Russians and possibly other oil producing nations demanding payment in Euros rather than US$ for oil and the birth of a nascent oil trading market in Tehran that could threaten the supremacy of London’s International Petroleum Exchange. In the case of the oil trading market the major oil producing countries are determined to take control of trading advising that the current markets in London and the NYMEX in New York do not work in their favour. Neither of these stories is new either. The potential for war of either the real or economic kind is what makes markets roil and raises the stakes for the potential of a financial meltdown. For months now the rhetoric has been rising between Tehran and Washington over the potential for Iran’s nuclear industry to produce nuclear weapons. The Europeans have been trying to cut a deal with Iran now for some time in order to keep the problem under control. The Iranians deny that they are aiming to produce nuclear weapons. And on it goes. In 1981 Israel pre-emptively struck nuclear facilities in Iraq on the basis that the Iraqis were going to produce a nuclear weapon. A strike today in Iran could trigger a global conflict as both China and Russia have significant ties to Iran through oil agreements in the case of China and Russia supplying military assistance. But Iran is seen by the US and Israel as supporting terrorism through Hezbollah and other groups. Iran has been accused of supporting the insurgents in Iraq. Tehran has close ties with groups who won the recent election in Iraq where numerous Iraqi Shiite clerics were in exile in Tehran. Conflict has existed for years between Israel and Iran and it is no secret that Israel would like to see Iran taken out. This also fits with the agenda in Washington who sees regime change as essential for the countries deemed to be anti-American or as they put it “countries of tyranny”. This includes Iran and Syria who is being accused of being behind the recent assassination of Rafik Harriri the former Lebanese Prime Minister. Iran and Syria have vowed to assist each other should they be invaded. Other countries in the Mid-East on the list include Saudi Arabia and Yemen. The Mid-East sits on the biggest oil reserves in the world and currently supplies the US with about 21% of its imports. Amongst other countries on the US hit list for regime change is Venezuela where there is no love between the US and the Chavez government. Venezuela supplies about 11% of US oil. Recent indications are that Venezuela is signing contracts to provide more oil to China and less to the US. It has been surmised that the US was behind a failed coup d’etat in 2002. Chavez was elected as President of Venezuela and as well survived a recall vote with strong majorities following the failed coup d’etat. Continuing to lurk in the background is the Israeli/Palestinian conflict. While efforts are being made to reach an accord with Yassir Arafat out of the way and the newly elected Mahmoud Abbas in charge many challenges remain that could derail the current shaky peace. Recall it was hard right Israeli settlers that derailed earlier peace efforts including the assassination of Yitzhak Rabin. As well Abbas has to deal with hard core groups such as Hamas. Any of these could derail the current process. Both Abbas and Sharon could face civil war and either could be target for assassins. Despite the great claim that democracy is breaking out in Afghanistan and Iraq we are reminded that much of Afghanistan remains under the control of war lords and is effectively a narco state with one of the lowest standards of living in the world. The Iraqi election has not ended the Sunni insurgency. The party blessed by Shiite Ayatollah Sistani with close ties to Iran won the most seats in Iraq election. Al-Jaafari a former Iranian exile stands to become President. There have been calls to institute Islamic law which would be very problematic for the US. Other groups in the Iraqi coalition are unlikely to want Islamic law and the Shiite groups that won will have to compromise or there is the risk of civil war. Calls have been made by numerous groups that now that the election is over that US should leave. So election or not in Iraq there remain very high risks. What all this is pointing to is that any incident that may have already occurred or one that has not occurred could trigger war, either of the real or economic kind. Markets do not like war. The thought of it or the outbreak of hostilities does trigger sharp drops in the markets. In this case a sharply falling US$ could also trigger a bond market collapse. This tells us that the odds of a financial accident in the upcoming months has now become real and very high. While it might not happen the question that needs to be asked is “do we feel lucky”? Given the high level of debts and leverage that exist in North America today coupled with the low level of savings this heightens the concern of a financial meltdown. We are potentially staring at a precipice or as Financial Sense (www.financialsense.com) would say “we are facing a potential perfect storm”. We thought it would be interesting to provide a short summary of US wars in the 20th century and their impact on US stock markets (using the Dow Jones Industrials as the proxy). The general observation is that threats of war or a trigger event (i.e. Pearl Harbour, 9/11) are more likely to trigger market sell offs while invasions and an appearance that the war is going well triggers huge market rallies. An unexpected escalation of the war also triggers market sell offs. The 20th century and early part of the current century has seen the US involved directly in seven wars starting with the Spanish American War that got underway at the end of the 19th century. We did not count the long Cold War (1945-1989) as that involved no direct conflict but instead proxy wars. Nor did we count the Balkan Wars of the 1990’s where the US involvement was through NATO. We follow the wars chart with a weekly chart of the S&P 500 and of Gold as we believe that Gold will be a major beneficiary of a market meltdown. We have placed some interpretations on the charts. Please keep in mind that these are interpretations only and there may be others as well. Elliott wave is subject to numerous interpretations even by serious devoted Elliott wave practioneers. We have only looked at big waves and made no attempt to interpret sub waves that can change the entire count.

Subject: Re: Sparks to light a powder keg? From: Pancho Villa alias Gringo To: johnny5 Date Posted: Thurs, Feb 24, 2005 at 18:03:28 (EST) Email Address: nma@hotmail.com Message: 'It is lamentable, that to be a good (very best) patriot one must become the enemy of the rest of mankind.' Voltaire

Subject: What is the current P/E of the market? From: johnny5 To: All Date Posted: Thurs, Feb 24, 2005 at 16:21:10 (EST) Email Address: johnny5@yahoo.com Message: http://www.hussmanfunds.com/wmc/wmc050222.htm One of the important elements in the success of great investors like Warren Buffett is the ability to maintain what J.K. Galbraith once called a “durable sense of doom” during periods of market overvaluation. This is not easy, because investors often confuse temporary stock returns with permanent ones. They accept excessive risk in overvalued markets because they fear “leaving money on the table.” Historically speaking, advances that emerge from low valuations have typically been “permanent” in the sense that they are not erased by later market declines. In contrast, market returns from price/peak-earnings ratios over 18-19 have regularly been given back, often painfully. Though I certainly wouldn't advise it as a strategy, investors would have historically outperformed the S&P 500 with much less risk than a buy-and-hold simply by selling stocks when the S&P reached 19 times earnings and staying in T-bills until the P/E reverted to 15, even if it took years to do so. In effect, market gains (over and above T-bill yields) from P/E multiples over 18-19 have historically been purely temporary. Investors are often warned that missing a modest number of the strongest days or weeks in the market would have resulted in dismal long-term performance. Aside from the absurdly low probability of missing those specific periods while holding stocks in all the others, what's not recognized is that those strong periods don't occur randomly. If you look at market data, over two-thirds of the best 30 weeks, for example, have occurred in periods when market valuations were below their historical medians. Importantly, the converse is not true. The majority of bad weeks don't concentrate in overvalued periods. Instead, they concentrate in periods when the quality of market action has already deteriorated on the basis of yield trends, price action and so forth.

Subject: Industry Standard Reporting From: johnny5 To: All Date Posted: Thurs, Feb 24, 2005 at 15:38:58 (EST) Email Address: johnny5@yahoo.com Message: Can some of you point me to any research on how tightening bi-monthly 401K contributions could distort markets? Something similar to this but focusing on the contribution inflows and not the transers: http://www.bc.edu/centers/crr/papers/Fifth/Agnew-Balduzzi.pdf How an individual trades in a 401(k) account has implications for both the financial security of the individual’s retirement and for the financial markets as a whole. At the individual level, the success of trading strategies can directly impact whether an individual has sufficient funds for retirement or not. At the market level, understanding 401(k) flows may provide insights into how the introduction of private Social Security accounts could affect the stability of the financial markets. Indeed, previous research has suggested that flows and certain types of trading strategies can influence the returns and volatility of financial markets (Balduzzi, Bertola and Foresi 1995; DeLong, Shleifer, Summers, and Waldmann 1990). Given that the introduction of private Social Security accounts could result in an inflow of billions of dollars into individual trading accounts, a better understanding of how these personal accounts might be traded is relevant to assessing their potential impact on the market. Unfortunately, drawing direct inferences about retirement flows from past research of portfolio flows and asset returns may not be advisable. This is because most existing papers have studied data sets that combine both non-retirement and retirement fund flows, or simply non-retirement flows. Given that previous research (Agnew, Balduzzi, and Súnden 2002; Barber and Odean 2001) has shown a marked difference in trading between individual stocks and mutual funds, this pooling may result in a misrepresentation of the retirement flows. This paper overcomes this problem and contributes to the literature by studying a new and unique data set that focuses solely on the portfolio flows within 401(k) accounts. In addition to its novelty, this data set also has the important featur e of breaking down mutual fund flows into three components: contributions, outflows, and net transfers. Separating out transfers from other flows may be important. Fant (1999) shows in his analysis of monthly mutual fund flows that only the transfer component of flows has a significant relationship with asset returns.1 Thus, this paper focuses solely on transfer activity, making it the first paper to do so using data at the daily frequency. I know people say market timing is a losers game but: http://www.usatoday.com/money/perfi/funds/2003-11-02-hearing_x.htm?csp=20 The SEC survey also found: • 'Almost 30% of ... broker-dealers indicate that they assisted market timers in some way.' Now think about 401K contributions - most of my friends get paid the 15th and the 30th/1st. http://www.webmasterworld.com/forum31/1381-3-10.htm In my experience in the US: Old-style Human Resource people in the US think that employees must be paid on Fridays because they will not come to work the day after a payday. So many pay on Friday, for no other reason. They usually hand out the checks before lunch specifically because they want to the employees to spend their own time (lunch break) online at the bank, instead of 'running out to cash the check' during company time. Of course with most salaried people choosing direct deposit these days, this doesn't make sense, but when did that bother an HR person? They process payroll after the payweek closes (often a Friday) and the checks are ready by Tuesday. The signer of the checks gloats over his power for a day or so, and the checks are generally ready by Thursday afternoon - then held for Friday morning delivery. They pay for 2 weeks of work, every 2 weeks (with the 5 day delay). http://64.233.161.104/search?q=cache:iKD25ol8X2QJ:cbs.marketwatch.com/news/story.asp?guid=%7B55D4E190-F43D-4919-851A-D3160C113D9D%7D&siteid=mktw&dist= mutual fund flow contributions 401k&hl=en Skimming the 401(k) Delayed deposits costing U.S. workers millions SAN FRANCISCO (MarketWatch) -- In an age of instantaneous electronic fund transfers, many U.S. companies are capitalizing on an outdated law that allows them to earn money off their employees' 401(k) deductions. Personal checks now clear in a day, and online payments are expedited with a click, but millions of U.S. employees still wait several days or longer for 401(k) deductions to hit their accounts, costing them tens of millions of dollars each year. A 1997 federal law gives employers up to seven weeks to deposit 401(k) deductions, when they previously had 90 days. Over that time, companies earn short-term interest on the 'float' -- the period between deduction and deposit -- or retain the cash for their own use. A senior U.S. Department of Labor official told MarketWatch Friday that the agency intends to update the law with tighter deposit deadlines. 'It would be a matter of days, a couple of weeks or so -- shorter than the current outside limit,' said Ann Combs, assistant secretary for the Employee Benefits Security Administration, the DOL unit that oversees 401(k) plans. Americans pour an estimated $80 billion a year into 401(k) and similar 'defined-contribution' plans, according to the Profit Sharing/401k Council of America. Delaying deposit for just one week after every bi-weekly payroll -- intentionally or not -- equates to $55 million in short-term interest that U.S. workers forfeit each year, according to data supplied to MarketWatch from investment research firm Ibbotson Associates. Rules and practices around 401(k) plans haven't advanced with technology. So the estimated 45 million employees who fund such accounts -- often as their sole means of retirement savings -- essentially depend on management acting fairly and responsibly to ensure deposits are made as quickly as possible. 'There's nothing a participant can do about it -- it's going to happen when it happens,' said Ted Benna, an employee-benefits expert who created the first 401(k) plan. 'The technology exists today that my contribution could be deposited just the way paychecks get direct deposited. Clearly employers could do it every pay period; it's not that big of a job.' Tightening rules Relief for workers may be in sight. In the last decade, the Labor Department stepped up the auditing and penalizing of employers for forestalling 401(k) contributions. The number of civil violations rose to 1,269 in fiscal 2004 from 34 in 1995, the first year the agency began targeting 401(k) abuse, according to the DOL. The enforcement actions have produced more than $340 million in penalties and fines through Sept. 30. The Labor Department now intends to issue new 401(k) contribution guidelines that could dramatically impact employers and employees alike. Existing law says a plan sponsor must deposit 401(k) money for employees as soon as possible, but no later 15 business days after the month in which the payroll deduction was made. At the extreme, a deduction made on Dec. 1 could land in an employee's account on Jan. 21 -- seven weeks later -- and still be legal. 'That regulation was issued years ago, before we had automated payroll systems,' said Eric Keller, an attorney with Paul, Hastings, Janofsky & Walker in Washington. 'You're expected to do it much quicker.' The Labor Department's expectations should become clearer once the agency issues a stricter definition of 'timely deposit' for employers to follow, Combs said in a telephone interview. The DOL will consider public comment before reaching a final decision, she added, but aims to create a legal safe harbor for companies that reduces the guesswork and uncertainty that plagues many companies. 'The vast majority of employers should be able to meet that much shorter deadline,' Combs said. 'In those few cases where they can't, they have to demonstrate why.' Withholding contributions may shave only about a quarter of 1 percent from the annual return on an all-stock 401(k) portfolio, but still can amount to several thousand dollars of lost gains over a 25-year savings period, according to Ibbotson. 'When it's your retirement savings, it's very important,' Combs said. 'It needs to be invested as quickly as possible so it can start to earn interest and provide retirement security.' Contributor beware The Labor Department's Web site, in fact, cites employer failure to make timely retirement plan deposits as a key warning sign that pension contributions are being misused. Most often, however, experts say that a few days' lag time suggests lax administration rather than cash flow problems. 'We don't see plan sponsors trying to game this process or hang onto employees' money,' said Scott Peterson, head of retirement outsourcing services at pension consultant Hewitt Associates. 'The vast majority of our clients are getting the money invested within three or four days of payroll, and many are doing it more quickly.' But Hewitt and other leading retirement plan administrators such as Automatic Data Processing (ADP: news, chart, profile) and mutual-fund companies The Vanguard Group and Fidelity Investments deal mostly with large companies. Such Fortune 1000 firms typically have more sophisticated payroll systems than smaller businesses, which sometimes aren't even automated. 'The smaller end of the market is where you're more likely to see periods of longer delay,' said Jim Norris, head of Vanguard's institutional retirement plan services. 'If you're a smaller company, you're less likely to have people who are dedicated to retirement plans.' Regardless of size, some companies are reluctant to speed response time, even though doing so could improve employee morale and avoid potential legal problems. 'Not a lot of money gets invested in the administrative end of a 401(k) because it generally doesn't produce any income,' said Ed Slott, a retirement plan advisor who runs the IRAhelp.com Web site. 'There's no effect on the bottom line, except if employees start griping.' Employees who are surprised to find out that 401(k) contributions are held back for days or weeks should know that complaints can produce equally surprising results, Slott added. 'Too many employees, even in the post-Enron era, have blind faith that their companies are doing the right thing,' he said. 'The law of the land is not the law of the plan. There's a set of federal guidelines, but you don't really know. The only way to know is to check your monthly statement. If it's too slow, then say something.' So they shorten 401K contribution timeframes - tightening the time in which this influx of funds are going to hit the market and funds. Now you have these 2 concepts - time weighted reporting and dollar weighted reporting - you are a market maker - you know a large percentage of investment cash is going to hit the market 2 days each month, every other friday. Now you are a crook of the most loathsome sort - when do you jack the prices to really sock it to these fools on thier systematic influx of cash into the markets through thier 401k? It seems obvious to me - every other friday or whatever model best correlates to the new tightening of 401K contribution time frames. Now you are a money manager who understands this concept - what is the best way to report performance to your 401k customers to give them the rosy colored picture of thier investing? That thier dollars are being infused into the markets when they have peaks every other friday - or time weighted reporting? institutional investor am I way off base again? please help me understand because I am confused again :(

Subject: Bush buys raymond james? From: johnny5 To: All Date Posted: Thurs, Feb 24, 2005 at 13:36:16 (EST) Email Address: johnny5@yahoo.com Message: Notice Pres Bush has investments in raymond james from his tax filings - also vanguard and oil and timber: http://www.opensecrets.org/pfds/pfd2003/N00008072_2003.pdf I don't know who this dent guy is but I guess that throws me into the bull camp as I purchase dividend paying oil company shares with all my loose money and don't see why anyone would horde gold. I buy p/e ratios of the historical average close to 14 though and mr. buffet just bought one that had 34 so I will have to reflect on this. If the DJIA hit 40K I should do well in XOM. http://www.lewrockwell.com/french/french27.html

Subject: Ryanair announce purchase of 140 Boeings From: Setanta To: All Date Posted: Thurs, Feb 24, 2005 at 13:26:55 (EST) Email Address: Not Provided Message: not bad for an airline that had a few beat up turbo-prop planes on a shuttle run from Dublin to London! 24/02/2005 - 9:09:13 AM Ryanair expands with 70 new planes and 2,500 jobs No-frills carrier Ryanair today announced a major expansion involving 2,500 new jobs, 10 new bases, continuing lower fares and more than €2.9bn-worth of new planes. The Irish budget airline said it had placed an order for 70 more Boeing 737-800 aircraft with options on 70 more. The planes will arrive between 2008 and 2012 and are expected to take Ryanair’s passenger numbers up to more than 70 million a year. The new planes will help create more than 2,500 jobs – principally for pilots, cabin crew and engineering people. The airline said: “Half of these jobs will be generated at the airline’s existing 12 European bases, with the remainder at the 10 or more new bases which will be developed by Ryanair over the next seven years.” Announcing the expansion plans in London today, Ryanair’s chairman David Bonderman said: “The Boeing 737-800 series aircraft is the most efficient narrow-body short-haul aircraft in the world. 'Since its introduction into the Ryanair fleet in March 1999, it has transformed our technical reliability, making Ryanair the number one on-time major airline in Europe. “At the same time, the 737-800 has significantly reduced our unit operating costs and allowed us to reduce air fares each year for the last five years. With this new order and new pricing in place, Ryanair expects that unit operating costs (excluding fuel) will continue to fall each year for the next five years. “This will enable Ryanair to offer even lower fares and underpin our growth strategy as we plan to double traffic from 34 million passengers in 2005-06 to over 70 million passengers in 2011-12.” Ryanair began its day’s trading on the ISEQ at €6.14.

Subject: Why Is Ryanair a Success From: Terri To: Setanta Date Posted: Thurs, Feb 24, 2005 at 14:33:57 (EST) Email Address: Not Provided Message: Setanta, what is the secret? How were Ryanair and Virgin able to compete so easily from Europe? Are the older airlines so hopelessly inefficienct that they can not effectively compete on price? I avoid airlines, for they have been impossible investment for decades, but the success of new airlines in Europe and America is consistent and intriguing.

Subject: Re: Why Is Ryanair a Success From: Setanta To: Terri Date Posted: Fri, Feb 25, 2005 at 04:59:14 (EST) Email Address: Not Provided Message: Terri, its all to do with market segmentation. historically it was extremely expensive to fly within Europe with reciprocal agreements and accords dating from the 1950's governing air traffic. for every flight, for example, from London to Paris (granted to the flagship carrier of uk - british airways) there was a reciprocal flight from Paris to London (granted to the french flagship carrier - air france). with the development of the European Union came the removal of restrictions of the movement of capital and labour within the EU. this led to the rise of competition legislation which prohibited these practices. ryanair, following lufthansa's lead, embarked on the road to a low cost structure. they achieved this by the following: cutting out all the frills - no free tea, coffee, sandwich etc on the flight. limiting the bookings to the ryanair website only - cutting out the travel agents. flying into lesser known airports in the country - the parisian airport is beauvais, not charles de gaulle, and is about 40 mins from the city. decreasing the turnaround time between flights - achieved by the purchase of B737 as in the posted article above. no insignificant part of this success was down to Michael O'Leary (the businessman i admire most) and his firebrand, revolutionary management style. there is still a market for the higher end airlines, such as aer lingus, BA, British Midland, Air France etc but air travel has been opened up to millions in europe as a result of ryanair's philosophies. virgin, however, defies explanation, i think it is subsidised by richard branson's other enterprises. it is essentially an all-the-frills airline without the prices of the budget airlines. furthermore it tends to have the high profile routes to North America, Asia and Australia while leaving the short hop routes in europe to the budget airlines. (budget airlines won't fly transatlantic as it will not fit in their cost models). to place the air fare revolution in context: 10 years ago the price of a return flight from dublin to london was approximately IR£250 (Eur317) now it is possible to fly return to london, madrid or rome for Eur50 (cheaper than a return rail ticket from Dublin to Cork). you have to be willing to book in advance for awkward times and dates to avail of these prices though!

Subject: Re: Why Is Ryanair a Success From: Terri To: Setanta Date Posted: Fri, Feb 25, 2005 at 12:41:44 (EST) Email Address: Not Provided Message: Excellent Setanta. Makes perfect sense, and I suspect you are right about Virgin, though we both may not understand how inefficient the old airlines really were.

Subject: For the Starve the Beast Fans From: Setanta To: All Date Posted: Thurs, Feb 24, 2005 at 12:10:33 (EST) Email Address: Not Provided Message: spotted something here that should be of interest to those 'starve the beast' supporters. www.bbc.co.uk Living in Somalia's anarchy As Somalia's new government prepares to return to restore order after years of anarchy, the BBC News website's Joseph Winter reports from Mogadishu on life with no central control. Somalia is the only country in the world where there is no government. Seventeenth century philosopher Thomas Hobbes wrote that 'life is solitary, poor, nasty, brutish and short', if there is no central authority. Few Somalis have probably heard of Hobbes but most would agree with his description - except for 'solitary', as family and clan ties remain extremely strong. The last government, of Siad Barre, was toppled in 1991. Since then Somalia has been divided into a myriad of different fiefdoms controlled by rival warlords, who occasionally clash for territory. So what is life like after more than a decade without a government? No public spending Driving 50km (30 miles) from one of the airstrips near the capital, Mogadishu, to the city, you pass seven checkpoints, each run by a different militia. At each of these 'border crossings' all passenger vehicles and goods lorries must pay an 'entry fee', ranging from $3 - $300, depending on the value of the goods being carried - and what the militiamen think they can get away with. There is no pretence that any of this money goes on public services, such as health, education or roads. Much of it is spent by the militiamen on khat, an addictive stimulant, whose green leaves they can chew for hours on end. Those who can afford it travel with several armed guards - and then you can pass the road-blocks unmolested. Much of south Mogadishu appears deceptively calm but parts, including the north, remain too dangerous to visit. While Siad Barre is commonly referred to as a dictator and people were press-ganged into fighting wars with Somalia's neighbours, some now remember with fondness that schools and hospitals were free. It is now estimated that only about 15% of children of primary-school age actually go to school, compared with at least 75% even in Somalia's poor neighbours. In Mogadishu, many schools, colleges, universities and even government buildings, have become camps for the people who fled to the capital seeking sanctuary from fighting elsewhere. Kidnappings Makeshift shelters made from branches, orange plastic sheets and old pieces of metal cover what were once manicured lawns outside schools and offices. And since some of the militiamen started to kidnap aid workers, demanding huge ransom fees, many of the aid agencies have pulled out, leaving many of those in the camps without any assistance whatsoever. 'Some of my children sell nuts in the street to earn some money. We can't afford to send them to school,' says Ladan Barow Nur with resignation, as she cooks chapattis for the evening meal on an open fire just outside her tent. 'My husband helps shoppers carry their goods in the market but it's not enough. We're always hungry.' She lives in what was a school in Mogadishu. There are no toilets in what is now a refugee camp, and in the rainy season, diseases such as malaria, tuberculosis, diarrhoea and dysentery spread quickly. Some schools, universities and hospitals continue to operate but they are mostly privately run and charge fees. The many thousands of people like Mrs Ladan are unable to pay the $3 it costs to see a doctor and so people die of diseases which could be easily prevented or cured. Market forces 'Somalia is a pure free market,' one diplomat told me. And the central Bakara market certainly looks to be thriving. Some businesses, such as telecoms, are also doing well, with mobile phone masts and internet cafes among the few new structures in Mogadishu, a city where many buildings still bear the scars of the heavy fighting between rival militias of the early 1990s. But is a pure free market a good thing? Speaking from a theoretical point of view, some economists might say so, but in the very harsh reality of Mogadishu, it means guns and other military hardware are freely available in a market not far from the city centre. I was advised that it was too dangerous to visit, as customers were constantly firing the weapons to make sure they work before buying them. The cost of an AK-47 is the equivalent of a survey of business confidence in more stable countries. Following the election of a new president in October, the price fell, as people anticipated that militias may soon no longer be able to operate with impunity. But a month on, with a government still not named, nor a clear plan for how or when President Abdullahi Yusuf and his team will even go to Mogadishu, let alone get anything done, the price of a weapon has been creeping higher. Passports for sale The lack of a government also means that the US dollar is the currency of choice - even refugees beg in hard currency. Somali shillings are still used but the notes only come in one denomination - 1,000, worth seven US cents. Three types of notes are in circulation - some still survive from the last government, some were printed by the newly elected President Yusuf, when he was in charge of his native Puntland region, and others were commissioned by private businessmen. At first, some traders in Mogadishu refused to accept the new notes but now they are all used side-by-side. Similarly, the printing of passports has been privatised. For just $80 and in less than 24 hours, I became a Somali citizen, born in Mogadishu. As I had omitted to travel with any passport-sized photos, my supplier kindly left the laminate for that page intact, for me to stick down at home. For a slightly higher fee, I was offered a diplomatic passport, with my choice of posting or ministerial job. With passports and guns freely available, those wanting to launch terror attacks have just about everything they need. And some fear that in the absence of any other authority, terror training camps could be set up in Somalia. Although Somalis are able to survive and some are even prospering, everyone I spoke to in Mogadishu is desperate for a return to some semblance of law and order - schools and hospitals can only follow security on the new government's to-do list. 'I just want a government, any government will do,' one man told me. We all seem to enjoy criticising our governments but life in Somalia shows the alternative is far worse, as Hobbes wrote 350 years ago. A former Somali army major, now a refugee in London, summed up life without a government very well. 'There is nothing you can do when kids with guns steal everything you have, even your clothes. I'm from a small clan, so I was unable to fight back,' he said. 'Here, there are rules which people respect and so you can get on with your life in peace.'

Subject: Medical Companies Joining Offshore Trend From: Emma To: All Date Posted: Thurs, Feb 24, 2005 at 11:21:28 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/02/24/business/worldbusiness/24offshore.html?pagewanted=all&position= Medical Companies Joining Offshore Trend By ANDREW POLLACK Bala S. Manian rarely looked back when he left India to attend graduate school in the United States. Since 1979, he has started one medical technology company after another in Silicon Valley. But Dr. Manian is now rediscovering his native country. His newest medical venture, ReaMetrix, which makes test kits for pharmaceutical research, is still based in Silicon Valley. But 20 of its 28 employees are in India, where costs for everything from labor to rent are lower. The exporting of jobs by ReaMetrix is telling evidence that the relentless shifting of employment to countries like India and China that has occurred in manufacturing, back-office work and computer programming is now spreading to a crown jewel of corporate America: the medical and drug industries. It could be a worrisome sign. The life sciences industry, with its largely white-collar work force and its heavy reliance on scientific innovation, was long thought to be less vulnerable to the outsourcing trend. The industry, moreover, is viewed as an economic growth engine and the source of new jobs, particularly as growth slows in other sectors like information technology. 'What I see in India is the same kind of opportunity I saw in the Valley in 1979,' said Dr. Manian. In the United States, he said, 'a million dollars doesn't go more than three months.' In India, by contrast, 'I can run a group of 20 people for a whole year for half a million dollars.' While life sciences jobs may be less vulnerable to outsourcing than jobs in information technology, industry officials say many companies are looking at that option as pressures mount to control drug prices and cut development costs. First toys, clothes, those kind of things, then electronics and computers and now, finally, pharmaceuticals and biotech,' said Jimmy Wei, a venture capitalist in San Francisco who helped start Bridge Pharmaceuticals, a company that is doing drug screening in Asia for American pharmaceutical companies. The outsourcing of some life sciences jobs could be seen as evidence that American biotechnology companies, like their counterparts in other industries, are doing nothing more than building global connections that help make them more competitive around the world. So far, the job movement has been small. According to the most recent data compiled by the Commerce Department, less than 6 percent of American companies with biotechnology operations employed contract workers abroad in 2002, but industry specialists say that percentage has increased in the last three years. 'It's a trend that's becoming more pronounced as people's budgets get tight,' said Riccardo Pigliucci, chief executive of Discovery Partners International, a San Diego company that does chemistry work for drug companies. He said a chemist in India made $20,000 to $40,000 a year, in contrast to $80,000 to $100,000 in the United States. Discovery Partners started a small operation in India to offer lower-cost services. In conjunction with that move it consolidated its American operations in San Diego and South San Francisco, closing a facility in Tucson and laying off 28 employees, according to its regulatory filings. Clinical trials of new drugs, for instance, are already moving to countries in Asia, Eastern Europe and Latin America, because the costs of conducting the trials are lower and human subjects can be recruited more easily. Drug manufacturing is another area that can move. India already has a thriving generic drug manufacturing sector and is moving into biotechnology. One biotechnology company, Biocon, went public in India last year. Its founder and chief executive, Kiran Mazumdar-Shaw, has been described in the news media as the richest woman in India. With revenues of more than $100 million last year, Biocon is a leading producer of generic cholesterol-lowering drugs called statins. It has designs to become a major producer of insulin and monoclonal antibodies. It also has divisions that do contract research and run clinical trials for large American and European pharmaceutical companies. Fueling the outsourcing trend are Indian and Chinese scientists who obtained graduate degrees and work experience in the United States and Europe and are now returning to their native countries. Ge Li, the founder of WuXi Pharmatech in Shanghai, for example, spent 12 years in the United States, earning a doctorate in organic chemistry at Columbia University and then co-founding Pharmacopeia, a New Jersey drug company. In 2001, Dr. Li moved to Shanghai to start WuXi, which does chemistry work for American and European companies. The company has grown to 570 employees and had revenues of $21.5 million last year, Dr. Li said. 'Essentially all of the big pharmas are our customers,' he said. PTC Therapeutics, a biotech company in South Plainfield, N.J., hires WuXi when extra help is needed for a short time. 'We can turn them on and off as needed,' said John Babiak, senior vice president for discovery technologies at PTC. But he said PTC decides which compounds to make to test as potential drugs, leaving WuXi to make them. 'We're just farming out the bench work,' he said. In that sense, what is going offshore might be called 'back laboratory' work, somewhat equivalent to the back-office information technology functions that have moved in the past. But there are signs that the biotech migration will go beyond low-level work. Roche, the big Swiss drug company, just opened a research center in Shanghai to make use of Chinese scientists returning from abroad. 'U.S. academia had been run by Chinese post-docs for the last 10 years, if not 15,' said Jonathan Knowles, head of global research for Roche. China and India are starting to invest heavily in developing biotechnology expertise. Meanwhile, Singapore has created a cluster of research centers and has attracted some top scientists. Another potential advantage for some Asian countries is their more permissive stance on embryonic stem cell research, a promising new field that is restricted in the United States. A group of British stem cell specialists that visited China, Singapore and South Korea said scientists in those countries were as talented as in Britain but better equipped and funded. 'The challenge to Western pre-eminence in stem cell science from China, Singapore and South Korea is real,' it concluded in a report. However, the life sciences industry, even without outsourcing, is not so big that it can make up for jobs lost in other sectors. By a broad definition of the industry, including medical devices, pharmaceuticals and certain parts of agriculture and chemicals, employment reaches 885,000, according to a study by Battelle Memorial Institute for the Biotechnology Industry Organization. Some 225,000 jobs, mainly in computers and back-office work, moved offshore in 2004 alone, according to an estimate by Forrester Research. There are some factors that suggest life science jobs will be slower to migrate offshore than those in information technology. For one thing, drug companies face less pressure to cut costs than, say, computer disk drive manufacturers because pharmaceuticals have relatively high profit margins. 'We're not trying to eke out another percent of operating margin,' said Kevin Sharer, chief executive of Amgen, the largest biotech company, which is based outside Los Angeles. Also, life sciences companies often prefer to be near the best university research, which, for now, is largely in the United States because of ample funding from the National Institutes of Health. Novartis, the Swiss pharmaceutical giant, for example, shifted its research headquarters from its home country to Cambridge, Mass., in large measure to be near Harvard, M.I.T. and the numerous biotechnology companies there. 'The lead the United States has built in biomedical sciences is so great that I don't think this will be lost anytime soon,' said Paul Herrling, head of research for Novartis. Moving research and development far from customers in the United States can also pose problems. Aviva Biosciences of San Diego, which makes chips for biological research, for example, was started by Chinese scientists with the idea that much of the technology would be developed in China. But now Aviva does most of its work in San Diego because the scientists in China could not grasp the needs of American researchers, said Jia Xu, vice president for research and development. 'In terms of the market we're trying to address you really need people who are from the industry,' he said. 'And that's something you cannot find in China.' These barriers to foreign outsourcing, say those in the business, are not likely to slow the trend. Besides, they argue, cost savings from outsourcing can free up resources for more drug development in the United States. Dr. Manian said ReaMetrix, for instance, can prepare material in advance so scientists in the United States can do experiments faster. 'I am not interested in replacing jobs here,' he said. 'I am interested in taking those opportunities that are compelling, and yet are not economical to do here and do them in India.' An expert in optics, Dr. Manian first started Digital Optics, which made equipment to transfer digital medical images, like CT scans, onto film. (That same technology is used to put computer-generated special effects onto movie film, earning Dr. Manian an Academy Award certificate for technical achievement.) Among the other companies he co-founded were Molecular Dynamics, which developed a DNA-sequencing machine, Surromed, a drug and diagnostics company, and Quantum Dot, which has a system for detecting biological molecules. These days, he thinks India holds big advantages, including a young population. 'The exodus of jobs in life sciences will take place,' he said. 'There's no avoiding it. There's no way that you can sustain the inefficient research and development that exists in the U.S.'

Subject: Medical Malpractice Rates? From: Emma To: All Date Posted: Wed, Feb 23, 2005 at 14:19:44 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/02/22/business/22insure.html?ei=5070&en=436b5da09a135eba&ex=1109307600&pagewanted=all&position= Behind Those Medical Malpractice Rates By JOSEPH B. TREASTER and JOEL BRINKLEY Speaking before hundreds of doctors and medical workers in a St. Louis suburb last month, President Bush called attention to a neurosurgeon on stage with him in the small auditorium. The doctor, the president said, was paying $265,000 a year in premiums for insurance against malpractice claims. Such high prices, 'don't start in an examining room or an operating room,' the president declared. 'They start in a courtroom.' Indeed, at many recent appearances, Mr. Bush has complained about the 'skyrocketing' costs of 'junk lawsuits' against doctors and hospitals. But for all the worry over higher medical expenses, legal costs do not seem to be at the root of the recent increase in malpractice insurance premiums. Government and industry data show only a modest rise in malpractice claims over the last decade. And last year, the trend in payments for malpractice claims against doctors and other medical professionals turned sharply downward, falling 8.9 percent, to a nationwide total of $4.6 billion, according to data compiled by the Health and Human Services Department. 'There is an underlying cost push,' said J. Robert Hunter, the director of insurance for the Consumer Federation of America, who is a former insurance regulator in Texas. 'But there has not been an explosion of big jury verdicts or settlements. It's a constant drip, drip every year.' Lawsuits against doctors are just one of several factors that have driven up the cost of malpractice insurance, specialists say. Lately, the more important factors appear to be the declining investment earnings of insurance companies and the changing nature of competition in the industry. The recent spike in premiums - which is now showing signs of steadying - says more about the insurance business than it does about the judicial system. 'You get these jolts in insurance prices periodically, and they attract a lot of attention,' said Frank A. Sloan, a Duke University economist who has been following medical malpractice trends for nearly 20 years. 'They're a result of a confluence of many things.' Data compiled by both the federal government and by insurance organizations show costs for the insurance companies climbing steadily over the last decade at an average annual rate of about 3 percent, after adjusting for inflation. Over most of that period, premiums for doctors rose modestly and sometimes even dropped as the insurance companies battled for market share in a scramble to collect more money to invest in strong bond and stock markets. But when the markets turned sour and the reserves of insurers shriveled, companies began to double and triple the costs for doctors. 'The insurers were catching up, getting to where they should have been,' said Larry Smarr, the president of the Physician Insurers Association of America, a trade group of companies that provide more than 60 percent of the nation's medical malpractice insurance. While acknowledging the impact of industry forces and practices on prices, Mr. Smarr and many others in the insurance industry still regard lawsuits as their biggest problem. Claims of medical malpractice are typically complex and are rarely paid without a lawsuit or the threat of a lawsuit. If the insurance companies could find a way to limit payments for lawsuits, they say, they could significantly reduce their costs. President Bush, supported by the insurance industry and the American Medical Association, is proposing a remedy: a national limit on what juries can award in medical malpractice cases. Such a limit, or cap, has often been cited by the president as an important part of what has been called tort reform - limiting what Mr. Bush calls costly and frivolous lawsuits. The Bush administration is pushing for a $250,000 limit on jury awards to victims of medical mistakes and their families for pain and suffering. No limit would be placed on the more quantifiable payments for economic losses, including medical expenses and lost wages. Introduction of legislation calling for such national medical malpractice limits - traditionally left to individual states - is at least a month away. Still, the administration has been bolstered by stronger Republican majorities in the House and Senate and by last week's signing into law of a measure that would move many class-action lawsuits to federal court, sharply limiting their potential spread. Senate Majority Leader Bill Frist of Tennessee, who is a doctor, calls malpractice award limits 'a majority priority.' The House has passed similar proposals seven times in the last 10 years, most recently in 2003. While this Congress might be the best opportunity yet for supporters of jury award limits, there will certainly be a fierce battle from Democrats, consumer groups and plaintiffs' lawyers. Consumer advocates say such limits would mean that some of the most seriously hurt patients would not receive fair compensation. Also, they say, in the death of an infant, an elderly person or a homemaker, there would be little compensation because of the prevailing view that there could be no economic loss because no income was being earned. Trial lawyers and consumer groups have been parading heart-wrenching victims of doctors' mistakes to make their argument. Among them, the American Trial Lawyers Association says, is Alice Lloyd of North Carolina. Doctors failed to treat her blood infection for so long that finally they had to amputate both legs above her knees, her left arm and all the fingers from her right hand. She still has her right thumb. As the two sides dig in for a fight in Congress, 27 states have already adopted award limits, with caps ranging from $250,000 to $1 million. In some states, insurers have agreed to reduce, at least temporarily, premiums in exchange for limits on awards. Insurers say that caps not only promise lower costs, but greater predictability on potential payouts. 'It takes an unknown entity, which is the pain and suffering component, and makes it quantifiable and estimate-able,' said Mr. Smarr of the Physician Insurers Association of America. Insurers acknowledge that they consider several factors besides claims costs in setting prices for doctors. In the 1990's, even as their costs were rising, malpractice insurers held firm on prices, even lowering them in some years to hold or win a share of the market. 'You always try to say you're not chasing market share,' said Donald J. Zuk, the chief executive of Scipie, a medical malpractice insurer that does business in about 30 states. 'On the other hand, you have to have a certain market share, you have to show a certain amount of growth, or you don't survive.' But by the late 1990's, some insurers discovered that they had dropped prices well below the cost of paying claims. Several went out of business. One of the biggest insurers, the St. Paul Companies, now Travelers St. Paul Companies, stopped offering medical malpractice coverage. The surviving companies 'had to raise prices or go out of business,' Mr. Smarr said. In 2000, about the same time that under-pricing and other market conditions began to push up prices in medical malpractice, the much larger world of commercial insurance was also going through a cycle of higher prices. The Sept. 11 terrorist attacks cost insurers $40 billion and accelerated the upward pressure of the latest premium cycle. Martin D. Weiss, the chairman of Weiss Ratings Inc., an independent financial rating agency, said the cyclical nature of the insurance business and a drop in insurers' investment earnings when markets fell had been among the strongest forces behind the rise in medical malpractice premiums. Over the last year, insurance analysts say, prices for most lines of commercial insurance appear to have peaked and have begun to decline. While prices for medical malpractice coverage are not yet falling, they rose less steeply in 2004. Costs for most doctors last year rose between 6.9 percent and 24.9 percent compared with increases of between 10 percent and 49 percent in 2003, according to The Medical Liability Monitor, a newsletter published in Chicago. The most expensive place in the country is South Florida, where some obstetricians and general surgeons paid nearly $280,000 for coverage last year, according to The Monitor. Obstetricians in Illinois paid as much as $230,428, The Monitor said, while in Nebraska, the least expensive place in the country for malpractice insurance, obstetricians paid $16,194. Florida adopted a cap on awards of $500,000 to $1 million in 2003. Illinois has no cap and Nebraska has a cap of $500,000. The recent jump in premiums shows little correlation to the rise in claims. According to the National Practitioner Data Bank of the Health and Human Services Department, the total paid out by insurance companies for claims against doctors and other medical professionals rose 3.1 percent annually, on average, between 1993 and 2003 and then declined last year. The average payment in 2003 for malpractice, the data bank said, was $268,605, up from $197, 753 in 1993, after adjusting for inflation. In 2004, the average payment fell to $262,486 and the number of payments made for medical malpractice cases dropped to 17,696 from 18,996 the year before. What may muddy the public picture is that while claims are rising at a measured pace, there have been more headline-grabbing big awards. Data compiled by the Physician Insurers Association of America show a distinct rise in payments of more than $1 million to victims of medical mistakes. In 1993, the organization said, 2.9 percent of the payments made by its companies exceeded $1 million. A decade later, 8.5 percent of the payments were for more than $1 million. Many insurers regard the $250,000 limit in California as a model for Mr. Bush. They see it as largely responsible for California's shift from being one of the most expensive places for medical malpractice insurance to one of the least expensive. Consumer advocates, however, say the main reason costs for doctors have fallen in California has been a 1988 law that prohibits insurers from raising rates more than 15 percent a year without a public hearing. And some researchers are skeptical that caps ultimately reduce costs for doctors. Mr. Weiss of Weiss Ratings and researchers at Dartmouth College, who separately studied data on premiums and payouts for medical mistakes in the 1990's and early 2000's, said they were unable to find a meaningful link between claims payments by insurers and the prices they charged doctors. 'We didn't see it,' said Amitabh Chandra, an assistant professor of economics at Dartmouth. 'Surprisingly, there appears to be a fairly weak relationship.'

Subject: Re: Medical Malpractice Rates? From: johnny5 To: Emma Date Posted: Wed, Feb 23, 2005 at 14:36:35 (EST) Email Address: johnny5@yahoo.com Message: This doctor is critical of the couch potatoes and smokers but is privatization the answer? http://www.lewrockwell.com/orig6/armstrong1.html February 22, 2005 Within the past few years I have read repeatedly in the opinion sections of newspapers the call for the federal government to provide a 'single payer' system for America’s medical care. These proposals are classics of left-wing thinking – they work out beautifully in the heads of those doing the proposing. The comedy occurs when they are subjected to the scrutiny of reality; the tragedy when they become reality. Government involvement in medicine exacerbates rather than alleviates its ills. HMOs and the government are pre-paid systems that are the cause of the financial crisis facing health care (I mean in addition to the contribution of greedy lawyers and irrational juries). A caller on a talk show recently commented: 'The rest of the world has a one-payer government system, so why don’t we?' The answer: Because then we’ll have the same quality of care of the rest of the world. Socialized medical care is a disaster worldwide for patients who need attention now or tomorrow or by next week, especially if that attention entails a procedure or surgery. I offer the perspective of a practitioner who has lived through the changes in the system. The cost of health care has increased alarmingly during the decades of my career because of third-party payer systems: HMOs and the government. Health care costs will increase and quality decrease with every increase in government involvement. The working citizen pays for health care regardless of the system: entirely government, entirely private, or HMO. Therefore, we the people should have access to the most efficient system possible, 'efficient' meaning the most cost-effective and most free in terms of the patient's right to choose. It’s a happy coincidence that such a system would also be the most health-efficient (health-promoting) and most fair – the best plan from both moral and practical standpoints. In the HMO system, the patient has turned over to the HMO – or rather the employer has done so for the employee-patient – what would have been the employee’s larger salary. That is, the employee pays by forgoing a larger salary or another benefit. That’s because employers are not in the business of printing money. They can pay the employee one way or another, but not both. The HMO must then ration care in order to make a profit – profit being a requisite for the survival of a private business. The employee, the patient, is naturally motivated to squeeze what he or she can from the third-party payer. Under a 'single payer' system (rhetorical code for federal socialized medicine), the citizen pays through taxes. Government and HMO are third-party, pre-paid payers. The patient’s position is, under those two systems, 'I have already paid, so I want only the most and the best – and today.' That demand is independent of medical need, independent of fairness, and independent of any thought about the effect on overall cost. That’s all natural; it is not a reflection of sinister attitude. Under a pre-paid system, seeking attention for trivialities or requesting a sub-specialist for a problem that can be handled quite competently by a physician’s assistant or a nurse-practitioner is only natural. Thirty years of experience have led me to the following conclusions on how to solve existing problems of health care and forestall new ones. Under a sensible – meaning private – plan, the patient can go anywhere he or she wants. Private insurance is 'third party,' but it is a mutually voluntary contract negotiated to cover whatever the patient selects and pays for. The patient’s premiums depend upon – or should depend upon – his or her life-style. That is, the cost to the patient of the protection from medical expenses should depend on the patient’s health habits, and his or her premiums should be adjusted accordingly. The patient can request and pay for all the benefits and 'rights' he or she chooses, from catastrophic to weekly drop-ins for reassurance. Catastrophic would be the least expensive, weekly visits the most expensive. The patient would be free to go to a sub-specialist at any time for any problem that could be handled quite handsomely at the primary-care office. But the patient usually would not, since the cost will be multiples of the cost of primary-care, and the patient will pay this out of pocket or his or her premiums will rise accordingly. Under a sane system, instead of pressuring the doctor for an expensive procedure under the slightest pretext, the patient would ask what the chances are of this procedure (say an MRI) being positive. When the doctor answers, 'Approximately five percent,' then the patient will respond, 'Then I’ll take your suggestions for treatment and get back with you if any of the symptoms or criteria you listed occur.' The numerically most significant (the most common) killers are diseases that are by and large self-inflicted – caused by lifestyle. The vast majority of cardiovascular disease (heart disease, stroke, peripheral vascular disease), and a significant amount of (and perhaps most) cancer, kidney disease, osteoporosis and large-joint arthritis are self-inflicted by smoking, dietary malfeasance, obesity, lack of exercise, alcohol and other substance abuse, and by their resultant, intermediate disorders – hypertension, hyperlipidemia (blood fats, including cholesterol), and diabetes (90% of diabetics have the self-inflicted Type 2, which is exclusive to overweight people). Not only life-threatening diseases are self-inflicted. Numerous others less deadly but as costly in lost productivity and needless suffering are also, including disorders of the gallbladder, back – muscular and spinal – and those transmitted sexually. If you believe people with bad health-habits are motivated by longevity, you are clearly someone with good health habits. People with bad habits are motivated only by cost. If we reward people for irresponsible behavior we reap a bumper harvest of irresponsible behavior. Paying people (by a 'third-party' system) to continue their bad health habits negates any potential motivation to live healthfully. When we physicians bring up the subject of making crucial changes in behavior, most patients who live unhealthfully listen with the face of the deer whose eyes are fixed on the headlights; they look at us – or respond – with the thought, 'If this guy doesn’t quit hassling me about the way I live, I’m going to switch to a real doctor who will cut out the prevention noise and give me my pills.' Why live healthfully when you get pre-paid care and can take free or subsidized medications? The HMO and government systems serve as 'enablers' by rewarding and subsidizing those bad habits, thus reinforcing them. The employee who lives responsibly pays for the expenses of his or her fellow employee who lives irresponsibly by foregoing what would have been a bigger salary but was withheld so that the employer can pay the HMO for the care of the irresponsible. This increases costs both by the exacerbation of the illnesses, and by patients’ tendencies to abuse the prepaid system. Six to twelve times per day at the clinic where I work in Ventura-Oxnard, California I hand out to obese patients a copy of my one-page detailed diet protocol: physical work-out daily, low-fat, high-fiber diet including just say no to the cheeseburgers and other fast foods. Regularly another patient comes in to announce that his or her insurance no longer covers the cost of prescription drugs. 'Therefore, may I have another copy of the diet and exercise protocol you gave me last year?' Translation: 'As soon as I exited your clinic last year I dumped your guide in the trash. Now that I have to pay for my medicines, I believe I just might be interested after all in getting rid of my diabetes, my high blood pressure, and my [go down the list].' I recall suggesting to one obese couch potato that he take and live by my diet protocol. 'Those are fighting words, doctor.' Well fine, live and die as you desire, but the idea of responsible taxpayers paying for that attitude and behavior is unfair, immoral, and counterproductive in terms of health and economics. A) Infinite and arbitrary demand because of third-party payer, and B) just as arbitrary bureaucratic rationing to control the resulting mushroom cloud of costs – these are the reasons Medicare’s budget is (adjusted for inflation), let’s see, about twelve or fifteen times that predicted by its founders, and would be much worse if it were not for bureaucratic restrictions placed upon the patient – call that the deletion of the patient’s freedom. These faults would increase geometrically under a government system-for-all because of infinite demand and ever-expanding bureaucracy to deal with the inevitable rationing. The only effective approach is a system in which the doctor can say, 'Mr. Lipidus, aren’t you tired of paying $5 or $10 per pill? Aren’t you tired of your insurance premiums going up annually because of your medical-care outlay? If you will eat properly and exercise daily as we discussed, you probably won’t need these pills at all, and you certainly won’t require this frequency of office-visits and hospital admissions, and your premiums are going to plummet.' I have never heard this crucial factor in the cost of medical care discussed on Capitol Hill. Genuine reform would provide that a patient's pay-in per year would depend on his or her habits – automobile insurance style. In the movie As Good as It Gets (I don’t recall the names of the characters, so we’ll call them Jack Nicholson and Helen Hunt), Jack has funded a rescue of Helen’s asthmatic eight-year-old son from the 'greedy' restrictions of the 'evil' corporate HMO. Helen makes a disgusted reference to the HMO, to which the audience responds with spirited approbation for her sentiments and derision for the HMO. HMOs were resorted to by employers as a means of controlling costs, which is to say rationing under the euphemism of 'managed care.' It’s private socialism, so to speak and it’s the wrong approach since it costs the patient his or her freedom and penalizes those who live healthfully as they pay for it with smaller salaries and restricted access to care. Let’s sing the refrain one more time: Costs should be controlled by coupling patient cost to patient behavior. Do away with government and HMO involvement. Provide the needy with the means to buy private insurance. Have laws against price conspiracies and monopoly by the insurance companies. People with unhealthy habits, now faced with high premiums and expensive pills, are going to find themselves suddenly very interested in Prevention. Costs will plummet. Now those with innocent bystander diseases such as asthma (except that some asthmatics smoke; no, I’m not kidding) will not have to call upon Jack to bail them out. California’s Medi-Cal program is a huge microcosm – a paradox that helps make the point – of the bane of federal involvement in medicine. The average wait for a patient at the clinic where I work is about 90 minutes and is often several hours because the waiting room is overrun with Medi-Cal moms bringing in their children with stuffy noses and stubbed toes. Whenever I see two or three charts waiting at the same treatment-room door, I know it’s a Medi-Cal family. One of the kids seems sick, so why not bring in all the kids? Another of them had a touch of diarrhea a few days ago. Still another bruised his knee last week. Bringing one? Bring them all. Why not?! Service is 'free.' Demand skyrockets. To compound the tragi-comedy, Medi-Cal is rife with ridiculous and costly rules. Government further escalates the cost of medical care as bureaucrats require procedures for those who don’t need them. If the primary-care physician wants a $150 referral to a specialist, the rules dictate that a $1000 MRI is required in advance, when part of the point of the referral was to obtain the specialist’s agreement that the MRI is not needed. With unlimited demand and irrational rules, no wonder it takes several weeks for the patient to reach the specialist she should have seen within a day or three of the referral. How are costs of demand and diktat to be controlled? Here’s how: by the arbitrary rationing of those same bureaucrats, who place restrictions on procedures for those who do need them. Welcome to the land of buronic wisdom. How does the new plan to have Medicare pay for the pharmacy costs of seniors affect a young working couple? Let’s suppose he is a heating-air conditioning specialist and she the manager of a store, both living responsibly and healthfully and doing their best to raise a child or two. Along comes the government and confiscates their income to pay for the $5 per pill medicines for a well-to-do 68- or 78-year-old who refuses to cure his diabetes, or to give up his cigars, or to walk from tee to green at the country club, or even to use the exercise room on the cruise ship. Nice going, government! How’s that for social justice? The same principles hold if the patient with bad habits, instead of enjoying a cruise, is on Medicaid or Medi-Cal. The system is just as pragmatically backward and morally reprehensible whether the one who refuses to change his or her habits is rich or poor. This subsidy of destructive habits, this enabling and rewarding those who choose not to live healthfully, is grossly unfair to those who live responsibly – who live healthfully. It escalates demand; it escalates costs. In short, it is counterproductive in every respect of health and cost. The third-party payer system is a disaster for everyone concerned except for HMOs and politicians who derive power from citizen dependency upon government. The more prevalent the HMO or government pre-pay system, the greater the demand. The only way a 'single-payer' (Medicare for all) universal government system is going to control stratospheric demand and costs is rationing that will make HMOs look like a genie fulfilling your every wish. Private medical savings accounts would beat the Medicare system in every respect. MSAs are pro-choice: seniors would have more freedom to select their care; they would be motivated to live healthfully, since the excess MSA money would be theirs to enjoy; and there would be greater availability of care since demand would be determined by need as agreed to by patient and physician. The best system for poor and marginal-income people would be state-provided vouchers or cash with which to buy private insurance. As the recipient’s health habits improve, he or she would be allowed to keep the difference (for a certain number of years) as the insurance premiums decreased because of those improved health habits. There could be decreasing coverage for every year the individual refuses to cooperate by living healthfully. Now you’re going to see smokers, substance-abusers and couch-potatoes suddenly discovering a new life style. This plan increases individual choice and decreases dependency on the government and will therefore be fiercely opposed by left-wing political forces, their politicians, and certain lobbies. By financing health care through a private patient-controlled system, the cost of health care will be as high or as low as the public wants. If the American public has a lapse of intellect and judgment serious enough to elect the politicians who want to socialize our medical care, I have a health advisory for you: get rich, or don’t get sick. On second thought, don’t bother getting rich: there will probably be laws against going outside the system – unless, of course, you’re a member of Congress. Charles L. Armstrong, MD [send him mail], is a practicing physician in Oxnard, California.

Subject: Re: Medical Malpractice Rates? From: Setanta To: johnny5 Date Posted: Thurs, Feb 24, 2005 at 09:36:13 (EST) Email Address: Not Provided Message: thank god i live in europe! private medical savings accounts sound like anarchy. those that can take care of themselves are ok and damn anyone who can't.

Subject: Insurance for 'Good' Patients From: Terri To: Setanta Date Posted: Thurs, Feb 24, 2005 at 11:06:49 (EST) Email Address: Not Provided Message: Setanta That was surely a frightening essay, but the idea of such medical insurance for 'good' patients is completely absurd and will never be seriously entertained. Happily I have never know such a physician.

Subject: Re: Insurance for 'Good' Patients From: johnny5 To: Terri Date Posted: Thurs, Feb 24, 2005 at 11:48:23 (EST) Email Address: johnny5@yahoo.com Message: I normally have voted republican - after recent events I knew I had to get bush out of the stewardship of our country. Never underestimate what a bunch of near sighted closed minded individuals can do to unravel the bright points of human compassion. The idea may be completely absurd but there is a lot that is seriously entertained and executed that is even more absurd - economic hit men - political assassinations - support for tyranny as long as they are USA friendly. Terri where all have you lived in your life? What classes of people have you intermingled with? I read a lot here from the NYtimes but the blues have lost the country to hypocritical oreilly's and limbaughs and bush's - absurd as it is. http://www.latimes.com/news/opinion/commentary/la-oe-scheer22feb22,0,744296,print.column?coll=la-news-comment-opinions Of, by and for Big Business Robert Scheer February 22, 2005 Watching the 109th Congress, one would be forgiven for thinking our Constitution was the blueprint for a government of Big Business, by Big Business and for Big Business. Forget the people — this is Robin Hood in reverse. Here's the agenda, as laid out by the president and the Republicans who control Congress: First, limit people's power to right wrongs done to them by corporations. Next, force people to repay usurious loans to credit card companies that make gazillions off the fine print. Then, for the coup de grace, hand over history's most successful public safety net to Wall Street. Of course, the GOP and the White House use slightly different language for this corporate-lobbyist trifecta: 'Tort reform,' 'eliminating abuse of bankruptcy' and 'keeping Social Security solvent' are the preferred Beltway phrasings for messing with the little guy. The first installment came last week with the passage of a law that will make it more difficult for consumers to win class-action lawsuits against private companies. Because state courts, which are closer to the people, have proved sympathetic to the liability claims of ordinary folks, the new legislation puts many class-action suits in federal courts, which turn out decisions more attuned to the heartfelt pleas of corporate attorneys. What is so phony about the much ballyhooed tort reform is that it aims not at overzealous lawyers but only at those who happen to represent poorer plaintiffs. Corporate lawyers are very much in play in writing this new legislation. Which is why we should expect severe limits on the amount of damages that can be collected by those harmed by asbestos exposure or by medical malpractice. Memo to would-be Erin Brockoviches: Don't give up your day job. Next on the corporate wish list is savaging Chapter 7 bankruptcy relief, which is offered to individuals who can't pay their debts. It allows them to give up nonessential assets in exchange for a fresh start. Chapter 7 has been a tool for family and societal stability for decades; torquing it in the favor of credit card companies has been a fantasy of the industry for almost as long. Never mind that it is obvious to everybody who gets junk mail that lenders should be far more responsible about how they hand out credit cards. The credit industry's sleazy come-ons, onerous interest rates and frantic marketing to teenagers go unaddressed by Congress; it is only consumers who are expected to be conscientious. Is 'onerous' too strong? Hardly. It's way beyond onerous when a struggling parent puts back-to-school expenses on an 'introductory rate' credit card and then sees the interest rate surge toward 30% when she's two days late with her payment. Now $500 in books and clothes are going to cost her thousands by the time she can afford to finish paying for them. Ironically, considering the number of senators and representatives who love to quote Scripture, such outrageous usury was explicitly condemned in the Old Testament as what it is, 'extortion.' And while the story of Jesus in the temple is also being roundly ignored, so is that other once- sacred pillar of the Republican philosophy, states' rights. Nearly all states have reasonable limits on interest rates, which have been trumped by D.C. politicians in the thrall of corporate lobbies. Sure, business interests deserve some clout in a democracy, but this is ridiculous. In fact, the GOP's legislative calendar looks like a wish list sent over to the White House from the Chamber of Commerce across the street. Senate Republican Majority Leader Bill Frist (Tenn.) dropped in there the other day after a breakfast meeting with the president to assure the chamber that its wishes would soon be law. After all, the chamber spent $168 million to push the anti-class-action lawsuit bill along. Still to come this session: raising allowable emissions standards on major pollutants, oil drilling in the Arctic National Wildlife Refuge and the granddaddy of all corporate payouts, privatization of Social Security. So what's the big revelation? That, almost 2,000 years after Jesus routed those scoundrels, the money changers have not merely reentered the temple — they are the temple.

Subject: Re: Medical Malpractice Rates? From: Alfred E. Neuman To: johnny5 Date Posted: Wed, Feb 23, 2005 at 22:49:24 (EST) Email Address: ziggystardust@aol.com Message: People honestly think the government can straighten out the healthcare industry? Yeah right, just like they fixed the airline and S&L industries. Mr. Krugman and his leftist bretheren need to quit expecting more government and less free market forces to be the answer.

Subject: Commercial Real Estate From: Emma To: All Date Posted: Wed, Feb 23, 2005 at 13:53:32 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/02/23/business/23real.html A Lexington Ave. Deal Is Now Looking Up By JOHN HOLUSHA When SL Green Realty paid $480 million last summer for two buildings occupying the block bounded by Lexington and Third Avenues and 46th and 47th Streets, some real estate executives wondered what was going on. Green is a publicly traded real estate investment trust, and as such is required to pay out 90 percent of its earnings each year to shareholders. As a result, most REIT's tend to buy buildings that are almost like annuities - fully rented with leases that extend into the distant future. But TIAA-CREF, a giant pension fund for educators, which sold the buildings that SL Green bought at 485 Lexington and 750 Third Avenues, is planning to leave them by the end of the year, throwing 1.1 million square feet of office space on the market. That made the transaction look quite speculative, with the risk that the buildings would be a drag on SL Green's financial performance if it took a long time to find tenants. In addition, the interiors of the 1950's buildings were built for TIAA-CREF's specialized needs and will require substantial additional investment to attract tenants looking for modern office space. Indeed, Green has said it will invest $90 million to upgrade the buildings and convert them into a single 1.7-million-square-foot entity to be called Grand Central Square. Lately, however, the investment has been looking a lot less speculative. The vacancy rate for Midtown Manhattan has declined below 10 percent, the proportion that most real estate executives consider the dividing line between a surplus of space and a scarcity. And the rate is likely to keep declining because no major new office buildings are scheduled to open for a few years. The number of blocks of lease space over 125,000 square feet - which are attractive to a corporation seeking to establish a visible headquarters - has declined from 28 at the end of 2003 to 22 at the end of last year. And with buildings in Manhattan trading recently at an average of $350 a square foot, the $282 a square foot that Green paid for the two buildings is looking more like a bargain, real estate executives said. 'With the vacancy rate in the high 8's now, it looks like a very shrewd purchase at this point,' said Mitchell S. Steir, chief executive of Studley, a brokerage firm that represents tenants in negotiations with landlords like Green. 'You probably could not have picked a better time in the last 20 years to come on line with a block of space like that.' Others said the purchase fits well with Green's basic strategy of buying well-located, but tired, buildings and than refurbishing them to something approaching Class A status, the category of the most modern and best-situated properties. 'SL Green does a good job of fixing up buildings and jacking up the rent,' said Ruth Colp-Haber, of Wharton Property Advisors, a commercial brokerage. 'This purchase will have synergy because they have so much property in the area.' According to SL Green executives, the office space market in Midtown had tightened to the extent that they were forced to make a move. 'By the end of 2003, we realized that we were 95 percent leased,' said Marc Holliday, the president and chief executive of SL Green, whose chairman is Stephen L. Green. 'Office space is our fundamental product, and we realized we would not have enough vacant space to meet demand in '05 and '06,' Mr. Holliday said. The strong demand for the REIT's space went largely unnoticed because there was not a flood of new tenants to the Midtown area, Mr. Green said. 'It was our existing tenants who renewed their leases and expanded, adding 5,000 or 10,000 feet,' he said. The 900,000-square-foot 485 Lexington, which is to be empty by the end of the year, presents an opportunity for a major corporation to establish a headquarters without having to wait years for a new tower to be built, as Bloomberg L.P., the financial information company, did at the former Alexander's department store site on Lexington Avenue and 58th Street, or as Bank of America is doing at One Bryant Park at 42nd Street and the Avenue of the Americas, Mr. Green said. 'This is a branding opportunity within a block and a half of Grand Central,' he said. 'We can plan, execute and have someone in within a year.' The remaining 200,000 square feet of space to become available is in the tower of 750 Third Avenue, on the 18th to 33rd floors. The lower floors are occupied by long-term tenants. The renovations to the building will include replacing all 4,000 clear glass windows with tinted ones and replacing silver-covered outdoor trim at 485 Lexington to create a uniform dark blue look. The lobby and retail space in the buildings will be remodeled and clad in light-colored stone, producing the look of a dark mass over a light one. The company has already demolished and partially rebuilt the fifth floor of the Lexington Avenue building to demonstrate how the space can be divided and equipped. 'This is our marketing floor; this is how we put a new face on the building,' said Gerard T. Nocera, the chief operating officer of SL Green. TIAA-CREF occupied the Lexington Avenue building for so long that most brokers and prospective tenants are not familiar with it, he said. 'There was a single tenant in here, so it has not been part of the commercial market for 25 years,' Mr. Nocera said. 'We have to reintroduce it to the brokers and put it back onto the market.' SL Green executives clearly hope to attract a financial services company as the anchor tenant at 485 Lexington. They say they are prepared to remove a floor slab to create a 20-foot-high space that could be used for securities trading. Mr. Nocera said the buildings already had the back-up generators that financial companies require to maintain essential services in the event of power blackouts, and there was the capacity to add more if a company wanted its own independent power supply.

Subject: Your paper about Currency Crises From: Flor Pereda To: All Date Posted: Wed, Feb 23, 2005 at 11:42:02 (EST) Email Address: fpereda@cantv.net Message: Dear Dr. Krugman: I work in my master's tesis on currency crises. I read your paper title Currency Crises but I don't appear the date in which you have wrote it. In other to put it to the references correctly or completly, please inform me when was. Best Regard, FLOR PEREDA CARACAS-VENEZUELA

Subject: Re: Your paper about Currency Crises From: Jennifer To: Flor Pereda Date Posted: Wed, Feb 23, 2005 at 12:26:47 (EST) Email Address: Not Provided Message: What is the exact title and wheree was the essay published? Then we can look on Google to find the date.

Subject: Re: Your paper about Currency Crises From: Flor Pereda To: Jennifer Date Posted: Wed, Feb 23, 2005 at 15:34:00 (EST) Email Address: fpereda@cantv.net Message: What is the exact title and wheree was the essay published? Then we can look on Google to find the date. --- The title is 'Currency Crises' and it is publicated in the Krugman's web site at MIT and in this too. It is in the last position of the list with a '?'. Thank! FLOR PEREDA

Subject: Re: Your paper about Currency Crises From: Pancho Villa alias El Gringo To: Flor Pereda Date Posted: Wed, Feb 23, 2005 at 16:48:16 (EST) Email Address: nma@hotmail.com Message: Hope this will help: # Hardcover: 356 pages # Publisher: University of Chicago Press (September 1, 2000) # ISBN: 0226454622 # Product Dimensions: 9.3 x 6.2 x 1.1 inches

Subject: Re: Your paper about Currency Crises From: Jennifer To: Pancho Villa alias El Gringo Date Posted: Wed, Feb 23, 2005 at 19:44:16 (EST) Email Address: Not Provided Message: http://www.press.uchicago.edu/cgi-bin/hfs.cgi/00/14111.ctl Krugman, Paul, editor Currency Crises. 356 p., 49 line drawings, 41 tables. 6 x 9 2000 Series: (NBER-C) National Bureau of Economic Research Conference Report Cloth $47.00spec 0-226-45462-2 Fall 2000 There is no universally accepted definition of a currency crisis, but most would agree that they all involve one key element: investors fleeing a currency en masse out of fear that it might be devalued, in turn fueling the very devaluation they anticipated. Although such crises--the Latin American debt crisis of the 1980s, the speculations on European currencies in the early 1990s, and the ensuing Mexican, South American, and Asian crises--have played a central role in world affairs and continue to occur at an alarming rate, many questions about their causes and effects remain to be answered. In this wide-ranging volume, some of the best minds in economics focus on the historical and theoretical aspects of currency crises to investigate three fundamental issues: What drives currency crises? How should government behavior be modeled? And what are the actual consequences to the real economy? Reflecting the latest thinking on the subject, this offering from the NBER will serve as a useful basis for further debate on the theory and practice of speculative attacks, as well as a valuable resource as new crises loom. .... Paul Krugman wrote the Introduction, and a comment on an essay by Robert Gordon.

Subject: Re: Your paper about Currency Crises From: Flor To: Jennifer Date Posted: Thurs, Feb 24, 2005 at 06:08:06 (EST) Email Address: fpereda@cantv.net Message: Jennifer: Thank you very much!! FLOR PEREDA Caracas-Venezuela

Subject: Flor on Currency Crises From: Jennifer To: Flor Date Posted: Thurs, Feb 24, 2005 at 11:08:12 (EST) Email Address: Not Provided Message: Flor Pereda Please post your essay when you are done. I would like to read it.

Subject: Re: Your paper about Currency Crises From: Jennifer To: Pancho Villa alias El Gringo Date Posted: Wed, Feb 23, 2005 at 19:37:22 (EST) Email Address: Not Provided Message: Ah, the book, the book. I passed right by, looking for an essay. Thanks Pancho.

Subject: Sending Money to Mexican Families From: Emma To: All Date Posted: Wed, Feb 23, 2005 at 11:06:40 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/02/23/international/americas/23migrants.html?pagewanted=all&position= Mexico's Migrants Profit From Dollars Sent Home By GINGER THOMPSON VALPARAÍSO, Mexico - Less than two months after he was elected, Mayor Alberto Ruiz Flores climbed in his truck and set out on a 26-hour road trip across the border to Southern California, carrying a wish list of public works projects to a backyard barbecue in Oxnard. The reason? To solicit money from some of the 400,000 Mexicans who abandon their country each year for work in the United States, including half his town in Central Mexico. Those who have left Valparaíso send home an estimated $100,000 a day, as much money in one month as the municipality will spend all year. A week later, Mr. Ruiz was at a restaurant in Aurora, Ill., for a meeting with a Mexican factory worker and billboard painter who has raised hundreds of thousands of dollars for Valparaíso. The week after that, he invited migrant leaders from Dallas and Las Vegas to join him at home for the annual crowning of the municipal beauty queen. 'I consider myself the mayor of Valparaíso, and the mayor to those, like you, who had to leave Valparaíso in search of a decent life,' Mr. Ruiz said at the start of each encounter. 'You have shown with your generosity that you are still a part of Mexico. Without you, who knows where we would be.' For Mr. Ruiz, politics does not stop at the United States border. The same is true across Mexico, the Caribbean and Latin America, where more and more officials like him answer to cross-border constituencies made up of the people at home who cast ballots and the ones abroad who pull the purse strings. Today more than ever, the remittances sent home by immigrant workers, both legal and illegal, are translating into political clout, and their communities in the United States, better organized and more vocal than before, have become social and political forces too important to ignore. It is a phenomenon that has made Washington a principal battleground to lobby support among Salvadorans for the Central American Free Trade Agreement; New York a crucial state in elections in the Dominican Republic, which allows its citizens to vote from the United States; and Chicago a mandatory campaign stop for Mexican politicians. On Tuesday, in Mexico City, migrant power was further consolidated when the lower Chamber of Deputies passed legislation allowing the migrants to cast absentee ballots from the United States, which will allow Mexicans with American citizenship to vote in both places. The measure opens the way for an estimated 10 million Mexicans and Mexican-Americans to vote in presidential elections next year, in a potential tidal wave that could have significant impact on this country's fledgling democracy. Other countries including Venezuela, Colombia, Brazil and Honduras also allow their migrants to cast absentee ballots. For Mexico, the logistics of the huge endeavor remain unclear; legislators estimated that operating polls in the United States could cost at least $50 million. The measure, which was passed by an overwhelming majority and is expected to win easy passage by the Senate, also provides money for Mexican political parties to campaign in the United States. However, it prohibits them from receiving foreign campaign donations. Already, the economic influence of the migrants is undeniable. The Inter-American Development Bank estimates that migrants sent more than $45 billion to Latin America and the Caribbean last year, exceeding foreign investment and official development assistance for the third year in a row. Mexico - where people compete with oil as the country's chief export - received some $17 billion in remittances, almost twice the amount of just four years ago. Óscar Chacón, of the immigrant advocacy group Enlaces América, calls the phenomenon a quiet revolution led by an expanding network of more than 500 mom and pop organizations that are filling in where more than a decade of free trade and foreign investment has failed to narrow the gap between the rich and poor. Today those immigrant groups are using the power that comes with their remittances to place ever greater demands on politicians at all levels. Their leaders have met with advisers to President Bush to push for sweeping immigration reform, and with presidents across Latin America to demand everything from the power to cast absentee ballots and run for office in their homelands, to universal health insurance and college scholarships. 'Once the voices of immigrants were weak,' said Efraín Jiménez, a former auto mechanic who now oversees multimillion-dollar infrastructure projects in Zacatecas, financed by immigrants in California. 'We had money, but we had no organizations. 'Now we have hundreds of organizations,' he said. 'No president can ignore us.' So far, migrants have lost more of those political battles than they have won, especially in the United States, where Mr. Bush's plans have stalled for a guest worker program. It would offer temporary legal status to an estimated three million Mexican laborers. Still, says Mr. Chacón, migrants are raising money for public works, forming political action committees to support candidates at home and, in small but growing numbers, returning home to run for public office themselves. Some are serving as mayors, city council members and state legislators, bringing fresh perspective and ideas from their time spent in the United States and new demands for accountability from governments long regarded as corrupt or ineffective. Like Mexico, most countries prohibit political parties from receiving foreign campaign donations. But in recent years, migrants in the United States have formed political action committees to sponsor campaign trips to America for candidates from their home countries. And they send delegations of campaign workers back home to help candidates press the pavement, more and more of which they have paid for. Few places understand the changes better than Zacatecas, the Central Mexican state where Mr. Ruiz serves as mayor. More than a century of migration has inextricably linked Zacatecas to the United States. Today more than half of the state's people live north of the border, mostly in California, Illinois and Texas. The Political Process Expands While the rest of Mexico debates whether to give migrants the power to cast absentee ballots, Zacatecas is already allowing its migrants to come home and run for office. Two migrants, including Andrés Bermúdez, a wealthy California grower known as the Tomato King, won mayoral races. Two other immigrants won seats in the state legislature. The governor of Zacatecas, Amalia García, has traveled to the United States at least four times since she was inaugurated in September. She spent a weekend in November in Los Angeles, listening to migrant complaints at the Mexican Consulate, discussing investment opportunities with Mexican business leaders, and helping to crown the new Miss Zacatecas at the annual Zacatecano Ball. When asked during her whirlwind visit to explain why she gives so much attention to Mexicans thousands of miles away, Ms. García said: 'I consider Zacatecas as a binational state. Although the reasons our people have migrated are painful, these people have guaranteed our social stability.' Southern California is the capital of the Mexican diaspora, and a hotbed of Mexican politics, led by the Federation of Zacatecan Clubs and men like Guadalupe Gómez. The federation meets in a drab gray building in the City Terrace section of East Los Angeles that looks more like an abandoned warehouse than a transnational seat of power. And its leaders are auto mechanics, postal workers, hospital administrators, real estate agents and tax consultants. Nearly everybody who wants to be anybody in Zacatecan politics has walked through its doors. Presidential agreements have been signed there. Political campaigns have been started. The federation proclaims that it is apolitical. But it is precisely its close ties to the government of Zacatecas that have helped it grow out of its members' garages into one of the most successful migrant fund-raising groups in the United States - and helped men like Mr. Gómez change from a mild-mannered tax consultant to a high-powered, cross-border political operative. Today in his lobbying efforts, he rubs shoulders with President Fox as well as President Bush. To spend time with the 44-year-old father of four is to glimpse a world without borders, where Spanglish is the first language. One day he is in Los Angeles addressing a ballroom full of Guatemalan mayors seeking his advice on how to get their own migrants to invest in public works projects back home. The next, he is giving the same advice to a room full of Mexican mayors in Zacatecas. In 1998, Mr. Gómez established a migrant political action committee that was key to electing the first opposition governor of Zacatecas, helping the state break free of nearly seven decades of authoritarian rule by the Institutional Revolutionary Party. Two years later he helped Mr. Fox win the support of Mexican migrants in his historic bid to become this country's first democratically elected opposition president. In an agreement negotiated by Mr. Gómez and other federation leaders, every dollar sent home was matched by three more dollars from the local, state and federal governments in a program called Tres por Uno, or Three for One. Mr. Gómez then negotiated with President Fox to nationalize the program. For the first time, Mexican migrants were not only sending money home, but also had a say in how the money was spent. 'We do not want anyone deciding for us what our communities need,' Mr. Gómez said. 'We are not going to Mexico asking for help. We are offering help. We want to play a key role in the future. 'If Mexico is ever going to get out of the third world,' he said, 'then we need to be a part of that.' Balancing Needs and Wants All it takes is one night at a federation meeting to understand that the relationship between Mexican elected officials and the migrants is not all love and happiness. Negotiations are far from easy. The street outside at a recent meeting was packed with sport utility vehicles. Inside, the meeting hall looked like a small sea of cowboy hats. Seated on the dais was a federal senator, two state legislators and at least seven members of Governor García's cabinet, including the ministers of economic development and agricultural industry, and the director of migrant affairs. In the audience sat at least 16 mayors from municipalities across Zacatecas. Each one got up to address the crowd. And they seemed to have one common plea. 'Many clubs have come to us offering to build rodeo arenas or to renovate churches in areas that do not have electricity or potable water,' said Mayor Rodolfo Monreal of the municipality of Fresnillo. 'We are asking you to consider projects with greater social impact. 'I understand that the migrants should have a voice in what we do in Mexico,' he went on. 'But we know better than anybody what our communities need, and those needs should come first.' The room began to grumble. Some of the migrant leaders whispered that the mayors did not care so much about 'projects with greater social impact' as they did about projects aimed at making the government look good to voters. Other mayors argued back that the migrants had fallen out of touch with Mexican realities, and that they wanted to remake Mexico in the image of the United States. 'The migrants want to have here the lives they have over there,' Mr. Monreal said. 'They do not listen to what we want.' Mr. Jiménez, who manages the federation's public works spending, stepped to the microphone with a diplomat's demeanor. It is true, he told the mayors, that migrants might start out renovating churches. Many of them want to show thanks to God for their success in the United States. But if local authorities support their churches, the migrants will come around and support local authorities to build roads and schools and clinics. Mr. Gómez watched from the back of the room. He said he had been listening to this debate since the federation began. For a while, he said, the staunchly secular government refused to contribute public funds to help renovate churches - almost all of them Roman Catholic - or build recreation facilities. But when migrants threatened to withdraw from Tres por Uno, the government relented, and in the last four years it has helped renovate more than 100 churches in Zacatecas alone. 'Those are the projects that inspired us to organize,' Mr. Gómez said. 'And if the government says no to what we want, then we are not going to support the projects the government wants.' Hardships and Homecomings Christmas in Valparaíso is one of the best times and places to get a look at what drives immigrant politics, and at the hardships and homecomings that make this cross-border phenomenon what it is. In November, villages like Boquilla del Refugio were almost empty. By the first weekend of December, they had come back to life as immigrants came home from the United States for the holiday. Lights turned on in houses that are vacant the rest of the year. Expensive sport utility vehicles with license plates from Arizona, Oklahoma, Colorado, Texas, California and Illinois roared through the streets. Local stores extended their hours and doubled their prices. Lines of people wearing American-style T-shirts and baseball caps crawled up the aisles of a nearby chapel and the walls around the sanctuary were sprinkled with photos of Mexicans and Mexican-Americans in the United States armed forces, who had returned safely from duty in Iraq. Almost every night there was a dance, flowing with beer and tequila. And when there was no dance, the immigrants hired street musicians to follow them as they paraded, swigging tequila, through town. There were success stories among the throngs who had come home. Román Cabral, the state legislator from Valparaíso, lived 30 years in California and Oregon. He started out as a dishwasher, and when he left last year to run for office, he was earning millions from his construction company and used-car lots. But more common were men like the president of the hometown club from Boquilla del Refugio, a 54-year-old metal worker named Rosendo Rivera. The club was started by a dozen working-class immigrants in the Chicago area, and in the last three years it has raised more than $350,000 for projects in a town where the population has dropped to nearly 600 people from 2,000. In Aurora, Mr. Rivera lives a working-class life, supplementing the income from his factory job by selling expensive cowboy attire. In Boquilla del Refugio, he is received like a hero. Mayor Ruiz said: 'If you listen to the migrants, all you will hear are success stories. They never talk about how hard their lives are in the United States. All of them say they have made it, and they spend money as if they are rich. 'So people here admire them,' Mr. Ruiz said. 'They have tremendous influence.' But after decades of watching the phenomenon up close, Mr. Ruiz said he saw immigrants and their remittances as more of a mixed blessing. The more people go, the more money flows back. But the more money that flows back, the more people go. And once everyone is gone, he said, immigrants will not have any reason to send more money. There are already places in Zacatecas, he said, where remittances have peaked and are beginning to decline. Boquilla del Refugio seems headed toward the same fate. Florencio Herrera, treasurer of the village's hometown association and a resident of Elgin, Ill., says the elementary school buses in children from other communities so the government will keep it open. There are so few people left to worship in the village's church, lovingly renovated with remittances from the United States, that Mr. Herrera calls it an 'empty palace.' Still, the club raises money. On the first Saturday night of December, it held a dance that would help pay to install a sewage system in Boquilla del Refugio. When asked why he keeps raising money for a ghost town, Mr. Rivera seems stuck at first for an answer. 'I ask myself that sometimes,' he said. 'I guess because I lived here and suffered here, and I want to make things better. But no matter how much we try to make things better, it's not going to stop people from leaving.' 'I guess it's just a matter of pride,' he concluded. 'It's our way of making something of ourselves, and making a difference in the world.'

Subject: Re: Sending Money to Mexican Families From: johnny5 To: Emma Date Posted: Wed, Feb 23, 2005 at 14:23:54 (EST) Email Address: johnny5@yahoo.com Message: If the dollar falls a lot and all our jobs leave to asia or india - what would be the incentive to being broke and unemployed here as compared to anywhere else?

Subject: Re: Sending Money to Mexican Families From: Harry Paranuts To: johnny5 Date Posted: Wed, Feb 23, 2005 at 23:01:07 (EST) Email Address: harryp@mindspring.com Message: All of our jobs are not leaving to Asia and India - quit believing all that drivel that Lou Dobbs is spewing.

Subject: India: Having the Vote and Little Else From: Emma To: All Date Posted: Wed, Feb 23, 2005 at 10:51:47 (EST) Email Address: Not Provided Message: http://www.nytimes.com/2005/02/23/international/asia/23india.html?pagewanted=all&position= In a Corner of India, They Have the Vote, but Little Else By SOMINI SENGUPTA PATNA, India - On the next-to-last day of the toughest election race of his career, Laloo Prasad Yadav, one of India's canniest and most caricatured politicians, is wrapped up in a rambunctious campaign caravan known here as a 'road show.' Laloo-ji, as he is universally called, sits in the cab of his forest-green campaign bus, eats sugar-cane candy out of a plastic bag and promises factories and bridges to the roaring crowds outside. Marigold garlands are tossed at him in adoration; campaign fliers are tossed out to the crowds; his fans practically stampede for a chance to touch his outstretched hand. Mr. Yadav, scion of lower-caste farmers, self-fashioned champion of the downtrodden, now a federal cabinet minister who rules India's third most populous state, Bihar, worships them in return. 'I salute you, I pay my respect to you,' he bellows. 'The government of India is yours.' As dusk turns to dark, on the edges of the road, Laloo loyalists display his party symbol in a show of support: they hold up lanterns to light up the road. Actually, they do not have much of a choice. Only 5 percent of households in Bihar have electricity, compared with 40 percent nationwide, according to the World Bank. On virtually every other development indicator, from infant mortality to literacy to its share of people below the poverty line, Bihar and its 82 million people sit at or near the bottom. Many of its politicians, jailed on criminal charges, are campaigning from behind bars. Unemployed Biharis leave the state in droves to seek work across India. And a spate of widely publicized kidnappings of doctors, businessmen and, lately, schoolchildren has prompted one of Mr. Yadav's political rivals, Ram Vilas Paswan, to remark, 'Except kidnappings, there is not a single industry in Bihar.' At a time when other parts of India are experiencing remarkable economic growth and optimism, Bihar is a stark reminder of an India left behind. In this respect, Bihar's state assembly race, the results of which will be announced Sunday, offers an object lesson in Indian elections - one that upends conventional wisdom on what democracy yields in poor countries. Democracy here, as Mr. Yadav's ascent amply demonstrates, has empowered those on the lower rungs of the social ladder. But it has not necessarily delivered material gains, like roads, hospitals and drinking water, nor a longer, healthier life. 'If you expect democracy to deliver development, governance, there's nothing of the sort,' observed Yogendra Yadav, a sociologist who studies elections and is no relation to Mr. Yadav, the politician. 'It's paradoxical.' Mr. Yadav has never cast himself as Bihar's Mr. Pothole. Yet for 15 years he has worked the arithmetic of Bihar's identity politics in his favor: with a coalition of voters most threatened by upper-caste Hindu rule, mainly Muslims and lower-caste Biharis, he and his party have consistently won over one-third of the electorate, enough to choose the chief minister of the state. (While Mr. Yadav does not technically hold the post - he is forbidden to, after his role in a corruption scandal a few years back - he still rules through his wife, Rabri Devi, whom he picked as his successor.) However, that coalition is now widely believed to be eroding. Middle- and low-caste voters could splinter among Mr. Yadav and his two main rivals, who come from the low-end of the caste ladder. Muslims no longer have a Hindu nationalist government in Delhi to fear. Therein, as many analysts see it, lies the test of these elections: how long can India's most infamous populist milk his folksy brand of identity politics without dispensing other material benefits to his people? Not much longer, his critics and rivals say. Nitish Kumar, the candidate aligned with the Hindu nationalist Bharatiya Janata Party, has been trumpeting the need to restore law and order. An independent lower-caste candidate in Rabri Devi's home district has cast herself as the 'nokrani against the maharani,' the housemaid against the queen. Anwar Ali, the spokesman for a group that represents lower-caste Muslims (in India, caste divisions are not restricted to Hindus), has urged Muslim voters to think independently instead of reflexively backing Mr. Yadav out of fear. Among Mr. Yadav's claims to fame is having checked Bihar's long and ugly history of Hindu-Muslim riots. 'The question of bread, the question of the stomach remains,' Mr. Ali argued. Mr. Paswan, who is stumping on behalf of a candidate who happens to be in jail right now, has promised a raft of services for the poor: interest-free loans, free school lunches, a financial bonus for parents with girl children, jobs. 'My fight is not for caste, not for religion,' Mr. Paswan told a campaign rally Monday evening. 'My friends, I fight for development.' On the edges of the rally, Surendar Jha, an upper-caste farmer who had voted for Mr. Yadav in previous elections, said this time he would defect. 'In the last 15 years, he has eaten flesh from our bodies,' Mr. Jha said. 'If we vote for him again, he'll eat our bones.' For his part, Mr. Yadav remained unbowed about his victory. 'Every election I face is a tough fight,' he said in an interview on his shaded patio, as one of his uniformed attendants came running up with a fistful of tobacco. Mr. Yadav disgorged into the spittoon, before tucking a fresh bunch into his mouth. 'Always Laloo versus all,' he added. 'Everybody 'gherao' me, and I escape.' (In Hindi, to 'gherao' means to corral.) At a Laloo rally on Sunday, a group of men sat in the shade of a tree strung with loudspeakers and waited for his helicopter to arrive. Asked what he has gained from Laloo's 15-year reign, Ganesh Thakur, 48, a farmer from the Yadav caste, said it was neither electricity nor jobs, the two things his village needs badly, but something else altogether. 'He gave us self-respect,' Mr. Thakur said. 'We walk with our heads high.' Cries of 'Laloo jindabad!' - 'Long Live Laloo!' - rose up from the fields. Mr. Yadav's helicopter arrived, kicking up clouds of dust. Dressed head to toe in white, waving a sky-blue hand towel, Mr. Yadav boomed from the stage. 'All the poor people, they have given a lot of strength, a lot of power for Laloo to conquer Delhi,' he cried. 'Now we can do development in Bihar. The Treasury is open to us.'

Subject: Interest Rates From: Terri To: All Date Posted: Wed, Feb 23, 2005 at 10:23:12 (EST) Email Address: Not Provided Message: Notice that the consumer inflation report showed no inflation to worry about, and the long term Treasury note is yielding a low 4.24%. The long term bond market is showing remarkable stability, and this is a positive sign indeed. Whoever is buying is not worried about inflation increasing from here. Surprising, but nonetheless the bond market is stable at healthy interest rates.

Subject: Re: Interest Rates From: johnny5 To: Terri Date Posted: Wed, Feb 23, 2005 at 10:33:42 (EST) Email Address: johnny5@yahoo.com Message: I thought it had been pointed out by the BIS and IMF and several others when looking at post bubble dynamics - it is not CPI you must concern yourself with - but asset inflation - as in the 2 biggest bubbles of this past century - the america of the late 20's and the japanese of recently - CPI was not high?

Subject: Asset Prices From: Terri To: johnny5 Date Posted: Wed, Feb 23, 2005 at 12:39:53 (EST) Email Address: Not Provided Message: There are selectively high prices for certain assets, such as real estate in several urban and related areas or oil, but I find no reason to compare this to the American in 1929 or Japan in 1989. Conditions in Japan in 1989 and America in 1929 were also far different. For the present, I think long term interest rates are telling.

Subject: Saving and Debt From: Terri To: Terri Date Posted: Wed, Feb 23, 2005 at 14:08:30 (EST) Email Address: Not Provided Message: The guess is that the problems we may face will be due to lack of household saving and government debt as a result of a decline in tax revenue from high income households and corporations. So, long term interest rates may be a proper guide to our health. We can wish Paul Krugman will write extensively on these issues should they seem pressing enough.

Subject: Fund Managers understating risk by 40%? From: johnny5 To: All Date Posted: Wed, Feb 23, 2005 at 09:06:55 (EST) Email Address: johnny5@yahoo.com Message: Isaac Asimov's 'machines' still aren't there yet. http://www.wilshire.com/Company/Fund_Managers.pdf January 26, 2005 US – The conventional quantitative methods of portfolio analysis widely used by fund managers could systematically understate the risks in both passively managed and actively managed investment portfolios, Wilshire Associates has warned. According to research by the consulting firm, excess value at risk in retirement equity portfolios could be as high as 5% of the portfolio. Robert Kuberek, a senior managing director at Wilshire, commented: “The biases are such that the standard deviation of return in a pension fund’s equity portfolio may be understated by 40% or more. “As a result, the excess value at risk for a conventional equity portfolio may be as much as 5% of the portfolio. For a typical individual investor with a US$500,000 retirement nest egg, this could amount to an unintended exposure to loss of as much as US$25,000 during a one year period.” http://www.pionline.com/article.cms?articleId=49234 Getting a Handle on Risk--Really Pensions & Investments (02/07/05) Vol. 33, No. 3, P. 8 ; Chernoff, Joel Portfolio managers often use optimizers in investment decisions, but these tools underestimate risk, leaving many portfolios open to exposures up to 5 percent of the value of the portfolio in a given year. Some managers that rely merely on risk ratings are also at risk for taking on too many unknown exposures because those ratings are often based on similar biases. Wilshire Associates Inc. stated its new ShaPTSE estimator has been created to eliminate a majority of those biases, including those segments unrelated to geographic location and industry. http://uk.biz.yahoo.com/050125/81/fb0wn.html Wilshire Associates' Research Concludes Excess Value at Risk in Retirement Equity Portfolios as High as Five Percent SANTA MONICA, Calif., Jan. 25, 2005 (PRIMEZONE) -- Research announced today by Wilshire Associates Incorporated, a global leader in investment technology, investment consulting and investment management, concludes that conventional quantitative methods of portfolio analysis in wide use by fund managers can systematically understate the risks in both passively managed and actively managed investment portfolios. 'The biases are such that the standard deviation of return in a pension fund's equity portfolio may be understated by 40% or more. As a result, the excess value at risk for a conventional equity portfolio may be as much as five percent of the portfolio. For a typical individual investor with a $500,000 retirement nest egg, this could amount to an unintended exposure to loss of as much as $25,000 during a one year period,' noted Robert Kuberek, a senior managing director at Wilshire Associates who supervises quantitative research and software development for the Equity Management, Fixed Income Management, Total Fund Management and Asset Allocation products offered by the firm. To reduce or eliminate these kinds of biases in risk estimation, Wilshire Analytics, a business unit of Wilshire Associates that develops and markets asset allocation, risk management and accounting analytical solutions, has developed sophisticated, new technology and has incorporated it into the most recent versions of Wilshire's analytical systems provided to investment professionals, Mr. Kuberek said. Among the technology solutions utilizing the new technology are The Wilshire Atlas, The Wilshire Axiom, The Wilshire Spectrum and The Wilshire iQuantum, the next generation in analytical solutions. Traditionally, portfolio managers estimate risk in a portfolio using the statistical notion of variance, a measure of randomness in the dispersion of payoffs that was pioneered in the 1950's by Nobel laureate Harry Markowitz. Since the mid-1970's analytics firms like Wilshire have used this powerful and highly successful idea to measure investment risk in institutional portfolios such as pension funds that focus on total return. Since the early 1990's, J. P. Morgan has used an essentially equivalent approach, characterized Value-at-Risk, for financial institutions such as banks and brokerage firms that focus on dollar exposure. Both approaches are based on the same underlying mathematics and measure essentially the same thing. According to Mr. Kuberek, a critical step in the risk measurement process is estimation of the variances and covariances for the variables that drive changes in portfolio value. This set of numbers, arranged in an array called a matrix, summarizes the risk level of the underlying variables, taking into account the tendency of some of the variables to move together. Frequently, the matrix of variances and covariances is estimated using historical returns. However, he noted that when historical returns are used to estimate variances and covariances, noise in the particular sample employed results in errors in the estimated covariance matrix. This means that some of the sample covariances will be smaller, and some larger, than they really are. 'On average, these errors in the sample covariance matrix will tend to cancel: the sample covariance matrix is said to be an unbiased estimator for the true covariance matrix. However, if optimization is applied to the portfolio with the objective of minimizing risk, using the sample covariance matrix as an input, the resulting 'optimized' portfolio will almost always appear to be less risky than it really is: optimization tends to favor portfolios for which risk is underestimated,' said Peter Matheos, Ph.D., a managing director at Wilshire and the lead researcher for this study. 'The amount of the bias will depend on the number and magnitudes of the underlying true covariances and on the length of the historical sample used to estimate them.' 'The tendency for optimization to result in portfolios for which estimation errors are greatest is known. However, what may not be as well appreciated is that even if optimization is not used to construct portfolios explicitly, it could often be the case that optimization is used implicitly. This would happen if in considering trades portfolio managers cannot resist the temptation to 'peek' at their risk estimates,' said Mr. Kuberek. 'The tendency would be to attribute higher reward/risk ratios to trades which produce value-added at what appears to be low marginal risk. Since such trades appear attractive, chances are good that the trades will be executed, and the resulting positions will reflect a preponderance of the trades. However, unless the portfolio manager has a lot of data from which to estimate variances and covariances, what is 'low risk' will likely depend on exactly the same covariance matrix that is used to report risk on the portfolio after the trades are done. This more insidious form of risk estimation bias may be less pronounced than in the case where optimization is used explicitly, but likely will still be present.' Using mathematics that have only been known for a few years, Wilshire's SHaPTSE estimator explicitly corrects for the bias in the estimate of portfolio risk that results from the use the sample covariance matrix. (SHaPTSE stands for Structured Hadamard Product Target Shrinkage Estimator.) The SHaPTSE estimator works by adjusting the sample covariance matrix in a way that takes account of things that are known (or can be assumed) about the true covariance matrix. In this respect, the SHaPTSE estimator resembles a Bayesian estimator. 'From the point of view of the ultimate investor, the issue is a technical one,' Mr. Kuberek acknowledged. 'However, it is a little like a computer virus: the technical details of how computers are infected with a virus and how a virus works are obscure to many of us, but the effects are obvious, and sometimes disastrous, to most of us.' 'For investors the main concern likely will be the possibility of underestimating risk in the portfolio -- in particular, being caught off-guard by portfolios whose true risks are large but whose estimated risks are small. SHaPTSE directly addresses that possibility by optimally adjusting the measured risk in the portfolio and offering a better characterization of that risk. This is a material step forward in practical modern risk management,' said Dr. Matheos. About Wilshire Associates Wilshire Associates is a leading global investment technology, investment consulting and investment management firm with four business units including Wilshire Analytics, Wilshire Funds Management, Wilshire Consulting, and Wilshire Private Markets. The firm was founded in 1972 revolutionizing the industry by pioneering the application of investment analytics and research for investment managers in the institutional marketplace. Wilshire also is credited with helping to develop the field of quantitative investment analysis that uses mathematical tools to analyze market risks. All other business units evolved from Wilshire's strong analytics foundation. Wilshire developed the index now known as the Dow Jones Wilshire 5000 Total Market Index, the first asset/liability models for pension funds, the first U.S. equity style metrics work and many other 'firsts' as the firm grew to more than 300 employees serving the investment needs of institutional and high net worth clients around the world. Based in Santa Monica, CA, Wilshire provides services to clients in more than 20 countries representing in excess of 600 organizations with assets totaling more than $12.5 trillion. With eight offices on four continents, Wilshire Associates and its affiliates are dedicated to providing clients with the highest quality counsel, products and services. For more information go to www.wilshire.com

Subject: The Dollar From: Emma To: All Date Posted: Wed, Feb 23, 2005 at 06:24:14 (EST) Email Address: Not Provided Message: These past 2 years the stock and bond markets have not reacted adversely to the government deficit, the balance of trade deficit, the decline in value of the dollar, or even the rise in energy costs. We may now find if a change in central bank dollar policy has such market impacts.

Subject: Re: The Dollar From: emma To: Emma Date Posted: Wed, Feb 23, 2005 at 07:26:09 (EST) Email Address: Not Provided Message: Markets to watch adjust to a currency value change should the change continue are Europe, Canada, Australia.

Subject: A Decline in Dollar Value From: Emma To: All Date Posted: Wed, Feb 23, 2005 at 05:52:32 (EST) Email Address: Not Provided Message: What puzzles me is why a central bank would discuss a change in reserve policy before the policy is implemented. Why should the Korean central bank tell us of policy before there has been significant diversification? Currency traders will simply play off the information. Curious.

Subject: Good question From: Pete Weis To: Emma Date Posted: Wed, Feb 23, 2005 at 09:21:47 (EST) Email Address: Not Provided Message: Not sure either unless they are sending a public message to the US administration and Congress as they are about to go into budget discussions. Here is more: Dollar Declines as Bank of Korea Plans to Diversify Reserves Feb. 22 (Bloomberg) -- The dollar fell the most in more than four months against the yen and dropped versus the euro, Korean won and at least 30 other currencies after the Bank of Korea said it plans to diversify its reserves. South Korea's central bank, which has a total of $200 billion in reserves, said in a Feb. 18 report to a parliamentary committee it will increase investments in assets denominated in currencies such as the Australian and Canadian dollars. The country's reserves are the world's fourth biggest, behind Japan, China and Taiwan, according to data compiled by Bloomberg. ``The market will now be looking to other central banks and what they will be doing, including the European central banks and Middle Eastern banks,'' said Mansoor Mohi-Uddin, head of currency strategy at UBS AG in London. ``The market has got nervous and has continued selling the dollar.'' The dollar weakened 1.3 percent to 104.26 yen at 8:51 a.m. in New York, from 105.54 late yesterday in Toronto, according to EBS, an electronic foreign-exchange dealing system. It dropped to as low as $1.3227 per euro, from $1.3068. U.S. markets were closed yesterday for President's Day. UBS forecasts the dollar will fall to a record $1.40 per euro by year-end. Australia's currency climbed as high as 79.57 U.S. cents today, the strongest in more than a year. Canada's dollar reached 81.71 cents, the highest in a month. ``Support for the dollar is quickly disappearing,'' said Kenichiro Ikezawa, who manages $1 billion in overseas debt at Daiwa SB Investments in Tokyo. Korea's report ``feeds into suspicion that others are also seeking to cut their exposure to the dollar.'' Pimco's Call The dollar has dropped for the past three years against the euro and the yen, in part on concern demand for U.S. assets will fail to match a widening current-account deficit. The gap was a record $164.7 billion in the third quarter, meaning the U.S. must attract $1.8 billion a day to fund the shortfall and support the dollar's value, according to Bloomberg calculations. ``I'd prefer not to own dollars,'' said Andrew Bosomworth, a former European Central Bank economist and a fund manager at Pacific Investment Management Co. in Munich. Pimco manages about $415 billion in assets. ``The list of fundamentals doesn't add up to a stack of positives for the U.S. currency.'' Korean investors, including the central bank, are the fifth- biggest foreign holders of U.S. Treasuries, with $69 billion as of December, the most recent figures available, according to the Treasury Department. Japan, the largest, has $711.8 billion. The Bank of Korea report was given to some legislators on Feb. 18 and reported by Reuters yesterday. `The Anti-Dollar' ``The likes of Thailand, Taiwan and smaller, medium-sized central banks may follow suit'' in diversifying their reserves, said Stephen Jen, global head of currency research at Morgan Stanley in London. ``The euro is going to be the anti-dollar,'' he said. Japan and China, the second-biggest holder of Treasuries, probably won't shift out of the dollar, Jen said. They ``cannot diversify while the dollar is under pressure.'' China has kept its currency pegged to the dollar since 1995. Japan sold a record amount of yen in the first quarter of last year to help stem its advance. ``In the long run I still have faith in the U.S. dollar,'' said Jen, who raised his forecasts for the currency on Feb. 10. Jen predicts the dollar will trade at $1.24 per euro and 96 yen at year-end, up from previous estimates of $1.32 and 92 yen. Other currency strategists, including Meg Browne at Brown Brothers Harriman & Co. in New York, also said they expect the dollar to regain momentum after today's slide. ``There has been an overreaction'' to the Korean report, she said. Browne said the dollar may rebound to $1.30 per euro. The Bank of Korea report, distributed to members of the parliament's finance and economy committee in advance of a debate scheduled for Feb. 24, also said the bank will expand investments into assets with lower credit ratings than the South Korean government. The plan must be approved by parliament. `Sheer Size' ``The sheer size of Korea's reserves makes it unignorable,'' said Tetsu Aikawa, currency sales manager in Tokyo at UFJ Bank Ltd., a unit of Japan's fourth-largest lender. ``That revives the memory in people's minds how badly the dollar was sold when Russia said it was diversifying.'' The dollar fell to a then-record against the euro on Nov. 23 after Russia's central bank said it may increase the amount of euros in its reserves. The dollar slid as much as half a percent against the euro on Jan. 24, after a survey sponsored by Royal Bank of Scotland Plc showed central banks boosted euro holdings. Almost 70 percent of the 56 central banks surveyed said they increased exposure to the 12-nation currency, according to the survey conducted by Central Banking Publications Ltd., a London- based publisher, between September and December 2004. `Good to Diversify' U.S. Treasuries were the second-worst-performing major government market in the world last year, returning 3.5 percent to investors, according to Merrill Lynch & Co. indexes. Only Japanese bonds, which returned 1.3 percent, did worse among the world's largest government bond markets. ``To have a high proportion in U.S. assets is far from ideal, so it's good to diversify,'' said Mark Austin, head of currency strategy at HSBC Holdings Plc in London. HSBC forecasts the dollar will fall to a record $1.40 per euro and to 98 yen, the weakest in a decade, by the end of the year. ``South Korea wants to start picking up higher yields, so that includes moves in to the Australian currency and sterling, and they'll be buying government bonds,'' said Austin. The yen's advance began earlier today on speculation Japan's economy will recover from its fourth recession since 1991. Traders may renew bets on the yen after it retreated 3 percent from a five-year high of 101.69 on Jan. 17, said Sabrina Jacobs, a currency strategist at Dresdner Kleinwort Wasserstein. Japanese Economy ``Investors are increasingly realizing that the second-half recession in 2004 was the low point in Japan and that it's most likely getting better,'' said Singapore-based Jacobs. ``That's helping the yen.'' Finance Minister Sadakazu Tanigaki said on Feb. 20 Japan's economy will ``improve in the latter half of this year,'' after it contracted at an annualized 0.5 percent pace in the fourth quarter. The economy contracted for three straight quarters. Japan's Cabinet office kept its assessment that the economy is recovering, in its February report released today. The government removed currency moves as a risk for the economic outlook in its report. A stronger currency may slow export growth by making Japanese goods more expensive abroad.

Subject: A Decline in Dollar Value - 1 From: Emma To: Emma Date Posted: Wed, Feb 23, 2005 at 06:00:33 (EST) Email Address: Not Provided Message: Does OPEC have the intent and market impact to increase the price of oil in line with any decline of the value of the dollar?

Subject: OPEC From: Pete Weis To: Emma Date Posted: Wed, Feb 23, 2005 at 15:06:57 (EST) Email Address: Not Provided Message: OPEC ministers have talked about demanding Euros instead of US dollars for their oil, but so far its only talk. What they have done at times is cut production when they feel they are getting too few dollars for their oil. They've stated that at least part of the reason for production cuts has been the falling dollar.

Subject: Re: OPEC From: johnny5 To: Pete Weis Date Posted: Wed, Feb 23, 2005 at 17:41:47 (EST) Email Address: johnny5@yahoo.com Message: But Pete, as he opens a new pier for oil trading he promises he will stabilize prices! http://www.nasdaq.com/asp/quotes_news.asp?cpath=20050223\ACQDJON200502230432DOWJONESDJONLINE000315.htm&selected=9999&StoryTargetFrame=_top&mkt=WORLD&chk=unchecked&lang=&link=&headlinereturnpage=http://www.international.nasdaq.com/asp/gmWorldNews.asp&headl OPEC President: OPEC Will Act To Stabilize World Oil Market MANAMA, Bahrain -(Dow Jones)- The president of the Organization of Petroleum Exporting Countries said Wednesday that OPEC won't allow the prices to 'surge to record levels' and will work to stabilize the global oil market. Sheik Ahmad Fahad al-Ahmad al-Sabah, who is also Kuwait Oil Minister, was reacting to an increase in oil prices Tuesday when crude oil futures for March in New York ended up nearly $3 a barrel to a more than three-month high. Front-month light, sweet crude futures on the New York Mercantile Exchange settled up $2.80 at $51.15 - the highest settlement price this year. Al-Sabah said there will be an OPEC reaction to help cap any surge in oil prices, but gave no specific details. 'Oil prices rose again yesterday. It's premature to say that we will support or reject a production increase but I can say that we will act to stabilize the market as we did in 2004', he said. 'This is our policy which is part of OPEC strategy,' he added. Tuesday, al-Sabah said that OPEC was unlikely to cut output at its upcoming March 16 meeting in Isfahan, Iran. 'Until now, we don't have to cut. The price is very high and we have to respect that price and cooperate with others for oil market stability,' he said. Al-Sabah was speaking to reporters in Kuwait on the sidelines of a function marking the opening of a new pier at al-Ahmadi oil export terminal. -By Abdulla Fardan, Dow Jones Newswires; (973) 17530758; abdulla.fardan@ dowjones.com

Subject: Right From: Pete Weis To: johnny5 Date Posted: Wed, Feb 23, 2005 at 19:44:46 (EST) Email Address: Not Provided Message: Right Johnny5. You notice he does not say they will act to reduce pricing, but rather 'stabilize'. They don't like it when the pricing is erratic, especially when it falls steeply. What they like is a 'stable', steady increase in pricing.

Subject: Smooth it out! From: johnny5 To: Pete Weis Date Posted: Thurs, Feb 24, 2005 at 05:38:29 (EST) Email Address: johnny5@yahoo.com Message: How they word things keeps noam chomsky up at night. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=476981 I can't help but think of terri when I read this - I don't know why that is so however - I just do: Irrational Optimism ELROY DIMSON London Business School - Institute of Finance and Accounting PAUL MARSH London Business School - Institute of Finance and Accounting MIKE STAUNTON London Business School - Institute of Finance and Accounting December 2003 LBS Institute of Finance and Accounting Working Paper No. IFA397 Abstract: We address the tendency of many investors to overestimate the rewards and underestimate the risks of investing in stocks over the long term - that is, investors' irrational optimism. In particular, we examine the widely held belief that stocks are a 'safe' investment for the long run. The probability of experiencing a real loss on equities depends on the expected real return and standard deviation of stocks. Judgments about the future magnitude of these two parameters typically involve extrapolating from history. We use a global database of real equity returns from 16 countries during the 103-year period from 1900 through 2002 to confront the optimism of investors with the reality of history. Since 1900, the worldwide real return on equities averaged close to 5 percent a year (before costs, fees, and taxes). This is appreciably lower than is frequently quoted from historical averages, a difference that arises because we use a longer time frame than other studies and adopt a global focus. Prior views on the long-run safety of equities have been overly influenced by the experience of the United States. Furthermore, the US evidence that, over the long haul, stocks have beaten inflation over all 20-year periods is based on relatively few nonoverlapping observations and is hence subject to large sampling error. To counteract this dependency on projections of the US experience, we examine the histories of other countries. We find only three non-US equity markets (with a fourth on the borderline) that never experienced a shortfall in real returns over a 20-year period. The worst 20-year real returns of 11 countries were negative. Historically, in 6 of the 16 countries, investors would need to have waited more than 50 years to be assured of a positive return. We also analyze the future shortfall risk of an equity portfolio. The base case for the projections is a worldwide historical volatility level of 20 percent and mean real return of 5 percent, and we also examine a lower return of 4 percent. The projected shortfall risk exceeds the historical risk of shortfall - partly because of the lower assumed real returns, and partly because, even though volatility was projected to be the same as in the past, the shortfall analysis focuses on the full range of possible future returns rather than a single historical outcome. By construction, historical returns converged on long-term realized performance, but the forward-looking analysis shows that there is always risk from investing in volatile securities. Although the probable rewards from equity investment are attractive, stocks did not and cannot offer a guaranteed superior performance over the investment horizon of most investors. Furthermore, their prospective returns are lower than many investors project, whereas their risk is higher than many investors appreciate. Investors who assume that favorable equity returns can be relied on in the long term or that stocks are safe so long as they are held for 20 years are optimists. Their optimism is irrational. Keywords: Portfolio management, asset allocation, long-run returns, shortfall analysis JEL Classifications: F30, G12, G15, G23, J26, N20 Working Paper Series Abstract has been viewed 7399 times

Subject: Steadfastly positive From: Pete Weis To: johnny5 Date Posted: Thurs, Feb 24, 2005 at 10:16:09 (EST) Email Address: Not Provided Message: While I do agree with what this article has to say, I don't think of Terri when I read it. I believe Terri is not irrationaly optimistic. Rather I see Terri as the kind of steadfastly positive human being whom makes this world a better place in which to live. If we are truely in a mess, Terri would be the first to say there is a way to get out of this mess. It's great to have a diversity of opinion on this board, because it improves the quality of the board. Johnny5, you and I keep hammering away at what we see as the threats and risks to our economic wellbeing and I believe with you that it's important to do so. But just as important are those who say 'yes but...' to our 'no-it's-absolutely-this-way'. So I probably would do well to tone it down and listen more - something I haven't always been that good at.

Subject: Yah - what you said! From: johnny5 To: Pete Weis Date Posted: Thurs, Feb 24, 2005 at 11:29:31 (EST) Email Address: johnny5@yahoo.com Message: I would hate for you to tone it down as much as I would hate for Terri to do the same. Without both of you dueling it out - many would lose the education you 2 are giving them. Terri while maybe not preventing you from a loss will be there to make life better after the reality hits and get you up out of the collapse much faster than otherwise - I think if hunter s thompson had friends like terri around, whatever was troubling him would have mattered less. I think in the past the optimists did not avoid the 29 crash or other bubbles - many great people were sucked into them - that is a part of life - but after those things dealt thier psychological damage if you didn't have terri's around to give you hope the loss would have killed your soul - I have seen this happen first hand to people that didn't have terri's in thier life. Terri's hopeful spirit a few others are truly the life blood that keeps things so interesting here. If they toned things down - bear or bull - what are the rest of us dummies gonna learn without good debate and opposing discussions. Although I don't share terri's 'feelings' or hope about the immediate future - without terri slinging away your gloom Pete - this place just wouldn't be any fun at all and certainly not educational. You are right, the major points of the bears have been made and now it is time to give the fingers a rest a let terri educate us some more and expand our horizons but please don't tone it down Pete, the debate itself is perhaps more important than the conclusions it arrives at. If everyone