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Emma -:- An Immigration Experiment -:- Sun, Mar 20, 2005 at 10:42:46 (EST)

Emma -:- What? They Never Heard of WorldCom? -:- Sun, Mar 20, 2005 at 10:38:19 (EST)

Terri -:- Why the Dollar Will Not Collapse -:- Sun, Mar 20, 2005 at 09:43:28 (EST)

johnny5 -:- Solow says tech comprises most growth -:- Sun, Mar 20, 2005 at 08:45:03 (EST)

johnny5 -:- marketocracy -:- Sun, Mar 20, 2005 at 07:24:14 (EST)

Terri -:- Comparison -:- Sun, Mar 20, 2005 at 07:02:49 (EST)
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Terri -:- Where is Value? -:- Sun, Mar 20, 2005 at 07:16:02 (EST)
__ Terri -:- Jeremy Siegel -:- Sun, Mar 20, 2005 at 07:23:15 (EST)

johnny5 -:- Market fragility - dolllar strength? -:- Sun, Mar 20, 2005 at 06:47:47 (EST)

johnny5 -:- This was predicted at realty times -:- Sun, Mar 20, 2005 at 06:36:39 (EST)

Terri -:- The Dollar Will Not Collapse -:- Sun, Mar 20, 2005 at 06:18:47 (EST)
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Terri -:- The Dollar Will Likely Lose Value -:- Sun, Mar 20, 2005 at 06:49:05 (EST)
__ johnny5 -:- Re: The Dollar Will Likely Lose Value -:- Sun, Mar 20, 2005 at 07:00:27 (EST)
_ johnny5 -:- Re: The Dollar Will Not Collapse -:- Sun, Mar 20, 2005 at 06:31:54 (EST)

johnny5 -:- Pete called a dollar death -:- Sun, Mar 20, 2005 at 06:10:19 (EST)

Terri -:- Bonds: Taxable or Tax Free -:- Sat, Mar 19, 2005 at 18:48:00 (EST)
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johnny5 -:- If the dollar dies? -:- Sun, Mar 20, 2005 at 05:31:19 (EST)

Terri -:- Projected Returns for Stocks and Bonds -:- Sat, Mar 19, 2005 at 17:00:59 (EST)
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Terri -:- National Index Returns -:- Sat, Mar 19, 2005 at 22:12:03 (EST)

Terri -:- Jeremy Siegel -:- Sat, Mar 19, 2005 at 15:12:06 (EST)
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Terri -:- Terrific Interview -:- Sat, Mar 19, 2005 at 21:11:10 (EST)

Emma -:- In Life on the Mekong -:- Sat, Mar 19, 2005 at 13:54:12 (EST)

Emma -:- Private Pension Accounts in Texas -:- Sat, Mar 19, 2005 at 11:43:54 (EST)
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Emma -:- A Poor Plan -:- Sat, Mar 19, 2005 at 11:55:40 (EST)
__ Emma -:- Why are Returns so Low -:- Sat, Mar 19, 2005 at 13:46:35 (EST)
___ David E.. -:- Re: Why are Returns so Low -:- Sun, Mar 20, 2005 at 01:14:18 (EST)
____ Terri -:- Re: Why are Returns so Low -:- Sun, Mar 20, 2005 at 06:05:56 (EST)
___ johnny5 -:- Re: Why are Returns so Low -:- Sat, Mar 19, 2005 at 14:14:58 (EST)

Emma -:- Broadband and Phone Lines -:- Sat, Mar 19, 2005 at 10:29:15 (EST)
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johnny5 -:- Re: Broadband and Phone Lines -:- Sat, Mar 19, 2005 at 14:21:41 (EST)

Emma -:- Oil Wealth in Indonesia -:- Sat, Mar 19, 2005 at 10:24:47 (EST)

Terri -:- Warren Buffett and Optimism -:- Sat, Mar 19, 2005 at 09:50:16 (EST)
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Terri -:- Reasonably Priced Assets -:- Sat, Mar 19, 2005 at 10:23:14 (EST)
__ Terri -:- Finding Assets -:- Sat, Mar 19, 2005 at 10:47:48 (EST)

Terri -:- Bond Fund Refuge -:- Sat, Mar 19, 2005 at 07:30:11 (EST)
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johnny5 -:- What is buffet buying? -:- Sat, Mar 19, 2005 at 08:31:46 (EST)

Terri -:- Value and Value -:- Sat, Mar 19, 2005 at 07:01:18 (EST)
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johnny5 -:- Buffet is not a market timer? -:- Sat, Mar 19, 2005 at 08:27:58 (EST)

johnny5 -:- Strategic Failure to Deliver -:- Sat, Mar 19, 2005 at 05:56:25 (EST)

johnny5 -:- Naked Shorts on Nasdaq - Golden Rule -:- Sat, Mar 19, 2005 at 05:25:07 (EST)

Terri -:- Vanguard Returns -:- Fri, Mar 18, 2005 at 21:27:37 (EST)
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Terri -:- Sector Indexes -:- Fri, Mar 18, 2005 at 21:28:31 (EST)
__ johnny5 -:- DFA beating Vanguard -:- Sat, Mar 19, 2005 at 01:15:59 (EST)

Terri -:- Understanding Price Earning Ratios -:- Fri, Mar 18, 2005 at 20:30:17 (EST)
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Pete Weis -:- Re: Understanding Price Earning Ratios -:- Sat, Mar 19, 2005 at 04:20:46 (EST)
__ Terri -:- Well Done -:- Sat, Mar 19, 2005 at 06:12:08 (EST)
__ johnny5 -:- French on Behavioral Finance -:- Sat, Mar 19, 2005 at 05:08:00 (EST)
___ Pete Weis -:- Give credit to Terri for.... -:- Sat, Mar 19, 2005 at 12:54:32 (EST)
____ johnny5 -:- Re: Give credit to Terri for.... -:- Sat, Mar 19, 2005 at 21:03:47 (EST)
____ Terri -:- Re: Give credit to Pete for.... -:- Sat, Mar 19, 2005 at 14:03:19 (EST)
_ johnny5 -:- Kindleberger says one word 'Mania' -:- Sat, Mar 19, 2005 at 01:02:03 (EST)
__ Jennifer -:- Hope All is Fine -:- Sat, Mar 19, 2005 at 09:19:27 (EST)
___ johnny5 -:- Re: Hope All is Fine -:- Sat, Mar 19, 2005 at 20:48:10 (EST)

Terri -:- Japan and Bubbles Bursting -:- Fri, Mar 18, 2005 at 18:33:37 (EST)
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Terri -:- Limiting a Negative Wealth Effect -:- Fri, Mar 18, 2005 at 21:54:57 (EST)

Terri -:- The Wealth Effect -:- Fri, Mar 18, 2005 at 18:21:05 (EST)

johnny5 -:- Deflation coming home -:- Fri, Mar 18, 2005 at 16:56:03 (EST)

Pete Weis -:- Market cap to GDP -:- Fri, Mar 18, 2005 at 15:08:52 (EST)
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Terri -:- Well Done -:- Fri, Mar 18, 2005 at 15:55:38 (EST)
_ johnny5 -:- Re: Market cap to GDP -:- Fri, Mar 18, 2005 at 15:50:11 (EST)

Pete Weis -:- Tipping points -:- Fri, Mar 18, 2005 at 14:56:33 (EST)
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Terri -:- Well, Possibly -:- Fri, Mar 18, 2005 at 19:54:43 (EST)

Emma -:- Canada and Oil and Boom Towns -:- Fri, Mar 18, 2005 at 14:22:22 (EST)

Emma -:- Brazil Plane Maker Getting Big Orders -:- Fri, Mar 18, 2005 at 14:20:46 (EST)

Emma -:- Retirement, the Federal Way -:- Fri, Mar 18, 2005 at 14:19:41 (EST)

Setanta -:- Caste the financial net -:- Fri, Mar 18, 2005 at 10:12:31 (EST)

johnny5 -:- 423 million digital dollars stolen -:- Fri, Mar 18, 2005 at 04:00:30 (EST)
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Jennifer -:- We are Secure If we Feel Secure -:- Fri, Mar 18, 2005 at 09:05:27 (EST)
__ johnny5 -:- Re: We are Secure If we Feel Secure -:- Fri, Mar 18, 2005 at 13:50:37 (EST)
___ Jennifer -:- Learning How to Read -:- Fri, Mar 18, 2005 at 14:18:27 (EST)
____ Jennifer -:- Re: Learning How to Read -:- Fri, Mar 18, 2005 at 15:28:21 (EST)

johnny5 -:- Using the machines to steal yer money -:- Fri, Mar 18, 2005 at 03:01:33 (EST)
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johnny5 -:- They are using your computes against you -:- Fri, Mar 18, 2005 at 03:53:19 (EST)

johnny5 -:- Real price of oil after military expense -:- Fri, Mar 18, 2005 at 02:39:15 (EST)

johnny5 -:- moneys gone, should have bought houses -:- Fri, Mar 18, 2005 at 02:28:49 (EST)

johnny5 -:- Hack your taxes and beat the gubbment -:- Fri, Mar 18, 2005 at 02:20:40 (EST)

Terri -:- Energy and Growth -:- Thurs, Mar 17, 2005 at 17:52:00 (EST)
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Pancho Villa -:- Re: Energy and Growth -:- Thurs, Mar 17, 2005 at 19:57:03 (EST)
__ Pete Weis -:- What is energy? -:- Fri, Mar 18, 2005 at 10:04:52 (EST)
___ Emma -:- Re: What is energy? -:- Fri, Mar 18, 2005 at 14:23:11 (EST)
__ Terri -:- Energy and Utility -:- Thurs, Mar 17, 2005 at 20:52:31 (EST)

Billy -:- How Bush Won U.S. Presidency -:- Thurs, Mar 17, 2005 at 16:01:41 (EST)
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johnny5 -:- Rome survived Nero no? -:- Fri, Mar 18, 2005 at 00:15:26 (EST)

Pancho Villa -:- It's y(our) money -:- Thurs, Mar 17, 2005 at 14:18:17 (EST)

Emma -:- Americans Save So Little -:- Thurs, Mar 17, 2005 at 11:24:35 (EST)

johnny5 -:- Solow and sustainable development -:- Thurs, Mar 17, 2005 at 10:05:45 (EST)
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Terri -:- Thank You -:- Thurs, Mar 17, 2005 at 11:08:33 (EST)
_ johnny5 -:- Loss of wealth of nations -:- Thurs, Mar 17, 2005 at 10:12:28 (EST)

johnny5 -:- Leverage in TSY 50:1 -:- Thurs, Mar 17, 2005 at 10:00:54 (EST)

johnny5 -:- inflation & social disparity our future -:- Thurs, Mar 17, 2005 at 09:38:58 (EST)

Terri -:- Looking Ahead -:- Thurs, Mar 17, 2005 at 07:26:11 (EST)
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johnny5 -:- Re: Looking Ahead -:- Thurs, Mar 17, 2005 at 09:13:06 (EST)

Setanta -:- From the mouth of the great man himself! -:- Thurs, Mar 17, 2005 at 07:19:39 (EST)
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Terri -:- Re: From the mouth of the great man himself! -:- Thurs, Mar 17, 2005 at 08:52:02 (EST)
__ johnny5 -:- Re: From the mouth of the great man himself! -:- Thurs, Mar 17, 2005 at 09:07:40 (EST)
___ Emma -:- Peace Always -:- Thurs, Mar 17, 2005 at 10:06:16 (EST)
____ Pancho Villa -:- Re: Peace Always -:- Thurs, Mar 17, 2005 at 11:54:06 (EST)

Setanta -:- Bluff your way in Irish! -:- Thurs, Mar 17, 2005 at 07:13:03 (EST)
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johnny5 -:- Too drunk to learn -:- Thurs, Mar 17, 2005 at 09:02:49 (EST)
_ Terri -:- Re: Bluff your way in Irish! -:- Thurs, Mar 17, 2005 at 07:18:04 (EST)
__ johnny5 -:- Non alcoholic beer for the good -:- Thurs, Mar 17, 2005 at 09:04:18 (EST)
__ Setanta -:- Re: Bluff your way in Irish! -:- Thurs, Mar 17, 2005 at 07:42:03 (EST)
___ Terri -:- Re: Bluff your way in Irish! -:- Thurs, Mar 17, 2005 at 08:51:05 (EST)

Terri -:- We Can be Optimistic -:- Thurs, Mar 17, 2005 at 06:27:30 (EST)

Terri -:- Selected Vanguard Returns -:- Thurs, Mar 17, 2005 at 06:12:38 (EST)

johnny5 -:- Happy st pats day everyone -:- Thurs, Mar 17, 2005 at 03:20:17 (EST)
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Setanta -:- Re: Happy st pats day everyone -:- Thurs, Mar 17, 2005 at 07:02:12 (EST)
__ Terri -:- Re: Happy st pats day everyone -:- Thurs, Mar 17, 2005 at 07:15:29 (EST)

johnny5 -:- Real Estate Blog Pete - 87.6% in 5 yrs -:- Thurs, Mar 17, 2005 at 02:39:37 (EST)

johnny5 -:- More on the KL hedge fund cowboys -:- Wed, Mar 16, 2005 at 22:50:45 (EST)

johnny5 -:- He is sorry your money got stolen -:- Wed, Mar 16, 2005 at 22:34:37 (EST)
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johnny5 -:- ID theft victims cry to congress -:- Wed, Mar 16, 2005 at 22:39:18 (EST)

Terri -:- Vanguard Indexes -:- Wed, Mar 16, 2005 at 21:42:20 (EST)
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Terri -:- Vanguard MSCI Indexes -:- Wed, Mar 16, 2005 at 21:48:12 (EST)
__ johnny5 -:- My trust is hard to earn -:- Wed, Mar 16, 2005 at 22:16:38 (EST)

Emma -:- China's Economic Numbers -:- Wed, Mar 16, 2005 at 21:35:11 (EST)

Ted -:- Video from Krugman/Tanner debate? -:- Wed, Mar 16, 2005 at 21:15:53 (EST)

Terri -:- Vanguard Indexes -:- Wed, Mar 16, 2005 at 15:34:01 (EST)
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johnny5 -:- Weighting of Insiders -:- Wed, Mar 16, 2005 at 21:34:02 (EST)
__ Jennifer -:- Perfect for Investors -:- Wed, Mar 16, 2005 at 21:59:49 (EST)
___ johnny5 -:- Re: Perfect for Investors -:- Wed, Mar 16, 2005 at 22:06:53 (EST)

Emma -:- Explosive Mix in Mexico's Politics -:- Wed, Mar 16, 2005 at 12:28:22 (EST)

Emma -:- Yuan and Dollar -:- Wed, Mar 16, 2005 at 11:01:30 (EST)
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Emma -:- Growth and Currency -:- Wed, Mar 16, 2005 at 11:13:39 (EST)

Pete Weis -:- OPEC changes its story -:- Wed, Mar 16, 2005 at 10:49:57 (EST)

Terri -:- Learn About Vanguard -:- Wed, Mar 16, 2005 at 10:31:54 (EST)

Emma -:- Berkshire Hathaway and Insurance -:- Wed, Mar 16, 2005 at 10:27:30 (EST)

Emma -:- China: Stability and Development -:- Wed, Mar 16, 2005 at 10:24:18 (EST)

Jennifer -:- A Contract -:- Wed, Mar 16, 2005 at 06:14:25 (EST)
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Jennifer -:- Contract -:- Wed, Mar 16, 2005 at 06:18:39 (EST)
__ Jennifer -:- Act at Once -:- Wed, Mar 16, 2005 at 07:21:50 (EST)
___ Jennifer -:- Signature Guarantee -:- Wed, Mar 16, 2005 at 08:26:10 (EST)
____ Pete Weis -:- Excellent advice.... -:- Wed, Mar 16, 2005 at 10:30:18 (EST)
_____ Ari -:- Re: Excellent advice.... -:- Wed, Mar 16, 2005 at 11:04:38 (EST)
______ johnny5 -:- Thanks everyone -:- Wed, Mar 16, 2005 at 11:27:55 (EST)
_______ Jennifer -:- Re: Thanks everyone -:- Wed, Mar 16, 2005 at 12:00:17 (EST)

johnny5 -:- Raymond James lying to my uncle -:- Wed, Mar 16, 2005 at 03:02:09 (EST)
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Pete Weis -:- Sad to say............. -:- Wed, Mar 16, 2005 at 10:25:44 (EST)

David E... -:- 3 Times I have seen the light -:- Wed, Mar 16, 2005 at 02:12:20 (EST)
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johnny5 -:- The trouble is Minnie - there aint no light -:- Wed, Mar 16, 2005 at 02:35:13 (EST)
__ johnny5 -:- When does bush stumble off the stage? -:- Wed, Mar 16, 2005 at 02:44:06 (EST)

johnny5 -:- Soviets spent themselves into oblivion -:- Tues, Mar 15, 2005 at 22:08:07 (EST)
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johnny5 -:- Re: Soviets spent themselves into oblivion -:- Tues, Mar 15, 2005 at 22:32:37 (EST)

Pancho Villa -:- ...all wrong...? -:- Tues, Mar 15, 2005 at 21:39:14 (EST)
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johnny5 -:- Re: ...all wrong...? -:- Tues, Mar 15, 2005 at 21:58:40 (EST)
__ Jennifer -:- Paul Krugman was Right -:- Wed, Mar 16, 2005 at 08:28:53 (EST)
___ Pete Weis -:- It's strange....... -:- Wed, Mar 16, 2005 at 10:46:55 (EST)
____ Terri -:- Re: It's strange....... -:- Wed, Mar 16, 2005 at 11:06:19 (EST)

johnny5 -:- China wants OIL, not dollars -:- Tues, Mar 15, 2005 at 21:09:40 (EST)

Pete Weis -:- Recession? -:- Tues, Mar 15, 2005 at 14:49:23 (EST)
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Terri -:- Re: Recession? -:- Tues, Mar 15, 2005 at 16:38:39 (EST)
__ Terri -:- Re: Recession? -:- Tues, Mar 15, 2005 at 20:17:04 (EST)
___ johnny5 -:- If the dollar falls -:- Tues, Mar 15, 2005 at 20:58:41 (EST)

Terri -:- Demand for Dollars -:- Tues, Mar 15, 2005 at 14:38:27 (EST)
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johnny5 -:- Re: Demand for Dollars -:- Tues, Mar 15, 2005 at 20:35:25 (EST)
_ Pete Weis -:- S&P a definite loss for most.... -:- Tues, Mar 15, 2005 at 15:03:30 (EST)
__ Pete Weis -:- The value of our assets... -:- Tues, Mar 15, 2005 at 15:07:15 (EST)
___ Terri -:- Re: The value of our assets... -:- Tues, Mar 15, 2005 at 16:46:05 (EST)

Terri -:- Investing in Europe -:- Tues, Mar 15, 2005 at 13:44:26 (EST)
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johnny5 -:- Re: Investing in Europe -:- Tues, Mar 15, 2005 at 20:23:35 (EST)

Terri -:- Investing in Developed Countries -:- Tues, Mar 15, 2005 at 13:18:29 (EST)
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johnny5 -:- Re: Investing in Developed Countries -:- Tues, Mar 15, 2005 at 20:18:35 (EST)

Emma -:- Developing and Developed Nations -:- Tues, Mar 15, 2005 at 09:59:22 (EST)
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johnny5 -:- World Melting Pot -:- Tues, Mar 15, 2005 at 20:06:07 (EST)

Emma -:- Investing -:- Tues, Mar 15, 2005 at 08:14:19 (EST)
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johnny5 -:- Re: Investing -:- Tues, Mar 15, 2005 at 19:57:35 (EST)

Emma -:- Biological Resources -:- Tues, Mar 15, 2005 at 07:18:12 (EST)

johnny5 -:- Why invest in Europe? -:- Tues, Mar 15, 2005 at 06:30:16 (EST)
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johnny5 -:- Re: Why invest in Europe? -:- Tues, Mar 15, 2005 at 06:35:38 (EST)
__ RL -:- Re: Why invest in Europe? -:- Tues, Mar 15, 2005 at 08:50:27 (EST)
___ Institutional Investor -:- Re: Why invest in Europe? -:- Tues, Mar 15, 2005 at 10:40:21 (EST)
____ RL -:- Re: Why invest in Europe? -:- Thurs, Mar 17, 2005 at 03:48:13 (EST)
____ johnny5 -:- How much tech growth is left? -:- Tues, Mar 15, 2005 at 19:47:08 (EST)
_____ RL -:- Re: How much tech growth is left? -:- Thurs, Mar 17, 2005 at 04:05:43 (EST)
______ johnny5 -:- Re: How much tech growth is left? -:- Thurs, Mar 17, 2005 at 06:09:26 (EST)
_______ RL -:- Re: How much tech growth is left? -:- Thurs, Mar 17, 2005 at 07:16:18 (EST)
________ johnny5 -:- Re: How much tech growth is left? -:- Thurs, Mar 17, 2005 at 08:55:14 (EST)
_________ RL -:- Re: How much tech growth is left? -:- Fri, Mar 18, 2005 at 05:20:38 (EST)

Emma -:- Our Biological Resources -:- Tues, Mar 15, 2005 at 06:23:40 (EST)

Emma -:- Health Care as our Resource -:- Tues, Mar 15, 2005 at 06:15:33 (EST)

Emma -:- Health Care as a Precious Resource -:- Tues, Mar 15, 2005 at 06:05:25 (EST)

johnny5 -:- Data cowboy steal yer money - cspn3 10am -:- Mon, Mar 14, 2005 at 19:25:55 (EST)

johnny5 -:- The MATRIX has you Jennifer - GUILTY -:- Mon, Mar 14, 2005 at 18:51:45 (EST)
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Ari -:- Nonsense -:- Mon, Mar 14, 2005 at 19:39:49 (EST)
__ johnny5 -:- Blue pills for you! hehe -:- Mon, Mar 14, 2005 at 19:43:19 (EST)
___ johnny5 -:- Before you all go crazy again -:- Mon, Mar 14, 2005 at 19:59:30 (EST)
____ johnny5 -:- Some movies to watch -:- Mon, Mar 14, 2005 at 20:32:29 (EST)
____ Ari -:- Re: Before you all go crazy again -:- Mon, Mar 14, 2005 at 20:09:16 (EST)
_ johnny5 -:- Re: The MATRIX has you Jennifer - GUILTY -:- Mon, Mar 14, 2005 at 18:58:55 (EST)
__ johnny5 -:- Who will you call if you have no mouth -:- Mon, Mar 14, 2005 at 19:07:02 (EST)

Terri -:- Arguing Stocks and Bonds -:- Mon, Mar 14, 2005 at 18:26:11 (EST)
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johnny5 -:- No energy -:- Mon, Mar 14, 2005 at 18:46:12 (EST)
__ Terri -:- Bonds and Energy -:- Mon, Mar 14, 2005 at 18:55:09 (EST)
___ johnny5 -:- Energy Viper -:- Mon, Mar 14, 2005 at 19:13:14 (EST)

Emma -:- Imagine Life With no Butterflies -:- Mon, Mar 14, 2005 at 16:45:29 (EST)

Terri -:- Conservative Investing -:- Mon, Mar 14, 2005 at 12:05:55 (EST)
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johnny5 -:- Re: Conservative Investing -:- Mon, Mar 14, 2005 at 18:37:56 (EST)
__ Terri -:- Re: Conservative Investing -:- Mon, Mar 14, 2005 at 20:56:35 (EST)

Pete Weis -:- Bubbles - whose at fault? -:- Mon, Mar 14, 2005 at 10:14:11 (EST)

Terri -:- Bond and Stocks -:- Mon, Mar 14, 2005 at 08:34:02 (EST)

Terri -:- Building a Bond Portfolio -:- Mon, Mar 14, 2005 at 08:06:23 (EST)

Terri -:- Buying and Selling Bonds -:- Mon, Mar 14, 2005 at 06:25:54 (EST)
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johnny5 -:- Re: Buying and Selling Bonds -:- Mon, Mar 14, 2005 at 06:43:32 (EST)

Pete Weis -:- Corporate bonds risky? -:- Mon, Mar 14, 2005 at 00:28:55 (EST)
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johnny5 -:- Re: Corporate bonds risky? -:- Mon, Mar 14, 2005 at 00:42:43 (EST)
__ johnny5 -:- Re: Corporate bonds risky? -:- Mon, Mar 14, 2005 at 00:58:20 (EST)
___ Pete Weis -:- Excellent posts Johnny -:- Mon, Mar 14, 2005 at 09:28:47 (EST)
____ johnny5 -:- Re: Excellent posts Johnny -:- Mon, Mar 14, 2005 at 18:31:59 (EST)

Emma -:- Our Currency, Your Problem -:- Sun, Mar 13, 2005 at 19:05:59 (EST)

Emma -:- The Quality Health Care Cure? -:- Sun, Mar 13, 2005 at 18:57:36 (EST)
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johnny5 -:- Re: The Quality Health Care Cure? -:- Mon, Mar 14, 2005 at 00:31:21 (EST)

Fur -:- Weaken Dollar -:- Sun, Mar 13, 2005 at 14:17:33 (EST)
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johnny5 -:- Perhaps -:- Sun, Mar 13, 2005 at 16:07:37 (EST)
_ Fur -:- Re: Weaken Dollar -:- Sun, Mar 13, 2005 at 14:19:55 (EST)

Emma -:- Three Proofs that TSM is Efficient -:- Sun, Mar 13, 2005 at 10:27:59 (EST)
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johnny5 -:- Berkshire Hathaway -:- Sun, Mar 13, 2005 at 16:29:42 (EST)

Emma -:- The President's Stealthy Tax Increase -:- Sun, Mar 13, 2005 at 10:14:07 (EST)
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David E... -:- Why do the Republicans punish the rich? -:- Sun, Mar 13, 2005 at 14:01:23 (EST)
__ Paul G. Brown -:- Re: Why do the Republicans punish the rich? -:- Mon, Mar 14, 2005 at 02:45:50 (EST)
___ David E... -:- Re: Why do the Republicans punish the rich? -:- Mon, Mar 14, 2005 at 13:03:10 (EST)

Emma -:- China to Cut School Fees For Poorest -:- Sun, Mar 13, 2005 at 09:39:53 (EST)
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johnny5 -:- Tianemen redux -:- Sun, Mar 13, 2005 at 16:01:20 (EST)

Emma -:- 'Every Man a Speculator' -:- Sun, Mar 13, 2005 at 09:36:22 (EST)

Emma -:- Beyond Our Interests -:- Sun, Mar 13, 2005 at 06:54:39 (EST)
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Terri -:- Re: Beyond Our Interests -:- Sun, Mar 13, 2005 at 18:14:26 (EST)

Emma -:- Risk and Time -:- Sun, Mar 13, 2005 at 06:43:56 (EST)
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johnny5 -:- Short term puts and calls -:- Sun, Mar 13, 2005 at 23:29:54 (EST)

johnny5 -:- Running on Empty afterthoughts -:- Sat, Mar 12, 2005 at 22:52:22 (EST)
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johnny5 -:- Re: Running on Empty afterthoughts -:- Sat, Mar 12, 2005 at 22:58:28 (EST)

Terri -:- National Index Returns -:- Sat, Mar 12, 2005 at 17:46:40 (EST)
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johnny5 -:- Re: National Index Returns -:- Sat, Mar 12, 2005 at 18:03:47 (EST)
__ Terri -:- Allocation -:- Sat, Mar 12, 2005 at 18:36:24 (EST)
___ johnny5 -:- Sounds great -:- Sat, Mar 12, 2005 at 21:20:31 (EST)
____ Terri -:- Re: Sounds great -:- Sat, Mar 12, 2005 at 21:34:40 (EST)
_____ johnny5 -:- Re: Sounds great -:- Sat, Mar 12, 2005 at 23:03:45 (EST)
______ Jennifer -:- Re: Sounds great -:- Sun, Mar 13, 2005 at 08:45:34 (EST)
_______ Jennifer -:- Re: Sounds great -:- Sun, Mar 13, 2005 at 14:02:12 (EST)
________ johnny5 -:- Slashdot.org -:- Sun, Mar 13, 2005 at 15:43:27 (EST)
_________ David E.. -:- Fidelity Competence -:- Sun, Mar 13, 2005 at 18:52:32 (EST)
__________ johnny5 -:- Human Capital -:- Sun, Mar 13, 2005 at 23:45:09 (EST)
_________ Jennifer -:- There is no Worry -:- Sun, Mar 13, 2005 at 18:34:55 (EST)
__________ Jennifer -:- Re: There is no Worry -:- Sun, Mar 13, 2005 at 18:46:05 (EST)
___________ johnny5 -:- Re: There is no Worry -:- Mon, Mar 14, 2005 at 00:10:23 (EST)

Terri -:- Gauging the Economy by Interest Rates -:- Sat, Mar 12, 2005 at 17:41:22 (EST)

johnny5 -:- Running on Empty watch on web tonight -:- Sat, Mar 12, 2005 at 16:29:03 (EST)

Emma -:- Possessions and Status -:- Sat, Mar 12, 2005 at 14:12:51 (EST)
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Emma -:- Possessions and Status - 1 -:- Sat, Mar 12, 2005 at 14:13:14 (EST)
__ johnny5 -:- The solution of the past -:- Sat, Mar 12, 2005 at 15:56:27 (EST)

Emma -:- Monetary Policy -:- Sat, Mar 12, 2005 at 13:49:27 (EST)

Terri -:- BABY-SITTING THE ECONOMY -:- Sat, Mar 12, 2005 at 11:42:47 (EST)
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johnny5 -:- Who will watch warrens Baby? -:- Sat, Mar 12, 2005 at 15:24:20 (EST)

Emma -:- Africa's Garment Factories -:- Sat, Mar 12, 2005 at 09:53:54 (EST)
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Emma -:- Africa's Garment Factories - 1 -:- Sat, Mar 12, 2005 at 09:55:40 (EST)

Terri -:- Sector Stock Indexes -:- Sat, Mar 12, 2005 at 09:31:24 (EST)

Terri -:- Vanguard Returns -:- Sat, Mar 12, 2005 at 09:25:36 (EST)
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johnny5 -:- Re: Vanguard Returns -:- Sat, Mar 12, 2005 at 15:10:10 (EST)

Emma -:- Monetary Policy -:- Sat, Mar 12, 2005 at 08:29:14 (EST)
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Pete Weis -:- Re: Monetary Policy -:- Sat, Mar 12, 2005 at 11:23:08 (EST)

joseph hill -:- competition -:- Sat, Mar 12, 2005 at 08:22:55 (EST)

Emma -:- Ben Bernanke on the Trade Deficit -:- Sat, Mar 12, 2005 at 07:24:30 (EST)
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Pete Weis -:- Re: Ben Bernanke on the Trade Deficit -:- Sat, Mar 12, 2005 at 11:50:38 (EST)
__ johnny5 -:- Re: Ben Bernanke on the Trade Deficit -:- Sat, Mar 12, 2005 at 15:00:40 (EST)
___ Pete Weis -:- Re: Ben Bernanke on the Trade Deficit -:- Sat, Mar 12, 2005 at 23:55:13 (EST)

Terri -:- Household Debt -:- Fri, Mar 11, 2005 at 22:09:11 (EST)
_
johnny5 -:- Re: Household Debt -:- Sat, Mar 12, 2005 at 03:02:03 (EST)
__ Ari -:- Re: Household Debt -:- Sat, Mar 12, 2005 at 09:49:17 (EST)
___ johnny5 -:- Re: Household Debt -:- Sat, Mar 12, 2005 at 14:49:16 (EST)
____ Ari -:- Thanks -:- Sat, Mar 12, 2005 at 18:44:58 (EST)
_____ johnny5 -:- 16 tons and what do you get? -:- Sat, Mar 12, 2005 at 20:59:23 (EST)
______ johnny5 -:- Emma called it -:- Sat, Mar 12, 2005 at 21:09:05 (EST)

Terri -:- Stocks and Bonds -:- Fri, Mar 11, 2005 at 21:59:54 (EST)

Pancho Villa -:- Welcome to SANTA-CLAUS.com? -:- Fri, Mar 11, 2005 at 20:50:36 (EST)

johnny5 -:- But didn't XOM say this was a cycle? -:- Fri, Mar 11, 2005 at 18:16:04 (EST)

Howard -:- Meet the Press -:- Fri, Mar 11, 2005 at 15:17:06 (EST)
_
Paul G. Brown -:- Re: Meet the Press -:- Fri, Mar 11, 2005 at 17:22:08 (EST)
__ Howard -:- Re: Meet the Press -:- Fri, Mar 11, 2005 at 21:12:34 (EST)
___ Paul G. Brown -:- Re: Meet the Press -:- Sat, Mar 12, 2005 at 19:04:17 (EST)
____ Howard -:- Re: Meet the Press -:- Sat, Mar 12, 2005 at 21:06:03 (EST)
_____ Paul G. Brown -:- Re: Meet the Press -:- Sun, Mar 13, 2005 at 12:58:25 (EST)
______ Howard -:- Re: Meet the Press -:- Sun, Mar 13, 2005 at 20:30:14 (EST)

johnny5 -:- new s&p 500 -:- Fri, Mar 11, 2005 at 15:08:16 (EST)

johnny5 -:- Dollar exits? -:- Fri, Mar 11, 2005 at 14:59:05 (EST)

johnny5 -:- Americans funding hezbollah -:- Fri, Mar 11, 2005 at 13:13:25 (EST)

Bobby -:- Pathetic -:- Fri, Mar 11, 2005 at 11:53:40 (EST)
_
johnny5 -:- Adaptability indeed! -:- Fri, Mar 11, 2005 at 12:07:11 (EST)
__ johnny5 -:- Red Snakes eating Blue Newts -:- Fri, Mar 11, 2005 at 12:16:05 (EST)

Emma -:- How Long Can G.M. Tread Water? -:- Fri, Mar 11, 2005 at 11:21:04 (EST)
_
johnny5 -:- Re: How Long Can G.M. Tread Water? -:- Fri, Mar 11, 2005 at 11:55:21 (EST)

Emma -:- Five Years After the Bubble -:- Fri, Mar 11, 2005 at 11:18:31 (EST)
_
william bishop -:- Re: Five Years After the Bubble -:- Fri, Mar 11, 2005 at 12:47:13 (EST)
_ johnny5 -:- Kindleberger -:- Fri, Mar 11, 2005 at 11:44:46 (EST)

Emma -:- Teaching Samba to G.M. Brazil -:- Fri, Mar 11, 2005 at 11:17:09 (EST)

Setanta -:- Allez les verts!!!! -:- Fri, Mar 11, 2005 at 11:05:57 (EST)

Emma -:- The Flow of Credit: Ben Bernanke -:- Fri, Mar 11, 2005 at 06:18:10 (EST)
_
Emma -:- The Flow of Credit -:- Fri, Mar 11, 2005 at 06:25:40 (EST)
__ Pete Weis -:- Re: The Flow of Credit -:- Fri, Mar 11, 2005 at 10:23:33 (EST)
___ Emma -:- Understand and Argue -:- Fri, Mar 11, 2005 at 11:01:07 (EST)
____ Pete Weis -:- Absolutely -:- Fri, Mar 11, 2005 at 15:19:11 (EST)

Emma -:- Globalization: Alan Greenspan -:- Fri, Mar 11, 2005 at 06:03:31 (EST)
_
Emma -:- Footnotes to Speech -:- Fri, Mar 11, 2005 at 06:07:42 (EST)

johnny5 -:- Listen to Pete - he sees it coming. -:- Fri, Mar 11, 2005 at 05:48:57 (EST)

johnny5 -:- The limits of globalism -:- Thurs, Mar 10, 2005 at 23:43:12 (EST)
_
johnny5 -:- One armed economists - BWAHAH! -:- Fri, Mar 11, 2005 at 00:21:39 (EST)

Terri -:- Alan Greenspan -:- Thurs, Mar 10, 2005 at 20:38:48 (EST)
_
Terri -:- Adaptability -:- Thurs, Mar 10, 2005 at 20:56:47 (EST)
__ johnny5 -:- Rain on the parade? -:- Thurs, Mar 10, 2005 at 22:23:35 (EST)
___ johnny5 -:- Re: Rain on the parade? -:- Thurs, Mar 10, 2005 at 22:33:23 (EST)
____ johnny5 -:- You can't eat a house -:- Thurs, Mar 10, 2005 at 23:21:22 (EST)

Emma -:- Africa Makes Fine Films -:- Thurs, Mar 10, 2005 at 18:55:58 (EST)

Pancho Villa -:- The Bush administration goes soft (Huh?) -:- Thurs, Mar 10, 2005 at 18:30:32 (EST)
_
johnny5 -:- Servicing the military killed Rome -:- Thurs, Mar 10, 2005 at 22:11:35 (EST)

johnny5 -:- Political Shell Game -:- Thurs, Mar 10, 2005 at 18:10:51 (EST)

Pete Weis -:- Capsize point -:- Thurs, Mar 10, 2005 at 15:25:40 (EST)
_
johnny5 -:- Like Munger said -:- Thurs, Mar 10, 2005 at 17:31:26 (EST)
__ Pete Weis -:- Hey, I just like sailboats... -:- Thurs, Mar 10, 2005 at 19:13:00 (EST)
___ johnny5 -:- Sailing takes me away to where I want to be -:- Thurs, Mar 10, 2005 at 22:02:50 (EST)

johnny5 -:- Prepay penalty - was that in fine print -:- Thurs, Mar 10, 2005 at 12:50:41 (EST)
_
Setanta -:- Re: Prepay penalty - was that in fine print -:- Fri, Mar 11, 2005 at 04:30:57 (EST)
__ Jennifer -:- Re: Prepay penalty - was that in fine print -:- Fri, Mar 11, 2005 at 10:20:59 (EST)

johnny5 -:- America is number 1 er 2 um 3 no 4 uh 5? -:- Thurs, Mar 10, 2005 at 12:41:13 (EST)

Emma -:- Five Years After Nasdaq Hit Its Peak -:- Thurs, Mar 10, 2005 at 10:37:38 (EST)
_
johnny5 -:- Re: Five Years After Nasdaq Hit Its Peak -:- Thurs, Mar 10, 2005 at 12:27:13 (EST)

johnny5 -:- I did not have sex with that hedge fund -:- Thurs, Mar 10, 2005 at 10:36:20 (EST)
_
johnny5 -:- Re: I did not have sex with that hedge fund -:- Thurs, Mar 10, 2005 at 10:50:40 (EST)
__ Pancho Villa -:- Re: I did not have sex with that hedge fund -:- Thurs, Mar 10, 2005 at 11:00:18 (EST)

Emma -:- China Textiles Flood the U.S. -:- Thurs, Mar 10, 2005 at 10:31:47 (EST)

Pete Weis -:- 5 years later -:- Thurs, Mar 10, 2005 at 10:20:11 (EST)
_
Terri -:- Re: 5 years later -:- Thurs, Mar 10, 2005 at 19:10:09 (EST)
_ Emma -:- Re: 5 years later -:- Thurs, Mar 10, 2005 at 10:36:00 (EST)
__ Pete Weis -:- Re: 5 years later -:- Thurs, Mar 10, 2005 at 20:47:07 (EST)

Terri -:- What is a Hedge Fund? -:- Thurs, Mar 10, 2005 at 05:52:24 (EST)
_
Pancho Villa -:- Re: What is a Hedge Fund? -:- Thurs, Mar 10, 2005 at 11:12:21 (EST)
_ Pete Weis -:- Re: What is a Hedge Fund? -:- Thurs, Mar 10, 2005 at 09:51:11 (EST)
_ Setanta -:- Re: What is a Hedge Fund? -:- Thurs, Mar 10, 2005 at 07:42:23 (EST)
__ Terri -:- Ireland's Saving-Investment Plan -:- Thurs, Mar 10, 2005 at 08:37:58 (EST)
_ Terri -:- European Mutual Funds -:- Thurs, Mar 10, 2005 at 07:19:50 (EST)

johnny5 -:- NEW international vanguard vipers -:- Thurs, Mar 10, 2005 at 04:48:15 (EST)
_
Terri -:- Cost and Service -:- Thurs, Mar 10, 2005 at 05:39:10 (EST)
__ johnny5 -:- Service indeed! -:- Fri, Mar 11, 2005 at 00:41:44 (EST)
___ Terri -:- Simplicity -:- Fri, Mar 11, 2005 at 11:31:25 (EST)
____ Terri -:- Re: Simplicity -:- Fri, Mar 11, 2005 at 12:07:23 (EST)
___ Jennifer -:- Re: Service indeed! -:- Fri, Mar 11, 2005 at 10:18:29 (EST)
____ johnny5 -:- Re: Service indeed! -:- Fri, Mar 11, 2005 at 11:26:46 (EST)
____ Jennifer -:- Re: Service indeed! -:- Fri, Mar 11, 2005 at 10:22:52 (EST)

johnny5 -:- Politics killing America -:- Thurs, Mar 10, 2005 at 04:18:48 (EST)

Terri -:- Rising Long Term Interest Rates -:- Wed, Mar 09, 2005 at 21:51:22 (EST)
_
Pete Weis -:- Good point..... -:- Thurs, Mar 10, 2005 at 10:00:54 (EST)

Pete Weis -:- Going upside down -:- Wed, Mar 09, 2005 at 21:49:06 (EST)
_
Terri -:- Re: Going upside down -:- Wed, Mar 09, 2005 at 21:52:59 (EST)

Pancho Villa -:- Papa Roach's 'Unprepared world' -:- Wed, Mar 09, 2005 at 20:52:13 (EST)
_
Jennifer -:- Re: Papa Roach's 'Unprepared world' -:- Wed, Mar 09, 2005 at 21:09:37 (EST)
__ Pancho Villa -:- Re: Thank u -:- Wed, Mar 09, 2005 at 21:13:06 (EST)

Terri -:- Dreaming of Hedge Funds -:- Wed, Mar 09, 2005 at 20:02:33 (EST)
_
johnny5 -:- Why hedge funds underperform from a hedge manager -:- Thurs, Mar 10, 2005 at 04:12:07 (EST)

johnny5 -:- C-span3 tonight - the Rich cheat taxes -:- Wed, Mar 09, 2005 at 18:20:51 (EST)

johnny5 -:- A book for you Terri -:- Wed, Mar 09, 2005 at 17:36:54 (EST)
_
Terri -:- Charles Kindleberger -:- Wed, Mar 09, 2005 at 17:52:36 (EST)

Terri -:- Hedge Funds -:- Wed, Mar 09, 2005 at 17:20:15 (EST)
_
Terri -:- Hedge Fund Data Management -:- Wed, Mar 09, 2005 at 19:39:08 (EST)
_ johnny5 -:- Vanguard Europe on Bear markets -:- Wed, Mar 09, 2005 at 17:59:52 (EST)
__ Institutional Investor -:- Re: Vanguard Europe on Bear markets -:- Wed, Mar 09, 2005 at 21:59:40 (EST)
___ Setanta -:- Re: Vanguard Europe on Bear markets -:- Thurs, Mar 10, 2005 at 04:31:52 (EST)
____ Institutional Investor -:- Re: Vanguard Europe on Bear markets -:- Thurs, Mar 10, 2005 at 21:09:27 (EST)
___ johnny5 -:- Re: Vanguard Europe on Bear markets -:- Wed, Mar 09, 2005 at 22:59:27 (EST)
____ Institutional Investor -:- Re: Vanguard Europe on Bear markets -:- Thurs, Mar 10, 2005 at 21:06:54 (EST)
_____ johnny5 -:- Re: Vanguard Europe on Bear markets -:- Thurs, Mar 10, 2005 at 21:55:46 (EST)

Terri -:- Bear Funds -:- Wed, Mar 09, 2005 at 17:07:17 (EST)
_
David E.. -:- Bear Funds - my experience -:- Wed, Mar 09, 2005 at 18:52:06 (EST)
__ johnny5 -:- Buffet says put your money on afterburner flight -:- Wed, Mar 09, 2005 at 21:42:09 (EST)
_ johnny5 -:- Re: Bear Funds -:- Wed, Mar 09, 2005 at 17:48:10 (EST)

Pete Weis -:- XOM up - stocks & bonds down -:- Wed, Mar 09, 2005 at 15:08:18 (EST)
_
johnny5 -:- Re: XOM up - stocks & bonds down -:- Wed, Mar 09, 2005 at 16:09:18 (EST)

johnny5 -:- The case for hedge funds? -:- Wed, Mar 09, 2005 at 14:54:04 (EST)

johnny5 -:- Watching the nukular prez -:- Wed, Mar 09, 2005 at 14:43:01 (EST)
_
Setanta -:- Re: Watching the nukular prez -:- Thurs, Mar 10, 2005 at 04:16:42 (EST)
__ johnny5 -:- Re: Watching the nukular prez -:- Thurs, Mar 10, 2005 at 04:28:22 (EST)

Emma -:- Computing and Health Care Costs -:- Wed, Mar 09, 2005 at 12:22:58 (EST)
_
Emma -:- Health Industry Under Pressure to Computerize -:- Wed, Mar 09, 2005 at 12:26:34 (EST)
__ johnny5 -:- Re: Health Industry Under Pressure to Computerize -:- Wed, Mar 09, 2005 at 14:00:34 (EST)

Setanta -:- PK article on the anti-globalisation -:- Wed, Mar 09, 2005 at 12:08:54 (EST)
_
johnny5 -:- Re: PK article on the anti-globalisation -:- Wed, Mar 09, 2005 at 13:53:02 (EST)

Setanta -:- EU scores barmy own goal with Intel -:- Wed, Mar 09, 2005 at 11:27:23 (EST)
_
Emma -:- Intel in Japan -:- Wed, Mar 09, 2005 at 12:13:04 (EST)
__ johnny5 -:- Nuke em again! -:- Wed, Mar 09, 2005 at 13:34:50 (EST)

Emma -:- Transfer of Risk -:- Wed, Mar 09, 2005 at 11:06:39 (EST)
_
johnny5 -:- Re: Transfer of Risk -:- Wed, Mar 09, 2005 at 13:25:04 (EST)

Emma -:- Free Trade Proposal Splits Bolivian City -:- Wed, Mar 09, 2005 at 10:24:20 (EST)
_
johnny5 -:- Re: Free Trade Proposal Splits Bolivian City -:- Wed, Mar 09, 2005 at 13:21:50 (EST)

Pete Weis -:- Just another nail in...... -:- Wed, Mar 09, 2005 at 10:12:00 (EST)
_
Emma -:- Transfer of Risk -:- Wed, Mar 09, 2005 at 10:35:07 (EST)
__ Pete Weis -:- Good observation Emma -:- Wed, Mar 09, 2005 at 15:04:02 (EST)
__ johnny5 -:- Their is hope! -:- Wed, Mar 09, 2005 at 13:14:08 (EST)

Terri -:- Simplicity -:- Wed, Mar 09, 2005 at 07:26:03 (EST)
_
johnny5 -:- Mach 5 -:- Wed, Mar 09, 2005 at 13:02:26 (EST)

Terri -:- Liquidity -:- Wed, Mar 09, 2005 at 06:15:44 (EST)

johnny5 -:- Dollar 'miracles' -:- Wed, Mar 09, 2005 at 03:26:48 (EST)
_
j9 -:- Re: Dollar 'miracles' -:- Wed, Mar 09, 2005 at 08:10:55 (EST)
__ johnny5 -:- Re: Dollar 'miracles' -:- Wed, Mar 09, 2005 at 12:59:04 (EST)
___ jimsum -:- Re: Dollar 'miracles' -:- Wed, Mar 09, 2005 at 21:45:11 (EST)

johnny5 -:- Debt and investing -:- Wed, Mar 09, 2005 at 00:31:28 (EST)
_
Setanta -:- Re: Debt and investing -:- Wed, Mar 09, 2005 at 11:54:33 (EST)
__ johnny5 -:- Re: Debt and investing -:- Wed, Mar 09, 2005 at 12:49:32 (EST)
_ johnny5 -:- Federal Financing Bank? -:- Wed, Mar 09, 2005 at 04:15:29 (EST)
_ johnny5 -:- 100% returns -:- Wed, Mar 09, 2005 at 00:44:10 (EST)

johnny5 -:- Cheer Up Pete! -:- Tues, Mar 08, 2005 at 20:31:06 (EST)
_
Pete Weis -:- I'm cheered Johnny -:- Tues, Mar 08, 2005 at 21:02:32 (EST)
__ Emma -:- Re: I'm cheered Johnny -:- Tues, Mar 08, 2005 at 21:18:47 (EST)
___ Terri -:- Re: I'm cheered Johnny -:- Tues, Mar 08, 2005 at 21:49:44 (EST)
____ johnny5 -:- You guys the best! -:- Tues, Mar 08, 2005 at 23:31:43 (EST)

johnny5 -:- Come to fl, take a shower if you can? -:- Tues, Mar 08, 2005 at 20:18:10 (EST)

Emma -:- A Fighting Strategy for Veterans -:- Tues, Mar 08, 2005 at 19:28:59 (EST)
_
johnny5 -:- Poor veteran or poor welfare mom -:- Tues, Mar 08, 2005 at 20:09:09 (EST)
__ Emma -:- Re: Poor veteran or poor welfare mom -:- Tues, Mar 08, 2005 at 20:58:38 (EST)

Emma -:- A Just-Right Economy -:- Tues, Mar 08, 2005 at 10:00:05 (EST)
_
johnny5 -:- Computer hedonics counted 2 times? -:- Tues, Mar 08, 2005 at 19:48:39 (EST)

Jennifer -:- Annuities? -:- Tues, Mar 08, 2005 at 08:18:38 (EST)
_
johnny5 -:- Re: Annuities? -:- Tues, Mar 08, 2005 at 18:17:05 (EST)
_ Jennifer -:- Adding to: Annuities? -:- Tues, Mar 08, 2005 at 11:16:43 (EST)
_ Pete Weis -:- Re: Annuities? -:- Tues, Mar 08, 2005 at 10:56:00 (EST)
__ Jennifer -:- What do We Need? -:- Tues, Mar 08, 2005 at 11:23:07 (EST)
___ johnny5 -:- Re: What do We Need? -:- Tues, Mar 08, 2005 at 17:58:53 (EST)

johnny5 -:- Munger moans MPT, Diversifiication, Beta -:- Tues, Mar 08, 2005 at 02:38:14 (EST)
_
Terri -:- Excellent Post -:- Tues, Mar 08, 2005 at 16:16:02 (EST)
__ johnny5 -:- Re: Excellent Post -:- Tues, Mar 08, 2005 at 17:41:25 (EST)
_ Jennifer -:- Re: Munger moans MPT, Diversifiication, Beta -:- Tues, Mar 08, 2005 at 06:30:33 (EST)
__ johnny5 -:- Oh brother -:- Tues, Mar 08, 2005 at 10:40:22 (EST)
___ Jennifer -:- You are Right -:- Tues, Mar 08, 2005 at 11:27:03 (EST)
__ Jennifer -:- Re: Munger moans MPT, Diversifiication, Beta -:- Tues, Mar 08, 2005 at 08:31:45 (EST)
___ johnny5 -:- Re: Munger moans MPT, Diversifiication, Beta -:- Tues, Mar 08, 2005 at 10:49:24 (EST)
____ Jennifer -:- I Agree -:- Tues, Mar 08, 2005 at 11:30:54 (EST)
____ Pete Weis -:- Respect -:- Tues, Mar 08, 2005 at 11:29:35 (EST)
_____ johnny5 -:- Preface -:- Tues, Mar 08, 2005 at 17:49:53 (EST)
______ Terri -:- I Disagree -:- Tues, Mar 08, 2005 at 18:21:04 (EST)
_______ Jennifer -:- Re: I Disagree -:- Tues, Mar 08, 2005 at 18:36:43 (EST)
_____ Terri -:- Re: Respect -:- Tues, Mar 08, 2005 at 16:17:06 (EST)
__ Jennifer -:- Warren Buffett and Charles Munger -:- Tues, Mar 08, 2005 at 08:27:34 (EST)

Pete Weis -:- OF lazy Susan-deals & barter revenue -:- Mon, Mar 07, 2005 at 22:11:09 (EST)
_
johnny5 -:- Re: OF lazy Susan-deals & barter revenue -:- Mon, Mar 07, 2005 at 22:45:52 (EST)

johnny5 -:- Are bear funds wise Pete? -:- Mon, Mar 07, 2005 at 12:00:35 (EST)
_
Pete Weis -:- Re: Are bear funds wise Pete? -:- Mon, Mar 07, 2005 at 15:07:22 (EST)
__ johnny5 -:- The Great Inflation -:- Mon, Mar 07, 2005 at 17:38:56 (EST)
___ Pete Weis -:- Certain types of annuities.. -:- Mon, Mar 07, 2005 at 21:28:10 (EST)
____ johnny5 -:- Re: Certain types of annuities.. -:- Mon, Mar 07, 2005 at 22:28:47 (EST)
___ Jennifer -:- Be Conservative -:- Mon, Mar 07, 2005 at 21:21:15 (EST)

johnny5 -:- Canadian I-shares bad buy? -:- Mon, Mar 07, 2005 at 11:39:17 (EST)
_
jimsum -:- Re: Canadian I-shares bad buy? -:- Mon, Mar 07, 2005 at 23:43:50 (EST)

Emma -:- China's Economic Policy -:- Mon, Mar 07, 2005 at 11:08:32 (EST)

Emma -:- China Says It Won't Sell Dollars -:- Mon, Mar 07, 2005 at 10:34:59 (EST)

Emma -:- What Makes a Team a Success? -:- Mon, Mar 07, 2005 at 10:23:11 (EST)

Terri -:- Timing and Housing -:- Mon, Mar 07, 2005 at 07:26:11 (EST)
_
Pete Weis -:- Agree -:- Mon, Mar 07, 2005 at 09:55:28 (EST)
__ Emma -:- Mortgages in Europe -:- Mon, Mar 07, 2005 at 10:30:23 (EST)
___ Setanta -:- Re: Mortgages in Europe -:- Tues, Mar 08, 2005 at 12:31:45 (EST)
____ Terri -:- Adjustable or Fixed Rate Mortgages? -:- Tues, Mar 08, 2005 at 15:07:50 (EST)
_____ johnny5 -:- Re: Adjustable or Fixed Rate Mortgages? -:- Tues, Mar 08, 2005 at 17:36:55 (EST)

Terri -:- Minimal Market Timing -:- Mon, Mar 07, 2005 at 06:27:29 (EST)

Terri -:- Cautious Simple Investing -:- Mon, Mar 07, 2005 at 06:10:36 (EST)

johnny5 -:- Rust not Bust in Tampa, West Palm -:- Mon, Mar 07, 2005 at 05:47:33 (EST)

johnny5 -:- Don't Worry, Be Happy -:- Mon, Mar 07, 2005 at 04:20:46 (EST)
_
johnny5 -:- Like Terri's sunshine state - Negro Removal -:- Mon, Mar 07, 2005 at 04:26:40 (EST)

Terri -:- Listing iShares -:- Sun, Mar 06, 2005 at 19:29:18 (EST)
_
johnny5 -:- Re: Listing iShares -:- Sun, Mar 06, 2005 at 21:15:48 (EST)
__ DJ -:- Re: Listing iShares -:- Sun, Mar 06, 2005 at 22:53:07 (EST)
___ johnny5 -:- Transaction costs -:- Sun, Mar 06, 2005 at 23:46:48 (EST)
____ David E.. -:- Re: Transaction costs -:- Mon, Mar 07, 2005 at 21:45:27 (EST)

Terri -:- Warren Buffett on the Dollar -:- Sun, Mar 06, 2005 at 15:52:10 (EST)
_
johnny5 -:- Thomas Jefferson -:- Sun, Mar 06, 2005 at 18:31:50 (EST)
__ johnny5 -:- Re: Thomas Jefferson -:- Sun, Mar 06, 2005 at 19:00:58 (EST)

Terri -:- On Commodities -:- Sun, Mar 06, 2005 at 15:35:20 (EST)

johnny5 -:- Keep them laughing... -:- Sun, Mar 06, 2005 at 13:19:18 (EST)
_
johnny5 -:- Re: Keep them laughing... -:- Sun, Mar 06, 2005 at 13:57:26 (EST)

Emma -:- Who Wins in a New Social Security? -:- Sun, Mar 06, 2005 at 10:25:23 (EST)
_
johnny5 -:- Re: Who Wins in a New Social Security? -:- Sun, Mar 06, 2005 at 14:00:13 (EST)
__ jimsum -:- Re: Who Wins in a New Social Security? -:- Mon, Mar 07, 2005 at 19:00:49 (EST)
___ johnny5 -:- Re: Who Wins in a New Social Security? -:- Tues, Mar 08, 2005 at 02:30:46 (EST)

Emma -:- Companies Behaving Badly -:- Sun, Mar 06, 2005 at 10:17:29 (EST)
_
Emma -:- Note to Myself: 'Duh' -:- Sun, Mar 06, 2005 at 15:05:48 (EST)

Emma -:- Meeting Middle Class Needs -:- Sun, Mar 06, 2005 at 07:38:41 (EST)
_
Emma -:- Thank You -:- Sun, Mar 06, 2005 at 08:36:56 (EST)

Terri -:- Commodities: Speculation and Investment -:- Sun, Mar 06, 2005 at 07:19:37 (EST)
_
j9 -:- Re: Commodities: Speculation and Investment -:- Sun, Mar 06, 2005 at 07:51:12 (EST)

Terri -:- A Risky Risky Long Term Bond Market -:- Sun, Mar 06, 2005 at 07:00:27 (EST)
_
jimsum -:- Re: A Risky Risky Long Term Bond Market -:- Sun, Mar 06, 2005 at 22:51:05 (EST)
__ johnny5 -:- Re: A Risky Risky Long Term Bond Market -:- Sun, Mar 06, 2005 at 23:00:37 (EST)
___ jimsum -:- Re: A Risky Risky Long Term Bond Market -:- Mon, Mar 07, 2005 at 18:55:13 (EST)

Terri -:- A Complex Bond Market -:- Sun, Mar 06, 2005 at 06:50:10 (EST)

johnny5 -:- Krugman takes a dump on American Growth -:- Sat, Mar 05, 2005 at 23:15:00 (EST)
_
johnny5 -:- Re: Krugman takes a dump on American Growth -:- Sat, Mar 05, 2005 at 23:17:36 (EST)
__ David E... -:- Tone -:- Sun, Mar 06, 2005 at 11:37:50 (EST)
___ johnny5 -:- Where is my soap mouthwash? -:- Sun, Mar 06, 2005 at 13:14:36 (EST)
____ David E.. -:- Johnny5, Johnny5 -:- Sun, Mar 06, 2005 at 14:49:40 (EST)
_____ johnny5 -:- I-shares -:- Sun, Mar 06, 2005 at 18:55:19 (EST)
______ David E.. -:- Links -:- Sun, Mar 06, 2005 at 22:02:40 (EST)
_______ johnny5 -:- worldwide dividend etf's -:- Sun, Mar 06, 2005 at 22:45:58 (EST)
_____ Ari -:- Having Fun -:- Sun, Mar 06, 2005 at 15:12:18 (EST)

johnny5 -:- Problem with asset v. risk allocation -:- Sat, Mar 05, 2005 at 22:43:38 (EST)

Terri -:- Investing in Commodities -:- Sat, Mar 05, 2005 at 21:13:04 (EST)
_
j9 -:- Re: Investing in Commodities -:- Sat, Mar 05, 2005 at 22:40:42 (EST)
__ Terri -:- Re: Investing in Commodities -:- Sat, Mar 05, 2005 at 23:54:33 (EST)

Terri -:- National Index Returns -:- Sat, Mar 05, 2005 at 19:13:16 (EST)

johnny5 -:- futures less volatile than s&p index -:- Sat, Mar 05, 2005 at 14:12:27 (EST)
_
Terri -:- The Case for Commodities -:- Sat, Mar 05, 2005 at 15:33:05 (EST)
__ johnny5 -:- Re: The Case for Commodities -:- Sun, Mar 06, 2005 at 00:16:40 (EST)
___ Terri -:- Re: The Case for Commodities -:- Sun, Mar 06, 2005 at 10:54:40 (EST)

johnny5 -:- Decoy of the falling dollar -:- Sat, Mar 05, 2005 at 14:04:21 (EST)
_
johnny5 -:- More on bonds and inflation -:- Sat, Mar 05, 2005 at 21:53:34 (EST)

johnny5 -:- Phillipines gonna default -:- Sat, Mar 05, 2005 at 13:43:50 (EST)

Pancho Villa -:- Henri 'Papillon/Ponzi' Charriere... -:- Sat, Mar 05, 2005 at 12:59:58 (EST)
_
Jennifer -:- Central banks Face Dilemma -:- Sat, Mar 05, 2005 at 14:21:37 (EST)
__ johnny5 -:- Re: Central banks Face Dilemma -:- Sat, Mar 05, 2005 at 14:43:03 (EST)
___ Terri -:- Central banks and Private ownership -:- Sat, Mar 05, 2005 at 15:43:45 (EST)
____ johnny5 -:- Some consensus -:- Sat, Mar 05, 2005 at 17:23:19 (EST)
_____ Terri -:- Commodity Stocks or Commodities -:- Sat, Mar 05, 2005 at 18:22:53 (EST)

Terri -:- Hedge Funds -:- Sat, Mar 05, 2005 at 10:58:31 (EST)
_
Terri -:- European Investing -:- Sat, Mar 05, 2005 at 11:04:29 (EST)

Emma -:- Citgo and Houston and Venezuela -:- Sat, Mar 05, 2005 at 09:42:08 (EST)

Emma -:- Whose Patent Is It, Anyway? -:- Sat, Mar 05, 2005 at 09:40:05 (EST)

Terri -:- Investing and Quality Changes -:- Sat, Mar 05, 2005 at 07:34:28 (EST)
_
johnny5 -:- Brookings on Data Quality -:- Sat, Mar 05, 2005 at 14:24:17 (EST)
_ Terri -:- Adapting to Change -:- Sat, Mar 05, 2005 at 09:31:33 (EST)

Terri -:- Vanguard Fund Returns -:- Sat, Mar 05, 2005 at 07:12:17 (EST)
_
Terri -:- Sector Indexes -:- Sat, Mar 05, 2005 at 07:13:28 (EST)

Emma -:- Social Benefit Programs -:- Sat, Mar 05, 2005 at 07:06:38 (EST)

Terri -:- Stocks and Bonds -:- Sat, Mar 05, 2005 at 06:37:09 (EST)

Terri -:- Sunshine State -:- Fri, Mar 04, 2005 at 18:41:45 (EST)

Terri -:- Adjusting for Quality -:- Fri, Mar 04, 2005 at 15:06:15 (EST)
_
johnny5 -:- Re: Adjusting for Quality -:- Fri, Mar 04, 2005 at 21:26:29 (EST)

Terri -:- International Stock Indexes -:- Fri, Mar 04, 2005 at 15:03:38 (EST)

Terri -:- European Investing Puzzle -:- Fri, Mar 04, 2005 at 12:19:53 (EST)
_
Terri -:- Investing in Europe? -:- Fri, Mar 04, 2005 at 12:24:49 (EST)
__ johnny5 -:- Re: Investing in Europe? -:- Fri, Mar 04, 2005 at 14:32:17 (EST)
___ David E.. -:- Re: Investing in Europe? -:- Fri, Mar 04, 2005 at 22:30:15 (EST)
____ Terri -:- Investing in Asia? -:- Sat, Mar 05, 2005 at 10:46:55 (EST)

Emma -:- Trading for a Venture in China -:- Fri, Mar 04, 2005 at 10:58:21 (EST)

Emma -:- China Worries About Missing the Poor -:- Fri, Mar 04, 2005 at 10:55:21 (EST)

Pete Weis -:- When depreciation runs out -:- Fri, Mar 04, 2005 at 10:13:09 (EST)
_
Terri -:- What of International Real Estate? -:- Fri, Mar 04, 2005 at 10:52:47 (EST)

Terri -:- Hopeful Numbers -:- Fri, Mar 04, 2005 at 09:33:29 (EST)

johnny5 -:- Hedge Fund assets Frozen -:- Fri, Mar 04, 2005 at 09:08:57 (EST)

johnny5 -:- America by the numbers? why invest here? -:- Fri, Mar 04, 2005 at 07:47:49 (EST)

Terri -:- European and American Productivity Gains -:- Fri, Mar 04, 2005 at 07:26:51 (EST)
_
johnny5 -:- Good for europe - but not America -:- Fri, Mar 04, 2005 at 07:40:46 (EST)
__ Pancho Villa -:- Re: Good for europe - but not America -:- Fri, Mar 04, 2005 at 07:54:23 (EST)
___ johnny5 -:- Re: Good for europe - but not America -:- Fri, Mar 04, 2005 at 08:12:49 (EST)
____ Pancho Villa -:- Re: That's what IBM stands for... -:- Fri, Mar 04, 2005 at 08:37:56 (EST)
_____ Pancho Villa -:- I-B-M? -:- Fri, Mar 04, 2005 at 09:25:01 (EST)

Emma -:- Productivity Benefits -:- Fri, Mar 04, 2005 at 06:09:41 (EST)
_
Emma -:- Productivity Benefits - 1 -:- Fri, Mar 04, 2005 at 06:18:45 (EST)
__ Emma -:- Productivity Benefits - 2 -:- Fri, Mar 04, 2005 at 06:23:12 (EST)
___ johnny5 -:- Re: Productivity Benefits - 2 -:- Fri, Mar 04, 2005 at 08:39:09 (EST)

Emma -:- Measuring Productivity -:- Fri, Mar 04, 2005 at 05:34:27 (EST)

johnny5 -:- Johnny's Tour of Palm Beach County -:- Fri, Mar 04, 2005 at 00:45:55 (EST)
_
Pete Weis -:- Palm Beach has a special... -:- Fri, Mar 04, 2005 at 15:17:46 (EST)
__ Terri -:- Re: Palm Beach has a special... -:- Fri, Mar 04, 2005 at 18:35:34 (EST)
___ johnny5 -:- Lincoln Beach -:- Fri, Mar 04, 2005 at 19:50:53 (EST)

Terri -:- Productivity Growth -:- Thurs, Mar 03, 2005 at 19:54:55 (EST)
_
johnny5 -:- Hedonics Terri? -:- Fri, Mar 04, 2005 at 00:30:45 (EST)

Terri -:- Projected Bond Returns -:- Thurs, Mar 03, 2005 at 19:30:15 (EST)
_
Terri -:- Subdued Bond Returns -:- Thurs, Mar 03, 2005 at 20:29:13 (EST)

Pancho Villa -:- 1,3 > -:- Thurs, Mar 03, 2005 at 18:45:03 (EST)

Pancho Villa -:- Greenspan urges to 'save' the 'CA' -:- Thurs, Mar 03, 2005 at 18:28:15 (EST)
_
Pancho Villa -:- Re: Greenspan urges to 'save' the 'CA' -:- Thurs, Mar 03, 2005 at 18:29:56 (EST)

Pancho Villa -:- Greenspan urges to 'save' the 'CA' -:- Thurs, Mar 03, 2005 at 18:26:20 (EST)
_
Pete Weis -:- Re: Greenspan urges to 'save' the 'CA' -:- Thurs, Mar 03, 2005 at 21:51:05 (EST)
_ Pancho Villa -:- Re: Greenspan urges to ...(part II) -:- Thurs, Mar 03, 2005 at 18:34:47 (EST)

Pancho Villa alias Joey -:- Go, go Carly go! -:- Thurs, Mar 03, 2005 at 17:12:51 (EST)
_
johnny5 -:- Re: Go, go Carly go! -:- Thurs, Mar 03, 2005 at 17:35:37 (EST)
__ Pancho Villa -:- Re: Go, go Carly go! -:- Thurs, Mar 03, 2005 at 18:18:48 (EST)
___ Pete Weis -:- Wolfowitz -:- Thurs, Mar 03, 2005 at 21:40:16 (EST)

Emma -:- Mexican Oil Seeks Expansion -:- Thurs, Mar 03, 2005 at 10:11:04 (EST)

Emma -:- Drilling for Oil by the Yard -:- Thurs, Mar 03, 2005 at 10:09:55 (EST)
_
jimsum -:- in Springfield? -:- Thurs, Mar 03, 2005 at 21:41:45 (EST)
__ Emma -:- Re: in Springfield? -:- Thurs, Mar 03, 2005 at 22:09:25 (EST)

Emma -:- Disability Insurance -:- Thurs, Mar 03, 2005 at 10:07:53 (EST)
_
johnny5 -:- Re: Disability Insurance -:- Thurs, Mar 03, 2005 at 17:30:00 (EST)
__ johnny5 -:- Re: Disability Insurance -:- Thurs, Mar 03, 2005 at 23:42:54 (EST)
__ Emma -:- Medicaid? -:- Thurs, Mar 03, 2005 at 20:08:36 (EST)

Terri -:- Productivity Growth -:- Thurs, Mar 03, 2005 at 09:56:59 (EST)

Terri -:- Why Bonds Funds -:- Thurs, Mar 03, 2005 at 07:19:56 (EST)
_
Pete Weis -:- Does past performance... -:- Thurs, Mar 03, 2005 at 15:08:30 (EST)
__ johnny5 -:- why not bonds? -:- Thurs, Mar 03, 2005 at 17:19:29 (EST)

Jennifer -:- Housing Market Stability -:- Thurs, Mar 03, 2005 at 06:15:51 (EST)
_
Pete Weis -:- Housing turnover -:- Thurs, Mar 03, 2005 at 10:21:57 (EST)
__ Jennifer -:- Re: Housing turnover -:- Thurs, Mar 03, 2005 at 10:49:30 (EST)

Setanta -:- Sinn Fein economics for the provo riche -:- Thurs, Mar 03, 2005 at 05:48:34 (EST)
_
Jennifer -:- Re: Sinn Fein economics for the provo riche -:- Thurs, Mar 03, 2005 at 08:55:06 (EST)
__ Terri -:- Re: Sinn Fein economics for the provo riche -:- Thurs, Mar 03, 2005 at 09:42:07 (EST)

Terri -:- Vanguard Returns -:- Wed, Mar 02, 2005 at 19:20:09 (EST)
_
Terri -:- Sector Indexes -:- Wed, Mar 02, 2005 at 20:02:51 (EST)

Terri -:- Bond Fundss and Safety -:- Wed, Mar 02, 2005 at 19:10:48 (EST)
_
johnny5 -:- countrywide cd's beating bonds -:- Thurs, Mar 03, 2005 at 05:30:54 (EST)

johnny5 -:- From west palm beach -:- Wed, Mar 02, 2005 at 17:28:20 (EST)
_
johnny5 -:- Re: From west palm beach -:- Wed, Mar 02, 2005 at 17:34:59 (EST)
__ johnny5 -:- Re: From west palm beach -:- Wed, Mar 02, 2005 at 17:44:59 (EST)

johnny5 -:- More Wmd's? -:- Wed, Mar 02, 2005 at 12:41:54 (EST)

Emma -:- African Solutions to African Problems -:- Wed, Mar 02, 2005 at 12:01:53 (EST)

Emma -:- Where Has All the Prilosec Gone? -:- Wed, Mar 02, 2005 at 11:59:42 (EST)

Terri -:- Why We Must Save and Invest -:- Wed, Mar 02, 2005 at 11:08:03 (EST)
_
Terri -:- We Must Save and Invest -:- Wed, Mar 02, 2005 at 11:58:10 (EST)
__ johnny5 -:- Re: We Must Save and Invest -:- Wed, Mar 02, 2005 at 12:19:54 (EST)
___ johnny5 -:- Et Tu Warren? -:- Wed, Mar 02, 2005 at 12:33:18 (EST)

Pete Weis -:- Brother, do you have a dime? -:- Wed, Mar 02, 2005 at 10:19:54 (EST)
_
Emma -:- A Bad Bill Made Worse -:- Wed, Mar 02, 2005 at 10:42:36 (EST)

Terri -:- Saving and Investing -:- Wed, Mar 02, 2005 at 08:58:06 (EST)

Terri -:- U.S.: Housing -- Bubbly? -:- Tues, Mar 01, 2005 at 20:53:14 (EST)
_
Pete Weis -:- Re: U.S.: Housing -- Bubbly? -:- Tues, Mar 01, 2005 at 22:21:04 (EST)
__ johnny5 -:- What would scare Terri? -:- Wed, Mar 02, 2005 at 01:06:01 (EST)

Pancho Villa -:- Military or Story? -:- Tues, Mar 01, 2005 at 17:53:50 (EST)

Emma -:- Uruguay Veers Left, in a Latin Pattern -:- Tues, Mar 01, 2005 at 16:41:47 (EST)

Emma -:- China : Was the War Pointless? -:- Tues, Mar 01, 2005 at 15:52:28 (EST)

johnny5 -:- Private investors > -:- Tues, Mar 01, 2005 at 14:25:07 (EST)

Emma -:- Gold in the Boom in Home Prices -:- Tues, Mar 01, 2005 at 11:03:45 (EST)
_
johnny5 -:- Fat Fanny falls out of bed -:- Tues, Mar 01, 2005 at 11:13:44 (EST)

Emma -:- China's Oil Diplomacy in Latin America -:- Tues, Mar 01, 2005 at 10:45:26 (EST)

Emma -:- Mr. Gates Goes to Washington -:- Tues, Mar 01, 2005 at 10:38:53 (EST)

johnny5 -:- Ineffecient Market Hypothesis -:- Tues, Mar 01, 2005 at 03:05:12 (EST)
_
johnny5 -:- Saloman brothers bear quits! -:- Tues, Mar 01, 2005 at 03:07:47 (EST)

johnny5 -:- Exxon Changes thier Tune! -:- Tues, Mar 01, 2005 at 02:06:38 (EST)
_
johnny5 -:- International Diversification -:- Tues, Mar 01, 2005 at 10:27:36 (EST)

johnny5 -:- How many economic teams... -:- Mon, Feb 28, 2005 at 16:00:21 (EST)
_
johnny5 -:- Bush sub-cabinet vacancies? -:- Mon, Feb 28, 2005 at 16:03:14 (EST)
__ Pancho Villa -:- Re: Bush sub-cabinet vacancies? -:- Mon, Feb 28, 2005 at 18:28:28 (EST)
___ johnny5 -:- R. Glenn Hubbard -:- Mon, Feb 28, 2005 at 19:02:22 (EST)

Emma -:- Don't Blame Wal-Mart -:- Mon, Feb 28, 2005 at 15:52:54 (EST)
_
johnny5 -:- The man in the mirror -:- Mon, Feb 28, 2005 at 16:12:18 (EST)

johnny5 -:- Bye-Bye Housing Boom -:- Mon, Feb 28, 2005 at 15:41:15 (EST)

Emma -:- Political Driection in Brazil -:- Mon, Feb 28, 2005 at 12:47:22 (EST)

Pancho Villa -:- What would Blondie and Santana cut ? -:- Mon, Feb 28, 2005 at 09:56:09 (EST)
_
johnny5 -:- Hotel (debt) california -:- Mon, Feb 28, 2005 at 11:22:17 (EST)
__ Pete Weis -:- Excellent post -:- Mon, Feb 28, 2005 at 15:07:51 (EST)
___ johnny5 -:- Embrace the debt -:- Mon, Feb 28, 2005 at 16:18:02 (EST)
____ RL -:- slaves of debt? -:- Tues, Mar 01, 2005 at 03:52:50 (EST)
_____ johnny5 -:- Re: slaves of debt? -:- Tues, Mar 01, 2005 at 04:14:17 (EST)

Pete Weis -:- More dust -:- Mon, Feb 28, 2005 at 09:42:26 (EST)
_
johnny5 -:- A case for the secular bear -:- Mon, Feb 28, 2005 at 15:16:08 (EST)

johnny5 -:- Growth in Wal-mart - playing now on CNBC -:- Sun, Feb 27, 2005 at 19:50:42 (EST)
_
Pancho Villa -:- Re: Growth in Wal-mart - playing now on CNBC -:- Sun, Feb 27, 2005 at 20:39:30 (EST)
__ johnny5 -:- Re: Growth in Wal-mart - playing now on CNBC -:- Sun, Feb 27, 2005 at 23:38:57 (EST)
___ Mik -:- Re: Growth in Wal-mart - playing now on CNBC -:- Tues, Mar 01, 2005 at 16:42:00 (EST)
___ Pancho Villa -:- Re: 1.35bn - 0.45bn = ? -:- Mon, Feb 28, 2005 at 06:09:38 (EST)
____ johnny5 -:- Re: 1.35bn - 0.45bn = ? -:- Mon, Feb 28, 2005 at 11:35:33 (EST)

Emma -:- Thousands Died in Africa Yesterday -:- Sun, Feb 27, 2005 at 19:39:45 (EST)
_
Pancho Villa -:- Re: Thousands Died in Africa Yesterday -:- Sun, Feb 27, 2005 at 20:37:19 (EST)
__ johnny5 -:- Re: Thousands Died in Africa Yesterday -:- Sun, Feb 27, 2005 at 23:41:15 (EST)

Emma -:- Foreign Stocks and Portfolio Risk -:- Sun, Feb 27, 2005 at 19:18:42 (EST)

Emma -:- John Kenneth Galbraith -:- Sun, Feb 27, 2005 at 19:04:39 (EST)

Pancho Villa alias StùCazz -:- The 'Greenspan - Steve Miller Band: Abracadabra -:- Sun, Feb 27, 2005 at 18:50:16 (EST)
_
Pete Weis -:- Bernanke practices his Greenspeak -:- Sun, Feb 27, 2005 at 20:52:01 (EST)
_ johnny5 -:- Playing now on C-Span -:- Sun, Feb 27, 2005 at 19:06:51 (EST)
__ Pancho Villa -:- Re: Playing now on C-Span -:- Sun, Feb 27, 2005 at 19:22:38 (EST)
___ johnny5 -:- Re: Playing now on C-Span -:- Sun, Feb 27, 2005 at 19:24:48 (EST)

Emma -:- The Way We Eat: Tex Macs -:- Sun, Feb 27, 2005 at 18:21:20 (EST)

Pete Weis -:- Some Real Estate Thoughts -:- Sun, Feb 27, 2005 at 17:05:15 (EST)
_
johnny5 -:- Capital flows misprice assets -:- Sun, Feb 27, 2005 at 18:28:13 (EST)
__ Pete Weis -:- Re: Capital flows misprice assets -:- Sun, Feb 27, 2005 at 20:38:27 (EST)
_ Pete Weis -:- Some Real Estate Thoughts [cont.] -:- Sun, Feb 27, 2005 at 17:36:38 (EST)
_ Terri -:- Exceptional Real Estate Thoughts -:- Sun, Feb 27, 2005 at 17:32:09 (EST)

johnny5 -:- NPR with ben stein - REIT's are it! -:- Sun, Feb 27, 2005 at 16:41:38 (EST)

Bobby -:- Message Board Cleaning -:- Sun, Feb 27, 2005 at 16:39:49 (EST)


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Subject: An Immigration Experiment
From: Emma
To: All
Date Posted: Sun, Mar 20, 2005 at 10:42:46 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/20/opinion/20sun3.html An Immigration Experiment Worth Watching in Spain By DAVID C. UNGER Madrid — As so much of the Western world debates imposing tighter restrictions on immigration, it's a good time to take a look at Spain. The year-old Socialist government of José Luis Rodríguez Zapatero is moving in the opposite direction, toward a more enlightened system that aims to reduce the number of illegal foreigners by simplifying the path to legal recognition. It is too soon to know how well Spain's new approach will work or if it is even possible for one country in an increasingly borderless Europe to chart a distinctive course. But if Madrid's experiment is a success, it could become a model for other countries struggling to balance the need for additional labor with fears that terrorists could hide their tracks among large communities of foreign workers forced to live outside the legal system. The new Spanish policies largely reflect the thinking of Consuelo Rumi, the government's state secretary for immigration. As a symbol of the new approach, Ms. Rumi's offices have been moved out of the Interior Ministry, whose main business is policing, and are now housed in the Ministry of Labor and Social Affairs. Enforcement is still a priority: electronic barriers are being built along Spanish coastlines and new bilateral agreements have been reached so that foreigners who do not qualify for legal residence are swiftly returned to their home countries. What is different is that the large and rapidly expanding flow of foreigners into Spain is now frankly recognized as an economic phenomenon which can and should be coordinated with the labor needs of Spanish employers. Although Spain's overall unemployment rate hovers above 10 percent, the economy is desperately short of people willing to do some of the manual jobs Spaniards shun, for example in construction and agriculture. There are plenty of willing workers available to fill these jobs from North and Central Africa, Eastern Europe and Latin America. Its open borders with France and Portugal and the proximity of impoverished nations in North Africa - Morocco is only nine miles away at the closest point - make Spain an attractive destination for foreign workers, legal and illegal. Of the estimated 2.7 million foreigners now in Spain, 1 million are believed to be there illegally, more than three times as many as in 2001. That increase testifies to the failure of the previous government's policies, which were characterized by an overreliance on police sweeps and deportations. The more sophisticated approach now being tested rests on the sound premise that by regulating and smoothing the process of legal labor migration, illegal migration can be more effectively monitored and controlled. As a first step toward drawing foreigners out of the underground economy, the government is currently offering legal residency papers to people with no criminal record and a six-month labor contract in hand from an employer. After this amnesty expires in May, workers who fail to qualify will be deported, while those who employ them will face fines of more than $80,000 per illegal employee. Bringing eligible foreign workers into legal daylight makes it easier for the authorities to keep track of their employment status and their whereabouts. Making sure they are paid on the books and with appropriate social insurance contributions deducted should make their presence more acceptable to Spanish public opinion. Spain, like the United States and most Western countries, recognizes that people facing ethnic or political persecution in their home countries have a right to apply for refugee status. More unusually for Europe, Madrid is also opening a small door toward the kind of skills-based immigration offered by countries like Canada. Under an experimental system, highly qualified immigrants without labor contracts will be permitted to live legally in Spain for a limited period while they seek work. And recognizing that the trade, foreign and development policies of wealthier countries sometimes inadvertently contribute to the tide of desperate economic migrants by destroying third world agriculture and jobs, Ms. Rumi meets regularly with Spanish officials working in other ministries to try to achieve better policy coordination. In immigration, as in other areas of government, grand strategies often have unintended and unwanted consequences. But if the new Spanish policies do manage to achieve their ambitious aims, they could help set a positive precedent on a continent that has always been uneasy about welcoming foreigners and where xenophobic populism is a mounting political danger.

Subject: What? They Never Heard of WorldCom?
From: Emma
To: All
Date Posted: Sun, Mar 20, 2005 at 10:38:19 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/20/business/yourmoney/20gret.html What? They Never Heard of WorldCom? WHAT a week. Bernard J. Ebbers, founder of WorldCom, got to add felon to his already colorful curriculum vitae. Maurice R. Greenberg, dictator in chief at American International Group, the global insurance giant, was toppled after almost 40 years at his post. The Federal Reserve told Citigroup it could not make any major acquisitions until it cleaned up its compliance act. And General Motors laid a big, scary earnings egg. Isn't it nice to know these incidents are anomalies and that most American companies are chugging along, reporting good solid earnings? Sure would be. But contrary to popular belief, the quality of corporate earnings is on the slide again and, as a result, Richard Bernstein, chief United States strategist at Merrill Lynch, is advising investors to tread carefully. 'There is an impression that the quality of earnings has improved dramatically,' he said. 'That is true relative to the worst levels of post-bubble reporting, but relative to history, the absolute quality of earnings is quite poor.' And getting poorer. Mr. Bernstein reaches this depressing conclusion by analyzing the difference between the earnings that Standard & Poor's 500 companies have reported under generally accepted accounting principles and operating earnings, the figures companies typically trumpet because they do not include write-offs and other unusual items. The difference between the two figures, Mr. Bernstein says, is the G.A.A.P. gap. And it is widening. In the most recent period - the fourth quarter of 2004 - the gap was 13.7 percent. In other words, operating earnings were on average 13.7 percent higher than reported earnings. While that figure is well down from the 40 percent gap reached in 2002, it is much higher than the long-term, pre-bubble average of 6.7 percent. The result: while stock valuations may not be so high as they were before the bubble burst, the quality of earnings appears to be worse. Of course, none of this might matter if investors bought stocks based on G.A.A.P. earnings. But too many buy shares based on what companies report in their press releases and on their quarterly conference calls, which are often heavily skewed to earnings before the bad stuff. 'The fact is, stocks trade on press releases, on what the headline number is,' Mr. Bernstein said. 'And on the conference calls, companies talk about whatever numbers they want to talk about. Investors should still be very skeptical of the quality of earnings.' Mr. Bernstein said that he thought the recent downturn in earnings quality began, not surprisingly, a couple of quarters ago, when the profit surge started to subside. 'If times are good, companies are not under pressure to keep their growth profile up,' he said. 'In tough times, when you get a cyclical company that has been coined by the Street as a growth company, it feels pressure to keep up that profile.' That's when the earnings games usually begin. By focusing on operating earnings, rather than on more stringent reported figures, companies try to steer investors away from mistakes such as asset write-downs or restructuring charges. But these factors reflect bad choices by managers - such as overpriced acquisitions - and should definitely not be excluded from investors' analyses. 'The difference between operating and reported earnings is an indication of how well executives are managing the balance sheet of their company,' Mr. Bernstein said. This is often lost on investors who pay little heed to the balance sheet. The five companies with the widest gap between reported earnings and operating income currently, according to the Merrill Lynch analysis, are: Eastman Kodak; Georgia Pacific, a paper products company; Rowan Companies, an oil drilling concern; Ford Motor; and Clorox. Mr. Bernstein said the vast majority of companies with the biggest gaps between reported earnings and operating income are of lesser-quality, those whose common stocks are ranked B or below by S.& P.; among the five with the widest gap, all are rated B or below except Clorox, which is rated A. So investors can often limit their exposure to earnings shenanigans by sticking with high-quality issues. But such a strategy won't offer full protection. As Mr. Bernstein noted, 22 percent of the companies with the largest gaps between reported and operating earnings were rated B or better by S.& P. Mr. Bernstein said he thought the earnings games would be curtailed sharply if the Securities and Exchange Commission required that all company communications with investors reflected figures computed in accordance with generally accepted accounting principles. Then there would be no confusion among investors about what a particular company really earned in a quarter. 'The reason you have G.A.A.P. is so investors have consistent clear information,' Mr. Bernstein said. 'The U.S. has always prided itself on having the most transparent financial markets. 'But over the past 5 to 10 years, the U.S. market has become more opaque, and foreign markets have become more transparent. That has huge implications for the economy as a whole and for the cost of capital.'

Subject: Why the Dollar Will Not Collapse
From: Terri
To: All
Date Posted: Sun, Mar 20, 2005 at 09:43:28 (EST)
Email Address: Not Provided

Message:
The dollar can not collapse because American assets are vastly valuable. Should American asset prices decline, there will come buyers; buyers in America for well valued assets, and internationally. We owe no debt in foreign currency. There can be no collapse of the dollar. The idea makes no sense. The dollar can not collapse because there is a Federal Reserve that will control inflation, and inflation is the only threat to the dollar internally. Internationally, the Euro may continue to rise in value though Europeans do not wish this. But, there is a limit to such a Euro rise and investors are simply not going to hold currencies like the Yen or Yuan for long. A decline in the value of the dollar against other currencies will make our international corporations that much more profitable, and will add to American exports, but side effects such as rising interest rates though a problem can be controlled by the Fed.

Subject: Solow says tech comprises most growth
From: johnny5
To: All
Date Posted: Sun, Mar 20, 2005 at 08:45:03 (EST)
Email Address: johnny5@yahoo.com

Message:
So what will be the next BIG THING in the USA? Net usage is plateauing. http://it.slashdot.org/article.pl?sid=05/03/19/1823213&tid=95&tid=218 Nielsen Report Says Internet Usage Flattening Posted by timothy on Saturday March 19, @01:24PM from the adding-to-the-divide dept. Ant writes 'This BetaNews story says an analysis of major Internet markets revealed that the time netizens spend online at home has come close to hitting a plateau in many major markets. Nielsen//NetRatings, a syndicated rating system for Internet audience measurement, measured markets in Brazil, Germany, Spain, Switzerland, Sweden, the United Kingdom and the United States and found them to be maturing. In contrast, Australia, France, Hong Kong, Italy and Japan experienced double-digit growth. According to Nielsen//NetRatings' press release (PDF) and current news story concluded that mature markets are in wait of 'the next big thing' whereas emerging markets were rife with opportunity for companies online. Some of the growth engines cited in the report is the proliferation of broadband and societal changes in media consumption...'

Subject: marketocracy
From: johnny5
To: All
Date Posted: Sun, Mar 20, 2005 at 07:24:14 (EST)
Email Address: johnny5@yahoo.com

Message:
http://www.321gold.com/editorials/mauldin/mauldin031905.html ....There are some 70,000 investors who trade a hypothetical $1 million at the web site Marketocracy run by California investor Ken Kam. Only 2% have records of beating the S&P both long-term and monthly. Kam picks the top 100 managers to actually run a fund. However, last year, the fund lost 4% while the S&P 500 gained 11%. It's a tough world out there. Listen to how Rich Karlgaard of Forbes describes these top 100 investors: 'Few of Kam's top 100 attended Harvard Business School. That's the point. Wall Street investment houses, says Kam, recruit the wrong people. The top-drawer firms look for high achieving, well spoken generalists from the best business schools. But good investors, Kam says, tend to be savants with a passion. They're nerds. They're freaks. They're too young or too old. They eat junk food and stare at the monitor and perhaps forget to bathe. They live and breathe stocks. They tend to be sector specialists who know the underlying science, product cycles, supply chains and buyer habits in their sectors.' HAHA - that sounds like most of my buddies at silicon investor!

Subject: Comparison
From: Terri
To: All
Date Posted: Sun, Mar 20, 2005 at 07:02:49 (EST)
Email Address: Not Provided

Message:
Possibly the proper way to examine what rising interest rates and declining dollar values might mean is to look to the period from 1972 to 1982. What sort of investments held value through these years? What might hold value in the coming decade? To begin with, my sense is domestic large and mid cap value stocks, international developed market value stocks, and intermediate to short term bond funds.

Subject: Where is Value?
From: Terri
To: Terri
Date Posted: Sun, Mar 20, 2005 at 07:16:02 (EST)
Email Address: Not Provided

Message:
Jeremy Siegel gives us reason to believe that value stocks or stocks that are well valued relative to earning potential are to be preferred for long term investing. Siegel also favors international developed market investing. Then, Vanguard Value Index and International Value Fund and Europe Index may be attractive. Also, Vanguard Health Care Fund may be attractive. Vanguard also has a Health Care Index, as a Viper share. There is so much more on the value or growth at a reasonable price side.

Subject: Jeremy Siegel
From: Terri
To: Terri
Date Posted: Sun, Mar 20, 2005 at 07:23:15 (EST)
Email Address: Not Provided

Message:
This interview is most interesting - posted below in full: http://www.pbs.org/wsw/tvprogram/#retail March 18, 2005 GEOFF COLVIN: It isn't often that a famous and highly respected authority announces new findings that are practically guaranteed to change your most fundamental views about investing. But hold on, because some of those views are about to get shot down. Looking for innovative, fast-growing firms to invest in? You shouldn't be. Fighting to get a piece of the hottest new IPO? Don't waste your time. Resigned to accepting the returns of index funds? There is an even better approach. Jeremy Siegel of Wharton wrote an investing classic, Stocks for the Long Run, and his new book, The Future for Investors, may be even more influential. Jeremy, you start shooting down the core beliefs of many investors with the subtitle of this book, which is: Why the Tried and True Triumph over the Bold and New. What do you mean by that? JEREMY SIEGEL: It surprised me also. I used to think that one of the reasons the S&P 500 gave such good returns was all the new firms that kept on being added… COLVIN: Yes, people should realize that index is consistently being refreshed with new firms. SIEGEL: Updated, yeah. In fact since its founding in 1957, there's been almost 1,000 new firms that have been added. You know, Intel, Microsoft and all the rest. What I've found actually is the old original ones taken as a group actually outperformed all the new firms that came in the last half of the century....

Subject: Market fragility - dolllar strength?
From: johnny5
To: All
Date Posted: Sun, Mar 20, 2005 at 06:47:47 (EST)
Email Address: johnny5@yahoo.com

Message:
Certainly Terri many of these people are not as strong as you - but much more panicky no? The fact is that the markets are hyper-sensitive to these figures, and analysts pore over them like Kremlinologists. The fear that central banks are contemplating industrial action against the dollar—and the collective sigh of relief when it seems they are not—is part of a broader unease about the nature and solidity of America’s economic growth. Based, as it is, on mammoth consumption by both the private and public sectors—ie, on big trade and fiscal deficits—it needs foreigners willing to suspend disbelief and buy shiploads of securities denominated in a currency that has steadily lost value for about 40 years. ... This is perhaps not the week to air such apocalyptic concerns, though they are much on Buttonwood’s mind. In the end, what foreign central bankers have it in their power to do is to reveal before all the world that the mighty American economic empire has no clothes—not even a pair of little fuchsia-coloured shoes Starkers Mar 16th 2005 From The Economist Global Agenda The dollar may get another short-lived respite but it is heading inexorably down. The question is how much it takes with it ALL you need to get into Harvard Law School these days, it seems, is a pair of fuchsia-pink high-heeled shoes. Or so say Buttonwood’s daughters, reliably informed by an early-teen cult film, “Legally Blonde”. On the basis that they can probably manage the shoes, if not the grades, Buttonwood is paying close attention these days to exchange rates. Her hope is that in seven years’ time, if the dollar continues to slide against other currencies (and British universities continue to raise their fees), it might cost little more to send the thuglets to study in Cambridge, Massachusetts than it would to pay their way in Cambridge, England. What gives with the greenback? In two of the past three weeks, the dollar took a pasting on reports that various Asian central banks, whose purchases of America’s debt help it to go on borrowing and consuming, were planning to diversify their foreign-exchange reserves away from dollars. Bond yields spiked up (ie, prices fell) and shares looked glum too. Then, on Tuesday March 15th, keenly-awaited figures from America’s Treasury showed a big increase in net purchases by foreigners of American long-term securities. The net flow in January ($91.5 billion) was 50% up on December’s figure ($60.7 billion), way over January’s trade deficit of $58.3 billion. Hidden in the figures were some interesting trends: purchases of American shares picked up, for example—which suggests a genuine fondness for the dollar unlikely to be unwound soon. But so too did purchases from the Caribbean—home to even more hedge funds than The Economist’s own St James’s Street—which could be liquidated tomorrow. Mark Austin, chief of foreign-exchange research at HSBC, a British bank, points out that central banks bought about the same amount as before, while private-sector purchases increased sharply. Is that positive for the dollar or negative? The currency rallied, though questions persisted. The Treasury data tend to be volatile and in any event show only a portion of real flows. And one month does not a summer make. But taken together with other figures from the Federal Reserve showing an increase in February and early March in the securities it holds in custody for foreign owners, they do suggest two things. The first is that the full shock-horror scenario, in which Asian central banks dump the dollar and America promptly collapses, is way overdone. The second is that although Bretton Woods II is still in business, it is likely to change fundamentally. The fact is that the markets are hyper-sensitive to these figures, and analysts pore over them like Kremlinologists. The fear that central banks are contemplating industrial action against the dollar—and the collective sigh of relief when it seems they are not—is part of a broader unease about the nature and solidity of America’s economic growth. Based, as it is, on mammoth consumption by both the private and public sectors—ie, on big trade and fiscal deficits—it needs foreigners willing to suspend disbelief and buy shiploads of securities denominated in a currency that has steadily lost value for about 40 years. ... This is perhaps not the week to air such apocalyptic concerns, though they are much on Buttonwood’s mind. In the end, what foreign central bankers have it in their power to do is to reveal before all the world that the mighty American economic empire has no clothes—not even a pair of little fuchsia-coloured shoes. http://www.economist.com/agenda/displayStory.cfm?story_id=3761805

Subject: This was predicted at realty times
From: johnny5
To: All
Date Posted: Sun, Mar 20, 2005 at 06:36:39 (EST)
Email Address: johnny5@yahoo.com

Message:
A few posts down this was predicted but on primary mortages - perhaps this is just warming up the hot water the frog is sitting in: Congressional Tax Committee Takes Up Home Equity Loans By Kenneth R. Harney Saturday, March 19, 2005; Page F01 The hottest consumer-financing concepts in America -- home equity loans and credit lines -- have entered the sights of a key congressional committee. The staff of the influential Joint Committee on Taxation, which advises both the House and Senate on tax policy issues, has proposed eliminating interest deductions for all second mortgages and credit lines. The proposal is included in a wide-ranging 'options' paper that identifies revenue-raising measures to stem the federal budget deficit, simplify the tax code and 'improve tax compliance.' The staff paper also proposes eliminating the tax-free status of income received by homeowners when they rent out their properties for less than 15 days a year. The curtailment of home equity deductions would raise an estimated $22.6 billion in federal taxes between 2005 and 2009, according to the committee staff. The home rental proposal would raise far less, an estimated $100 million. more... http://www.washingtonpost.com/wp-dyn/articles/A45933-2005Mar18.html

Subject: The Dollar Will Not Collapse
From: Terri
To: All
Date Posted: Sun, Mar 20, 2005 at 06:18:47 (EST)
Email Address: Not Provided

Message:
The dollar will not collapse, but there should be more thought about a decline in relative value of the dollar. The dollar could well continue to lose value, possibly for several years, against several international currencies however. Dollar weakness may also raise interest rates, and if interest rates rise from here for any reason, bonds will lose value. Also, if there is need to worry about the dollar losing value in America, why should an investor hold long term bonds?

Subject: The Dollar Will Likely Lose Value
From: Terri
To: Terri
Date Posted: Sun, Mar 20, 2005 at 06:49:05 (EST)
Email Address: Not Provided

Message:
The question to be asked is, how can investors protect against a further decline in the international value of the dollar? The answer would seem to be, invest abroad. Diversification of assets helps in domestic terms, and international terms. International bond investing is expensive and risky in a climate when interest rates are rising internationally. So, a combination of international stocks and domestic stocks that have international components would seem a helpful strategy. A collapse of the dollar would mean a dollar would have no purchasing power in America, but how could that be as long as there is a Federal Reserve? A decline in value of the dollar however is a realistic possibility.

Subject: Re: The Dollar Will Likely Lose Value
From: johnny5
To: Terri
Date Posted: Sun, Mar 20, 2005 at 07:00:27 (EST)
Email Address: johnny5@yahoo.com

Message:
Well I think we are coming to consensus then, I hold a lot of XOM, and just put my mom into a lot of vangaurd international value fund, thank you for all the education on vangaurd - I hope they serve her better than the scudder fund she had. In your mind - do you think the vanguard international fund or the international vipers with thier .18% expense ratios versus .56% for the fund is better? Costs matter and I initially put her in the more expensive investment option before I realized there were international vipers.

Subject: Re: The Dollar Will Not Collapse
From: johnny5
To: Terri
Date Posted: Sun, Mar 20, 2005 at 06:31:54 (EST)
Email Address: johnny5@yahoo.com

Message:
Terri, why are you so confident the dollar cannot collapse? Many others are not so optimistic - is it because you think greenspan and the government will intervene to save the dollar and are not doing things to sacrifice it and inflate our way out of debt? Is it because we have trained economic hitmen that will save the dollar and trained central bankers that will save it with thier 5 tril reserves when 15 tril private investors run for the exists - I am not being fecitious or negative - I am just trying to understand why you are so certain the dollar will not collapse - why is this scenario a 'fantasy' to you but pete and I feel it is very very possible - why are we having such fundamentally different beliefs on this possibility and risk? Buffet says things are not good, secretary rubin and peterson and volker said things are not good, roach and stiglitz says things are not good, smart money like bill gates says things are not good, many smart investors on silicon investor boards say things are not good, and amongst this tidal wave of negativity - we have you Terri, standing steadfastly optimistic that a dollar crash is not possible. I am not pointing this out to attack you or hurt you - here is my thinking - if the majority of investors think like me and pete and short the dollar and flee it - you will be wiped out in your domestic philosophy - however if the majority of investors think like you and invest accordingly - pete and buffet will find out the hard way that the markets can remain what they consider irrational longer than they will remain solvent. The trick is to figure out the behavior of the crowd - are the masses gonna go long the dollar and domestics in the face of any news and no fundamentals can ever change that - or are they kinda edgy terri - are a couple words from old greenspan or the word uttered 'diversify' from the leaders of china or japan able to rattle and shake markets because they are so fragile? I am sure you don't want to see me lose money by buying bearx and the markets continue to rally for many years, but I am sure I don't want to see you lose money by going long the market when a potential collapse may be likely. I agree, if the dollar loses value, long term bonds - even non callable aaa insured ones will lose because you will be paid back in less valuable dollars - so even they will not be a good investment.

Subject: Pete called a dollar death
From: johnny5
To: All
Date Posted: Sun, Mar 20, 2005 at 06:10:19 (EST)
Email Address: johnny5@yahoo.com

Message:
Death of the dollar By Steven Irvine 16 March 2005 Stiglitz predicts dollar will cease to be world's reserve currency. In his keynote address to CSFB's Asian Investment Conference yesterday (March 15), Nobel Prize winning economist, Joseph Stiglitz predicted the demise of the US dollar as the world's reserve currency. The former World Bank Chief Economist told the audience: 'Reserve currencies must serve the role of being a good store of value. The dollar is no longer serving that function and there are alternatives.' Stiglitz said from the perspective of a European, if they had held dollar assets, they would have seen those assets decline in value by 40-50% in terms of their own currency, the euro. 'That's the same thing,' Stiglitz pointed out, 'as if they had seen their purchasing power eroded by 40-50% by inflation. This exchange rate instability is therefore as destructive to a currency's suitability to be a reserve currency as inflation is.' He pointed out that there are now alternative reserve currencies. 'There is obviously the euro, and in the future possibly even the Chinese yuan.' Stiglitz said the dollar's right to reserve currency status cannot be taken for granted, and its loss of this status is likely. 'We've seen it before with the gold standard and with sterling,' he added. His view on the dollar formed part of an overall pessimism he felt about the US economy. Listing figures for the trillions that would be required for Medicare, the privatization of social security, the war in Iraq and the cost of making Bush's tax cuts permanent, Stiglitz said: 'We are looking at a larger and larger fiscal deficit. The hope that it will be cut in half in the next five years is just not borne out by the details. It will be very difficult to make the magnitude of cuts necessary to make that happen.' Stiglitz added that policy decisions were also proving a longer term problem for the US economy. He said investment in science and technology was dropping and thanks to the war on terror the US was no longer benefiting from the influx of talented engineers and students from abroad. He predicted the US's lead in science - 'a legacy from immigration after World War Two' - would be lost to China and India. A major problem he also identified was the fall in the US savings rate from 5.8% of GDP in 2000 to 1.1% in 2004. Responding to a question from the audience that suggested the average American did not realize they were spending beyond their means, he said: 'I agree about the seriousness of the problem. Americans are currently benefiting from high housing prices and that makes them confident about spending. It has become a cultural phenomenon and has created a built-in fragility for the economy that makes me pessimistic about the US going forward.' Asked how Americans could be made to save more, he responded: 'The sad answer is we don't know how to get Americans to save more - but we do know how to get them to spend more and save less. That was Greenspan's great achievement in 2001.' Currently a professor at Columbia University's economics department, and a member of the Clinton cabinet, Stiglitz said that when the financial markets recognize that political gridlock would not see the deficit reduced, the dollar would weaken. In the worst case scenario, if everyone ran for the exits at the same time, it could lead to a 'financial crisis'. This was a problem since three times as many dollar securities were held by the private sector as by the world's central banks; and the former would lead the charge for the exits at the same time. 'The dollar was attacked in the 1970s and it could happen again.' http://www.financeasia.com/articles/A5A2F560-9027-7E17-4BCC138D9ECC2BCB.cfm

Subject: Bonds: Taxable or Tax Free
From: Terri
To: All
Date Posted: Sat, Mar 19, 2005 at 18:48:00 (EST)
Email Address: Not Provided

Message:
Before deciding on whether to invest in taxable or tax free bonds or bond funds, be sure of what tax bracket you are in. Also, ask yourself whether you wish a bond or bond fund especially at a time when the Federal Reserve is tightening.

Subject: If the dollar dies?
From: johnny5
To: Terri
Date Posted: Sun, Mar 20, 2005 at 05:31:19 (EST)
Email Address: johnny5@yahoo.com

Message:
I have contacted fmsbonds.com Terri, I am going to assume that you and I and pete have the minimum 15K to make an initial investment with them, thereafter they will sell you 5K chunks. Now if you hold to maturity a non callable tax free AAA insured bond, is there a risk if rates change? The major risk I see in that is that the dollars will fall in wealth and purchasing power - and buffet suggest this is a very likely scenario and has put his money where his mouth is. Many insiders are not holding their stock from what I have read - but into cash. If the dollar does not fall this should represent a good safe way to invest. But as Pete says, the dollar fall or collapse needs to be central to our risk planning. I believe bush and co will sacrifice the dollar - or may even be pushing that dollar slaughter to fix other problems. Given this why hold any tax or tax free domestic bonds? When the dollar could not be exchanged for gold in the 30's we had a crisis, when nixon completely took the dollar off the gold standard another major event happened - well there was still a few saving graces of the dollar - it was the reserve currency for oil trading - that is going to change - I am almost certain of this from everything I read. Also the ability of our government to increasingly tax a fastly growing population - well that has also lost it's steam - so what is left for the dollar but destruction? Warren and Pete say you need to SERIOUSLY consider this, are you SERIOUSLY considering a total dollar collapse Terri? If not, why not? Is it just alarmist mumbo jumbo?

Subject: Projected Returns for Stocks and Bonds
From: Terri
To: All
Date Posted: Sat, Mar 19, 2005 at 17:00:59 (EST)
Email Address: Not Provided

Message:
http://www.irrationalexuberance.com/shillersocsec.doc Jeremy Siegel projects American long term stock returns at 6.0% in real terms and corporate bonds at 2.3%. Robert Shiller projects 4.6^ and 2.7% for bonds and stocks. Goldman Sachs has the figures at 5.0% for stocks and 2.5% for bonds.

Subject: National Index Returns
From: Terri
To: Terri
Date Posted: Sat, Mar 19, 2005 at 22:12:03 (EST)
Email Address: Not Provided

Message:
http://www.msci.com/equity/index2.html National Index Returns [Dollars] 12/31/04 - 3/18/05 Australia 8.1 Canada 5.0 Denmark 8.0 France 3.8 Germany -0.6 Hong Kong -2.3 Japan 0.7 Netherlands 5.1 Norway 10.1 Sweden -0.0 Switzerland 1.6 UK 3.3

Subject: Jeremy Siegel
From: Terri
To: All
Date Posted: Sat, Mar 19, 2005 at 15:12:06 (EST)
Email Address: Not Provided

Message:
http://www.pbs.org/wsw/tvprogram/#retail March 18, 2005 GEOFF COLVIN: It isn't often that a famous and highly respected authority announces new findings that are practically guaranteed to change your most fundamental views about investing. But hold on, because some of those views are about to get shot down. Looking for innovative, fast-growing firms to invest in? You shouldn't be. Fighting to get a piece of the hottest new IPO? Don't waste your time. Resigned to accepting the returns of index funds? There is an even better approach. Jeremy Siegel of Wharton wrote an investing classic, Stocks for the Long Run, and his new book, The Future for Investors, may be even more influential. Jeremy, you start shooting down the core beliefs of many investors with the subtitle of this book, which is: Why the Tried and True Triumph over the Bold and New. What do you mean by that? JEREMY SIEGEL: It surprised me also. I used to think that one of the reasons the S&P 500 gave such good returns was all the new firms that kept on being added… COLVIN: Yes, people should realize that index is consistently being refreshed with new firms. SIEGEL: Updated, yeah. In fact since its founding in 1957, there's been almost 1,000 new firms that have been added. You know, Intel, Microsoft and all the rest. What I've found actually is the old original ones taken as a group actually outperformed all the new firms that came in the last half of the century. COLVIN: You mean if you had bought the S&P 500 firms in 1957 and just held them and forgotten about all the companies that came into it since then, you would have beaten the S&P 500 index with all the firms that have been added? SIEGEL: Yeah, absolutely. And we know the S&P 500 index beats most money managers. It's a very hard bogey for them to match. So it is really surprising. Just those original companies, follow through all the mergers and all the acquisitions, you beat the dynamic, updated S&P 500 index. COLVIN: Well, now this is just stunning. Of course the question is why, and you looked into that. Why? SIEGEL: The major reason is that firms that have been added to the index are overpriced. In 9 of the 10 sectors of the economy, I found that the new firms that were added subsequently to 1957 actually underperformed the original firm. It isn't that they were growing any slower. In fact many of them were growing faster. It's just that the public getting so excited about these firms, once they get to be a big market value, the S&P is induced to put them in the index. That's the wrong time usually to buy a stock. COLVIN: Okay, so this is where we really start shooting down investment beliefs held by so many, many people. Let me just state some of them, and you tell me what's wrong with them. You want to invest in innovative, fast-growing firms. SIEGEL: Well, what is wrong about that is everyone wants to invest in innovative, fast-growing firms, and they push up the price way too high. And no matter how fast a firm is growing, you must pay attention to the price. And I think that that's so very, very important, missed by a lot of investors. COLVIN: Well, in fact you have identified something that you call the growth trap. What is it? SIEGEL: Yeah, that's really the first chapter of the book, the Growth Trap. The growth trap is people thinking that the best performance they can do in the market is just picking those firms that grow the fastest or those sectors that grow the fastest, or as I find later in the book, even those countries that grow the fastest. And it turns out that very often those are the firms, the stocks that under-perform the market. COLVIN: So they're growing fast, profits are growing fast, right? SIEGEL: Right. COLVIN: But they're bad investments. SIEGEL: Because you're paying too high a price. You know, I introduce early in the book a principle called the basic principle of investor returns, which basically says it's not how fast the earnings of a company are growing; it's how fast they're growing relative to what investors had expected them to grow. That's built into the price. That's what we call the P/E ratio. You've got to look at both. COLVIN: And so what follows from that I think so many people don't understand is that even if profits grow slowly, if it's a little faster than what was expected, it's going to be a good investment. SIEGEL: Oh, yes. I mean actually some of the great investors, Peter Lynch, and we know even Warren Buffett, they're not always looking for the fastest-growing. They're looking for the under-priced stocks, those that push out cash, they may be growing slower, but given their price, investors are going to come out ahead. COLVIN: You did a very interesting exercise in this book, where you said let's suppose it's 1950, and you were supposed to decide am I going to invest in Standard Oil, a big, even then an old industry, an old company, really big, arguably best days behind it, or am I going to invest in IBM? In 1950 the dawn of the computer age, exciting, high-tech, and in fact we know that both companies have grown and survived and prospered. But what did you find when you looked at them as investments in 1950? And by the way, the conventional view would be well, obviously you would have chosen IBM, on the launching pad of the computer revolution. SIEGEL: Absolutely. In fact, IBM earnings grew more than 3 percent per year faster than Standard Oil of New Jersey over the next half century. Their earnings grew faster, their dividends, their market value, their sales, but the winner was Standard Oil of New Jersey. An investor who bought that stock, reinvested the dividends -- and that's a very important component of long-term returns, as I talk about later in the book -- reinvested those dividends, ended up with a greater amount of wealth than someone getting in on the greatest technology stock at the beginning of the computer age. COLVIN: It is just stunning. Now you mentioned dividends, and this turns out to be another important point that contradicts another core belief of many investors, which is dividends are bad because your returns are getting taxed twice; one when the company earns the profits, and a second time when they're paid to you as dividends. So it's better to find companies that reinvest the cash rather than companies that pay it out in dividends. This turns out to be wrong. SIEGEL: It turns out to be false. Now we have two things that we have to look at. President Bush, obviously we reduced that dividend tax, so that difference between capital gains and dividends is much smaller than it was before. But what I found was that the dividend reinvestment was that margin by which many of those so-called slower growing firms actually beat the faster growing firms in the long run. You know a lot of others say firms that pay dividends, they don't have growth opportunities. Well, that proved to be wrong, too. A lot of those firms that used their cash for growth opportunities, actually they were buying overpriced firms, too. Then the technology industry, we saw that in '98 and '99, 2000. So it turns out returning that money to you, having you reinvest, the best proposition. COLVIN: Even though you had to pay the tax on it, you were still better off. SIEGEL: Most of the time you were still better off. Those dividend-paying firms really did better. COLVIN: Well, this is all just getting more and more remarkable. So let's move on to the next core belief of a lot of investors, which is if there's an IPO, especially a sort of a hot IPO, if by the remotest chance you can get it at the offering price -- and of course most of us civilians cannot get it at the offering price -- but if you can get it at the offering price, you should absolutely grab it because these things virtually always go up. SIEGEL: Yes, they go up, but sell it right away. Mom, don't hold it. What's really amazed me is I thought, well, if you got it at that offering price, it popped 100, 200, 300 percent, you'd be all right on the long run. COLVIN: Because it would never go down so much. SIEGEL: It would never go down by more than its IPO price or certainly not more than an index that was matched to small stocks. So what I did was looked at IPOs from 1968, all of them to the present. Let's assume you bought all of them then, even from that offer price, got the pops when they did occur, you fell behind either the S&P or a small stock index over 90 percent of the time. It was really amazing. COLVIN: It is really amazing. SIEGEL: Because certainly once it pops, people know, hey, you know, that may be a too high price, but I thought if you bought them at that offer price, you'd still be good in the long run. No. They're really hot potatoes. Get rid of them. Take your pop and be thankful. COLVIN: All right. Let's talk about sectors now, because this is the way a lot of people look at it. They say well, look, I'm going to identify the big picture, the fast-growing sectors. And you did this analysis, too. SIEGEL: Yes. COLVIN: Now you would think that if you buy a sector fund, right, and you have picked the fast-growing sectors, you're going to get the losers but the winners also, and you're probably going to do okay. Not true, right? SIEGEL: Not always. In fact, of the fastest-growing sectors that we had -- we had the healthcare sector, we had the financial sector, an information technology sector -- only healthcare in the long run did well for investors. Financial actually, even though it was the biggest expanding sector from 1957 to the present, actually fell behind the market. COLVIN: In investment returns to investors. SIEGEL: In the S&P 500, fell behind in investment returns. And even information technology, it slightly did better, but that was only because of a few years of IBM performance right at the beginning of the index. All the new firms that have been added to that information technology index subsequently, as an average, underperformed the S&P 500. COLVIN: You found something that just floored me, which was that the railroad sector outperformed the market? SIEGEL: Right, the railroad sector. This is really amazing. Now of course the railroad sector took a big dip during the Depression, after the war. Everyone had given up on the rail sector. No one wanted to touch the rail sector. The thing is that the rails figured out how to make money, and they were turning really good dividends, and so they were really what we call deep value stocks. It wasn't that they were growing so fast, but when you reinvested those dividends, I was so surprised it outperformed the average. By the way, another tremendous shrinking sector in terms of proportion of the market that also way outperformed was the energy sector. Over 25 percent of the market in 1957, less than 10 percent today, and yet it outperformed the S&P 500. COLVIN: As an investment. SIEGEL: As an investment. COLVIN: Now in Stocks for the Long Run, your previous book, your advice to investors was you should take all of the money that you plan to put in stocks and put it in an index fund that tracks the broadest possible index of stocks. After this research, you have changed that advice. Is that right? And what is it now? SIEGEL: Yes, well I still believe you need that diversification, so I say take half of your commitment and index it to the market. And by the way, there's a very big international component there that I have raised. The other half I like going into investments with high dividends, low price/earnings ratios. I like energy sector, pharmaceutical sectors, consumer staples, brand name companies, expanding worldwide. Something I call the corporate El Dorados that have done so very, very well. I talk about the 20 best performing companies. Tilt your portfolio in that direction, and I think you're going to get a couple percent or even more on these broad-based indices. COLVIN: Above the indices. SIEGEL: Above the indices. COLVIN: And you call this specifically the DIV strategy, right? SIEGEL: Yes. COLVIN: Which stands for D is dividends… SIEGEL: I is International, and international, a very heavy focus on international investing, and V is looking at valuation. The valuation, the price you're paying for those stocks in terms of dividends and earnings. COLVIN: Well, let's talk about each one of them in a little bit of detail, because this is very helpful stuff. The D, dividends, look for companies that pay how big a dividend? SIEGEL: Well, you know what I did was I looked at all the S&P companies from 1957 to the present. If you would have bought the 20 percent highest dividend payers and just rolled it around every year, you'd outperform the market by 3 percent a year for nearly a half century. COLVIN: And three points a year for 50 years is mammoth. SIEGEL: Oh, yeah. You're going to be triple, quadruple the sum that you would be if you were just in the index. In Stocks for the Long Run, I said maybe 25 percent of your equity portfolio you should be international. I've now pushed that to 40 percent. I really believe a lot of the growth is going to be outside the United States in the next 20, 30, 40 years, and you're going to need that diversification away from just having U.S. companies. COLVIN: Well, and so when you say international, you mean companies based outside the United States? SIEGEL: Headquarters outside the United States. In other words, either in Europe, obviously, or Japan. Something we call the EAFE index. We have to have emerging markets, but I caution you not to overweight there. But in other words, where the headquarters are not in the U.S. That's the current definition, which I think might actually change in the future, but the current definition of where a company is located, not where it sells or where it produces, where the headquarters are located. I believe you should go up to 40 percent. COLVIN: But you pointed out that if you invested in China, the fastest growing economy on earth, you wouldn't have done so well. SIEGEL: That was a shocker. You know, in 1992 to the present, 12 years, the fastest growing country by GDP, by virtually any measure, is China -- the worst dollar returns. And you know why? Again, everyone was so excited, including the Chinese, that they just bid the price of these stocks so high. They couldn't last, gave people negative returns. Actually $1,000 invested then turned into $300 by the end of 2003. COLVIN: It's incredibly surprising. Okay, the V in DIV is Value. SIEGEL: Is valuation. COLVIN: And this of course is the great classic basis for investing. All of the most successful investors have done so on that basis. What's your mechanism for identifying the stocks that a person should buy for the V part? SIEGEL: Well, you know, there's two groups of stocks that are important here. First of all, I did find that those that had the lowest price/earnings ratios did tend to outperform a value-based strategy. But there's that group of stocks that grew very fast but had reasonable prices. I call them the corporate El Dorados. They were the 20 best performing companies of the original S&P 500 companies. They were fast growers, but the interesting thing is that investors paid only a couple points over the average price/earnings ratio for these stocks. We sometimes call these stocks GARP, growth for… COLVIN: Growth at a reasonable price. SIEGEL: Growth at a reasonable price. That group of companies that has a history, that has brand name, that has international exposure and is increasing their markets, I've found that those are value stocks in a slightly different way. Not that they're low P/E stocks, but their P/Es are reasonable relative to their growth prospects. COLVIN: Essentially they bucked the big trend that you identified. They were fast growing, and yet you didn't have to pay a big price for them. SIEGEL: Right, because many of the people said, oh yeah, this company is fairly good, but maybe I'll give it 25 or 30 P/E while they were chasing these exciting technology and telecom and everything else at 70, 80, 90 P/E. Well, those other companies couldn't match that price, but these companies were really well worth it. And it was interesting when I looked at that list with Philip Morris and the pharmaceuticals. Actually of the top 20 original companies in the S&P 500, 90 percent were in two sectors: pharmaceuticals and consumer staples, the brand names that are known around the world. COLVIN: Brand names, right, perceived now as sort of non-sexy businesses. SIEGEL: Oh, yeah, you know pharmaceuticals certainly have taken huge hits. On a historical basis, they're about as cheap as you're ever going to get them. So if you don't think they're going to fade away, there's an opportunity there. But even the companies that have had this international exposure, brand name is so important in the developing world. In China and India they trust brand name. If you've got a skillful CEO that says I've got the brand names, you know, from Procter & Gamble to Coke to Pepsi, to Wrigley to Heinz, and we can keep on going down and down. Wow, those are the companies over time have produced tremendous returns.

Subject: Terrific Interview
From: Terri
To: Terri
Date Posted: Sat, Mar 19, 2005 at 21:11:10 (EST)
Email Address: Not Provided

Message:
This interview needs to be carefully considered.

Subject: In Life on the Mekong
From: Emma
To: All
Date Posted: Sat, Mar 19, 2005 at 13:54:12 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/19/international/asia/19mekong.html?pagewanted=all&position= In Life on the Mekong, China's Dams Dominate By JANE PERLEZ CHIANG KHONG, Thailand - For countless generations, fishermen along the Mekong River have passed their lore and way of life from father to son: the rhythms of the water, the habits of the many kinds of fish, the best nets and traps to use to survive and prosper. But Sri Sumwantha, 70, one of the old men of Asia's majestic river, has left his delicate pirogue tied up at the riverbank for longer stretches than usual. Through green bamboo stands, he has watched the caramel-colored current slow and surge unpredictably and his catch diminish. Now, he worries how much longer his family can live off the river. The reason is China. China's ravenous appetite for hydroelectric power at home and its thrust southward into Southeast Asia in search of trade is changing the very character of the Mekong. This is true not only in China itself, but also for the five nations and 60 million rural people downstream for whom the great river serves as their life's blood. Several hundred miles upstream from Sri Sumwantha's simple home, China has completed two dams. It is pushing ahead with three more and has three others on the drawing board. Just about 70 miles away from here, China has blasted reefs and rocks at the border of Laos and Myanmar to clear the way for its trading vessels to reach new markets deep into Laos. The effects of the river projects that serve China's colossal upstream ambitions have been visible for several years, but are growing more worrying, say conservationists and those who live on the river. The fish species found in this stretch of the Mekong in northern Thailand dwindled from 100 to only 88 last year, said Sayan Khamnueng, a researcher with the Southeast Asia River Network, an environmental group. Water levels and temperatures have fluctuated widely, threatening the river environment and disrupting the livelihoods of the fishermen and others who depend on the $2 billion annual catch of migratory fish. For the fishermen, their revered river, once nearly untouched and steady in its moods, has turned into a fickle sea. 'In the past the river was up and down like nature - every three or four days up and down,' said Tan Inkew, 72, a fisherman who lives in Meung Kan village. 'Now the river is like the sea - up and down, up and down very quickly.' Protests by Mr. Tan and other fishermen helped persuade the Thai government to stop China from blasting the rapids in Thai waters near his home, between the port of Chiang Saen and Chiang Khong. 'We protested outside the Chinese Embassy in Bangkok,' Mr. Tan recalled. 'We told them to stop blasting - and if they don't stop, we'll fight them.' Still, he worries about the impact of China's dams as well. His recalled how his son was recently out on the water for nine hours but 'did not catch one thing.' While Mr. Tan and his neighbors may have scored a small victory, clearly China cannot be kept at bay for long. The Mekong has been protected through the ages by a lack of development, and more recently by wars in Vietnam, Cambodia and Laos, as it winds its way on a brawling 2,870-mile journey from the Tibetan plateau to its delta in Vietnam. But today the countries downstream from China - Myanmar, Thailand, Laos, Cambodia and Vietnam - have settled into an era of relative peace and have shed their old fears of China, indeed, are currying favor. Booming Thailand is seeking more trade with China. Impoverished Laos and Cambodia want China's aid to kick-start their economies. Myanmar shares China's passion for hydropower to supply future growth. 'China seems to be doing this with impunity,' said Aviva Imhof, director of Southeast Asia programs at International Rivers Network, a nongovernmental group in Berkeley, Calif. 'The Mekong is slowly being strangled to death. Why aren't the downstream governments challenging China's activities?' The concern extends beyond environmental groups and fishermen. Ted Osius, until recently the State Department's regional environmental affairs officer and once a senior White House adviser to Vice President Al Gore, suggests that an unchecked China could turn the Mekong into an ecological disaster, akin to the Yellow River and the Yangtze River. 'China has a poor record on river protection,' Mr. Osius said in a speech in Bangkok, noting that 80 percent of the Yangtze's historic flood plain has already been cut off by a dike and levee system. Today China's economic and political power along the Mekong is unrivaled. More than ever, it is being strengthened and extended through growing trade and diplomatic ties and its use of new multilateral tools, like the Asian Development Bank. The bank, a major lender for poverty alleviation, was until now dominated by Japan. China contributed to its capital fund for the first time in 2004 - gaining more power over how the bank's loans are distributed. The impact was immediate. The bank added a new vice president, Jin Liqun, a former deputy finance minister in Beijing. Most important, the bank's grand plan for roads, bridges and a telecommunications network to knit southern China together with the five other Mekong River countries - a plan 10 years in abeyance - got a quick boost. Long-stalled work was suddenly under way on a 152-mile road from Yunnan Province across untamed territory to Houey Xai, a Laotian river town just a few hundred yards across the Mekong from Sri Sumwantha's village. Although relatively short, the road provides the vital link to China. A bridge is also in the works to replace the little ferryboats now used to cross the river. By the end of the decade, China could be connected by roads that cross the Mekong, head down to Bangkok and then run on to Malaysia and finally Singapore. 'China's donation gives them a seat at the donor's table,' said Bruce Murray, the bank's representative in Beijing. 'When they give, donors always have a certain agenda.' China's new clout can be felt on other important projects as well. One of the most controversial is a $1.3 billion dam proposed for the Theun River, a major Mekong tributary in Laos, a plan that has been fought over for more than a decade. The World Bank is expected to approve loan guarantees for the dam in March. American diplomats say they have quietly supported the World Bank's role - its first dam project in a decade - for fear that otherwise China will step in. 'The Laotians have told the World Bank that if the bank does not guarantee the dam and make it go ahead, they will turn to the Chinese,' an American official said. The United States is reluctant to have China build and manage one of Southeast Asia's biggest dams, he said. China, diplomats and conservationists say, would be much less fussy about the dam's impact than the consortium seeking World Bank support, led by Electricity Generating Authority Thailand (EGAT) and France's state-owned Electricité de France. Here in Chiang Khong, where the fishermen's bamboo houses are nestled along the banks, the changes to the river that China has already made are quickly causing a way of life to recede, along with the bounty of the Mekong's waters. Mr. Sayan, of the Southeast Asian River Network, said fishermen had stopped selling their fish at the main market in Chiang Rai. 'They don't have enough,' he said. In extreme cases, the fishermen have given up and become laborers, unloading the trading vessels from China that dock at Chiang Saen, laden with fruits and vegetables, electronics and cheap garments. 'As laborers they become impoverished and are miserable,' said Chainarong Srettachau, the director of the river network. Some fishermen have begun supplementing their incomes with crops. But crops are being hurt, too. China's upstream dams are also holding back as much as 50 percent of the fertile silt that is essential to the soil and that normally flows down river, according to conservationists. Erosion is also worsening. At Pak Ing, a small village near Chiang Khong, fishermen pointed to a 12-foot-high wall of exposed soil, a muddy mini-cliff where the water, flowing faster because of blasting of the rapids, has cut into once gently sloping riverbanks. The next step will be to erect concrete banks to hold back the land. Farther downstream, the effects may be even more severe. In Cambodia, an intricate ecology and age-old economy depend on the ebb and flow of the great lake fed by the Mekong, Tonle Sap, which can swell fourfold during the rainy season. The rhythm of life is built around the seasonal tides and the bounty that the waters provide. The fish catch dropped by almost 50 percent last year, according to the Mekong River Commission. In many areas, the low catches were caused by the sudden fluctuations that occurred when dams in China released water to allow easier passage for trading vessels, said Milton Osborne, an Australian historian and an expert on the Mekong. The water from the dams is also much colder than the water downstream, affecting the fish, which are extremely sensitive to changes in temperature, Mr. Osborne wrote last year in a paper titled 'River at Risk' for the Lowy Institute, a public policy group in Sydney. Large species in particular had fallen off, he said. The outlook for the river and its vast ecosystem was not promising, he added. 'Because of the enormous imbalance of power between China and the downstream countries,' he said, 'it is highly unlikely that there will be a halt to China's projected dam building program on the Mekong.' But Mr. Chainarong of the river network was less pessimistic. 'Two or three years ago, people said we would never be able to stop China blasting the Mekong inside Thailand,' he said. 'But we did.' 'One good thing,' he noted, 'is that China doesn't want to have conflict downstream. That's the challenge. The situation is up to China: does it want to go friendly or hostile?'

Subject: Private Pension Accounts in Texas
From: Emma
To: All
Date Posted: Sat, Mar 19, 2005 at 11:43:54 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/18/politics/18texas.html?pagewanted=all&position= On Texas' Coast, a Laboratory for Private Accounts By SIMON ROMERO GALVESTON, Tex. - As governor of Texas, George W. Bush had an up-close look at what many advocates of individual Social Security investment accounts consider a laboratory for how such a system might work: Galveston County's retirement system. In 1981 officials in Galveston, a seafront city on the Gulf of Mexico opted out of Social Security along with neighboring Brazoria and Matagorda Counties and chose instead to plunge their county governments into the unknown territory of offering private retirement accounts. Hundreds of employees in these counties have since retired under the system and more than 4,000 current employees make deposits into their private accounts each month. But there is intense debate over what lessons to draw from Galveston's experience and whether a government retirement system should help adjust income disparities. Some prominent retired officials swear by the system, saying it has allowed them to retire richer than if they had stayed with Social Security. 'You basically get back what you put in,' said Ray Holbrook, 78, a former county judge who retired in 1995. Mr. Holbrook had been an early supporter of the plan. Others, mainly retirees with lower income, have found their small nest eggs eroded by inflation or gone altogether after choosing a lump-sum payment instead of monthly checks. 'I don't know what I would do without Social Security,' said Norma Samuels, 61 , a retired food services manager who took the $22,000 she had put in her account over eight years as a lump-sum payment because her husband had died and amassed unpaid medical bills. Ms. Samuels still receives Social Security through survivor's benefits and is waiting to collect her Social Security benefits from a previous job when she turns 65. The Galveston plan also includes survivor and disability benefits that sometimes exceed those of Social Security. Still, few of the participants in the plan are explicitly critical of the system, perhaps because many say they feel they have greater control over their investments. Most county employees here also benefit from a separate county pension, which gives them a cushion. The Houston investment firm that designed the Galveston plan invests employees' money mostly in safe but low-yielding securities, providing participants with quarterly updates on their investments and the opportunity to withdraw their money in a lump sum upon retirement or in installments over several years. 'I have the luxury of completely forgetting about Social Security,' said Kirk Greene, 42, an information technology manager who began working full time for Galveston County with a salary of about $14,000 a year in 1986, five years after it adopted the system. Mr. Greene said he now had about $120,000 in the Galveston plan in addition to some $130,000 in the county's pension plan. Mr. Greene, who earns about $75,000 a year, said he expected to retire in nine years. 'I'll be going fishing when many of my friends will still be working,' said Mr. Greene, cherishing his ability to start drawing his money at 51, an option not available under Social Security. 'I feel able to benefit from the money that I myself put in.' Under the Galveston plan employees put about 6.1 percent of their salaries into their accounts, roughly the same as the 6.2 percent withdrawn from most workers' paychecks for Social Security. In addition, the three county governments then pay about 7.7 percent of employees' salaries, slightly higher than the 6.2 percent deposited in Social Security by most employers. The majority of the plan's money is invested in annuities, financial securities sold by insurance companies that provide fairly predictable rates of return. The exception is in Brazoria County. Some employees there are smarting after losses in their accounts because of an investment option, created around the time of the stock market's peak in 2000, allowing them to put some of their money in stocks with higher risks. Most of those losses have been recuperated in the last few years. The insurance company, rather than the plan's participants, pays a management fee of less than 1 percent of the plan's assets. First Financial Benefits of Houston, the creator and administrator of Galveston's plan, estimates that the plan has earned an average of 6.5 percent in annual returns since its inception, though that figure was influenced by the relatively high interest rates of the 1980's. The plan currently returns about 4 percent a year. Richard F. Gornto, the president of First Financial Benefits, helped design the plan and said his estimates showed that all retirees would do better financially under the county's plan than they would have under Social Security. But others who have studied the plan and used different assumptions disagree. Critics contend that employees with higher incomes do much better than those with lower incomes and that over time the fact that the returns are not indexed for inflation make them a worse deal than Social Security. A study in 1999 by the Social Security Administration, for instance, found that after 20 years of retirement, all of the plan's benefits, even for wealthier retirees, would be lower relative to Social Security. Eric R. Kingson, a professor of social work at Syracuse University who has studied the Galveston plan, also says it is a threat to the 'quiet redistribution' of wealth under Social Security that provides poorer retirees with a higher share of their pre-retirement wages than it does to their richer counterparts. For instance, the study by the Social Security Administration found that married low-income workers retiring in 2045 under the Galveston plan would receive initial benefits equivalent to about 60 percent of Social Security while a single high-income worker would receive payments equivalent to about 140 percent of Social Security. In 1983 Congress ended the option of allowing counties to drop out of Social Security but exempted those who had already left it. Another study of the Galveston plan, by the Government Accountability Office in 1999, projected that a low-income worker retiring in 2026 after 45 years would receive $1,028 a month under the Galveston plan compared with $1,366 under Social Security. The G.A.O. also found that those with larger incomes did better. A worker with a median income would receive $1,367 a month under Social Security as opposed to $2,024 under the private plan. An employee in a higher income range would receive $1,898 in Social Security compared with $4,089 a month under the Galveston Plan. (The G.A.O. defined a low-income salary as $17,124, median income as $25,596 and high income as $51,263.) Mr. Gornto, of First Financial Benefits, said that if a plan like Galveston's were tried on a national scale, it could always be altered to deal with any problems. He noted that the plan had already made changes to features deemed unwise, recently eliminating the option of hardship withdrawal. 'Some people like to see us here in Texas as unsophisticated, with chewing tobacco in our mouths,' Mr. Gornto said in an interview. 'The opposite is true. We can do our own quiet redistribution within the plan if that's needed,' he said, explaining that a formula could be used to shift some of the plan's resources to poorer retirees. For all the debate, participants in the plan tend to have few complaints about returns as long as they know that their accounts are gaining in value. 'It's known that we've got one of the best retirements in the law profession in Texas,' said Robert Dodd, 36, a sheriff's deputy who recently moved to Galveston. A 22-year-old colleague, Dustin Helms, on a cigarette break with him, took that thought a bit further. 'Social Security's a joke, and everybody knows it,' Mr. Helms said. 'By the time I retire it's not going to be around. I might as well stick around here.'

Subject: A Poor Plan
From: Emma
To: Emma
Date Posted: Sat, Mar 19, 2005 at 11:55:40 (EST)
Email Address: Not Provided

Message:
Notice the Galveston public employee pension plan costs much more than Scoial Security and the return to private accounts has been poor, especially poor to workers below median income.

Subject: Why are Returns so Low
From: Emma
To: Emma
Date Posted: Sat, Mar 19, 2005 at 13:46:35 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/18/politics/18texas.html?oref=login&pagewanted=all&position= 'The insurance company, rather than the plan's participants, pays a management fee of less than 1 percent of the plan's assets. First Financial Benefits of Houston, the creator and administrator of Galveston's plan, estimates that the plan has earned an average of 6.5 percent in annual returns since its inception, though that figure was influenced by the relatively high interest rates of the 1980's. The plan currently returns about 4 percent a year.'

Subject: Re: Why are Returns so Low
From: David E..
To: Emma
Date Posted: Sun, Mar 20, 2005 at 01:14:18 (EST)
Email Address: Not Provided

Message:
'The insurance company, rather than the plan's participants, pays a management fee of less than 1 percent of the plan's assets. First Financial Benefits of Houston, the creator and administrator of Galveston's plan, estimates that the plan has earned an average of 6.5 percent in annual returns since its inception, though that figure was influenced by the relatively high interest rates of the 1980's. The plan currently returns about 4 percent a year.' Note how carefully the less than 1% is defined. This is the insurance companies management fees the creator and administrator is talking about. He doesn't mention how much he gets in sales commissions and administration fees. Note that 6.5 1 1 is an 8.5% return which is not exceptional for the 80's. The current 4% return is about what my buddy gets from his newer rolled over annuities. Here is a link to an article in the Guardian. The GAO did a study in 1999 and came up with the same analysis(mentioned in the Guardian article) This week on CBN I saw TV coverage of Galveston's system. Everybody on TV in CBN land was very happy with their pension. No mention was made of the GAO study. And CATO also for some reason seems to skip the opportunity to refute the GAO study.

Subject: Re: Why are Returns so Low
From: Terri
To: David E..
Date Posted: Sun, Mar 20, 2005 at 06:05:56 (EST)
Email Address: Not Provided

Message:
David, you are a wonder. This is an excellent analysis. We want no Galveston plan for Social Security. Please read the interview with Jeremy Siegel. I will add later.

Subject: Re: Why are Returns so Low
From: johnny5
To: Emma
Date Posted: Sat, Mar 19, 2005 at 14:14:58 (EST)
Email Address: johnny5@yahoo.com

Message:
4 percent per year- BWAHAH - the people at fmsbonds told me I could get fla tax free munis and get paid 4.8 percent for my uncle.

Subject: Broadband and Phone Lines
From: Emma
To: All
Date Posted: Sat, Mar 19, 2005 at 10:29:15 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/19/technology/19phone.html?pagewanted=all&position= Dangling Broadband From the Phone Stick By MATT RICHTEL SAN FRANCISCO - To gauge the potential consumer impact of the consolidation sweeping the telephone industry, look no further than the silver-toned plastic phone gathering dust on the desk in Justin Martikovic's studio apartment. Mr. Martikovic, 30, a junior architect who relies on a cellphone for his normal calling, says he never uses the desk phone - but he pays $360 a year to keep it hooked up. 'I have to pay for a service I'm never using,' he said. He has no choice. His telephone company, SBC Communications, will not sell him high-speed Internet access unless he buys the phone service, too. That puts him in the same bind as many people around the country who want high-speed, or broadband, Internet access but no longer need a conventional telephone. Right now, their phone companies tend to have a 'take it or leave it' attitude. Consumers 'are not forced to go with SBC,' said Michael Coe, a company spokesman. 'If they just want a broadband connection, I'd recommend they look around for people who can provide just a broadband connection.' The nation's other two largest phone companies, Verizon Communications and BellSouth, have similar policies: broadband service is available only as a bundle with phone service. That means, even as high-speed Internet service has become one of the most quickly adopted technologies of the computer era, there are few options for the tens of millions of Americans trying to upgrade their dial-up connections. Some lawmakers and consumer advocates say the issue should be on the agenda as the government considers the market impact of two proposed big telecommunications deals: SBC's planned $16 billion acquisition of AT&T, and Verizon's $6.75 billion offer for MCI, which is being challenged by a rival offer from Qwest Communications. For many consumers, the main alternative to broadband from the phone company is the local cable company. But cable broadband prices tend to be higher - as much as $60 a month for access, compared typically with $40 or less for phone company broadband. And the cable companies prefer to sell the service as a package with television that can easily exceed $100 a month. That is assuming cable is even available, which it is not in Mr. Martikovic's apartment in the Nob Hill section of San Francisco - or in 10 percent of the nation's households, for that matter. Mr. Martikovic says that he has resigned himself to paying SBC $30 a month for a phone bill and $30 for Internet, in addition to $100 for a mobile phone from Sprint. 'I bet half of my friends are in this exact same situation,' he said. The question of broadband's availability is almost certain to become part of the policy debate as the Justice Department and the Federal Communications Commission rule on an eventual acquisition of MCI and whether SBC can buy AT&T. And two weeks ago, the House Energy and Commerce Committee held a hearing to discuss the consolidating market power of the phone companies. Consumer advocacy groups, including Consumers Union, say they plan to ask the F.C.C. to address the lack of 'à la carte' broadband when the agency reviews the proposed takeovers. Despite the market bottlenecks, broadband is increasingly in demand for its ability to let users zip e-mail back and forth with big photo or music files attached; or to play online games; or to quickly open Web pages loaded with video and audio extras. Of the nation's 74.5 million Internet households, an estimated 39 percent now have broadband - up from 36 percent of Internet households at the end of 2003. So popular is the service, and so few the alternatives for most consumers, that the three biggest regional Bell companies - SBC, Verizon and BellSouth - have been able to expand their share of the Internet broadband market even while declining to sell the service separately. The cable companies are still in the lead, having moved more nimbly than the phone companies in the early days of broadband back in 2000. But the phone industry's broadband share is now 37 percent, up from 32.7 percent at the end of 2003, and it continues to grow. While critics say the phone companies are simply squeezing millions of extra dollars from consumers and making it harder for people to move to cheaper Internet telephony in place of conventional phone service, the three big Bells argue that selling stand-alone broadband is not a simple proposition. In the case of Verizon, the nation's largest phone provider and the dominant one in the Northeast and Middle Atlantic states, the company says that it has based its technology and billing systems on delivering service to individual phone numbers. Verizon has said it is working to develop a stand-alone broadband offering that could be available as soon as the end of the year. 'It's just very complex,' said Michael D. Poling, Verizon's vice president for broadband operations and processes for Verizon. 'It's changing the guts of the systems and processes we've built for five years.' But the smallest of the Bells, Qwest, which operates primarily in the Rocky Mountain states and is struggling to grow, has been willing to offer à la carte broadband for more than a year. One satisfied Qwest customer is Chad Jorgenson, 25, a part-time student in Boise, Idaho, and an intern at a computer chip maker. By cutting off his traditional phone service, he said, he had been able to reduce his monthly bill to $47.92, from $71.40. (That bill could be lower still, but he opted for a particularly high speed of service.) Richard C. Notebaert, the company's chief executive, said Qwest spent just three days and $134,000 to get regulatory approval to offer the service, now a year old. The company now has around 25,000 stand-alone broadband customers. 'We've had no technical problems; we've had no billing problems,' he said. 'If the consumer wants it, why are you stiffing them?' In defending their marketing practices, the other Bell companies argue that they are sinking billions of dollars into building Internet-based networks that will eventually replace their conventional telephone technology even as they are struggling to cope with the erosion of their local telephone business. Last year, the phone companies lost 5.4 million residential phone lines as more subscribers chose to rely mainly on wireless service and abandoned second lines that had been used for dial-up computer modems. Another threat to the phone company revenues will be Internet-based phone service in which calls are transmitted over high-speed Internet lines, as digital packets, much the way e-mail is transmitted. Once customers have broadband Internet access, they are not limited to their local Bell company to be the provider of Internet phone service. A relatively new Internet phone company, Vonage, now has 550,000 customers who use its services over phone or cable broadband access lines. And so while Internet telephony is a business the Bells have all said they plan to embrace, some critics say the biggest Bells are using their current market power to slow its development. The issue might soon come before regulators and Congress. Representative Edward J. Markey, Democrat from Massachusetts, said he would like to see the Bells' reconsolidated power discussed as part of a pending rewriting of the increasingly outdated Telecommunications Act of 1996. The F.C.C. is already considering a related issue as it seeks to settle a dispute between BellSouth and four states it serves - Florida, Kentucky, Louisiana and Georgia. Those states have told BellSouth that it must continue to sell broadband to an existing customer even if that customer leaves BellSouth to get local phone service from one of the few competitors that have survived the telecommunications shakeout. BellSouth is fighting the requirements, in part on the ground that one of its competitive advantages is that it enables consumers to buy phone and broadband in one place. 'Our marketing strategy is that we offer a complete package of our services,' said Joe Chandler, a spokesman for BellSouth. Because the company has made the investments in broadband network technology, he said, it should reap the rewards. 'If our competitors want to offer broadband,' he added, 'they should make the same investments.'

Subject: Re: Broadband and Phone Lines
From: johnny5
To: Emma
Date Posted: Sat, Mar 19, 2005 at 14:21:41 (EST)
Email Address: johnny5@yahoo.com

Message:
This kid only pays 60 a month??? Johnny5 pays 79 a month for verizon wireless broadband over his cellphone, but this kids has SPRINT for his cellphone - he can get internet over his sprint cellphone for 15 dollars I believe, but to get broadband speeds he would have to switch to verizon - still who needs broadband to check email or chat on pkarchive bbs? I havent had a landline phone for over 5 years now I think.

Subject: Oil Wealth in Indonesia
From: Emma
To: All
Date Posted: Sat, Mar 19, 2005 at 10:24:47 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/19/business/worldbusiness/19indo.html?pagewanted=all&position= Oil Wealth Wasting Away in Indonesia By KEITH BRADSHER BALONGAN, Indonesia - Roaring all day from the top of a chimney at a state-owned refinery here, a 30-foot-high roiling column of orange flames spewed vast clouds of black smoke visible for miles around. A 12-year-old compressor had broken down, refinery officials explained, and huge quantities of valuable propylene were being burned off for safety reasons. Indonesia's oil industry, like the refinery, has been burning money for years, squandering the nation's mineral wealth through underinvestment, bureaucracy, corruption and a wariness of multinational companies. So few new wells have been drilled in the last decade that annual production has dropped by more than a third. And the draining of existing fields has brought Indonesia, one of the oldest members of the Organization of the Petroleum Exporting Countries, to the ignominy of having to import oil in the last four months of 2004. As OPEC struggles with how to respond to oil prices rising above $56 a barrel, Indonesia's failure is more than just a tragedy for a poor developing country that has failed to take advantage of a potential windfall. As OPEC's only Asian member, Indonesia should be ideally positioned to meet soaring demand from China and the rest of Asia. Instead, its increasingly meager output has forced officials in Beijing and other Asian capitals to look farther afield, relying more on pariah states like Sudan and bringing more oil through the Strait of Malacca, where pirates have been preying on tankers and where governments worry increasingly about possible terrorist attacks. Now, Indonesian officials say they are determined to make their country an exporter again. They have raised prices and cut subsidies for gasoline and diesel to discourage waste. They have passed new laws and tax policies to encourage multinational companies to invest. And while populists are calling for Indonesia to withdraw from OPEC, in part to save nearly $2 million a year in membership fees, Purnomo Yusgiantoro, the country's oil minister and the holder of OPEC's rotating presidency in 2004, has been holding them off by setting up a committee to study the issue and promising a brighter future for Indonesia's oil industry. 'Indonesia is expecting to produce more oil in the future,' Mr. Purnomo said. 'Even if we become a net importer for one year, or less than one year, what does it mean?' A turnaround may not be so easy, though, and Indonesia's subsidies are especially ruinous. Because of them, Indonesians have been burning cheap fuel by the tankful, contributing to urban sprawl and traffic jams in Jakarta that rival those in Los Angeles. At the same time, factories rely heavily on diesel generators. The electricity from the generators would be more costly than electricity from coal-fired power plants if diesel fuel were not subsidized. The question is whether Indonesia is doing enough. While new laws and tax rules have been passed, regulations that would put them into effect have not been issued. More seriously, a 29 percent increase in retail gasoline and diesel prices on Feb. 28 still leaves both fuels selling for less than $1 a gallon. And the price increase assumed that oil would cost $35 a barrel in 2005. This means that the subsidies, which absorbed one-sixth of government spending in 2005, will cost even more. 'It's going to have a huge impact,' said Ramesh Subramaniam, the principal economist for Indonesia at the Asian Development Bank. Already, the 29 percent increase has provoked large street demonstrations and even fistfights on the floor of Parliament. The political debate in Indonesia now is over whether to roll back the increase or simply form a committee to study whether to roll it back. Further increases in fuel prices are no longer even under public discussion. Mr. Purnomo said in an interview that he hoped to reverse a slide in production, which fell to 950,000 barrels a day late in 2004 from 1.6 million barrels a day in 1991. Mr. Purnomo said that he expected production to rebound to at least one million barrels a day and stay there. OPEC rules require that members be exporters of crude oil, but do not specify what happens if a country temporarily becomes an importer. Mr. Purnomo said that he had an understanding with OPEC that Indonesia would be given a chance to resume exports, with no deadline set; OPEC officials declined to comment. The scale of Indonesia's troubles, in energy terms and in environmental terms, can best be seen in its oil fields and refineries. Here in Balongan, the huge refinery run by Pertamina, the state-owned oil company, towers over a small Javanese fishing village. Young men sit on the decks of dozens of 25-foot wooden boats in the mouth of a muddy river, mending fishing nets. Oil spills from the oceanfront refinery have severely depleted local stocks of fish. Warnipan, a 40-year-old with three grandchildren, said that a recent two-night trip with three other fishermen brought in only 73 pounds of fish, a third of their previous normal catches. After costs for food, fuel and the large chunk of their catch they owe the boat owner, the sailors found they had earned 50 cents each on the trip. 'Sometimes we can't catch any fish at all,' said Mr. Warnipan, who, like many Indonesians, uses only one name. The problem for Indonesia's oil production is that few people have the education and training to take jobs in Pertamina's nearby oil fields or refineries. So, while there is great demand in the oil industry, large numbers of unemployed young men loiter here and in neighboring communities of northern Java. As for women workers, despite the oil wealth under the ground here, this region has become best known as a source for desperately poor prostitutes for Jakarta's many brothels. Pertamina executives did not respond to more than a dozen phone calls and faxes requesting interviews. Pertamina's refinery managers said that there had been problems in the past but that they were planning to improve environmental safety, and they cautioned that overfishing and other factors might have also affected fish stocks. The managers also said that they hoped to build a concrete platform soon to prevent leakage from thousands of aging barrels holding toxic catalysts and other materials. The barrels currently sit in piles directly on the dirt, a practice avoided at refineries in industrialized countries. Pertamina has been slow to look for new oil fields on its own even as older fields run dry. Multinational companies are wary of investing, troubled less by the terrorism that produced the bombing in Bali and the recent attacks in Jakarta than by the political unrest that accompanied the Asian financial crisis in 1997 and 1998 and by recent contract disputes with the government in Jakarta. Indonesia 'has been relying pretty much on early 90's investment in oil and gas,' said Thomas L. Soulsby, a director of PT Energi Mega Persada, a publicly traded Indonesian oil company. 'Committees sitting in Houston, London or even Sydney decided to put their investment dollars elsewhere, and Indonesia really suffered.' This part of northern Java has only one of Indonesia's large oil fields. But while local residents have complaints about the operation, at least the field and refinery here have been developed. Exxon Mobil found a large oil field in eastern Java at Cepu more early in this decade, in an area where Pertamina and other companies had failed to find oil. Exxon Mobil geologists re-examined old data and then drilled deeper wells than anyone had tried before, finding oil in quantities that could increase Indonesia's annual output by a fifth. But production has yet to begin as the Indonesian government, seeking a greater share of the revenue, has tried to renegotiate the terms of Exxon Mobil's contract, which runs until 2010. The most important step Indonesia can take to attract investment is to have clear rules for contracts, said Maman Budiman, the vice president for planning, commercial and public affairs at Exxon Mobil Oil Indonesia. Developing oil fields in Indonesia is expensive, making energy companies leery of signing away too much of the revenue once production begins. The Cepu deposits are unusually deep, four miles underground, and industry officials say that other deposits in Indonesia may be similarly deep. 'When you combine tough production-sharing terms with government uncertainty, the big players are reluctant,' said Jeff Brown, an oil analyst at the International Energy Agency in Paris. 'Typically, they have to get better terms to produce in harsh environments.'

Subject: Warren Buffett and Optimism
From: Terri
To: All
Date Posted: Sat, Mar 19, 2005 at 09:50:16 (EST)
Email Address: Not Provided

Message:
As investors we can own Berkshire Hathaway shares. If the A shares are too expensive, there are the almost identical B shares. We can also attend to what Warren Buffett has to say about economics and investing, and companies Berkshire Hathaway buys, but we should never think we know what Buffett is doing. Berkshire is always building cash and there is a steady need to invest. The company has hundreds of billions of dollars in investments that seldom change. Buffett is always looking for reasonably priced assets, and may buy on any day. A problem for Berkshire is having to invest in such large amounts, there are fewer choices than possibly any other investor. Buffett believes the dollar will decline in value for a time, and holds international liquid assets, but 50% of liquid assets are in dollars. The letter to shareholders is thoroughly optimistic about our future. There are problems, there will comes resolutions. We would like the resolutions this day, but we can be patient.

Subject: Reasonably Priced Assets
From: Terri
To: Terri
Date Posted: Sat, Mar 19, 2005 at 10:23:14 (EST)
Email Address: Not Provided

Message:
The question to be answered is what assets are reasonably prices relative to expected income. I ask this question over and over. I do not worry about bargains, though there will be some now and then. I wish for reasonably priced assets.

Subject: Finding Assets
From: Terri
To: Terri
Date Posted: Sat, Mar 19, 2005 at 10:47:48 (EST)
Email Address: Not Provided

Message:
A year and more from now, we will look to this time and realize that there were assets with fine earnings streams and reasonable valuations. Not assets that are difficult to purchase but easily available assets. To be fine and secure investors will need to find such assets every once in a while. Not all the time, just every once in a while. We can do this.

Subject: Bond Fund Refuge
From: Terri
To: All
Date Posted: Sat, Mar 19, 2005 at 07:30:11 (EST)
Email Address: Not Provided

Message:
Investors who become bearish can forget again and again that besides looking for market sectors with reasonable values and stable earnings streams, there are always bond funds. Vanguard bond funds are always going to be a safe haven. There is superb quality and diversity in the investment grade funds. Bond fund price swings will depend on interest rate movements and duration. A duration of 5 years or less is simply not going to be a problem for any patient investor. Interest rates are rising and may rise for a while, but there is a limit. The limit will be when the Federal Reserve fears the economy will grow too slowly. When the economy does slow, interest rates will slow in rise and begin to fall. Why should any investor fear to hold a bond fund such as the Vanguard GNMA, with a 2.5 year duration and bonds insured by Congress? A radical interest rate increase of 4 percentage points would lower the fund price by no more than 10% while yields climbed. There is an investor's security when all else fails.

Subject: What is buffet buying?
From: johnny5
To: Terri
Date Posted: Sat, Mar 19, 2005 at 08:31:46 (EST)
Email Address: johnny5@yahoo.com

Message:
Why is he buying international currencies? Why isn't one of the greatest living investors of all time still buying us stocks and bonds? Why in 2002 did he radically change his investment strategy from something that had served him well for what - 40 years?

Subject: Value and Value
From: Terri
To: All
Date Posted: Sat, Mar 19, 2005 at 07:01:18 (EST)
Email Address: Not Provided

Message:
A question that is often asked is why should a person invest when there are many worries about market valuations and economic conditions. Well, market timing is so difficult that I have never found a market timer who has been successful. Why should I think I can time markets. What I might be able to do is find reasonable investment values, buy the values and stay and stay. Saving gives us a reserve to use to always be looking for value. The stock market as a whole and technology stocks in particular were very very expensive in 1999 and 2000, and the Federal Reserve was in a tightening cycle. There was no reason to buy what was so expensive, rather there were wonderful reasonable values to be bought. REITs were well valued, large drug companies were well valued, large oil companies and utilities were as attractive. Value stocks in general were much less expensive than growth, and mid cap and small value still less expensive. So, we can look and look for relative and absolute value.

Subject: Buffet is not a market timer?
From: johnny5
To: Terri
Date Posted: Sat, Mar 19, 2005 at 08:27:58 (EST)
Email Address: johnny5@yahoo.com

Message:
Buffet says there isn't ANYTHING to buy - why do you disagree with him? Why is he wrong? He is one of the best investors ever no? He said he can't find ANY VALUE, he is out the dollar.

Subject: Strategic Failure to Deliver
From: johnny5
To: All
Date Posted: Sat, Mar 19, 2005 at 05:56:25 (EST)
Email Address: johnny5@yahoo.com

Message:
Remember I posted earlier that a 1932 congressman said the crash and liquidity tightening of that age was ENGINEERED to screw the little guy - well here you go: http://www.siliconinvestor.com/readmsg.aspx?msgid=21134943 CEO Overstock.com on Naked Shorting: When I ask, “By appeal to what law or regulation are you refusing to disclose this to me?” they clam up. This is one of the warnings telling me that this may be a problem of catastrophic proportions. Dr. Patrick Byrne (CEO, Overstock.com) on Naked Shorting: Patrick M. Byrne (Ph.D., Stanford) CEO, Overstock.com http://ncans.net/byrneshort.htm Dr. Patrick Byrne's Summary Of The Naked Shorting Problem From the Overstock Message Board - 3/13/05 Dear Colleagues, The issue of “naked shorting” seems to be becoming a news item, and is even (perhaps) a scandal in the making: I have been called by several publications in the last week to discuss the issue, and there is word of a major exposé on a network news program to run soon. This is especially topical, given the issue of Social Security private accounts. As is known by those who have been regular readers of this board, my involvement with the issue is that of a concerned citizen. However, I figured I would write something here so those who are interested can follow along. Some of this draws together points I have tried to make in earlier threads about “Wall Street Criminals,” but most of this is new. I have tried to explain here the Failure-to-Deliver and Naked Short issue in plain English. You auction sellers in particular will find many parallels between this issue and the issue of auction fraud, albeit it on a grander scale. In any case, I hope that those who are interested may find this a concise and useful précis on the issue. 1. Shorting Stock: This is a legal and honorable method of investing. Suppose a share of IBM stock is trading at $90, but I expect IBM to go down. I “short” it. This means that, through my broker, I borrow a share of IBM, sell it in the open market, and collect $90. Assume that IBM then drops from $90 to $50. That is as low as I think it is going to go, so I “cover” my short: I take $50 of the $90 that I collected, I buy a share out in the market, and return it (through my broker) to the person who loaned me a share in the first place. I am left with $40 profit. 2. Failure-to-Deliver (“FTD”): The American stock market runs on a “T 3” system. This means that when you sell a share of stock, you have 3 days to deliver that share. If you do not deliver within 3 days, you have, “failed to deliver,” or “FTD’ed”. Think of this like someone who posts auctions but does not deliver the goods. 3. DTCC: Depository Trust & Clearing Corporation. This is the back-office of Wall Street. Rather than have people run around with paper stock certificates, the DTCC keeps electronic records of who owns which stock at which brokerages, and settles the trading of stocks. If you “FTD” (“Fail to Deliver”), the DTCC are the folks whose books don’t match. 4. Strategic Failures to Deliver: Not all FTD’s are necessarily illegal. Someone may forget to get shares of stock out of her sock draw and deliver them to her broker within three days of a sale, yet this does not make her a criminal. Also, in the center of Wall Street there exists a job known as a “market maker,” someone who is charged with maintaining an orderly market in a stock by continuously buying and selling to create liquidity. Market makers are allowed (on a good faith basis) to buy and sell stock that does not exist, temporarily, just to keep liquidity in a stock. Again, this is expected and allowed. What is not allowed, however, is for investors to sell and fail-to-deliver purposefully: doing so (through a variety of mechanisms that I will explain below) in an attempt to manipulate the price of a stock, is a “strategic” failure-to-deliver. Some folks believe that Strategic FTD’s played a role in the 1929 meltdown. In any case, there have been regulations against it since 1933 (regulations which provide for criminal and civil penalties). The slang term for “Strategic Failure to Deliver” is, “naked shorting.” 5. The Economics of Naked Shorting: The gist of naked shorting is simply, when a hedge fund pretends to short a stock (I say, “pretends” because it is stock that it does not really own, and which it does not really borrow). It sells those made-up shares into the marketplace, and collects the money just as though it sold real shares (note that this is “counterfeiting,” more or less, though with electrons rather than paper). If it is stock in a small company, and does not trade with much liquidity, then the hedge fund can keep “selling” its made-up shares and drive the stock price down to wherever it wants it to go. In a healthy market, the check-and-balance on shorting would simply be the number of shares that are available for short sellers to borrow and sell. Since there would only be a finite number of shares to borrow and sell, there would be only a finite amount of pressure the shorts could bring upon a stock (and it would be offset by buying pressure holding that stock up). But if naked shorting is allowed, then there is no limit on how many bogus shares hedge funds can create. Thus means they can drive a stock’s price down close to $0. At the very least, this practice destroys peoples’ savings (remember, the shorts make money by driving the stock down, whereas any stockholders lose that same amount of money as the stock price drops). Some folks believe companies have been driven out of business by this, because they cannot raise new capital once those stocks have cratered badly enough. The key is this: if given the right to create an unlimited number of new shares, essentially out of thin air, not limited by the number of shares “in the borrow” as legal shorting requires, these hedge funds can always drive the price down and always cover for a profit. That is why it’s, “illegal.” 6. How can Naked Shorting Occur in Our Regulated Markets? _____a. The lazy explanation: How can a hedge fund get away with selling shares it neither owns nor borrows? One theory is that the DTCC (and some brokers) look the other way for “favored” clients. “Sell 100,000 shares of XYZ for me.” “Do you have the shares?” “Oh, you know I’m good for it!” Large clients enjoy such favored relationships and, because they have deep pockets, the DTCC and the brokers assume they can trust those clients to operate like this and true things up later. This lackadaisical attitude, however, gives dishonest hedge funds opportunity to “sell” stock that does not exist, and thus create downward pricing pressure that becomes self-fulfilling: as the stock gets driven down it reaches the point that other owners lose confidence and dump their stock, and as it gains downward momentum, the naked shorts can cover their shorts and move on. _____b. The sleazy explanation: Believe it or not, there is a more insidious explanation of how this game works. Imagine that a sleazy hedge fund chooses a small, illiquid company to attack. Often that company is in a poorly understood sector, or is a company with some accounting complexities so it will be possible to create “where there’s smoke there’s fire” skepticism about its books. Here is what happens: __________i. The hedge fund gets that US firm listed on foreign exchanges. __________ii. That hedge fund then “sells” shares it neither has nor borrows. __________iii. When the DTCC calls after three days and says, “Where are those shares?” The hedge fund replies, “I borrowed them on the German exchange, they will take a few weeks to show up,” or “I am a market maker for the German Exchanges in that stock, and thus excluded from the no naked shorting rules.” __________iv. With a nudge and a wink the DTCC says, “OK, we’ll loan you from our own reserves of that stock.” The DTCC collects a high fee from the hedge fund to do this. __________v. The hedge fund has relationships with a few compliant reporters, who are called and told, “Do a hatchet job on Company XYZ.” They do so, perhaps in return for off-shore compensation. __________vi. The combination of bad publicity coupled with the selling of an unlimited number of shares drives the stock down to the point either that the hedge fund covers and moves on, making a quick $20 - $50 million, or the company goes bankrupt, or simply remains a penny stock (in which case the hedge fund never has to cover its short, and hence, never pays taxes!) 7. The Regulatory Environment: After years of pressure, in 2004 the SEC promulgated Reg SHO (for “SHORT”), which directs the exchanges (NYSE, NASDAQ, etc.), to start publishing early in 2005 lists of companies whose FTD’s exceed a reasonable amount (“reasonable” = “greater than .5% of the shares in the company”). This list is called, “The Reg SHO Threshold List.” It does not list the amounts of FTD’s, just the names of companies that are experiencing them. The way Reg SHO is supposed to work is as follows. If a company crosses beyond the threshold of a reasonable amount of FTD’s, and then stays there for 5 days without crossing back under the threshold, its name goes on the Reg SHO list. Then, after 13 more days, if it is still on the list, brokers are supposed to tell those hedge funds that are failing to deliver that they must stop failing to deliver, and those brokers are not supposed to take any more short sale orders from those accounts for those stocks. 8. Reg SHO is flimsy: So flimsy, in fact, it set folks scratching their heads - does the SEC not get it? Here is why it is flimsy: _____a. Telling the hedge funds after 13 days, “You are not supposed to do any more naked shorting in this stock,” is meaningless - they weren’t supposed to be naked shorting it in the first place. _____b. There are no sanctions for violators. _____c. Why grandfather violations that have been illegal for 71 years? 9. Two theories regarding how big a problem this is: _____a. Tame theory: This is a problem for a small percent of companies, just those that find themselves on the Reg SHO list. Thus this is not a hard problem to fix. But fixing it is going to cause a lot of hedge funds to lose money. They are well-connected with the SEC, and the SEC is co-opted to the point that they are tightening down on this half-heartedly. _____b. Extreme Theory: This problem is so endemic that if the SEC tried to fix it the system would crack. There are so many losses waiting to be realized by the hedge funds, it would be like the failure of Long Term Capital Management, but on a massive scale (see Roger Lowenstein’s, When Genius Failed, for an excellent explanation of the risk that the failure of even one large hedge fund put on our financial system). In this scenario, the reason the SEC is not being suitably aggressive is because they know the problem has gotten beyond what can be solved without a systemic failure. 10. Which theory is correct? I don’t know. No one knows outside the DTCC, SEC, and maybe the NASDAQ and NYSE. And they are not telling. I have asked the DTCC, SEC, and NASDAQ for the size of Overstock’s FTD, but they all refused to disclose it. This amazes me: if I sold 100 shares out the back door of Overstock without registering them I would go to jail, but (per our inclusion on the SHO Threshold list) some hedge funds have sold hundreds of thousands (or millions) of phantom shares, and the SEC and DTCC protect them. When I ask, “By appeal to what law or regulation are you refusing to disclose this to me?” they clam up. This is one of the warnings telling me that this may be a problem of catastrophic proportions. I hesitate to describe the others, as it sounds like I might be lining my hat with tinfoil. But in the interest of completeness, I shall. In 2004 it became public that one well-known short seller, David Rocker (of Rocker Partners), was shorting our company. In October, 2004 I invited him on a conference call to debate me, and it got pretty nasty (see this transcript for details: Click here for the transcript Immediately thereafter some knowledgeable-sounding people got in touch and warned me of four things to come, in this order: _____a) Reporters A, B, C, and D would call and do hatchet jobs on me, as they were lackeys to Rocker; _____b) I would find Overstock.com listed on innumerable foreign exchange; _____c) We would find ourselves on the Reg SHO Threshold list when it came out in January. _____d) The SEC would announce they were starting some inquiry on us. I already knew Reporters A, B, and C, who had gone far out of their way to write uncharitable articles about me, and while I always wondered at their eagerness to do so, I gave the prediction of more such articles little credit. Yet I had never heard of Predicted Reporter D (Elizabeth MacDonald of Forbes): within two days, she (along with A, B, and C) had called with clear intent to write something unpleasant. Elizabeth hunted for a week, then gave up: we are so squeaky clean, the most such reporters can do is write anodyne trivia: e.g., Herb Greenberg actually once devoted a whole column to how quickly or slowly I returned his calls, and how this could be interpreted as a sign of sinister intent (as opposed to, say, whether or not I was getting on and off planes as I synched my emails). Then over the autumn of 2004 we found ourselves listed on five exchanges in Germany and one in Australia: someone went to all the trouble to get us listed on these exchanges, though hardly any shares have traded since (this confirms the theory that these foreign exchanges are used simply as smoke screens by hedge funds needing an excuse for the DTCC). On January 27 we appeared on the Reg SHO Threshold list (only about .4% of companies are on this list). Thus, these “crazies” had made four pretty far out predictions. The first three of them have come true. The test of any theory is its ability to make accurate predictions, and the “crazies” have passed that test. So I started paying a lot more attention to what they had to say. Incidentally, their fourth prediction (the SEC trying to make trouble for me) has not come true. However, an increasing number of smart people are telling me that, now that I am taking a lead role in this issue, and am the first non-fringe player to do so, the SEC is going to crucify me, for they (according to these sources) are thin-skinned, vindictive, unused to criticism from those whom they regulate, and partly captured by the very hedge funds that benefit from these practices. 11. The “Pay-No-Attention-To-The-Man-Behind-The-Curtain” Responses: A party line has developed within Wall Street that runs like this: _____a. “There is no naked shorting”: This used to be the party line, but since 300 companies appeared on Reg SHO since January 2005 it has worn thin. _____b. “Reg SHO will address this problem”: As only a handful of those 300 firms have dropped from the Threshold List, this is dubious, too. _____c. “CEO’s who make an issue of this are just mad that their stock is down.” I have nothing about which to be mad: our stock is 2-3X where it was in early 2004. I am trying to bring attention to this because there is a risk to the public. _____d. “The folks who make a big deal about this are crazies who line their hat with tinfoil.” Could be. I know they sound whacko. I know I sound whacko, too. But the test of a theory is its ability to predict, and these “crazies” make accurate predictions. I have been called by precisely those journalists they predicted would call me. OSTK has appeared on 6 foreign exchanges, none at our own request. On January 27 we appeared on the Reg SHO list (and as we have not come off it since then, I feel the “crazies” are right about the flimsiness of the Reg SHO mechanism, too). The only thing these “crazies” have missed so far is that the SEC has not started any vendetta against me (yet) for bringing attention to this issue. I hope this gives you, dear reader, a broad enough overview of this problem that it may suggest further inquiry. I repeat, I do not know how deep a problem this is. It could be next to nothing, or it could be an Enron waiting to happen (with far greater ramifications, as the failure could be systemic). I don’t know, but I do know that it would be easy for the SEC to clear up the mystery: all they have to do is publish the size of the FTD’s for the companies on the Reg SHO Threshold List. This is, I think, a fair question for me to ask: after all, if without registering them I sold 100 shares of Overstock out the back door of the firm I would go to jail. Yet per our inclusion on the Reg SHO Threshold list we know that some hedge funds have done that with hundreds of thousands (or millions) of shares: why won't the SEC reveal who, and how many counterfeit shares they 'issued'? The fact that the SEC, the DTCC, and the exchanges refuse to disclose this (though they must have the information every night, else how could the calculate whether or not a company belonged on Reg SHO list?) makes me worried that it might be a bigger problem than they want anyone to know. On the other hand, if there is really nothing to this issue, then the problem can be cleared up overnight, and myself (and all the other “crazies”) would go away. All we need are the answers to five simple questions, which I write out below in the hopes that some concerned citizens, or an enterprising journalist, can use them to dig a little deeper on her own. 12. Five Questions for the SEC _____a. Does SEC receive daily data from the DTCC/NSCC on Fail to Delivers? __________i. If not, why not? __________ii. How can the SEC regulate without this? _____b. How large is the fail to deliver problem? Does the SEC even know? __________i. Why won’t the DTCC tell anyone how large the problem is? __________ii. Why won’t the DTCC tell the SHO companies how large their FTD problem is? _____c. How can firms remain on the threshold list if Reg SHO is enforced? _____d. Why grandfather - pardon - all violations prior to January 7, 2005? __________i. Wasn’t it against the rules (10(a)2, 15(c)6-1, 17(a)) since 1934? __________ii. Why won’t the SEC enforce rules on the books for 71 years? __________iii. What logic supports pardoning flagrant, regular violation of rules? _____e. Who are the biggest violators of the Failure to Deliver rules? __________i. Who benefits the most from the past fails being pardoned? __________ii. Why reward these hedge funds for systematically violating the rules? _____f. How can private SS accounts be considered while this is going on? I thank any reader who has stuck with me through this long explanation. I made it as clear and concise as I could, and hope that through these modest efforts some enterprising reader or journalist will have gained the ammunition needed to breech the defenses of Wall Street and get some answers. And if for my efforts you see me doing the perp walk on TV, remember to send me a cake with a file in it! Respectfully submitted, Patrick M. Byrne (Ph.D., Stanford) CEO, Overstock.com PS My disclaimers: - While David Rocker has been public about being short us (and a surprising percentage of other companies on the Reg SHO Threshold List!), I do not mean to claim that he is naked short Overstock. Someone is, but it is not necessarily him. He could simply be short us, and it be some other party who is naked short our stock. - The Tools of Satan are going to try to claim that this is all some scheme of mine to get people to buy our stock. It is not true. None, and I mean none, of this is intended to get anyone to think about buying Overstock stock. I am doing this because I am convinced enough of the issue to want the public to get some answers. Someone has to do this, and John Wayne is dead. But do not confuse my involvement with this issue with any valuation or other issue regarding Overstock.com. Hey, I get involved in other political issues to (e.g., education reform), and they are not all driven by some secret aspirations to get customers or shareholders. (The end)

Subject: Naked Shorts on Nasdaq - Golden Rule
From: johnny5
To: All
Date Posted: Sat, Mar 19, 2005 at 05:25:07 (EST)
Email Address: johnny5@yahoo.com

Message:
Them who owns the gold, makes the rules: http://www.nasdaqtrader.com/aspx/regsho.aspx Regulation SHO for those of you who do not understand the significance. http://www.siliconinvestor.com/readmsg.aspx?msgid=21143810&srchtxt=SHO There are Laws governing the issuance of common stock. Those laws are rigorus and at the heart of all value. Any scheme to introduce any methodology into the system; which breaches the promise and practice of share issuance laws is itself an illegal act. BRKA is the best example of unadulturated S&D metrics.... Someones broken into the system by introducing methodologies into our markets these methodologies are illegal, the very existance of the SHO list is an admission of this. Focus on all the value arbitrarily created or assigned by illegal transactions; and you see why all attempts to legitimize these schemes must be held to account. No one is standing up though. Amazing isn't it? The government throws Martha, the last woman in America willing to cook and keep house, into the slammer for telling a fib on a $60K transaction, while billions are trading hands in illegal naked shorting activity. Yet no one will blow the whistle and start handing out supeona's. Heck they can't even decide on a date they are going to start enforcing the damn reg. http://www.siliconinvestor.com/readmsg.aspx?msgid=21146912&srchtxt=SHO "On March 4 and 7, I purchased a total of 180,000 shares, resulting in my obtaining 15.54% ownership of a stock reportedly already 100% owned by another investor. I assume that there may be additional investors who may also claim ownership of common shares of this company. "I have requested that certificates be issued to me representing my full 15.54% ownership interest, to protect my right to vote and enforce any other claims that may accrue to an actual documented owner. "I understand that Reg. SHO was supposed to detect and prevent the fabrication of millions of nonexistent shares. It would appear that my securities purchases prove that Reg. SHO has been systematically violated by market-making brokers and securities-clearing firms. "From time to time I may continue to purchase additional securities on the open market to increase my ownership interest to up to 100% of the company's common stock to give me an ownership interest equal to that of the current 100% owner," Floto concluded in his SEC filing. Simpson told FinancialWire that Oppenheimer has told him, after it sold him the shares, that it can not find shares to deliver to him. He said he has been discussing this with his attorney and plans soon to take action. Simpson is also considering court action in Nevada, the domicile of Global Links, to prevent the issuance by the company, whose executives he does not know nor seems to be interested in knowing, of any additional shares. He may also seek to become a director. Simpson is concerned that there may be a form of preferred shares that could prevent him from taking control of the company, so is exploring all his options. Simpson also said he received a call from a national reporter with the Dow Jones (NYSE: DJ) News Service, who he said accused him of "insider trading," and trying to flip his shares, and said she did not seem to know that his filing of the 13D prevents him from selling the shares for a year. That is not the least of his worries, however. A poster on Raging Bull with the monicker igroup), in post 27429 under the Zann Corp.'s message board, stated, "I would'nt be surprised if someone put bullet in the back of his head .." The message has been turned over to the Federal Bureau of Investigation. So brokers make money trading stock - real or fake stock - they still make money - well now people are threatening to bring honesty back to the market and getting death threats - terri does not want to hear this Pete - this is real world stuff with bullets and gangsters - don't stress them. Let the rich have all the gold and be happy for the crumbs they allow you to have.

Subject: Vanguard Returns
From: Terri
To: All
Date Posted: Fri, Mar 18, 2005 at 21:27:37 (EST)
Email Address: Not Provided

Message:
http://flagship5.vanguard.com/VGApp/hnw/FundsByName Vanguard Returns 12/31/04 to 3/18/05 S&P Index is -1.5 Large Cap Growth Index is -3.2 Large Cap Value Index is 0.6 Mid Cap Index is 0.1 Small Cap Index is -2.6 Small Cap Value Index is -2.1 Europe Index is 2.4 Pacific Index is 1.7 Energy is 17.3 Health Care is -0.1 REIT Index is -5.8 High Yield Corporate Bond Fund is -0.1 Long Term Corporate Bond Fund is 0.5

Subject: Sector Indexes
From: Terri
To: Terri
Date Posted: Fri, Mar 18, 2005 at 21:28:31 (EST)
Email Address: Not Provided

Message:
http://flagship2.vanguard.com/VGApp/hnw/FundsVIPERByName Sector Indexes 12/31/04 - 318/05 Energy 20.2 Financials -4.8 Health Care -1.7 Info Tech -7.9 Materials 4.3 REITs -5.8 Telecoms -6.6 Utilities 4.9

Subject: DFA beating Vanguard
From: johnny5
To: Terri
Date Posted: Sat, Mar 19, 2005 at 01:15:59 (EST)
Email Address: johnny5@yahoo.com

Message:
Terri if you look here http://www.dfaus.com/strategies/non_us/ for thier international and here for their domestic http://www.dfaus.com/strategies/us/ They are beating vanguard in a lot of funds - do you know much about DFA? For what reason would they be beating Vangaurd? Luck?

Subject: Understanding Price Earning Ratios
From: Terri
To: All
Date Posted: Fri, Mar 18, 2005 at 20:30:17 (EST)
Email Address: Not Provided

Message:
The S&P price earning ratio was 18.6 at the beginning of this month. What puzzles me is why the p/e ratio is still this high since we passed through a fierce bear market and have not yet recovered, also earning have been excellent. I do not think stocks are priced too highly, for the p/e ratio since 1970 is about 15, and 18.6 reflects a more liquid and even safer market. Also, interest rates are low so bonds are little competition. Still, I do not know why the p/e is still so high.

Subject: Re: Understanding Price Earning Ratios
From: Pete Weis
To: Terri
Date Posted: Sat, Mar 19, 2005 at 04:20:46 (EST)
Email Address: Not Provided

Message:
Obviously earnings have not been that excellent. Lots of spin on Wall Street and in the business press about great earnings. But while some companies have enjoyed great earnings (especially oil companies) overall earnings have been poor. Just shows you how you have to look below the surface to see through the bull that's being slung around these days. Another thing - many of those earnings being reported by many companies are phony. I'm betting the real p/e of the S&P is somewhere well north of 20. That series on Infospace and the dotcom industry in general in the Seattle Times gives a lot of detail about how these companies 'cook the books'. Believe me this business of fake earnings is fairly rampant throughout the world of publicly traded companies. Many corporate executives are more concerned about protecting the value of their stock than they are with the long term welfare of the companies they manage or the stockholders. They want to keep the stock price up at all costs until they can sell and cash in their gains. It's quite a system - IMO, a confidence game really. Here is how it works. A small investor goes to major brokerage firm seeking investment guidance. He or she is assigned a broker who is really just a sales person or front man/woman. The broker interfacing with the potential client gains the confidence of the small investor and makes them feel they can trust the broker and the firm he/she represents. Information about the prospective client is sent up the line to a group of 'investment analysts' who put together a 'balanced portfolio' of stocks, bonds, funds and investments for the prospective client. However, the main focus for these analysts is not what would constitute the best investment choices for the prospective client but rather to funnel the clients money into companies which compensate the brokerage and associated investment bank for underwriting services and investment banking services. This is where the real money comes from for major brokerage firms who have investment banking arms. Before signing an agreement, the prospective client is sent a booklet suggesting a portfolio which would be suitable for the client's investment goals. By law the brokerage firm must reveal its relationship to the companies it lists in the portfolio - usually with tiny footnotes and fine print. If the prospective client where to closely examine these footnotes they would discover what was going on. But few small investors pay much attention to this. The executives at the companies doing investment banking business with the brokerage reward the brokerage firm with continued lucrative business for, among other things, funneling small investor retirement savings into their companies. The top executives at these companies award themselves huge stock options while the board of directors pay-a-no-never-mind because many of them are their to just collect a nice check (like former senator Phil Gramm's wife on the board of directors at ENRON). Phil Gramm (long time banking committee chair while a senator) is now pulling down a hefty check as vice chairman of giant financial corporation UBS. UBS was part of the effort to hide ENRON's debt and earnings troubles and defrauding of investors. Gramm and his fellow UBS management team followed up the ENRON rip-off of investors with the HealthSouth investor fraud and the latest for UBS is their participation and assistance in hiding debt accumulated by the European food corporation Paarlamat(sp?). Morgan Stanley, Merrill Lynch, Smith Barney, JP Morgan, Goldman Sachs and Bear Stearns, to name a few, are all defending themselves against suits and SEC actions involving conflicts of interest and defrauding investors. But government regulators, when they do go after these offenders, only force them to pay fines which amount to 'pocket change' for companies which do billions in business. So they keep on running these schemes of skimming small investor savings to enrich the few who take part in this scam. There are certainly Democratic politicians who are also assisting and benefiting from these companies which are basically stealing from folks who have worked hard to have something in retirement. Even though I invest in the markets, I realize that they have become largely a vehicle to skim wealth from the masses to the few. At some point this whole corrupt system will fall apart and many very angry and disallusioned folks are going to want to know why and who did this to them.

Subject: Well Done
From: Terri
To: Pete Weis
Date Posted: Sat, Mar 19, 2005 at 06:12:08 (EST)
Email Address: Not Provided

Message:
This is a wonderful essay, carefully considered response at every point. I will in turn consider each point and respond. When you find an important series of articles always please tell us, for I would surely not have known about many articles you have posted and mentioned otherwise. Remember that bond funds can always be a secure investment alternative.

Subject: French on Behavioral Finance
From: johnny5
To: Pete Weis
Date Posted: Sat, Mar 19, 2005 at 05:08:00 (EST)
Email Address: johnny5@yahoo.com

Message:
Watch this video by Ken French on behavioral finance and small cap value investing: http://library.dfaus.com/videos/thinkers_french/ I read recently on diehards I think that a lot of the great value investors (buffet, graham) only look at earnings if they are sustainable, labor layoffs, one time productivity gifts in offshore IT and one time sales of assets are fooling uneducated investors because the earnings those things generated are not sustainable. Pete, warren said to get off the titanic, certain people think he is wrong and continue to put all thier wealth into investments he is betting against. In comparison that is like betting against andre agassi or pete sampras on some no name. That is like betting against shaq or kobe on some no name. Or like betting against jeff gordon in his nascar racer losing to your mother in her minivan. They defy logic - the man at the TOP of this investment game says GET OUT - one of the most skilled investors ever - and they keep wanting to bet on grandma millie and her mini van - not jeff gordon. So let them have their grandma millie - you stress them giving them all this negative info and they don't want stress - some people like being poor and stress free Pete - my grandfather did - and you trying to educate them about money and investing does not really help them even though you think it does - to you more money for stress may be worth it - but too many they want someone else to take care of them and make thier life stress free even if they are not as rich because of it. My grandfather lost his 40 acre farm because he liked stress free blissful ignorance, no big deal to him, he went and picked oranges all over the country for the next 20 years happy go lucky as he could be. He was truly a happy man, losing his farm did not bother him in the least. But then I read here about the property boom in 1890 california: http://www.siliconinvestor.com/readmsg.aspx?msgid=21138173 An article in the 'Los Angeles Times' dated June 9, 1887 told of a Pasadena citizen who took strychnine because 'he had sold some property too cheap,' and subsequent inflation of values had made him regret his disposal of it. So you have 2 kinds of people, my grandad and terri that can or will lose everything and not be bothered by it in the least, and then people like this guy who because he didn't make top gains committed suicide like hunter s thompson. Wether terri loses all her money or not - what good does it do her for me and you to stress her or anyone else? If someone sees the skill of jeff gordon and chooses to bet on grandma millie against him - let them have thier beliefs Pete - you and I know Gordon is certain to win - and if we can make the losers feel better by not stressing them then we all benefit - they don't mind the losses and you and I don't mind winning the 40 acre farm and everybody is happy. The markets can remain irrational longer than you can remain solvent, and if you keep preaching doom and short while they go long - all that happens in the end is you go broke and are upset for losing money, they go broke and are upset you kept glooming and dooming them - and everyone is upset then and loses. Instead follow the momentum as French recommends - don't rock the boat (titanic) be saavy - make people feel good for what they are doing - make your money and be happy, and let them feel good and stress free even if they lose their money and instead of everyone being upset - we will all be happy and less stressed.

Subject: Give credit to Terri for....
From: Pete Weis
To: johnny5
Date Posted: Sat, Mar 19, 2005 at 12:54:32 (EST)
Email Address: Not Provided

Message:
managing her own investments. I don't know about Terri, but if I make bad investment decisions and lose money, I can deal with it. But if I give it up to someone else and they scam me or make poor decisions on my behalf then it bothers me to no end and I feel like I'm a much bigger idiot. What disgusts me is all this talk about moral values and 'family values' and behind the scenes many of the very same people who mouth these platitudes, are leaching the retirement savings of millions of middle-class Americans via a corrupt system. So in the end, the bigger issue is not whether Terri, Johnny or Pete make the right investment decisions - it's about the selling out of America. But maybe I should just smarten up and realize that this has always been the America in which I have lived - I've only just become fully aware of it in the last several years. Or is it that we really have reached new levels of corruption both in the worlds of politics and business in recent times. I prefer to believe the latter since it means that sometime down the road, maybe after 'The Great Unraveling' has fully played out, we have a chance to clean this mess up.

Subject: Re: Give credit to Terri for....
From: johnny5
To: Pete Weis
Date Posted: Sat, Mar 19, 2005 at 21:03:47 (EST)
Email Address: johnny5@yahoo.com

Message:
I give great credit to Terri for money management and asset allocation, I am positive she knows the finer details at levels I have not reached nor may ever, but I worry that with the smart money like buffet and gates and others getting out of the dollar and buying foreign currencies if there is any domestic strategy that will be successful over the next 5-10 years. While you are in bearx and oil, and I am in oil and international value, she is in GNMA - we have different investing philosophy - I know for certain I will never be what warren is, so it seems logical to me to do anything opposite of what this great investor suggest is destined to failure. He says there are no values in domestics anymore. Terri steadfastly and optimistically thinks we can find value - but he says we cannot - and it is hard for me to understand how these 2 very bright individuals have such differing view on wether we should be short the dollar and time the market and get out of us currency or be in domestic bonds and equities. I can't take the risk Pete to be wiped out in a 1929, or march 2000 type event - even if I have to forego equity premiums for that safety I am beginning to believe strongly that it is ok and better safe than sorry. I am like you, the more devil in the details I discover about our brokerage system and financial systems the more amazed I am such things function with so few really understanding the 'conundrums' I only want for all of us to make secure retirements, but if you and I and terri and emma and david e and all the rest have very different asset allocations - it would be wise to get understanding why we all arrive at very different investment choices and outcomes from the same information? Why do you choose bearx? Why do I choose Xom? Why does terri choose gnma? I think at a fundamental level terri has more trust in large government entities than I do and I want to understand why that is so after greenspan admitting he was confused and wrong and having to cut our collective benefits because of his error.

Subject: Re: Give credit to Pete for....
From: Terri
To: Pete Weis
Date Posted: Sat, Mar 19, 2005 at 14:03:19 (EST)
Email Address: Not Provided

Message:
Agreed, Pete. These posts of yours are wonderfully well written. Intelligent investing is possible despite structural problems. The need is to keep learning how to be intelligent :)

Subject: Kindleberger says one word 'Mania'
From: johnny5
To: Terri
Date Posted: Sat, Mar 19, 2005 at 01:02:03 (EST)
Email Address: johnny5@yahoo.com

Message:
Now is not a good time to buy, Buffet is short the dollar and mostly out of the markets - why aren't you Terri?

Subject: Hope All is Fine
From: Jennifer
To: johnny5
Date Posted: Sat, Mar 19, 2005 at 09:19:27 (EST)
Email Address: Not Provided

Message:
I trust all has gone happily for your uncle.

Subject: Re: Hope All is Fine
From: johnny5
To: Jennifer
Date Posted: Sat, Mar 19, 2005 at 20:48:10 (EST)
Email Address: johnny5@yahoo.com

Message:
So far the broker assures him his money will be refunded and we wait - the broker was seeing a client and said these specific words to him 'I hope there are no hard feelings, when you get your head on straight and passed all this crazy thinking you are doing, we can get you into some good investments' I am disheartened Jennifer - I really don't think this person realizes that they were putting my uncle into a very bad investment - they don't understand that costs matter and spread disinformation that they believe in - I really appreciate y'alls advice and help. The broker claims in 15 years of business this was the first time ANYONE ever made use of ths sunshine law of 10 days to cancel the annuity and that is why they did not know it was only 10 days. If this is TRUE Jennifer - I feel so sorry for so many people. I convinced my mother to do a 1031 exchange on her property in west palm, we went and put a refundable 1,000 deposit on one of these 'master planned' community lots in pasco county, fl. Now this freaked me out, we had to stand in line for about 5 hours to get into the model homes office, then there was some kind of raffle for assigning lots, then they released lots in this phase of the development - phase 2 that was only supposed to be releases in phase 3,4, and 5. There was that much demand, they gave her a lot and because it was slightly bigger than standard - it would have a 5,000 dollar premium - we said OK (that lot was just a few hundred yards from a publix where most of my uncles have worked thier whole life) mom wrote the check for 1,000 and the next day they called us and said OOPS we made a mistake - that 5K premium is really gonna cost you 15K!!!!!!! I flipped Jennifer - I told my mom monday we need to go get a lawyer - that is a bunch of BS - the realtor said well it was a madhouse and we misquoted you the price and don't feel bad, if you hadn't got in that day, you would be paying 5K more for the lots already, so instead of a 15K premium, they are now a 20K premium - the realtor said be HAPPY you have already made 5K - this totally makes my brain hurt Jennifer - total madness. I think they saw they could jack the prices 10K and stick it to these people. Now Johnny5 was exploring and while the realtors were all fighting the crowds he was going through the drawers in the kitchen of one of the model homes to check out the rollers and surprise johnny5 found a price list from november 2004 - prices on a standard lot with a 1500SQ ft house were 170K, by march 08, their new price list had that setup for 210K but that was before the 10K new additional premium - so 170K in november, 220K in march for the exact same thing - these developers are making out like a bandit. Isn't the government supposed to protect citizens from overpaying for stuff in this country? What is funny is and older development right next door with houses that are about 5 years old but identical in look and architecture and just about everything else johnny could check only cost 150K used - there were a few for sale in that price range - so how does a brand new house cost 220K and a house 5 years old but almost identical in lot and house cost 150K?

Subject: Japan and Bubbles Bursting
From: Terri
To: All
Date Posted: Fri, Mar 18, 2005 at 18:33:37 (EST)
Email Address: Not Provided

Message:
When the Japanese stock market began the tumble in January 1989 from 38,900 to 24,000, the central bank comments were about the bubble economy that had burst as though this was a hopeful bursting. Japanese stocks were evidently not much owned in households, rather companies held stock in each other, so why should there be a problem? When real estate prices began to fall in 1992, households were effected but still the central bank seemed to welcome the bursting of the bubble. Well, it is 2005 and Japan has not recovered. I would hope the Federal Reserve is awfully wary of simply letting bubbles burst.

Subject: Limiting a Negative Wealth Effect
From: Terri
To: Terri
Date Posted: Fri, Mar 18, 2005 at 21:54:57 (EST)
Email Address: Not Provided

Message:
That we have a Federal Reserve which is always concerned about a negative wealth effect is of considerable comfort. We will not allow a negative wealth effect such as occured in Japan, for we will move much earlier and in pronounced fashion as the Fed did from January 2001.

Subject: The Wealth Effect
From: Terri
To: All
Date Posted: Fri, Mar 18, 2005 at 18:21:05 (EST)
Email Address: Not Provided

Message:
I read through the minutes of the November 15, 1994 Federal Reserve meeting when it was decided to raise rates by 75 basis points. Much to my surprise Alan Greespan strongly warned that the market had built in a 50 basis point increase and would build in another if the Fed went along. So 75 basis points was needed to assure investors that all was in control. Greenspan expressed worry about the stock market and the currency market, and was especially concerned that a loss in stock value would have a significant negative wealth effect. So, the Fed raised by 75 basis points to investors surprise and relief and bull markets began for bonds and stocks and the dollar continued to strengthen. The idea that a decline in stock and bond markets could be good for us makes no sense to me, and I hope the Fed would again try to ward off such an occurence.

Subject: Deflation coming home
From: johnny5
To: All
Date Posted: Fri, Mar 18, 2005 at 16:56:03 (EST)
Email Address: johnny5@yahoo.com

Message:
THE USA IS LUCKY THAT CHINA CANNOT SHIP HOUSES TO OUR ECONOMY. http://www.321gold.com/editorials/willie/willie031705.html Export Inflation, Import Deflation Jim Willie CB Archives Jim Willie CB is the editor of the 'HAT TRICK LETTER' Mar 17, 2005 For specific detailed analysis of the Gold, USDollar, Treasury bonds, and inter-market dynamics with the US Economy and Fed monetary policy, see instructions for subscription to my newsletter research reports, which include stock recommendations positioned to rise in the commodity bull market. Inflation remains the principal object of misunderstanding in the investment world. The criticism extends to the gold community. Massive US money supply growth in no way ensures a rampup in the gold price. We certainly do not measure inflation properly, as most give little credence to the joke CPI statistic. The banking system leaders have intentionally caused confusion on the inflation subject. We see a price rise in sectors where money flow travels or is directed, since bubbles come from applied monetary force in a bounded arena. THE USA IS LUCKY THAT CHINA CANNOT SHIP HOUSES TO OUR ECONOMY. On the other hand, we see a price decline in sectors where money flow is denied or neglected, since Asia floods our markets after exploiting its unlimited labor surplus. Federal Reserve spokesmen continue to spew nonsense about how 'inflation is gaining' or 'threat of deflation must be contained,' as though they are mutually exclusive, one occurring but not both. The Fed's method of dysfunction, corrupted by Fed loyalty and collusion with the USGovt, is to take indicator cues from the real economy (battling with severe recession) and use distress signals as justification for evermore free-flowing liquidity and easy money stimulative policy for the financial sector (in near constant steroid supply). My pen enjoys metaphors and imagery. They are effective to drive home a difficult point. Greenspan has a pack of relentless pit bull dogs biting his arse with secular deflation, seen with busted bubbles in the past, lost jobs to Asia, and steroid-driven bond speculation. He responds to soft prices in certain arenas and the onset of slower money flow (liquidity). Greenspan at the same time has a pack of vicious doberman dogs biting his genitalia with a systemic rising cost structure in concert with asset inflation. Action taken to protect his hind end jeopardizes his frontal jewel box. Actions taken to protect his exposed cod piece jeopardize his rear flank. The US Economy is victimized by the two packs of vicious dogs. In time, my expectation is that our corrupted, myopic, bewildered Fed Chairman will lose both his seat and his seed, rendered a pathetic shell of a man with only legs and a head. He will run away from his past, and speak more in rationalization and alibis, blaming others. In the end, like the middle class, his entire midsection will be ravaged front and back by both dogpacks. A grand middle class squeeze has accelerated, which has become asset rich with their homes but cash poor with income and cash flow. This article will not address whether secular deflation has the upper hand, confirmed by the continuing 25-year bond bull market. Reporting on that titanic struggle is for another day, a frequent topic in my Hat Trick Letter. My view is a bond top, marked by bottoming yields, has surely begun to be evident. However, the jury is still out on whether the US long-term decline in interest rates (10-yr TNote) will resume, and will work to converge with Japanese long-term rates. Hedge funds seem to apply leverage in that direction. See how the recent rise in our TENS yield is still beneath the downtrend. EFFECT OF GLOBALIZATION The US Economy is NOT a closed system, surely not since globalization. As a nation, we choose to contain our inflation for the benefit of assets, since we cave in to human laziness, drawn arrogantly to intellectual pursuits and toward a cleaner environment in the process. The mushroom price effect in stocks, bonds, housing all fits like a glove with the 'American Dream.' We choose to permit foreigners to perform our spadework, but the rub is that such a choice (passive or active) kills our economy. Destructive, incompetent, heretical economic policy and leadership has backfired to squeeze the US middle class beyond the field of vision from our financial press. We actually believe we can run monetary presses (counterfeit money printing operation) with impunity as we export our debts abroad. With 'flexibility' comes a heavy cost of erosion in job quality and quantity. The US Economy endures a roundtrip for inflation, and must overcome the deception that we avoid effects of rampaging hyper-inflation. By that is meant an explosion of money supply (inflation in pure form). Monetary expansion typically goes to asset groups, to industrial buildup, or to consumption. In the USA it tends to go domestically into assets (stocks, bonds, housing) and into wasteful spending. We export much debt to Asia, where they build factories and ship their output to our shores. See our big-box superstores, an endless chain of retail chains which sells Asian finished products. Try running a small business with any of these guys within your 5-mile trade zone. That is bigtime pricing power stress and a crimp on either hiring or expansion. The ugly hidden cost of exporting inflation and importing Asian output is that we in the USA lose wages and replace them with debt. We miss out on the entire trickle down multiplier effect, from all the supply industries. Those benefits reside in Asia. The 'Orwellian spin' by the USGovt is that we retain higher grade jobs, when the truth is that we arrange lower grade jobs in their replacement. A constant complaint and criticism from me in public and newsletter writing is the abysmal comprehension and total lack of proper teaching on the subject of 'inflation.' We tend to incorrectly regard any price rise as inflation. If the item being priced suffers a sudden jump, like say with orange juice after the shock of a damaging crop freeze to the groves, that is not price inflation. Rather, it is a price adjustment to address a shortage of products in inventory. If a flood of automobiles rolls to dealer lots as a result of forced job continuation and labor contracts to block worker layoffs, the lower car prices from incentive sales programs is not price deflation. Rather, it is price adjustment to address a surplus of products in inventory. On the other hand, if lower interest rates spawn an enormous speculative frenzy to invest in residential property, even second homes (as occurs now), and housing prices rise, yes, that is indeed evidence of inflation. Too much newly printed money has chased housing property. If easy money Fed stimulus is enables negative real interest rates, and bonds escalate in principal value, yes, that is indeed evidence of inflation. Too much newly printed money has chased bond securities. The wise fool who heads our Federal Reserve would have you think falling stock prices were the result of deflation. He would have you think falling car prices are the result of deflation. He would have you think falling consumer prices for electronics, cell phone, and computers are the result of deflation. In 2001, Chairman Greenspan ordered a new round of monetary inflation (increased money supply infusions) to combat debt collapse and speculative reversal, which had their root cause in excessive monetary inflation. So the cure for the harmful effects of monetary inflation was to be more ordered monetary inflation? Therein lies the insanity of policy, which is heartily endorsed. It is accepted partly because of ignorance to inflation, partly because of Wall Street eagerness to benefit from directed new money investment into familiar arenas. Those arenas after 2001 were bonds, mortgages, housing, and with stocks, enough to tread water. Simply stated, inflation is defined as money supply expansion, rising money supply, manifested often from an increase in debt and a flood of liquidity from Fed bond purchases, a basic growth in the monetary base. Take your definition pick. It is not the blister bubble on the bicycle tire, but rather the increased air supply from operating the pump !!! The money can be from new business expansion, from expenses for equipment & training, from mergers & acquisitions, from added margin debt for stocks, from Fed open market purchases with money out of thin air, from foreign central bank interventions to purchase new US Treasurys, from added hedge fund borrowing for speculation, from new consumer debt for household purposes, from large retail item purchase, from new car purchases, from rabid real estate activity, from home remodeling, from vacations, from dream motor boats. Notice only the first two examples pertain to constructive purposes. The remainder pertain to potentially destructive purposes. Cars and homes are surely necessities. But a second home on a lakefront is not. A new car every two years is not, which has crushed used car prices. A bigger house trade-up is not when children have moved out. The tendency has been to go toward bigger cars, including SUVs, toward bigger houses over 3000 square feet affectionately dubbed 'MacMansions.' Easy money has encouraged waste and speculation. THE EXODUS EXPORT OF MONETARY INFLATION Since the mid-1990 decade, a phenomenon has shown itself and taken root. The US trade deficit has grown in size, even as the US monetary base (money supply) has also grown. The constant has been that US debts always grow annually. We are the greatest debt abusers in mankind history. A phrase caught my attention over ten years ago. FOR YEARS THE USA HAS EXPORTED INFLATION. New money can be directed to go toward businesses, toward assets, or toward basic consumption. If into businesses to excess, then you tend to see over-production, over-hiring of workers, excess output, and eventual liquidation marked by lower prices. If directed into assets to excess, then you tend to see price bubbles, a boom frenzy in speculation, a trumpeted bull market, and eventual busts. If directed into consumption to excess, then you tend to see abusive size, inefficiency, suffocation, neglected health, debt overload, delinquency, default, and bankruptcy. The US Economy last saw over-investment in the telecommunications industry with too many cellular towers, too many cell phone carriers, too many long distance phone carriers. We saw over-investment in personal computer makers, and fiber optic supply firms. All suffered liquidations, consolidations, acquisitions, and revamped businesses. Consumers benefited with lower prices. We call it 'creative destruction.' We regularly and frequently over-invests in assets. We love our stocks, bonds, and housing. What easier way to make money than to anticipate properly the next 'trend' which in actuality, such practice is just to discern and anticipate where the next inflationary destination and routes will be. Well, the creative destruction nowadays has the US Economy suffering the destruction, while Asia enjoys the creation. Our wastefulness, insane economic policy, and desire to gamble rather than work have led to a mountain of debt which has been financed by foreigners. The veritable hemorrhage of trade surplus has been recycled into US Treasury debt, into US agency mortgage debt, and into vendor financed purchases in consumer debt. The USA has eluded rising prices by selling our debt securities to foreigners, outside our boundaries. We pretend we are selling assets in a fair trade. We are instead permitting foreigners to acquire an additional 1% of the entire US asset base each year in exchange for supplying our economy with cheaper goods produced abroad by foreign workers. We force our debt onto the world, which in a sense feels compelled to purchase it. THE USA EXPORTS INFLATION (in a monetary sense). We export debt. THE ROUND-TRIP IMPORT OF PRICE DEFLATION An overlooked statistic is that US consumer debt has been growing in lockstep with the Chinese trade gap (bilateral to USA). Total consumer debt, from both revolving and installment sources, has risen almost 22% since January 2001, from $1711 billion to $2085 billion through November 2004. During the same stretch of time, the Chinese trade deficit accumulated by a commensurate $440 billion. Hmmm, similar magnitude !!! The result of Fed stimulus has been a massive Asian factory buildup. Their central banks have ensured that currency corrections do not interrupt the 'grand giveaway' by mindless US officials, which includes technology given by our corporations. Yes, we donate our main comparative advantage to Asia, principally China. The Asian imported product influx has greatly suppressed product prices in the real economy, where things are made. Imports dominate systemically. Whether it be Wal-Mart, KMart, Circuit City, Best Buy, Staples, Office Depot, Home Depot, or Lowe's, our stores are stocked with products made in Asia. The supply chain stocking of our retail shelves represents a round trip from the exported inflation. We export inflation in the form of trade deficits and foreign purchases of debt. They invest in new factories across Asia, recently in China. Their output is sent to the US Economy, as we import it. WE IMPORT DEFLATION (in a falling product price sense). When money leaves our nation, passes through Asian factories, then returns, it is transformed from excess demand in the form of money to excess supply in the form of products. Inflation eventually pressures demand or pressures supply. Over-investment such as is in progress in China yields excess output and lower prices. It really is not so simple, since Chinese labor costs are 3% to 5% of the US labor costs. They have over-built factories though, and under-built the necessary roadways, electricity generation capacity, port loading docks, and truck & rail facilities. The last time severe over-investment occurred in Asia was 1995 to 1997. Thailand over-built cities. Korea over-built technology supply. The entire PacRim of Asian Tigers over-built in technology supply also. The Asian Meltdown followed. The key to US observers is to note how prices systemically in the finished product arena are kept low because we import deflation from Asia. Americans complete the process by shopping in the malls and bigbox superstores, which rekindles the cycle once more. The vast recycle of Asian trade surplus into US Treasurys is well-known. Their purchase support, if not intervention, keeps the long-term interest rates low. That is the financial side of the exported inflation equation. However, a pernicious additional force is at work. We as a nation believe we get off scott-free by shoving our factory load to Asia. The White House Council of Economic Advisors and Fed Chairman Greenspan speak openly about the low-cost advantage taken from Asian output. We believe we can export debt without consequence. The US exports inflation, only to see it return in the form of imported cheap products from Asia. We import deflation on the back end. This effectively kills pricing power and kills jobs. So the US consumer is helping to flatten the yield curve also. This is the commercial side of the exported inflation equation. Identified in this article is but one more symptom of the failed Fed Reflation initiative discussed over many months in the Hat Trick Letter, whose March issue was just posted.

Subject: Market cap to GDP
From: Pete Weis
To: All
Date Posted: Fri, Mar 18, 2005 at 15:08:52 (EST)
Email Address: Not Provided

Message:
I wonder if Bill Gross and others are right about CPI being understated and therefore GDP overstated. But even if GDP is being properly stated this article points to an interesting observation about the value or lack thereof of the stock markets. Morningstar.com Outsmarting Market Trends Wednesday March 16, 6:00 am ET By Curt Morrison, MD, FACC Shortly before the stock market crash of 1929, Yale economist Irving Fisher famously declared that stocks had reached what appeared to be a permanently high plateau. Undoubtedly, Fisher was neither the first person nor the last one to believe that prevailing conditions would never change. Those ideas appear to be as common at market bottoms as they are at market tops. Yet if history reveals one permanent feature of business conditions or stock returns, it is this: They change. In fact, they tend to change cyclically. If the cycles lasted only one week at a time, then no one would be fooled by them, but bull markets, bear markets, and business cycles can last for years, and their relative durability seduces investors. Among other reasons, I think this occurs because many investors lack a historical perspective, and many more have a short-term focus. Patient, knowledgeable investors can avoid this pitfall by valuing securities and the broad market based on normalized results. This sort of analysis warns investors away when market prices imply that peak performance will be sustained over the long term, and it invites them to take advantage of a sort of arbitrage opportunity when prices imply that adverse conditions will never improve. That is, patient investors can profit on the arbitrage between their long-term horizon and the short-term focus of many other market participants. Estimates of normalized results can be made with moderate confidence for mature companies, and with greater confidence for entire industries. Because we have more than 130 years of data on the broad stock market, and because it represents a major portion of the entire national economy, we can estimate its normalized results with the highest degree of confidence. I've described some examples below. Be wary when peak operating margins are projected over the long term. Aetna (NYSE:AET - News), Humana (NYSE:HUM - News), and UnitedHealth Group (NYSE:UNH - News) have all posted rising operating margins during the last several years, and all three companies have enjoyed a sharply rising stock price. However, the same could be said for most of their peers. In my opinion, managed-care companies have enjoyed an optimal environment between 2002 and 2004, but industry conditions have been cyclical in the past, and there are signs that the cycle peaked in 2004. Despite this, current stock prices appear to discount a continuation of recent peak or near-peak operating margins and organic sales growth rates over the long term. Drug companies have stumbled, but long-term prospects probably haven't changed. Contrarily, opportunities are created when short-term industry difficulties lead to lower long-term expectations. Last year's headlines were full of bad news for pharmaceutical companies, and their stocks fell to valuation levels last seen a decade ago (you can read more about the subject here and here). Although the research labs have been relatively unproductive at a number of these companies in recent years, the pharmaceutical industry has been extremely profitable for decades. Dry spells have always been followed by a new wave of discoveries, and it seems unlikely to me that the progress of medicine will slow in the decades ahead. Ground-breaking drugs create their own demand, and as long as the normalized productivity of future pharmaceutical research approximates that of the past, these companies should continue to post stellar growth and profitability in the decades ahead. In bear markets, investors expect bad times to last. In a similar vein, Warren Buffett wrote an article in 1979 explaining that the broad stock market offered excellent value. Inflation was high then and stock returns had been poor for seven long years. That was also the year that BusinessWeek famously ran a cover story titled 'The Death of Equities.' Irving Fisher described a permanently high plateau in 1929, but 50 years later, investors thought they saw a permanently low valley. Although it's possible for individual companies or even whole industries to suffer a permanent impairment, investors can be much more certain about the future of the entire market. Measured by the normalized P/E or the Q ratio (read more about these metrics here), the stock market sold at only 60% of fair value in 1979, but over the very long term these measures must revert to fair value as long as markets function freely. Insightful investors had an opportunity to profit on the arbitrage between their long-term outlook and the shorter term gloom reflected in market prices. As it turned out, a long-term outlook was required because the market's valuation fell to only half of a fair level by 1982. As Buffett is quick to admit, he has no idea what the market will do in the short-term--and three years is a short period in the stock market. Nevertheless, conditions did change eventually, and 1982 marked the beginning of the greatest bull market in history. Today's prices assume peak margins and high valuations are permanent. Unfortunately, I think that today's stock market is a polar opposite of 1979. It is markedly overvalued by the normalized P/E or Q ratio, as well as by Buffett's favorite metric, the ratio of total market capitalization to GDP. That ratio was recently about 1.3 against a long-term average near 0.62 and a long-term median of roughly 0.56. There are probably many contributing reasons for this unhappy state of affairs (unhappy because it means that prospective returns are low), but one might be analogous to the situation described for managed-care companies. Jeremy Grantham calls corporate profit margins the most reliably mean-reverting series in finance, and Buffett wrote that the margin (total aftertax corporate profits as a percentage of GDP) generally remains between 4% and 6.5%. He remarked that it's rare for the rate to go above 6.5%. However, that margin reached 7.92% last year, according to a report by Arnold Van Den Berg. That value was exceeded only once during the last 80 years--in 1929. Given that profit margins are mean-reverting, investors ought to assign low P/E ratios to high-profit margins and vice versa. In this way, investors could properly account for normalized long-term results. Yet, according to data presented by Grantham, they tend to do just the opposite. Investors in 1979 shared the outlook of their peers from 1932, a terrible year in the stock market, but today's investors have more in common with those of 1929, in my opinion. Too much importance has been assigned to unsustainable current conditions, and too little attention has been given to normalized estimates of profit margins, interest rates, and earnings growth. Just as independent-minded investors with a long-term focus profited by recognizing that bad conditions were likely to improve in 1979, like-minded investors today should heed the warning flags the market is waving: The normalized P/E, Q ratio, and market-capitalization/GDP ratio are unsustainably high.

Subject: Well Done
From: Terri
To: Pete Weis
Date Posted: Fri, Mar 18, 2005 at 15:55:38 (EST)
Email Address: Not Provided

Message:
Excellent articles. The concerns here need to be carefully looked to, and I will respond in several posts. We must think of the potential problem, and what widespread and personal responses might be.

Subject: Re: Market cap to GDP
From: johnny5
To: Pete Weis
Date Posted: Fri, Mar 18, 2005 at 15:50:11 (EST)
Email Address: johnny5@yahoo.com

Message:
Pete assuming we are at a peak that will drop like 1929 - is this the best time to stick all that social security money into the market? Won't the president be putting our citizens into the market at the worst possible time in history? He wouldn't do that would he? Where is paul krugmans retirement money invested? gold coins? collector wine?

Subject: Tipping points
From: Pete Weis
To: All
Date Posted: Fri, Mar 18, 2005 at 14:56:33 (EST)
Email Address: Not Provided

Message:
Mar 18, 2005 Global: America Smells the Coffee United States: Consumers Ready for Challenges Ahead China: Mild Anti-Speculation Measures Global: America Smells the Coffee Stephen Roach (from Beijing) Tipping points are a great concept, but virtually impossible to identify ahead of time -- let alone when they are occurring. It is only with the great luxury of hindsight that we can look back and know that the proverbial bell has rung. In my view, March 16, 2005 could end up in the running as a possible tipping point for America. Suddenly, the US has taken on a very different aura in an increasingly unbalanced world: The confluence of a record current account deficit, a disaster from General Motors, and yet another new high for oil prices all speak of an increasingly precarious role for the global hegemon. World financial markets have barely begun to sniff that out. The current account deficit probably says it all. As I have noted ad nauseum, it is an outgrowth of America’s biggest problem -- an unprecedented shortfall of national saving. The US net national saving rate -- the combined saving of individuals, businesses and the government sector (all adjusted for depreciation) -- has fallen to a record low of 1.5% since early 2002. Lacking in domestic saving, America must import foreign saving from abroad in order to keep growing at what the body politic judges to be acceptable growth rates. And so the US must then run massive and ever-widening current account deficits to attract that foreign capital. And ever-widening it is: America’s broadest measure of its external shortfall was just reported to have hit an all-time record of 6.3% of GDP in 4Q04 -- an astonishing 1.8 percentage point deterioration from the 4.5% deficit a year-earlier in 4Q03. Not only is this a record current-account deficit for the US, but it is also a record financing burden for the rest of the world. Based on the annualized current account deficit of slightly more than $750 billion in the final period of 2004, America now requires an average of $2.9 billion of capital inflows each and every business day to keep the magic going. “What’s good for General Motors is good for America.” I realize that dates me, but I’m old enough to remember when that was the battle cry of a once mighty Smokestack America. So when GM throws in the towel on earnings (again) and its bonds trade at near-junk status, maybe there’s more to this story than a quick flicker on the screen. The ever-cynical comments on chatrooms were quick to minimize the significance of this event: “What do you want from a healthcare provider dressed up as an auto company?” Yes, Detroit is now a shadow of its former self -- US automakers currently employ only 0.8% of all workers in the US. In many respects, that’s emblematic of the fate of the factory sector as a whole, where the job share has plunged from 33% of private nonfarm payrolls in 1960 to around 13% today. The demise of US manufacturing is now taken as a given and most simply dismiss GM’s latest travails as a non-event. I think there is a deeper meaning to all this -- especially coming on a day when the current-account deficit was reported to have taken yet another ominous leap into uncharted territory. Not surprisingly, the US trade deficit on goods accounted for fully 98% of America’s total current account deficit in 4Q04. That’s right, a once proud Smokestack America has borne the brunt of the unprecedented US saving shortfall. And just as GM led the charge in the heyday of America’s manufacturing prowess, it is now on the “bleeding edge” of its darker days. Coincidence? I doubt it. It may well be that the accelerated erosion of America’s manufacturing base in recent years is the most painful outgrowth of a record US saving shortfall. Washington, of course, wants to pin the blame on unfair foreign competition. Instead, it ought to take a look in the mirror: It is the budget deficit, of course, that has been crucial in pushing national saving to record lows in recent years. And it is the capital inflows -- and the trade deficits behind those flows -- that are required to compensate for these budget deficits and give a saving-short America the foreign aid it needs to keep on growing. March 16 was also a day of record oil prices. No, this is not just America’s problem. But in a falling-dollar climate, other nations enjoy a cushion from this blow as their currencies rise. Not so in the US as the current account deficit keeps the greenback under pressure. The press, of course, is filled with commentary about how oil no longer matters. All I can say is -- been there, done that. My experience tells me that this is precisely the rhetoric we always hear in the midst of an oil shock. And shock it is: In real terms, $56 oil represents more than a quadrupling from the lows of late 1998 -- putting this price spike very much on a par with those devastating blows of the 1970s. The apologists will tell you not to worry -- that the real price of oil is still below record levels hit in the late 1970s. That is poor macro, to say the least. Impacts to economic growth are not about levels -- but about changes. The sharp run-up of oil prices in these past few years is the functional equivalent of a tax on household purchasing power that only puts further pressure on an already over-extended American consumer. The fact that consumers haven’t caved yet doesn’t mean the Holy Grail of a new immunity to rising oil prices has been discovered. It could mean that something else has temporarily deferred the endgame. That “something else,” in my view, goes right back to America’s biggest hole -- the current account deficit and the capital inflows from abroad that keep funding it. Recent US Treasury data suggest this is not a problem -- net portfolio investment of $91.5 billion in January 2005 that was more than enough to cover the $58 billion trade deficit that month. The Washington spin is that foreigners can’t get enough of dollar-denominated assets and the returns they offer in an otherwise return-starved world. Don’t kid yourself. This rush of foreign capital is not about private investors plunging back into US assets. It is a conscious policy move on the part of foreign central banks. The US Treasury data do not accurately reflect the obvious -- an extraordinary build-up of dollar-denominated official foreign exchange reserves held by the world’s monetary authorities. By our estimates (based on IMF data), total reserves increased by about $700 billion from year-end 2003 to year-end 2004. Assuming that the dollar share of such holdings held steady at around 70% (an official BIS estimate as of late 2003), that implies an increase of nearly $500 billion in dollar-denominated holdings of the world’s central banks -- confirming that foreign central banks financed about 75% of America’s current account deficit last year. That policy-driven financing is a bold effort on the part of foreign central banks to keep their currencies from rising and defer what could be an otherwise painfully classic US current account adjustment -- complete with a further decline in the dollar and sharply higher US interest rates. The resulting subsidy to US interest rates -- and the asset-driven consumption that engenders -- goes a long way in cushioning the blows of stagnant real wages and surging oil prices that might have otherwise clobbered the American consumer. But the message from overseas is that this game is just about over. One by one, Asian central banks -- America’s financiers at the margin -- have dropped the not-so-subtle hint that they are saturated with dollar-denominated assets. From Korea and Japan to China and India -- not to dismiss Malaysia, Hong Kong, and Singapore -- there is a growing protest to massive dollar overweights in official reserve portfolios. The standard American response borders on arrogance: “What choice do they have?” The presumption is that the US has externally driven Asian economies over a barrel -- unwilling to accept a deterioration in export competitiveness that currency appreciation might bring. This misses a key cost-benefit tradeoff -- weighing the hit to exports against the fiscal cost of a portfolio loss on holdings of dollar-denominated assets. The bigger the build-up of dollar reserves, the more this tradeoff is likely to tip toward dollar diversification -- spelling the end of America’s cut-rate foreign financing. In the end, of course, there’s far more to this story than economics. As I noted recently, history is replete with examples of leadership tests that pit a nation’s military prowess against its economic base (see my 28 February dispatch, “The Pendulum of Global Leadership”). Yale historian Paul Kennedy has long argued that great powers typically fail when military reach outstrips a nation’s economic strength. In that vein, there’s little doubt that America is extending its reach in this post-9/11 world. Wars in Afghanistan and Iraq were the opening salvos. The Bush Administration’s recent nomination of two leading neocons to key global positions -- John Bolton as America’s ambassador to the UN and Paul Wolfowitz to head the World Bank (also announced on March 16) -- are more recent examples of a White House that is upping the ante on its “transformational” projection of global power. In Paul Kennedy’s historical framework, America is extending its reach at precisely the moment when its economic power base is weakening -- a classic warning sign of the fall of a Great Power. Was March 16, 2005 America’s tipping point? Only time will tell. The optimist can hope that it was a wake-up call for a saving-short US economy to put its house back in order. For once, call me an optimist. It’s time for America to smell the coffee.

Subject: Well, Possibly
From: Terri
To: Pete Weis
Date Posted: Fri, Mar 18, 2005 at 19:54:43 (EST)
Email Address: Not Provided

Message:
Well, yes, I am worrying more lately.

Subject: Canada and Oil and Boom Towns
From: Emma
To: All
Date Posted: Fri, Mar 18, 2005 at 14:22:22 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/18/international/americas/18alberta.html Looking for Recruits for the Frozen North? Try the Tropics By CLIFFORD KRAUSS FORT McMURRAY, Alberta - Forty below zero isn't so bad once you get used to it. At least that was the message of a seminar at Keyano College called 'We Love the Winters Here,' attended by 30 new immigrants from warm-blooded places like Venezuela and Nigeria, drawn here by the promise of hefty salaries in an oil boomtown. Of course, the lecturers noted, there are some important things to remember about living in this sub-Arctic town where winters last eight long, blustery months. For one thing, children must be taught that it is dangerous to stick their tongues on freezing metal poles. There are risks to warming up a car inside the garage, and there are ways to drive out of a skid on an icy road. It is all part of life in what was once a God-forsaken cowboy outpost until several multinational oil companies ratcheted up their oil sands operations here in recent years. In two decades, the population has nearly doubled, to 60,000 from 35,000. There is a lot of money to be made here, especially with oil prices over $50 a barrel, plenty of high-paying jobs and a real estate boom, which have all helped make just about everyone, blue-collar workers included, feel prosperous. But few Canadians from relatively balmy places like Vancouver and Toronto have the gumption to live in these frigid climes, so oil company recruiters are looking far and wide. Amazingly, they are finding plenty of hearty, well-trained and highly motivated people from places where 70 degrees Fahrenheit is considered chilly. 'What do you prefer,' asked Ligda Massicotte, 38, a lawyer who left the chaos of her native Venezuela four years ago. 'A country where there is kidnapping, crime, revolution, political uncertainty or a country that is cold where you have to put a hat on?' Nevertheless, Ms. Massicotte and her fellow English-language students at Keyano say the constant need to shovel snow and the short, dark days take some getting used to. 'When we first got here, my husband would say 'Let's go out,' ' she recalled, 'and I'd say, 'Oh honey, we have to dress the kids, two socks on each, then the long underwear, then the long-sleeve shirts, then the snow suit, then the mittens, then the hats, then the scarves.' Then as soon as you're ready one of the kids would pooh, and you'd have to start all over again. We'd always be an hour late.' Venezuela, where President Hugo Chávez fired more than 5,000 employees at the state oil company after a failed general strike, has been particularly fertile recruiting ground for energy companies. 'When you are in Venezuela and you read the word 'cold,' you don't really know what that word means,' said Cesar Mogollon, an electrical engineer with Suncor Energy who arrived from Venezuela in November. 'The first time I went out at minus 40 during a safety tour around the plant in early December, I was dying,' he said. 'I felt pain in my nose and ears that went inside. I looked around at my colleagues and asked myself, 'Do they have different blood than me?' ' But Mr. Mogollon said that once he found that local supermarkets carried the white maize flour dough used to make arepas and empanadas, 'I was O.K.' He and his wife have adjusted, he said, and his 9-year-old daughter and 13-year-old son are snow tubing and skiing with gusto. At least 4,000 foreign-born immigrants now live in Fort McMurray, and the number is growing fast. Local supermarkets carry halvah from Saudi Arabia, mango nectar from Egypt, jarred yellow cherries from Guatemala, rice sticks from the Philippines and marinating sauces from South Africa. There are cultural organizations for Latinos, Hindus, Filipinos and Chinese. The first Islamic school opened last year. Mushtaque Ahmed, a 54-year-old engineer at Syncrude Canada, who was born in Bangladesh, has worked previously in Iraq and Saudi Arabia. He says that 10 families from Bangladesh arrived here in the last three years, and that they now get together to celebrate Bangladeshi holidays with potluck dinners that mix their native cooking with Canadian fare: typically roast turkey and assorted biryanis. There has already been one marriage in the community, he said, and he is trying to persuade his brother-in-law to come here to open a Bangladeshi restaurant. 'I like the friendliness of the people here,' Mr. Ahmed said, although he admitted to one misgiving that has nothing to do with the weather: 'I can get uncomfortable with what's on television. There's a lot of tolerance to things I am not accustomed to.' Immigrants here, like immigrants everywhere, get homesick and cling to their native cultures. Oswald Francis, a 52-year-old Jamaican-born bus driver, still wears a Jamaican flag on a bracelet and on a pin on his lapel. He came here for a three-week holiday in 1977 to visit friends, and never left, in large part because his wife thought this could be a good place to raise their two daughters. 'Canada is the best place in the world to live right now, and Fort McMurray is the best place in Canada to live because of the opportunities, the jobs, the money,' he said while shopping for a long-distance calling card in a multicultural supermarket. 'As for the cold, I wouldn't call it an adjustment. You never get used to it.'

Subject: Brazil Plane Maker Getting Big Orders
From: Emma
To: All
Date Posted: Fri, Mar 18, 2005 at 14:20:46 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/18/business/worldbusiness/18embraer.html Brazil Plane Maker Getting Big Orders for Smaller Jets By TODD BENSON SÃO JOSÉ DOS CAMPOS, Brazil - Workers at the sprawling aircraft factory here, some 50 miles northeast of São Paulo, are assembling a new kind of plane that JetBlue Airways is betting will let it take its low-fare, low-cost philosophy to dozens of previously ignored destinations across the United States. The new plane, by the Brazilian jet maker Embraer, is a far cry from the cramped 50-seater that airlines normally use on shorter hops. In fact, it is roomier than the 156-seat Airbus A320 that JetBlue currently flies. Like it, the Embraer jet will have leather seats and digital entertainment systems for each passenger. But instead of six seats in each row, the new plane will have just four so no passenger has to sit in a middle seat. The result will be a 100-seat regional jet with expanded range and the comfort and feel of a big airliner at a fraction of the cost. The plane, the Embraer 190, is part of a family of four next-generation, 70-to-118-seat jets that may finally thrust Embraer past its archrival in the regional jet market, Bombardier Inc. of Montreal, and also allow Embraer to gobble up a potentially lucrative aviation niche ignored by the world's top two aircraft makers, Airbus and Boeing. 'Embraer did its homework,' said Douglas Abbey, a partner at the Velocity Group, an aviation consulting firm in Washington. 'They identified a hole in the market and went after it. And they're just now reaping the rewards because they have an aircraft that embodies all new technology and all new levels of comfort.' JetBlue will become the first airline to fly the Embraer 190, in October, and plans to put seven into service by year-end. It has 100 on order, for delivery through 2011, and an option to buy 100 more. Analysts say the planes will help JetBlue reshape the aviation industry in the United States by bringing affordable air travel to smaller cities that have long been shunned by budget airlines as too costly. Discount airlines like JetBlue are not the only ones adding Embraer's roomier little jets. Major airlines are turning to smaller planes by Embraer and others as they seek to bounce back from the post-9/11 travel slump and avoid losing money on routes where seats outnumber passengers. Embraer, short for Empresa Brasileira de Aeronáutica, is also pitching the planes to regional carriers looking to carry more passengers and serve longer routes. Embraer estimates that demand for the jets could exceed 5,800 over the next two decades. It already has firm orders for 343. [The company said Thursday that profit more than doubled last year, to a record $380.2 million.] 'Regional airlines want to expand, legacy airlines are trying to cut their operational costs, and low-cost airlines are choosing another kind of product to serve smaller markets,' said Maurício Botelho, Embraer's chief executive. 'This is a family of planes that is adapted exactly to that concept.' Airlines on both sides of the Atlantic have been buying. US Airways has 22 Embraer 170's - a 72-seat version of the 190, and the only jet in the new family to fly commercially so far - with 63 more on order. Air Canada, shifting to smaller aircraft as part of its restructuring, plans to add 60 of Embraer's new models (as well as just 30 Bombardier jets). Alitalia of Italy and Cirrus Airlines of Germany have begun flying the 170, and Finnair has 12 on order. Still, Embraer faces its share of obstacles. Like its peers, Embraer, which gets more than 70 percent of its revenue from commercial jet sales. For now, Embraer's new jets are not likely to face much competition. Airbus and Boeing are busy trying to outdo each other with planes that seat hundreds of passengers. And Bombardier, the world's leading producer of regional jets, currently makes only stretched versions of its older-style 50-seat commuter planes that seat up to 86 passengers. 'When the competition comes to the market, the good news for Embraer is they've got probably a five- or six-year lead on anybody,' said Ronald J. Epstein, a Merrill Lynch analyst in New York. Embraer, which was created by Brazil's air force in 1969, was privatized in 1994. Mr. Botelho, an engineer with no aviation experience, was brought in, and soon made it a major regional jet maker by selling 50-seat commuter planes. It is now one of Brazil's most global companies, with more than 14,000 employees in six countries, including the United States . In the late 1990's, both Embraer and Bombardier realized that regional airlines wanted larger jets. Although Bombardier got its jets to market quicker, Embraer's new planes have cockpit technology rivaling that found in Airbus and Boeing jets, wider seats and a new fuselage with a special shape that allows for more head room and cargo space. Bombardier is trying to raise $2 billion to develop jets with an all-new design that it hopes to put in the sky by 2010. But unlike Embraer's new planes, Bombardier's CSeries, with 110 to 135 seats, is intended to be 'a mainline carrier,' according to John Paul Macdonald, the spokesman for Bombardier Aerospace. Bombardier, which has received authorization from its board to start marketing the CSeries, plans to showcase the new plane at the Paris Air Show in June, Mr. Macdonald added. is eyeing a niche that it believes Airbus and Boeing are neglecting by focusing on bigger planes - a niche Embraer specifically avoided when it started developing its new planes - the 'big dogs' yard,' Mr. Botelho calls it. Instead, Embraer chose to go smaller after finding that on average more than 60 percent of all flights in the United States, its biggest market, take off with 70 to 110 passengers. Analysts expect orders for Embraer's new jets to jump in the next few years. And there are signs that Embraer, whose big order from Air Canada was widely viewed as a major coup on Bombardier's home turf, may start winning more of its rival's most prized customers. In an internal memo that was leaked to the news media, Fred Buttrell, the new president of Comair, a Cincinnati-based regional unit of Delta Air Lines with an all-Bombardier fleet, said Embraer's new jets were 'critical' to the airline's future. Nick Miller, a spokesman for Comair, confirmed that it was looking to add 35 jets through 2008, possibly 10 of Bombardier's 50-seat CRJ200's and 25 Embraer 170's, but he said no decision had been made.

Subject: Retirement, the Federal Way
From: Emma
To: All
Date Posted: Fri, Mar 18, 2005 at 14:19:41 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/18/business/18thrift.html?pagewanted=all&position= Retirement, the Federal Way By LOUIS UCHITELLE and RIVA D. ATLAS Brenda Barnett, an electronics technician for the Federal Aviation Administration in Oklahoma City, offers one model for how Americans may fare under President Bush's plan for private Social Security accounts. Her retirement account, part of the pension system for federal employees, has had an average return of just over 6 percent a year since 1997, achieved through a mixed investment in stocks and Treasury securities. 'On the whole, I've made money, not a ton of money, but enough,' she said. Jason O'Dell had a much different experience. Mr. O'Dell, 29, went to work for the government in 1999 as a sheet-metal mechanic at Tinker Air Force Base in Oklahoma City. He joined the Thrift Savings Plan for federal employees two years later, put most of his savings in a stock fund, and got caught in the market's steep decline. His account lost nearly 30 percent of its value. The experiences of Ms. Barnett and Mr. O'Dell, who are among two million civilian employees of the federal government enrolled in the thrift plan, show how giving investors control over their retirement savings can have widely varying results. 'It is all very dynamic, and to take this dynamic thing and translate it into actual average returns is impossible,' said Thomas Trabucco, chief spokesman for the Federal Retirement Thrift Investment Board, which administers the accounts. 'You have to go case by case.' President Bush holds up the federal savings program as a model for the retirement accounts he wants to add to Social Security. He is counting on those accounts to earn enough to offset the cuts that his plan calls for in the current fixed Social Security pensions. The federal thrift plan, however, differs in an essential way from the retirement accounts that the president wants to carve out of Social Security. The thrift accounts are on top of a generous fixed pension for federal employees, while President Bush's proposal envisions the accounts replacing a substantial part of Social Security's fixed pension. The thrift system functions like a 401(k)-type plan. Each of the five funds in the plan has done well enough to meet President Bush's minimum goal of an average annual return of 3 percent, adjusted for inflation. Over the 18-year life of the plan, even the most conservative fund, invested in Treasury bonds, has returned, on average, 6.6 percent annually before inflation, partly because the fees are kept below what Wall Street charges. (That compares with an annual inflation rate in that period of nearly 3 percent.) Near the high end, a fund that tracks the Standard & Poor's 500-stock index had an average return of 12 percent a year. The last 18 years, however, are not a template for the future. Nor do the performances of the five funds mirror the actual experiences of individual investors. Whether a federal employee can earn more than Mr. Bush's inflation-adjusted 3 percent a year over a 30-year to 40-year career depends on the mix of investments that the employee chooses and, above all, on a factor beyond anyone's control: the behavior of stocks and bonds. 'The last two decades have been fantastic for the markets, which does not necessarily mean that the next two decades will be as good, or good at all,' said Jeremy J. Siegel, a finance professor at the Wharton School and the author of 'Stocks for the Long Run' ( McGraw-Hill, 2002). Many investors in the thrift accounts have hurt themselves. As stock prices soared in the 1990's, they took money out of government securities and put it into the S.& P. 500-stock index fund. By the year 2000, the stock fund accounted for nearly 64 percent of all investments, up from 6 percent in 1991, the fund's first year. Then, as stocks fell, money flowed back into Treasury bonds. 'We have always known that people tend to put more money into the stock market toward the peak and are scared out when the market starts to drop,' Mr. Siegel said. 'What they should do is sell stock as the market rises and hold on when it slides. Just buying and holding and not getting scared is a sound plan.' The president's calculations also do not address another issue that government officials have raised, which is the danger that a worker approaching retirement with, say, $200,000 in his savings account might suddenly lose 30 percent or 40 percent of that amount in a market plunge and no longer have the time to recover the loss. The S.& P. 500 fund lost 43 percent of its value from 2000 through 2002. 'The real risk is that someone is holding an investment and it goes down at the wrong moment, just as they are approaching retirement,' said Patrick Purcell, a specialist in social legislation at the Congressional Research Service. Under President Bush's proposal, people would be asked, in effect, to take some of their Social Security payroll tax and invest it in the expectation that the return would be enough to offset the money diverted to the private accounts. A smaller return would reduce retirement income below the present level of Social Security pensions. Whatever the outcome, adding private accounts does not overcome any benefit cuts that might be imposed to help close the long-term financing gap facing the Social Security system. Congress created the Thrift Savings Plan in the 1980's as part of a new retirement system for federal employees similar to private pension plans, which were beginning to change, too. At the time, many companies were offering fixed corporate pensions, which they increasingly supplemented with 401(k) plans. Ms. Barnett, 37, currently contributes 10 percent of her $52,000 salary to her thrift account, and the government, as an incentive, matches the first 5 percent. She could put in as much as 14 percent, but she is divorced, raising two children and her expenses are high. 'The public schools even want you to pay for computer paper,' she said. She considers herself a smart, if cautious, investor. Right now, she has 50 percent of her $39,600 in a Treasury fund and 30 percent in a nearly-as-safe fixed-income bond fund. Only 20 percent is invested in a stock fund, and 10 years before she retires she plans to shift that money into the Treasury fund, she said. The thrift investment board applauds that sort of behavior. To encourage it, the board intends to offer later this year a new investment option, called a life-cycle fund. As an investor ages, it automatically shifts the mix from riskier stocks with their potentially higher returns to a safer and steadier investment in government securities. It is also intended to correct for too much caution when workers are young. Too much money channeled into Treasury securities defeats a goal of the accounts that Mr. Bush is proposing. The Social Security Administration already invests its payroll tax revenue in Treasury bonds. The retirement accounts in a changed Social Security system are supposed to beat the return on these ultrasafe investments to justify the risk. Richard Strombotne, a 71-year-old former physicist who worked for the Transportation Department in Washington, was earning in the low six figures when he retired in 1996 with more than $150,000 in his thrift account. But he could have done even better, he says. Through all the years of saving, Mr. Strombotne kept the money in the Treasury fund, not thinking interest rates would stay so low or stocks would do so well. 'I am a Depression baby and a conservative investor for the most part,' he said, 'and after the stock market crash in 1987, it certainly would make you cautious about investing in stocks.' By contrast, Mr. O'Dell put much of his money in a stock fund. From 2001 to 2003, he contributed 10 percent of his annual salary, which is now $41,000. But the legal expenses of a custody battle for his 9-year-old son overwhelmed him and he stopped saving, after putting away more than $10,000, including the government match. The balance today is only $7,545, all of it in the stock fund. 'With me being my age, I think I'll leave the money in the stock fund,' Mr. O'Dell said. Still another issue in setting up private Social Security accounts is resistance to change. Mr. Bush's proposals would allow people to stay with the present system or switch to his new mix of a fixed pension supplemented by a private account. Federal employees were offered a similar choice in 1987. They had the option to stay with the old Civil Service Retirement System or shift to the new one, with its mix of fixed pension and thrift savings. More than 97 percent declined to switch, among them Edwin Dean, a senior economist at the Bureau of Labor Statistics earning in the low six figures. The old system offered larger fixed pensions for higher-income workers, including Mr. Dean. If they had made the switch, they would have had to make up the difference through the thrift savings accounts. 'The point that I made to myself is that you ought to have a substantial core pension, and I was not going to take a chance on jeopardizing that core retirement income,' Mr. Dean, 71 and now retired, said. The resistance to switching reflected a cautiousness common to many investors. 'We've discovered in behavioral economics that people don't want to get rich with their retirement money,' said Teresa Ghilarducci, an economist at the University of Notre Dame. 'They just want it to be there.' Jonathan Frenkel, 39, an official in the Department of Homeland Security, said he winced when he reviewed his thrift statements in recent years. 'It's tough when you get your statements and the returns are negative,' Mr. Frenkel said. He has been putting 10 percent of his earnings into the plan since joining the government in 1998. He started out with 90 percent of his savings in the S.& P. 500 stock fund and decided to diversify, shifting some money out of that fund as the stock market declined, and investing in both the Treasury fund and in a fund specializing in small-capitalization stocks. In Mr. Frenkel's view, the results could have been much worse. 'Outside the plan,' he said, 'I invested in individual stocks, and they have all taken a dive.'

Subject: Caste the financial net
From: Setanta
To: All
Date Posted: Fri, Mar 18, 2005 at 10:12:31 (EST)
Email Address: Not Provided

Message:
Caste the financial net 14/03/2005 When Portuguese adventurers first arrived in India, drawn by the scent of spices and the lure of money, they set up their trading outpost in Goa. By the middle of the 16th century, the streets of Lisbon were buzzing with stories of gold, spices, exotic women and ready-made fortunes. The Orient was where it was at for any ambitious young man. As well as painted ladies, the word “casta'‘ became commonplace to describe the rigid Indian social hierarchy. Casta in Portuguese means race, breeding or lineage. This is where the term caste, used to describe the Indian social system, comes from. Indians refer to it as the “jati'‘ system. There are 3,000 castes and 25,000 sub-castes in India, each related to a specific occupation. These different castes fall under four basic categories: Brahmins are priests; Kshatryas are warriors; Vaishyas are traders and Shudras are labourers. Caste dictates one's occupation, dietary habits and interaction with members of other castes. Members of a high caste enjoy more wealth and opportunities, while members of a low caste perform menial jobs. At the bottom of the caste system are the Dalits or ‘Untouchables'. Untouchables' jobs, such as toilet cleaning and rubbish removal, require them to be in contact with bodily fluids. They are therefore considered polluted and are not to be touched. Back in the days of the Portuguese traders, such systems were common in many countries. Until the late 18th century, even modern, post-reformation Germany operated a system of Stande or status groups (where society was rigidly delineated into special groups). Likewise, imperial Japan had its system of samurai, merchants and peasants. These caste systems attempt to impose a functional order and stability on society, thus protecting elites from change. Observing the recent developments in the Fyffes/DCC trial, it is easy to conclude that a similar caste system exists in the Irish financial community, where the nature, quality and size of the deal depends on a company's position in the financial hierarchy. First, there are the “big boys'‘ - our 21st century financial Brahmins - who get the best deals, at the best prices, long before the rest of the market. Brahmins are on the boards of publicly-quoted companies, are paid in shares of those companies and can be (as in the Fyffes/DCC case) major investors in the company. When you are that big in a small market, you don't exactly make the regulations, but you damn well understand the rules of the game better than anybody else. Under the Brahmins are the Kshatryas, the warriors. These are the senior executives in the broking business and their preferred clients, who get preferential status on syndicates and are privy to exit strategies which are typically based on selling the asset to a lower caste in a few months or years when much of the value has been taken out. This is euphemistically known as a “turn'' or “flip'‘. Next we have the Vaishyas, the traders. These are the workhorses of the financial market in Dublin and they are typically brokers and their clients - the large pension funds. They work for a wage and rarely get a piece of the direct action (known as “a carry'‘ - a part of the equity in the deal), but they have generous expense accounts, company BMWs and Carton House memberships. They also help fine city centre restaurants do a roaring trade at lunchtime. Below the Vaishyas lie the Shudras, or the labourers who are the smaller brokers and their clients. Typically, new private clients might be those who have made money in property and want to diversify into stock, or maybe those who are topping up their self-administered pension funds with leveraged stock holdings. In good times, they can do well by going with the flow; in bad times, they tend to be the last to know of trouble and often do not get out on time. At the bottom of the caste system, we have the financial untouchables. These are the punters, the amateurs and those who naively believe that the market is fair, transparent and the odds are evenly matched. They are the hundreds of small Elan investors who, through their own actions, got caught up in the hype. They are the ‘Eircom untouchables' - the willing victims of botched privatisations. But like all caste systems, the market couldn't work without them. All markets work on the basis of an asset being shunted on to the next layer of buyers who take a bit of value and shunt on again to the lower caste. The name of the game is not to be the lowest caste holding the asset with nobody to shunt the thing on to. The untouchables are therefore an essential lubricant of the financial market. However, they sometimes do not realise that they are the buyers of last resort, rather than the small-town captains of the universe they like to see themselves as. Observing the evidence this week at the Fyffes/DCC trial - a clash of the Brahmins if ever there was one - one can be left in little doubt about the financial caste system. DCC decided to sell its stake in Fyffes and brokers lined up to place the stock. There was the risk of a huge overhang of the stock - over 10 per cent of the company - and therefore, the caste system got to work. The various different castes lined up their buyers. The aim is to get the deal away with as little impact on the price as possible, so that the Brahmin gets the best price for his asset. All the way down the food chain, different castes of investors will be allocated and different packages, usually at different prices - known as “bloc trades'‘ - will be readied to ensure that the price does not fall when the shares come to the market. What is clear to the outsider is that there are few heroes in the case. When the torch is shone into some of the darker alcoves of our financial market, a picture emerges which is not always pretty. We have a chief executive claiming that he was a “conduit'‘ rather than a “negotiator'‘. What is a human conduit? We are told about plcs issuing what some are contending were misleading statements and, finally, we have senior financial Brahmins suggesting that the market - not themselves or the company selling - negotiated the price of a major share sale. There may be a plausible and reasonable chain of events that makes all this credible - the judge will decide that. But the talk around town indicates that there is a lot at stake here. The industry is based on the myth that everybody has a fair chance, punters can play the casino like everyone else and there is no caste system. This essential illusion is not helped by the daily revelations in the High Court and, as a consequence, the industry is closing ranks. However, in the long run, the viability of the Irish financial market can only be maintained if everybody - even the untouchables - fully understands the risks as well as the rewards of committing cash to any investment. More players in the market would make it more liquid and make it more attractive to companies wanting to list. In fact, one of the problems in recent years has been the number of Irish companies seeking AIM listings in London, rather than Iseq listings. The untouchables were named “Harijans'‘ (Children of God) by Gandhi. He tried to raise their status with symbolic gestures, such as befriending and eating with them. The Irish market needs its own financial Gandhi who will preach openness, transparency and tolerance for all castes. One wonders will such a leader emerge from the detritus of this case. Stranger things have happened. www.davidmcwilliams.ie

Subject: 423 million digital dollars stolen
From: johnny5
To: All
Date Posted: Fri, Mar 18, 2005 at 04:00:30 (EST)
Email Address: johnny5@yahoo.com

Message:
This is what is being reported, I like the ease of throwing the credit card on the table and digital transactions, but they have to bring more protection to this area - what is happening that is not reported and still hidden? http://news.bbc.co.uk/2/hi/uk_news/4356661.stm The plan was to steal £220m ($423m) from the London offices of the Japanese bank Sumitomo Mitsui. Computer experts are believed to have tried to transfer the money electronically after hacking into the bank's systems. A man has been arrested by police in Israel after the plot was uncovered by the National Hi-Tech Crime Unit. Unit members worked closely with Israeli police. The investigation was started last October after it was discovered that computer hackers had gained access to Sumitomo Mitsui bank's computer system in London. They managed to infiltrate the system with keylogging software that would have enabled them to track every button pressed on computer keyboards. Cyber warning From that they could learn account numbers, passwords and other sensitive information. Yeron Bolondi, 32, was seized in Israel after an attempt to transfer £13.9m into an account there. We have undertaken various measures in terms of security and we have not suffered any financial damage Takashi Morita Sumitomo Mitsui Latest coup for hi-tech cops He has been charged with money laundering and deception, but police say their investigation is continuing. His relationship with the gang who tried to break into the network is unknown. They have issued a warning for banks and businesses to watch out for cyber criminals. The National Hi-Tech Crime Unit was launched in April 2001 with responsibility for tracking down the growing range of criminals who operate in cyberspace. Takashi Morita, head of communications at Sumitomo Mitsui in Tokyo, said the company had not suffered any financial loss as a consequence of the robbery attempt. He said: 'The case is still in the middle of investigation so we cannot comment further. 'We have undertaken various measures in terms of security and we have not suffered any financial damage.' This will be discussed by chief executives and others for some time to come and it will further reinforce the need for corporate asset protection systems Richard Starnes Computer security expert Richard Starnes, president of the Information Security Services Association, said: 'We have been talking about the doomsday scenario for quite some time and while this was not actualised it shows the magnitude of the threat to companies.' He told the BBC News Website: 'This will be discussed by chief executives and others for some time to come and it will further reinforce the need for corporate asset protection systems.' Mr Starnes, who works for Cable & Wireless, said key logging software - which detects every key stroke made by a keyboard and can give away crucial information such as passwords - was easy to obtain and quite simple to insert into a company's computers. He said: 'This is the arms race of this era. Police and criminals are constantly trying to stay one step ahead of each other.'

Subject: We are Secure If we Feel Secure
From: Jennifer
To: johnny5
Date Posted: Fri, Mar 18, 2005 at 09:05:27 (EST)
Email Address: Not Provided

Message:
These stories frighten me, so I choose not to pay attention to them. We are secure, if we feel secure. I mean this with complete respect and admiration.

Subject: Re: We are Secure If we Feel Secure
From: johnny5
To: Jennifer
Date Posted: Fri, Mar 18, 2005 at 13:50:37 (EST)
Email Address: johnny5@yahoo.com

Message:
We will be fine if this digital money is stolen, it won't impact you getting food or buying medicine - not in a dramatic way anyways - I play devils advocate in a lot of these messages, but I am very thankful for the benefits technology and the internet has brought, it far exceeds any small rise in prices from false digital dollars chasing limited goods. I just hate when a smart or rich person takes advantage of the system to take easy street and the rest of us have to work hard to get our needs met. Instead of not paying attention, why not try to read more into the technology and make it a new hobby to learn all these new things, it is fun, something new to look forward too everyday, not be fearful of. If I didn't have hackers and thieves and economists to read up on and learn about I would get bored - hehe.

Subject: Learning How to Read
From: Jennifer
To: johnny5
Date Posted: Fri, Mar 18, 2005 at 14:18:27 (EST)
Email Address: Not Provided

Message:
A fine explanation. Knowing that these articles can be read as cautions but not simply to becoe fearful, is helpful. Thank you for explaning, so I know how to read properly.

Subject: Re: Learning How to Read
From: Jennifer
To: Jennifer
Date Posted: Fri, Mar 18, 2005 at 15:28:21 (EST)
Email Address: Not Provided

Message:
We can surely hope your uncle with your help has resolved all problems successfully.

Subject: Using the machines to steal yer money
From: johnny5
To: All
Date Posted: Fri, Mar 18, 2005 at 03:01:33 (EST)
Email Address: johnny5@yahoo.com

Message:
Now kevin mitnick doesn't have to click buttons to steal your billions, he can write programs to do all the dirty work for him - recent headline from slashdot.org: http://it.slashdot.org/it/05/03/15/1341203.shtml?tid=172&tid=1 Observing Botnets with Honeynets Posted by CmdrTaco on Tuesday March 15, @09:38AM from the know-thine-enemy dept. Susan Saradon writes 'The Honeynet Project has released a new paper which deals with the observation of botnets. 'Know Your Enemy: Tracking Botnets' discusses what Botnets are, who is using them, how, and why. It als introduces the tools 'mwcollect' and 'drone' which can be used for collecting an tracking Botnet activity. Nice to read and looking forward to the release of these tools.' FTFA: In one case, bot software detected whether the game 'Diablo II' was installed on the host PC. If the game was present, the program would steal items from the player's characters and drop them at preplanned places in the online game world. The bot net's controller would then collect the items and sell them on auction site eBay, Holz said. I suggest the pkarchive crowd go watch the movie list I presented a few days ago and read books like neuromancer by william gibson - the digital money is being stolen left and right - but what does it matter right? We can just make more - won't all this illegally stolen or generated digital money create problems in the hard asset physical worlds pricing?

Subject: They are using your computes against you
From: johnny5
To: johnny5
Date Posted: Fri, Mar 18, 2005 at 03:53:19 (EST)
Email Address: johnny5@yahoo.com

Message:
Over a Million Zombie PCs http://it.slashdot.org/it/05/03/17/1551255.shtml?tid=172&tid=220 Posted by Zonk on Thursday March 17, @12:56PM from the daaaaataaaa dept. Doyle writes 'A BBC article discusses new research revealing that over 1 million computers have been compromised and are being used in bot nets. From the article: 'The largest network spied on by the team was made up of 50,000 hijacked home computers.''

Subject: Real price of oil after military expense
From: johnny5
To: All
Date Posted: Fri, Mar 18, 2005 at 02:39:15 (EST)
Email Address: johnny5@yahoo.com

Message:
Remember Bogle Heads - COSTS MATTER http://www.change-links.org/oiladdiction3.htm How much did you pay per gallon of gas the last time you filled up your car’s tank? It was probably about $1.75 per gallon, give or take a quarter depending on where you live. In the grand scheme of things, this isn’t much—less, in fact, than you would pay for a gallon of milk. But the price at the pump is nowhere near the real cost of that oil you put in your car. After you figure in the military expenditures of securing and protecting the petroleum, the cost of lost jobs and misplaced investment capital, and the burden of periodic “oil shocks,” the price is much, much higher. According to a recent study by National Defense Council Foundation, the real price of gasoline is somewhere between $5.01 and $5.19 per gallon. That’s as much as $93 to fill up a typical gas tank. Our oil addiction is burning a hole in our pockets, and most Americans don’t even know it. One of the most obvious costs of our oil dependence is the price of maintaining a vast military machine capable of keeping the oil flowing cheaply. Defending just the oil that comes out of the Persian Gulf costs some $42.8 billion a year. This doesn’t include military expenditures in oil-rich Colombia, nor the $87 billion in additional costs for the occupation of Iraq. Then there’s the damage to the economy. According to the study, the economy loses some $160 billion every year because of our addiction—money wasted on unproductive industries and eaten up by health care expenses. Periodic oil shocks—1973-74, 1978-80, 1991—have cost American businesses and consumers another $2.5 trillion. It’s almost as if we’re paying for the dubious privilege of being ripped off. The National Defense Council Foundation is a right-of-center think tank, its advisory board packed with people such as Senators Trent Lott and Orrin Hatch. That a proudly conservative group would go through the trouble of calculating the true cost of oil shows that concerns about the United State’s oil dependence transcend political lines. It’s just common sense: Oil addiction, like any addiction, is dangerous. Yet the NDCF’s numbers, however stunning, still don’t give the whole picture. For example, the study didn’t include the tax breaks and subsidies given to the oil industry. According to an investigation by Friends of the Earth and Taxpayers for Common Sense, the federal government gives oil corporations at least $4 billion a year in corporate welfare—money that comes straight from your taxes. The costs don’t stop there. Oil addiction also contributes to human pain and ecological destruction that are beyond any dollar figure. For how do you measure the value of the species wiped out in the course of oil drilling in sensitive rainforest ecosystems? What price do you place on the irrevocable altering of the earth’s climate? How can you calculate the pain of a mother and father whose son and daughter has died in a war fueled by our relentless demand for oil? There’s not a price tag big enough to capture the costs of such senseless tragedy. Our oil addiction carries a price that we cannot afford to keep paying. After the REAL price of gas is calculated we are not getting a better deal than europe are we? All we are doing with our military is pissing off our old friends - that darn Bush - he makes me so mad sometimes!!

Subject: moneys gone, should have bought houses
From: johnny5
To: All
Date Posted: Fri, Mar 18, 2005 at 02:28:49 (EST)
Email Address: johnny5@yahoo.com

Message:
If they had INVESTED in west palm beach real estate instead of the hedge fund, they would still have hard assets and not 8 million dollar losses for just one person - fools. Like gordon gecko said - a fool and his money are lucky to get together in the first place!! http://www.palmbeachpost.com/business/content/business/epaper/2005/03/18/a1d_hedge_0318.html KL Financial hedge fund official agrees to cooperate By Jeff Ostrowski Palm Beach Post Staff Writer Friday, March 18, 2005 FORT PIERCE — A key figure at a failed West Palm Beach hedge fund has agreed to cooperate with authorities and to turn over $1 million in cash and real estate, federal regulators said Thursday during a court hearing here. John Kim, a Jupiter man who was one of the three principals of hedge fund investment firm KL Financial Group, could give regulators and investors much-needed insight into what happened to tens of millions — and perhaps hundreds of millions — of dollars ponied up by wealthy investors. Kim has agreed to cooperate with the Securities and Exchange Commission and to meet with forensic accountants to lay out the massive scam that led to the firm's huge trading losses, SEC lawyers told U.S. District Judge Kenneth Ryskamp. In exchange for his cooperation, authorities agreed to let Kim keep $46,000 he holds in a joint checking account with his wife, said Michael Tein, an attorney for the court-appointed overseer of KL Financial's assets. Kim will use the money for living expenses and to pay for eye surgery for his 18-month-old daughter, Tein said. He has agreed to give up personal assets that include $150,000 in cash and a property in Korea that could be worth as much as $1 million. 'We're sympathetic to the human needs of his family,' Tein said. 'You can't penalize an 18-month-old baby girl for what her father did.' Authorities on Feb. 25 closed down KL Financial, a firm that wooed wealthy investors by touting outsize returns. Those returns were mostly fiction, the SEC says. The firm's two other principals, Yung Kim and Won S. Lee, have fled to Korea, an SEC attorney said, and Ryskamp on Thursday called them fugitives. Meanwhile, the SEC has confirmed that investors put at least $115 million into KL Financial, according to a report by Guy Lewis, a former U.S. attorney in South Florida appointed by Ryskamp to oversee the recovery of investors' money. Lewis said he has been able to track down only about $2.3 million in the money management firm's bank and trading accounts. Hedge funds like this one are loosely regulated investment vehicles that appeal to sophisticated investors. 'Unfortunately, it appears the overwhelming majority of the money is gone,' Lewis said. Making matters worse, more than $20 million of investors' money appears to have been used by the principals for personal expenses, the SEC said. While the SEC has no authority to extradite Yung Kim and Lee for a civil suit, there are hints of possible criminal charges involving KL Financial. Lewis' report said a federal grand jury is investigating the firm's collapse. Several KL Financial investors attended Thursday's hearing, although none testified and none agreed to give their names to a reporter. Gary Klein, a Boca Raton attorney representing more than 30 investors, called John Kim's apparent cooperation a good sign. 'If he's cooperating and he's giving up that information, that's good stuff,' Klein said. But, Klein cautioned, it's too early to say how far Kim's cooperation will go. Adam Rabin, a West Palm Beach attorney representing an investor he said lost '$4 million to $8 million' invested in the hedge fund operator, likewise hopes Kim will shed light on a complex scheme. 'Getting Kim's cooperation is going to help streamline things,' Rabin said. 'Information is crucial.' Kim didn't appear at the hearing, but he was represented by three attorneys from a Los Angeles law firm. SEC attorneys said they'll extend a temporary restraining order against KL Financial until March 25. The order freezes the assets of the hedge fund and its principals.

Subject: Hack your taxes and beat the gubbment
From: johnny5
To: All
Date Posted: Fri, Mar 18, 2005 at 02:20:40 (EST)
Email Address: johnny5@yahoo.com

Message:
Kevin Mitnick clicked buttons and stole billions in wealth - did that add to the productivity of the world? Is digital wealth controlled by a few a secure world for the masses who don't understand it all and can be led to the path of doom because they are ignorant of it? These aren't dumb grandma millies - these are the best of the best accountants and numbers guys. http://hosted.ap.org/dynamic/stories/I/IRS_COMPUTER_SECURITY?SITE=FLPET&SECTION=HOME Auditors find IRS workers prone to hackers By MARY DALRYMPLE AP Tax Writer WASHINGTON (AP) -- More than one-third of Internal Revenue Service employees and managers who were contacted by Treasury Department inspectors posing as computer technicians provided their computer login and changed their password, a government report said Wednesday. The report by the Treasury Department's inspector general for tax administration reveals a human flaw in the security system that protects taxpayer data. It also comes on the heels of accounts of thieves' breaking into computer systems of private data suppliers ChoicePoint Inc. and LexisNexis. The auditors called 100 IRS employees and managers, portraying themselves as personnel from the information technology help desk trying to correct a network problem. They asked the employees to provide their network logon name and temporarily change their password to one they suggested. 'We were able to convince 35 managers and employees to provide us their username and change their password,' the report said. That was a 50 percent improvement when compared with a similar test in 2001, when 71 employees cooperated and changed their passwords. 'With an employee's user account name and password, a hacker could gain access to that employee's access privileges,' the report said. 'Even more significant, a disgruntled employee could use the same social engineering tactics and obtain another employee's username and password,' auditors said. With some knowledge of IRS systems, such an employee could more easily get access to taxpayer data or damage the agency's computer systems. Employees gave several reasons for complying with the request, in violation with IRS rules that prohibit employees from divulging their passwords. Some said they were not aware of the hacking technique and did not suspect foul play, or they wanted to be as helpful as possible to the computer technicians. Some were having network problems at the time, so the call seemed logical. Other employees could not find the caller's name on a global IRS employee directory but gave their information anyway. Some hesitated but got approval from their managers to cooperate. Within two days after the test, the IRS issued an e-mail alert about the hacking technique and instructed employees to notify security officials if they get such calls. The agency also included warnings into its mandatory security training.

Subject: Energy and Growth
From: Terri
To: All
Date Posted: Thurs, Mar 17, 2005 at 17:52:00 (EST)
Email Address: Not Provided

Message:
Prices fluctuate, as Seinfeld learns, and so I expect we are nearing or at a top in the price of oil. But, while I expect oil prices to fall from here, I do not expect much of a fall or a lasting fall and there may reside a reason to expect a sluggish stock market. Between Federal Reserve interest rates increases and oil above 50 dollars a barrel, we may see growth ease soon.

Subject: Re: Energy and Growth
From: Pancho Villa
To: Terri
Date Posted: Thurs, Mar 17, 2005 at 19:57:03 (EST)
Email Address: nma@hotmail.com

Message:
What is energy?

Subject: What is energy?
From: Pete Weis
To: Pancho Villa
Date Posted: Fri, Mar 18, 2005 at 10:04:52 (EST)
Email Address: Not Provided

Message:
The basis for the existance of economic theory. Without energy - no economists.

Subject: Re: What is energy?
From: Emma
To: Pete Weis
Date Posted: Fri, Mar 18, 2005 at 14:23:11 (EST)
Email Address: Not Provided

Message:
Well answered.

Subject: Energy and Utility
From: Terri
To: Pancho Villa
Date Posted: Thurs, Mar 17, 2005 at 20:52:31 (EST)
Email Address: Not Provided

Message:
http://flagship2.vanguard.com/VGApp/hnw/FundsVIPERByName Interesting question. Look to the makeup of the Vanguard Energy and Utility indexes and there you have it. Unless you are after the transformation of matter to energy as Einstein would have it.

Subject: How Bush Won U.S. Presidency
From: Billy
To: All
Date Posted: Thurs, Mar 17, 2005 at 16:01:41 (EST)
Email Address: Not Provided

Message:
Published on Friday, March 11, 2005 by International Relations Center How George W. Bush Won Second-Term U.S. Presidency in 2004 Elections Run by Same Guys Who Sell Toothpaste by Noam Chomsky Presidential candidate John Kerry’s platform and program were way to the right of popular opinion on just about every issue in the 2004 U.S. elections. To the extent that anybody could even understand the program, people didn’t favor it. People who voted for Kerry are people who were concerned about the economy and about health issues. Do you think those people could tell you what Kerry’s health program was or what he was going to do for the economy? I mean, I couldn’t tell you. You have to do a research project to figure out what the program was. And it’s not that people failed to know it because they’re stupid. It’s because it was not presented as something comprehensible. Of the people who voted for candidate George Bush, the major categories were people who were concerned about terror and about national security. It’s claimed that people who were concerned about values voted for Bush, but that’s mostly a statistical artifact. When you asked the further question, “What values do you have in mind?” it turned out that the major values were things like, “I don’t like this society because it’s too materialistic,” and “There’s too much oppression.” Those are the values. Is that what Bush stands for? Getting rid of that? As far as terrorism is concerned, the administration very consciously chose actions that it was expected would increase the threat of terror and, in fact, did. It’s not because they want terror, it’s just not much of a priority for them. People who voted for Bush tended to assume that he was in favor of their views, even if the Republican Party platform was diametrically opposed to them. The same was largely true of Kerry voters. The reason for this is that the parties try to exclude the population from participation. So they don’t present issues, policies, agendas, and so on. They project imagery, and people either don’t bother or they vote for the image. The Gallup Poll regularly asks, “Why are you voting?” One of the choices is, “I’m voting for the candidate’s stand on issues.” That was 6% for Bush, and 13% for Kerry—and most of those voters were deluded about the positions of the candidates. So what you have is essentially flipping a coin. Each candidate got approximately 30% of the electorate. Bush got 31%, Kerry got 29%. The party managers know where the public stands on a whole list of issues. Their funders just don’t support them; the interests they represent don’t support them. So they project a different kind of image. If you listen to the presidential debates, you can’t figure out what they’re saying, and that’s on purpose. The last debate was supposed to be about domestic issues. The New York Times commented that Kerry didn’t make any hint about possible government involvement in health care programs because that position has, in their words, “no political support.” Well, according to the most recent polls, 80% of the population thinks that the government ought to guarantee health care for everyone, and furthermore regard it as a moral obligation. That tells you something about people’s values. But there’s “no political support.” Why? Because the pharmaceutical industry is opposed, the financial institutions are opposed, the insurance industry is opposed, so there’s “no political support.” It doesn’t matter if 80% of the population regard it as a moral obligation: That doesn’t count as political support. It tells you something about the elite conception. You’re supposed to vote for the image they’re projecting. That’s not surprising really. Just ask yourself, “Who runs the elections?” The elections are run by the same guys who sell toothpaste. They show you an image of a sports hero, or a sexy model, or a car going up a sheer cliff or something, which has nothing to do with the commodity, but it’s intended to delude you into picking this one rather than another one. Same when they run elections. But they’re assigned that task in order to marginalize the public, and furthermore, people are pretty well aware of it. For many years, election campaigns here have been run by the public relations industry and each time it’s with increasing sophistication. Quite naturally, the industry uses the same technique to sell candidates that it uses to sell toothpaste or lifestyle drugs. The point is to undermine markets by projecting imagery to delude and suppressing information—and similarly, to undermine democracy by the same method. In the year 2000, there was a huge fuss afterwards about the stolen election, with the Florida chads and the Supreme Court. But ask yourself who was exercised about it? It was all among a small group of intellectuals. They were the ones who were upset about it. There was never any public resonance for this. In the current election it’s being reiterated. There’s a big fuss among intellectuals about the vote in Ohio, how the voting machines didn’t work, and other things. But the interesting thing is that nobody cares. Why don’t people care if the election is stolen? The reason is that they don’t take the election seriously in the first place. They reacted about the way that people react to television ads. It’s a mode of delusion. If the Democrats want to succeed in that game, they’re just going to have to figure out better ways of delusion. There is an alternative, and that is to try to run a program that’s committed to developing a democratic society in which people’s opinions matter.

Subject: Rome survived Nero no?
From: johnny5
To: Billy
Date Posted: Fri, Mar 18, 2005 at 00:15:26 (EST)
Email Address: johnny5@yahoo.com

Message:
Good post Billy, chomsky has some interesting views. From a systemic level - if one stolen election is all it takes to break this country, then we are sad indeed - I think the founding fathers intended a ROBUST gubbment so that even with the lures of temptations and corruption - the general trend would be a positive one, but if one man in one office of our government can do so much damage - has our government lost its robustness? Here in Florida the legislature is trying to pass new term limits to give themselves 12 years in power instead of the 8 currently - they say 8 years is not enough time to learn politics and make a difference. Bush will be out in 4 years - is he going to blow up the world before then? How much damage did Nero do to Rome before his fall? Didn't he play his lyre while Rome burned?

Subject: It's y(our) money
From: Pancho Villa
To: All
Date Posted: Thurs, Mar 17, 2005 at 14:18:17 (EST)
Email Address: nma@hotmail.com

Message:
It's your money. Posted by John Irons at 03:10 PM So, I'm sitting here listening to the Senate's debate on PayGo, and am not happy (to say the least). The Senate's Budget resolution (as well as the president's proposal and the House) contains PayGo that applies to new spending but not taxes. From the people supporitng the one-sided PayGo, there lots's of people talking about how 1) tax cuts spur job creation and 2) how 'it's your money, and you should keep more of it' rhetoric. 1) While there are problems, the American economy is dynamic and vibrant enough that business doesn't need to beg for a tax cut a year to survive. Congress needs to realize that the economy/jobs line is wearing a bit thin. 2) It's OUR money, and WE get to decide how to spend it. If we want to spend it on education, scientific research, the national highway system, national parks, and health care for low-income Americans, that is OUR choice. The PayGo from the 90's worked. This budget is a sham, top to bottom. http://www.argmax.com/mt_blog/#

Subject: Americans Save So Little
From: Emma
To: All
Date Posted: Thurs, Mar 17, 2005 at 11:24:35 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/17/business/17scene.html?pagewanted=all&position= Americans Save So Little, but What Can Be Done to Change That? By ROBERT H. FRANK THE single-cell paramecium is about the size of the period at the end of this sentence. In many species, mature cells divide daily into two daughter cells. In schools around the world, this feature has made the paramecium a favorite vehicle for illustrating the miracle of compound interest. Left unchecked for 64 days, a single paramecium would become a colony of 9,223,400,000,000,000,000 members. Since 125 paramecia lined up shoulder-to-shoulder would span about an inch, this means a string spanning more than 1,164,600,000,000 miles - over 6,000 round trips between the Earth and sun. The story is less dramatic, of course, for growth rates much smaller than the paramecium's. Even with relatively small growth rates, however, the gains are impressive. Money invested at 7 percent interest, for example, will double every 10 years, which means that $1,000 deposited at that rate by Benjamin Franklin in the late 1700's would be worth more than $3 trillion today. The same $1,000 invested in 1945 would be worth more than $64,000. Given the miracle of compound interest, our ability to invest at even modest rates of return represents an extraordinary opportunity. Yet Americans have largely squandered it. Our savings rate, always low by international standards, has fallen sharply in recent decades. Almost a fifth of American adults have net worth of zero or less. Even more troubling, it is now common for families to pay $1,800 and more in annual interest on revolving credit card balances. Those families experience the miracle of compound interest in reverse. The savings shortfall threatens not just those who face retrenchment in retirement living standards, but also the country's economic prosperity. With little of Americans' own savings to finance domestic investment, the United States has been borrowing more than $600 billion each year from foreigners. The mushrooming foreign debt, now almost one-fourth of gross domestic product, has already weakened the dollar and threatens far more serious harm. Why do Americans save so little? Lack of self-discipline is one reason. If that were the only problem, families could solve it by simply committing a portion of each year's income growth into a payroll savings account, placing it out of temptation's reach. But the savings shortfall also stems from a second source, one less amenable to this solution. The basic idea is captured in the following thought experiment: If you were society's median earner, which option would you prefer? ¶You save enough to support a comfortable standard of living in retirement, but your children attend a school whose students score in the 20th percentile on standardized tests in reading and math; or ¶You save too little to support a comfortable standard of living in retirement, but your children attend a school whose students score in the 50th percentile on those tests. It is an unpleasant choice, to be sure, but most people say they would pick the second option. Because the concept of a 'good' school is relative, this thought experiment captures an essential element of the savings decision confronting most families. If others bid for houses in better school districts, failure to do likewise will often consign one's children to inferior schools. Yet no matter how much each family spends, half of all children must attend schools in the bottom half. The savings decision thus resembles the collective action problem inherent in a military arms race. Each nation knows that it would be better if everyone spent less on arms. Yet if others keep spending, it is too dangerous not to follow suit. Curtailing an arms race requires an enforceable agreement. Similarly, unless all families can bind themselves to save more, those who do so unilaterally risk having to send their children to inferior schools. People in other countries also face temptation and collective action problems. Why do they save more than we do? One explanation is that both problems are made worse by income disparities, which have widened much faster in this country than elsewhere. A collective agreement that each family save a portion of its income growth each year would attack both sources of the savings shortfall. Such an agreement might specify that one-third of income growth be diverted into savings until a target savings rate - say, 12 percent of income - was achieved. A family whose income did not rise in a given year would be exempt from the agreement. Such an agreement would put the magic of compound interest to work for retirement savings, a benefit that the current Social Security system completely misses. Most of the money currently taken from workers in payroll taxes gathers no interest in the decades before their retirement. Instead, it is paid directly to current retirees, who spend it on rent and food. We have a pay-as-we-go system because the program was started in the Great Depression, when there was simply no money to create a fully financed system. The good news is that Americans now have ample wealth to support such a system. Some have praised President Bush's proposal to privatize Social Security as a move that will create a fully financed program of retirement savings. It is no such thing. Under his proposal, the transition to private accounts is to be financed with borrowed money. The interest earned on private accounts would thus be offset by the interest paid on the money borrowed to create them, leaving the system right where it started. Many would object that requiring families to save a portion of each year's income growth would be an infringement of individual liberty. Yet it is the very absence of such a requirement that currently prevents most American families from saving as much as they wish to. Just as nations find it advantageous to restrict their options by signing arms reduction treaties, families may have a similar interest in limiting their freedom to engage in bidding wars for houses in top school districts. It is clear, in any event, that the failure to save entails risks of its own to freedom. America's rapidly rising debt to foreigners now threatens the economic prosperity on which so many of our cherished liberties depend. Robert H. Frank is an economist at the Johnson School of Management at Cornell University and the author, most recently, of 'What Price the Moral High Ground?'

Subject: Solow and sustainable development
From: johnny5
To: All
Date Posted: Thurs, Mar 17, 2005 at 10:05:45 (EST)
Email Address: johnny5@yahoo.com

Message:
http://www.project-syndicate.org/commentaries/commentary_text.php4?id=1874&lang=1&m=series The Lost Wealth of Nations by Partha Dasgupta The phrase “sustainable development” is commonplace, but economic commentators offer no guidance on how we are to judge whether a nation’s economic development is, indeed, sustainable. The famous Brundtland Commission Report of 1987 defined sustainable development as “... development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” Sustainable development therefore requires that, relative to their populations, each generation should bequeath to its successor at least as large a productive base as it inherited. But how is a generation to judge whether it is leaving behind an adequate productive base? Economists argue that the correct measure of an economy’s productive base is wealth, which includes not only the value of manufactured assets (buildings, machinery, roads), but also “human” capital (knowledge, skills, and health), natural capital (ecosystems, minerals, and fossil fuels), and institutions (government, civil society, the rule of law). Development is sustainable so long as an economy’s wealth relative to its population is maintained over time. In other words, economic growth should be viewed as growth in wealth, not growth in GNP. There is a big difference between the two. There are many circumstances in which a nation’s GNP (per capita) increases even while its wealth (per capita) declines. In broad terms, these circumstances involve growing markets in certain classes of goods and services (natural-resource intensive products), concomitant with absent markets and collective policies for natural capital (ecosystem services). As global environmental problems frequently create additional stresses on the local resource bases of the world’s poorest people, GNP growth in rich countries can fuel downward pressure on the wealth of the poor. Of course, a situation where GNP increases while wealth declines can’t last forever. When an economy eats into its productive base in order to raise current production, eventually GNP will decline, too, unless policies were to so change that wealth begins to accumulate. For example, using World Bank data on the depreciation of a number of natural resources at the national level, economists estimate that, although GNP per capita has increased in the Indian sub-continent over the past three decades, wealth per capita has declined somewhat. The decline has occurred because, relative to population growth, fixed-capital investment, knowledge and skills, and improvements in institutions have not compensated for the degradation of natural capital. In sub-Saharan Africa, both GNP per capita and wealth per capita have declined. Economists have also found that in the world’s poorest regions (Africa and the Indian sub-continent), areas that have experienced higher population growth have also lost wealth per capita at a faster rate. The economies of China and the OECD countries, by contrast, have grown both in terms of GNP per capita and wealth per capita. The latter regions have more than substituted for the decline in natural capital by accumulating other capital assets. In other words, during the past three decades the rich world seems to have enjoyed “sustainable development,” while development in the poor world (barring China) has been unsustainable. These are early days in the quantitative study of sustainable development. Even so, one can argue that current estimates of wealth are biased. As for natural capital, the World Bank has so far limited itself to the atmosphere as a sink for carbon dioxide, oil, and natural gas, and forests as sources of timber. Many types of natural capital, however, have not been included: fresh water, soil, forests as providers of ecosystem services, and the atmosphere as a sink for such pollution as particulates and nitrogen and sulphur oxides. If these missing items were included, the poor world’s economic performance over the past three decades, including China’s, would look far worse. But the estimates of wealth accumulation in recent years in the rich world are biased upward too. Empirical studies by earth scientists have revealed all too often that the capacity of natural systems to absorb disturbances is not unlimited. When their absorptive capacities are reached, natural systems are liable to collapse into unproductive states. Recovery is then costly, in terms of both time and material resources. On the other hand, if, say, the Atlantic current that keeps northern Europe warm were to shift direction or to slow down on account of global warming, the change would be essentially irreversible. In short, we know that up to some unknown set of limits, knowledge, institutions, and manufactured capital can substitute for natural resources, so that even if an economy loses some of its natural capital, in quantity or quality, its wealth would increase if it invested sufficiently in other assets. The remarkable increase in agricultural productivity over the past two centuries demonstrates this clearly. But there are limits to substitutability: the costs of substitution (including human ingenuity) often increase in previously unknown ways as key resources are degraded. Global warming is a case in point. When the downside risks associated with such limits and thresholds are brought into estimates of sustainable development, the growth in wealth among the world’s wealthy nations will probably turn out to have been less than we now think. Sir Partha Dasgupta is Professor of Economics at the University of Cambridge and Fellow of St. John’s College, Cambridge. His most recent book is Human Well-Being and the Natural Environment. His E-mail address is Partha.Dasgupta@econ.cam.ac.uk

Subject: Thank You
From: Terri
To: johnny5
Date Posted: Thurs, Mar 17, 2005 at 11:08:33 (EST)
Email Address: Not Provided

Message:
Thoughtful and provokative essays. There is much to consider here. Thank you so much.

Subject: Loss of wealth of nations
From: johnny5
To: johnny5
Date Posted: Thurs, Mar 17, 2005 at 10:12:28 (EST)
Email Address: johnny5@yahoo.com

Message:
Ok so one part of wealth is our hard assets: We fail that one with an aging infrastructre needing massive repair: http://www.fox5ny.com/_ezpost/data/13237.shtml Nation Has Aging Infrastructure (03.09.05- AP) — Crowded schools, traffic-choked roads and transit cutbacks are eroding the quality of American life, according to an analysis by civil engineers that gave the nation's infrastructure an overall grade of D. A report by the American Society of Civil Engineers released Wednesday assessed the four-year trend in the condition of 12 categories of infrastructure, including roadways, bridges, drinking water systems, public parks, railroads and the power grid. The overall grade slipped from the D-plus given to the infrastructure in 2001 and 2003. 'Americans are spending more time stuck in traffic and less time at home with their families,' William Henry, the group's president, said in a statement. The report said $1.6 trillion should be spent over the next five years to alleviate potential problems with the nation's infrastructure. Transportation alone requires $94 billion in annual spending, the report said. The House is to begin debate Wednesday on a six-year, $284 billion highway and mass transit bill, which stalled last year in a money dispute between the White House and Congress. The report concluded that airports will face the challenge of accommodating more regional jets and super-jumbo jets. Grade: D-plus. It's uncertain, the report said, whether schools can handle growing enrollment and smaller class sizes required by the No Child Left Behind Act. Grade: D. The report also noted that many transit systems are borrowing money to maintain operations as they're raising fees and cutting back service. Grade: D-plus. Well next for wealth is human capital, our collective society is getting older, sicker, futureshock and alvin toffler is getting too much for them, tech is getting beyond many, we are cutting NASA and science education and american is falling behind. So we fail that one. Next is natural capital - www.321energy.com for all the negatives on that and our foreign dependence - so we fail that one. Institutional capital is left - well with all the crooks in finance and gubbment - I wager we fail that one too - so if you got 4 f's on your report card of wealth - what do you do solow?

Subject: Leverage in TSY 50:1
From: johnny5
To: All
Date Posted: Thurs, Mar 17, 2005 at 10:00:54 (EST)
Email Address: johnny5@yahoo.com

Message:
http://www.pimco.com/LeftNav/Late Breaking Commentary/FF/2004/FF0604.htm 'Stay with me here, cause I m going to break some new ground! Right now, the Fed requires 102% over-collateralization for lending liquidity via its open market desk. The price for borrowing from the Fed (indirectly via the open market desk, in contrast to directly via the discount window) is the Repo rate, which is the Siamese twin of the Fed funds rate. Thus, a levered investor can hold Treasuries with only 2% equity capital: the amount of collateralization that is required. Put differently, you can lever Treasuries 50 to 1! '

Subject: inflation & social disparity our future
From: johnny5
To: All
Date Posted: Thurs, Mar 17, 2005 at 09:38:58 (EST)
Email Address: johnny5@yahoo.com

Message:
So we can expect high inflation and wider gaps between have and have nots? http://www.project-syndicate.org/commentaries/commentary_text.php4?id=1875&lang=1&m=series .....Like the radicals, the neo-Keynesians did not engage their challengers with empirical testing. The efficacy of high demand was a matter of faith. Yet events in the 1970’s put that faith to a cruel test. When supply shocks hit the US economy, the neo-Keynesians’ response was to pour on more demand, believing it would revive employment. There was little recovery – only faster inflation. ....We must proceed cautiously, however. In standard analyses, the tax cut brings a reduction in government purchases of goods and services, like defense. But a tax cut could instead contract the welfare state – social assistance and social insurance, which constitute social wealth. In that case, the tax cut, while gradually increasing private wealth, would decrease social wealth. The issue is an empirical one.

Subject: Looking Ahead
From: Terri
To: All
Date Posted: Thurs, Mar 17, 2005 at 07:26:11 (EST)
Email Address: Not Provided

Message:
What is always necessary is to look to the coming 5 years and think where the earning can be. Then we have to look to where current values are reasonable. Of course, with total market stock and bond indexes we can always simply save steadily in a balance that seems suitable and trust to the future.

Subject: Re: Looking Ahead
From: johnny5
To: Terri
Date Posted: Thurs, Mar 17, 2005 at 09:13:06 (EST)
Email Address: johnny5@yahoo.com

Message:
Ok I got my moms AARP scudder IRA rolled over to vangaurd this week, has about 10K in the account - put it into international value fund because I expect a dollar drop wanted strictly international bonds but I didn't see any thing on their funds like that - am I missing something? but that 30% volatility is beginning to concern me now that I am buzzing a bit (hiccup). Now am going to buy her a 3.5K IRA to get her some tax savings - was thinking about that GNMA fund - am I correct in believing that if interests rates go up - this fund will always pay better or do I have it reversed? Falling dollar and rising rates - my bets for the next 5 years.

Subject: From the mouth of the great man himself!
From: Setanta
To: All
Date Posted: Thurs, Mar 17, 2005 at 07:19:39 (EST)
Email Address: Not Provided

Message:
We know there was a real Patrick because he left us a record, his Confession, written in Latin near the end of his life. It is a fascinating insight into Patrick, the man. Here are some key extracts: Patrick introduces himself and tells how he was kidnapped at the age of 16… 'I, Patrick, a sinner, a most simple countryman, the least of all the faithful and most contemptible to many, had for father the deacon Calpurnius, son of the late Potitus, a priest, of the settlement of Bannavem Taburniae; he had a small villa nearby where I was taken captive. I was at that time about 16 years of age. I did not, indeed, know the true God; and I was taken into captivity in Ireland with many thousands of people, according to our deserts, for quite drawn away from God, we did not keep his precepts, nor were we obedient to our priests who used to remind us of our salvation. And the Lord brought down on us the fury of his being and scattered us among many nations, even to the ends of the earth, where I, in my smallness, am now to be found among foreigners.' On his embarrassment about his lack of education… 'And therefore for some time I have thought of writing, but I have hesitated until now, for truly, I feared to expose myself to the criticism of men, because I have not studied like others, who have assimilated both Law and the Holy Scriptures equally and have never changed their idiom since their infancy, but instead were always learning it increasingly, to perfection, while my idiom and language have been translated into a foreign tongue. So it is easy to prove from a sample of my writing, my ability in rhetoric and the extent of my preparation and knowledge, for as it is said, 'wisdom shall be recognised in speech, and in understanding, and in knowledge and in the learning of truth.'' On finding God while herding… 'But after I reached Ireland I used to pasture the flock each day and I used to pray many times a day. More and more did the love of God, and my fear of him and faith increase, and my spirit was moved so that in a day (I said) from one up to 100 prayers, and in the night a like number; besides I used to stay out in the forests and on the mountain and I would wake up before daylight to pray in the snow, in icy coldness, in rain, and I used to feel neither ill nor any slothfulness, because, as I now see, the Spirit was burning in me at that time.' Guided by a voice, he escapes…. 'And it was there of course that one night in my sleep I heard a voice saying to me: 'You do well to fast: soon you will depart for your home country.' And again, a very short time later, there was a voice prophesying: 'Behold, your ship is ready.' And it was not close by, but, as it happened, 200 miles away, where I had never been nor knew any person. And shortly thereafter I turned about and fled from the man with whom I had been for six years, and I came, by the power of God who directed my route to advantage (and I was afraid of nothing), until I reached that ship.' Called back to Ireland by a dream… 'And after a few years I was again in Britain with my kinsfolk, and they welcomed me as a son, and asked me, in faith, that after the great tribulations I had endured I should not go anywhere else away from them. And, of course, there, in a vision of the night, I saw a man whose name was Victoricus coming as if from Ireland with innumerable letters, and he gave me one of them, and I read the beginning of the letter: 'The Voice of the Irish', and as I was reading the beginning of the letter I seemed at that moment to hear the voice of those who were beside the forest of Foclut which is near the western sea, and the were crying as if with one voice: 'We beg you, holy youth, that you shall come and shall walk again among us.' And I was stung intensely in my heart so that I could read no more, and thus I awoke. Thanks be to God, because after so many years the Lord bestowed on them according to their cry.' Haunted by a youthful confession… 'They brought up against me after 30 years an occurrence I had confessed before becoming a deacon. On account of the anxiety in my sorrowful mind, I laid before my close friend what I had perpetrated on a day, nay, rather in one hour, in my boyhood because I was not yet proof against sin. God knows, I do not, whether I was 15 years old at the time, and I did not then believe in the living God, nor had I believed, since my infancy; but I remained in death and unbelief until I was severely rebuked, and in truth I was humbled every day by hunger and nakedness.' The faith he brought to the Irish… 'So, how is it that in Ireland, where they never had any knowledge of God but, always, until now, cherished idols and unclean things, they are lately become a people of the Lord, and are called children of God; the sons of. the Irish and the daughters of the chieftains are to be seen as monks and virgins of Christ.' Baptising a beautiful noblewoman… 'And there was, besides, a most beautiful, blessed, native-born noble Irish woman of adult age whom I baptised; and a few days later she had reason to come to us to intimate that she had received a prophecy from a divine messenger who advised her that she should become a virgin of Christ and she would draw nearer to God. Thanks be to God, six days from then, opportunely and most eagerly, she took the course that all virgins of God take, not with their fathers' consent but enduring the persecutions and deceitful hindrances of their parents. Notwithstanding that, their number increases, (we do not know the number of them that are so reborn) besides the widows, and those who practise self-denial. Those who are kept in slavery suffer the most. They endure terrors and constant threats, but the Lord has given grace to many of his handmaidens, for even though they are forbidden to do so, still they resolutely follow his example.' 'My confession…' 'But I entreat those who believe in and fear God, whoever deigns to examine or receive this document composed by the obviously unlearned sinner Patrick in Ireland, that nobody shall ever ascribe to my ignorance any trivial thing that I achieved or may have expounded that was pleasing to God, but accept and truly believe that it would have been the gift of God. And this is my confession before I die.'

Subject: Re: From the mouth of the great man himself!
From: Terri
To: Setanta
Date Posted: Thurs, Mar 17, 2005 at 08:52:02 (EST)
Email Address: Not Provided

Message:
To the great man, himself :)

Subject: Re: From the mouth of the great man himself!
From: johnny5
To: Terri
Date Posted: Thurs, Mar 17, 2005 at 09:07:40 (EST)
Email Address: johnny5@yahoo.com

Message:
What in interesting history - thanks - Cheers! (hiccup)

Subject: Peace Always
From: Emma
To: johnny5
Date Posted: Thurs, Mar 17, 2005 at 10:06:16 (EST)
Email Address: Not Provided

Message:
Peace always in Ireland. May there be peace from here on.

Subject: Re: Peace Always
From: Pancho Villa
To: Emma
Date Posted: Thurs, Mar 17, 2005 at 11:54:06 (EST)
Email Address: nma@hotmail.com

Message:
Voltaire: What is tolerance? -- it is the consequence of humanity. We are all formed of frailty and error; let us pardon reciprocally each other's folly -- that is the first law of nature.

Subject: Bluff your way in Irish!
From: Setanta
To: All
Date Posted: Thurs, Mar 17, 2005 at 07:13:03 (EST)
Email Address: Not Provided

Message:
now you can go out and celebrate St Patricks Day and impress all your friends! If you're Irish through and through or a wannabe Irish citizen, there's no doubt that you'll be in a pub at some stage on March 17th. So, we have compiled a list of essential Irish phrases that you'll be saying when you're out and about. Use this as helpful chat up lines, to get someone to buy you a pint or simply to converse with friends or strangers on the night. Even if you're not up to speed with the Irish language, we've added the easy pronunciation guide so you can completely bluff your friends!! Colour guide: Irish translation [how it's pronounced] Happy St Patrick's Day Beannachtaí na Féile Pádraig duit [Ban ack tee na fayla Pawd-rig ditch] -by the way Jonny, the reason this is diffent to my greeting earlier is that my greeting was in Connacht Irish and this is Ulster Irish! Kiss me, I'm Irish! Is Éireannach mé, ‘dom póg! [Is Air- an- ack may, do pogue] I'm Irish, are you? Is Éireannach mé, carb as duit féin? [Is air-an- ack may, carr-ab ass ditch hane?] The night is still young! Níl an oíche ach ina tachran! [Knee-ill an ee-ha ack inna tach-rann] Will you come back for a night cap!? Beidh deoch deireannach agat sula dtéann tú a luí? [Bay juchk jer-ann-ach agat sulla jay-ann too a lee] Sure you'll have one for the road! Ná himigh go n-ólaimid deoch an dorais! [Na himie gu knowl-am-widge juchk an dor-ish] Irish eyes are smiling Is minic aoibh a ghaire ar Éireannaigh [Isss min-ic eave a guy-ra air Air-an-ee] Mine's a pint Beidh pionta agamsa le do thoil! [Bay pin-ta agam- sa le do hill] Do you have Irish roots? An bhfuil duine ar bith muinteartha duit atá ina Éireannach? [An will din- ye ar bee mwin-char-tha ditch ata ina Air-ean-ach] How are you doin'?! Cad é mar atá tú? [Cad jay mar ata too?] Do you come here often? An dtig tú anseo go minic? [An jig too an-shaw gu minn-ic?] Get your coat, you've pulled! Imigh is faigh do chóta gasta, bhréag tú mé [Im-ee iss fwy do hoe-ta gasta , vreg too may!] Did I tell you that I'm Bono's cousin! An bhfuil a fhios agat gur colcheathrar dom é Bono? [An will iss agat gur cul- hee-ath-rar do ay Bono?] It's your round! Tá babhta deochanna agat orainn! [Ta bow-ta juchk-anna agat oreene ] It can't be my round, I'm Scottish! Tá dul amú ort, is Albanach mé! [Ta dul amoo ort, iss Alab-anac may!]

Subject: Too drunk to learn
From: johnny5
To: Setanta
Date Posted: Thurs, Mar 17, 2005 at 09:02:49 (EST)
Email Address: johnny5@yahoo.com

Message:
(Hiccup) too much beer, I will try to remember one of them though, hehe - isn't that gaelic what enya and clannad sing in? It can't be my round, I'm Scottish! BWAHAHA! This will be the one I learn as my last name is wallace and that counts for something in this little town of dunedin florida. The parade is going to be rained out though, lots of raindrops falling on my head.

Subject: Re: Bluff your way in Irish!
From: Terri
To: Setanta
Date Posted: Thurs, Mar 17, 2005 at 07:18:04 (EST)
Email Address: Not Provided

Message:
Suppose you do not care to drink :)

Subject: Non alcoholic beer for the good
From: johnny5
To: Terri
Date Posted: Thurs, Mar 17, 2005 at 09:04:18 (EST)
Email Address: johnny5@yahoo.com

Message:
But hard heavy corned beef and cabbage and strong irish whiskey for the bad - hehe (hiccup)

Subject: Re: Bluff your way in Irish!
From: Setanta
To: Terri
Date Posted: Thurs, Mar 17, 2005 at 07:42:03 (EST)
Email Address: Not Provided

Message:
The words should work just as well with soft drinks; instead of 'pint' substitute with 'gloine bainne/coke/uisce/soda' which translates to 'glass of milk/coke/water/soda' pronounced 'glin-na bonya/coke/ish-ka/soda' for those who do want a drink today here's an Irishman's tip - never drink a green drink, especially today...a pint of plain (Guinness) is your only man!

Subject: Re: Bluff your way in Irish!
From: Terri
To: Setanta
Date Posted: Thurs, Mar 17, 2005 at 08:51:05 (EST)
Email Address: Not Provided

Message:
You are wonderful. Love to Irish everywhere.

Subject: We Can be Optimistic
From: Terri
To: All
Date Posted: Thurs, Mar 17, 2005 at 06:27:30 (EST)
Email Address: Not Provided

Message:
What is interesting about looking at fine returns in a most difficult investment period is that it shows what diversity can mean. Of course the pattern will change in the coming 5 years. The past will not repeat, but there is reason to be optimistic with diversity and patience and understanding institutions that can and should be trusted. The most pessimistic investor should be joyful about bond funds these last 5 years. Yes, joyful.

Subject: Selected Vanguard Returns
From: Terri
To: All
Date Posted: Thurs, Mar 17, 2005 at 06:12:38 (EST)
Email Address: Not Provided

Message:
Vanguard REIT Index is up 148.23% over the 5 years through February 28, 2005. Comparison of REIT Index performance to real estate is valid. Vanguard Energy Fund is up 192.26%. Health Care is up 72.76%. Long Term Bond Index is up 61.98%. Nice. There is always reason to be optimistic with thought and diversity and fine conservative investment funds to rely on.

Subject: Happy st pats day everyone
From: johnny5
To: All
Date Posted: Thurs, Mar 17, 2005 at 03:20:17 (EST)
Email Address: johnny5@yahoo.com

Message:
May the luck of the irish shine on your investments all my pkarchive friends, I am still chasing that leprechaun with a pot of gold! Johnny will drink a green beer for you all. Cheers! (hiccup)

Subject: Re: Happy st pats day everyone
From: Setanta
To: johnny5
Date Posted: Thurs, Mar 17, 2005 at 07:02:12 (EST)
Email Address: Not Provided

Message:
La le feile Padraig agatsa freisin, Johnny5... Thats 'Happy St Patrick's Day to you too' in Irish Gaelic! Unfortunately, i'm not out enjoying myself (today being a public holiday in Ireland). I'm stuck in work because some damned Pension Scheme wants signed financial statements by next week! By the way, its a beautiful Spring day here, and in about 2 hours I'm going outside to enjoy the parade! its not going to be too much of a booze fest (personally, i haven't had more than 20 pints of beer in total since christmas), since all Off-Licenses (Irish equivalent of liquor stores) are closed and it's illegal to carry an open alcoholic drink in public. also, there's work tomorrow so all drinking was done last night! Well, have a good day and beware of the Sinn Fein/IRA bogeymen.

Subject: Re: Happy st pats day everyone
From: Terri
To: Setanta
Date Posted: Thurs, Mar 17, 2005 at 07:15:29 (EST)
Email Address: Not Provided

Message:
Happy peaceful day to all.

Subject: Real Estate Blog Pete - 87.6% in 5 yrs
From: johnny5
To: All
Date Posted: Thurs, Mar 17, 2005 at 02:39:37 (EST)
Email Address: johnny5@yahoo.com

Message:
This was just rated the number 1 real estate blog on the net Pete: http://insiderealestatejournal.blogspot.com/ He is based in my area - Tampa. He writes this down into his blog: The Florida Association of Realtors issued this news release telling us all about sales for Florida homes being up 10 percent in January, along with the median sale price of Florida homes. Statewide, sales of single-family existing homes totaled 15,567 last month compared to 14,204 homes sold a year ago... The statewide median sales price last month rose 24 percent to $204,900; a year ago, it was $164,900. In January 2000, the statewide median sales price for single-family homes was $109,200, resulting in an increase of 87.6 percent over the five-year-period, according to FAR records. Now Pete this is almost EXACTLY what has happened with my mothers house in west palm, unbelievable returns with similar pricing as their report - so my thoughts that she was in a bubble market compared to other areas of florida may be wrong. She doesn't live there though, she rents it out, and we are trying to find out about doing a 1031 exchange so she can get a house here so she can have it close by and look over it. So the past few weeks we have been riding around the neighborhoods of the tampa bay area and we see all these new developments with stucco homes - I thought that stucco stuff was bad in humid florida because of Mold growing on the inside destroying it? And lots of the new homes have brown patches on the sides where water sprinklers have wetted them with what my mom calls dirty copper water that is very unhealthy for you. We asked some of the realtors these 2 questions and never got a straight answer. Also insurers are raising rates in the state. This web guy is hype master number one if you ask me though, he counters every negative real estate article on the web and press and issues these always glowing reports - he is hyping trump tower big time. I don't understand why trump has decided to come to this coast versus another. But here: http://thehomeblog.blogs.com/thb/taxes/index.html This guy talks about the hidden agenda: Over at Realty Times Blanche Evens posits that the White House will be looking at the perceived profits being made in the housing market for some backdoor taxes to implement. Reducing or removing the mortgage interest tax exemption would do just that. Combine that with an increase in home ownership and you have a new tax base. Easy as pie. http://www.showcaseofhomes.tv/ So you go here and watch thier little 5 minute webcast show and she talks about greenspan and housing bubbles and not to worry because greenspan was praising our housing market and I can't understand how she can take such a positive view of what he said when I took a negative view - don't they know anything easy greenspan says negatively has to be multiplied by 10? I am going to look at the realytimes market conditions reports for a few areas and see what they say about bubbles and if they were rosy glasses too. To futher sour things - what did vanguard funds do the past 5 years versus real estate in FL - not as good I bet and now after these huge runups I hear some people wanting to get into real estate at this pricing peak and get out of vanguard.

Subject: More on the KL hedge fund cowboys
From: johnny5
To: All
Date Posted: Wed, Mar 16, 2005 at 22:50:45 (EST)
Email Address: johnny5@yahoo.com

Message:
Again I don't know that these guys were really evil by shorting goog at 180 - sounds safe and logical to me - but it reveals the flaw of our markets and hedge funds and leverage and why there is so much danger out there - even if you are right - you risk a lot of people's money not understanding the markets can remain irrational longer than you can remain solvent. Even Pete said he was giving up on the bear because of this mass psychology of delusion. http://www.palmbeachpost.com/business/content/business/epaper/2005/03/15/a1d_hedge_0315.html Principal of KL Financial investment firm apparently has fled country By David Sedore Palm Beach Post Staff Writer Tuesday, March 15, 2005 A West Palm Beach money manager under investigation for fraud fled the country last month for South Korea one day after being interviewed by the Securities and Exchange Commission. Won S. Lee, one of three principals of hedge fund firm KL Financial Group, apparently hopped aboard a Korean Air flight to Seoul on Feb. 23 with a one-way ticket in hand. 'He's gone forever,' said Gary Klein, a Boca Raton attorney who represents more than 30 investors who lost more than $30 million invested with the firm that operated from Esperante office building downtown before abruptly closing Feb. 25. 'The question is did he go with the money or without?' Earlier this month, the SEC sued KL Financial in federal court, calling it a 'massive hedge fund fraud.' The agency also sued Lee, a former resident of Riviera Beach, and brothers Yung Kim and John Kim, all principals in the firm. John Kim is a Jupiter resident. A federal judge has ordered the temporary freeze of the remaining assets of KL Financial and its principals. At least $81 million, perhaps as much $300 million, is gone as a result of the collapse of the firm that specialized in high-risk hedge fund investing. Lee's flight, paid for by cashing in frequent flier miles, came a day after SEC examiners visited the Irvine, Calif., offices of Shoreland Trading, a brokerage that Lee and the Kims controlled and that handled securities trading for KL Financial's various investment funds. On Feb. 22, the SEC examiners interviewed Lee and Yung Kim in Irvine about Shoreland's operations. The Shoreland brokerage, according to audits, showed huge trading losses — $16 million in 2003 and $46 million in 2004 — at the same time that KL Financial was telling its investors that it was making huge profits. Lee and Yung Kim told the SEC that Shoreland hired young, inexperienced traders and that the money they were trading was Lee's. Shoreland, they said, had no retail customers. The two men agreed to meet again with the SEC the next day. Yung Kim showed; Lee did not. The SEC was told that Lee was on a plane to Florida, and the examiners agreed to continue the interview that Feb. 25 in West Palm Beach, where KL Financial and Shoreland shared the 17th-floor of the Esperante building. Lee and Yung Kim didn't show. 'Won Lee on the 22nd, Yung Kim on the 23rd. That's the last anybody has heard from either of them,' said Ivan Harris, a staff attorney with the SEC in Miami. The FBI and the U.S. Attorney's office in Miami also are investigating the firm and its principals, though no charges have been filed. FBI spokesman Judy Orhuela would not comment Monday. John Kim, the other principal, remains in Jupiter. According to court documents, on Feb. 26, the day after the SEC shut down the West Palm Beach office, Kim told investors that Lee controlled everything and was responsible for the trading losses. He also said Lee had fled the country. John Kim also asked investors for more money, promising he would make back lost money. KL Financial raised $10.1 million in January and February. On Feb. 5, less than three weeks before its collapse, the firm had asked SEC for permission to raise $2 billion from investors. Gordon Gekko: Ever wonder why fund managers can't beat the S&P 500? 'Cause they're sheep, and sheep get slaughtered.

Subject: He is sorry your money got stolen
From: johnny5
To: All
Date Posted: Wed, Mar 16, 2005 at 22:34:37 (EST)
Email Address: johnny5@yahoo.com

Message:
The end of the article is the problem, they say they use the SS to make sure they are dealing with the right individual, well many of my friends SS was stolen and the banks used a faulty measure to determine who they are dealing with - can't they see their own foolishness in putting so much weight on a number? My friends that are bankrupt now because of identity theft deserved better than this. http://www.palmbeachpost.com/business/content/business/epaper/2005/03/16/a1d_idtheft_0316.html Data broker's CEO says he's sorry about security breach By Rebecca Carr and Marilyn Geewax Palm Beach Post-Cox News Service Wednesday, March 16, 2005 WASHINGTON — ChoicePoint Inc.'s chief executive apologized Tuesday for the data broker's slow response to last year's theft of about 145,000 customers' private information. But amid sharp questioning from members of both parties in one committee in the House and another in the Senate, officials of the Alpharetta, Ga., company resisted suggestions that new laws being prepared on identity theft include strong restrictions on the sale of Social Security numbers. 'Let me begin by offering an apology on behalf of our company and my own personal apology to those consumers whose information may have been accessed,' Chairman and CEO Derek Smith told the House Energy and Commerce Committee's panel on trade and consumer protection. He said ChoicePoint is notifying the individuals about the security breach and moving 'aggressively' to prevent it from happening again. 'The security breach that ChoicePoint discovered last fall in California has caused us to go through some serious soul-searching at ChoicePoint,' Smith said. 'In retrospect, the company should have acted more quickly. I should have been notified earlier of the investigation.' ChoicePoint and other data brokers are under fire on Capitol Hill for a string of recent security breaches, including an incident involving Boca Raton-based Seisint Inc., a division of LexisNexis, that compromised information on 30,000 individuals. Tuesday marked the first time Smith has testified before Congress since ChoicePoint's huge information loss became public last month. Smith said that in the future he would be informed of all criminal investigations beginning with the initial inquiry. Smith has said he did not learn of the security lapse until January, more than three months after it was first detected. The company plans to review its files for other acts of fraud or theft, Smith said. In a recent filing with the Securities and Exchange Commission, ChoicePoint reported that it is 'aware of a limited number of past instances that resulted in criminal convictions of certain former customers for activities involving improper use of our information products.' Lawmakers from both political parties are considering new legislation to regulate data brokers on two fronts: restricting Social Security numbers from public sale and requiring companies to inform consumers when intruders acquire personal information. 'I personally see no socially redeeming value in anyone having the right to market or use Social Security numbers and other personal information,' said Rep. Joe Barton, R-Texas, chairman of the House Energy and Commerce Committee. He predicted that Congress would pass a law restricting the sale of Social Security numbers except in limited cases, such as a criminal investigation. Smith and Kurt Sanford, chief executive officer of LexisNexis, supported proposals to strengthen federal laws protecting consumer privacy. But both resisted the idea of banning the sale of Social Security numbers. 'I would not support a blanket ban on the sale of Social Security numbers,' Sanford said. 'Financial institutions need unique identifying Social Security number information when they are investigating fraud and making sure they are doing business with the right individuals.'

Subject: ID theft victims cry to congress
From: johnny5
To: johnny5
Date Posted: Wed, Mar 16, 2005 at 22:39:18 (EST)
Email Address: johnny5@yahoo.com

Message:
This bill is not going to stop the hungry hackers in russia - laws and legislation are not the problem, the problem is the systemic risk inherint in having digital dollars floating in the virtual world. http://www.palmbeachpost.com/business/content/business/epaper/2005/03/15/a1d_idtheft_0315.html Identity theft victims tell Sen. Nelson their stories By Stephen Pounds Palm Beach Post Staff Writer Tuesday, March 15, 2005 BOCA RATON — Last year Raquel Lopez was turned down for bank loan, and it wasn't because her own credit was bad. The 31-year-old teacher from Tamarac called the nation's three credit bureaus and found that for two years someone in Wichita, Kan., was running up debt in her name. After contesting the debt, she thought she had cleared her name. ID theft information Watch video of interviews with victims, prevention tips.
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-- Highlights of U.S. Sen. Bill Nelson's bill against identity theft: • Places data brokers under the regulation of the Federal Trade Commission. • Gives individuals the right to see all personal information held on them and to correct wrong data. • Tracks who is requesting and receiving consumer information from data brokers. • Requires procedures to detect and prevent fraud. Then her problems with the IRS began. The agency said she hadn't filed W-2 forms for jobs in 2003 — jobs she never held. Today, she still owes $5,700 in IRS penalties and fees, Lopez said Monday. 'It's frustrating. You want it over with,' she told Sen. Bill Nelson, D-Fla., who came to Boca Raton to gain support for his bill in Washington to help thwart identity theft. 'You have no idea how much trouble you go through. And you have to do all the work yourself.' Lopez is one of nine to 10 million people a year who are victims of identity theft. She and a handful of other victims told Nelson how their lives were disrupted when their name, birth date, Social Security number and other personal information were pilfered by thieves. Nelson is championing the new congressional fight against identity theft. He has introduced legislation that would place data brokers such ChoicePoint and Seisint — both with computer operations in Boca Raton — under the regulation of the Federal Trade Commission. 'Increasingly, we have a problem with identity theft... and if we don't do something about it, if we don't get our arms around identity theft... none of us in America will have any privacy anymore,' Nelson said. The two companies are responsible for the personal information leaks affecting 175,000 Americans — more than 11,500 Floridians — in the past month. In those cases, computer security was breached by thieves using customers' login names and passwords, although in ChoicePoint's case the high-tech thieves stole personal information first to create bogus customer accounts. ChoicePoint and LexisNexis, the parent of Seisint, are notifying victims. Seisint's letters to victims went out in the mail Monday. Nelson has extra motivation to take action because his personal information was jeopardized in December when the Bank of America lost computer tapes with the account numbers and other information on 1.2 million customers. 'There ought to be responsibility by the Bank of America not to ever let those records get lost or stolen in the first place... and that's where we need to crack the whip,' Nelson said. While Nelson's bill would give the FTC authority over information brokers and require them to track requests for personal data, it wouldn't resolve the vast majority of identify-theft cases where someone's credit card number is stolen from a receipt found in a waste basket. 'If this passes, schemers wouldn't be able to sign up and get this information just by paying a fee,' Nelson aide Christine Hanson said. Two years ago, Nelson pushed for legislation that would require businesses to shred credit card data when disposing of it, after a Naples branch of CitiFinancial simply tossed more than a thousand customer records in a trash bin. Nelson's latest bill has been referred to the Senate Commerce Committee for hearings; a companion bill is in the House. Nelson also has asked for a General Accounting Office investigation into the possible national-security risk from the release of sensitive personal information by data brokers.

Subject: Vanguard Indexes
From: Terri
To: All
Date Posted: Wed, Mar 16, 2005 at 21:42:20 (EST)
Email Address: Not Provided

Message:
Morgan Stanley has superior indexes, and there is absolutely no connection to any possible ethics issue in the forming of these indexes. Vanguard has done precisely what is proper for investors in adopting these indexes. The change began several years ago and continues.

Subject: Vanguard MSCI Indexes
From: Terri
To: Terri
Date Posted: Wed, Mar 16, 2005 at 21:48:12 (EST)
Email Address: Not Provided

Message:
The reason to use Morgan Stanley indexes is simply that they are the finest market capitalization indexes. Taking them as a model is a perfect choice for investors.

Subject: My trust is hard to earn
From: johnny5
To: Terri
Date Posted: Wed, Mar 16, 2005 at 22:16:38 (EST)
Email Address: johnny5@yahoo.com

Message:
Terri after reading all over the place how MSDW and so many others are doing all these very very crooked things that distort the markets it gives me a grand picture of thier corporate culture - to screw me and you and make them and their rich buddies lots of money. Now given that, you are telling me that even though they are screwing the little guy in so many other parts of thier business, and that reflects a corporate ethics problem of where they manipulate things and distort the EMH with tricks - none of that EVIL will bleed over into other parts of their business like say the MSCI. I can't feel so secure as you given my huge distrust of wealthy people, crooks, lies, and cheats, that came from an educational and societal background where they have proven time and time again all they learned was to screw me and you ANY WAY they can. But you are absolutely confident that if evil people wanting to hurt the little guy for their own gain got control of MSDW and the MSCI weightings and a host of other statistic funny business and accounting tricks or whatever they would not use their power to manipulate things to their advantage but stay honest? Lets play devils advocate - lets take a paranoid view of the world, what TRICKS could be done with this MSCI that vangaurd has signed onto that would hurt the little guy at the benefit of richie?

Subject: China's Economic Numbers
From: Emma
To: All
Date Posted: Wed, Mar 16, 2005 at 21:35:11 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/16/business/16cnd-yuan.html?adxnnl=1&adxnnlx=1111008101-v/KcFQcI8Gdvqihxl9Zocw China Raises Home-Loan Rate in Bid to Slow Soaring Growth By KEITH BRADSHER HONG KONG - China's central bank announced late today that it was raising the cost of housing loans, after more signs emerged that the country's economy may be growing at an unsustainable pace as property prices soar. The minimum regulated interest rate for housing loans of five years or more will rise to 5.51 percent, from 5.31 percent. Banks will also be encouraged to require down payments of 30 percent of the purchase price, instead of 20 percent, in cities that have seen especially rapid appreciation lately, the People's Bank of China said. The moves come a week after Shanghai began assessing a capital gains tax of 5.6 percent on real estate bought and sold in less than a year, and after delegates to the National People's Congress in Beijing voiced worries in the past week that real estate speculation was becoming out of control and hurting the affordability of housing. Real estate prices have been climbing faster in China than in much of the United States, with urban prices escalating 10.8 percent in the fourth quarter after a jump of 8.6 percent in the third quarter. Prices have been rising even faster in Shanghai, where overseas investors have been buying up apartments in hopes of profiting from not only from rising prices but also a possible increase in the value of China's currency against the dollar. The Chinese central bank tempered the effects of the housing loan rate increase on the overall economy, however, by reducing the interest rate it pays banks for reserves they hold in excess of regulatory minimums. The effect of the decrease, to 99-hundredths of a percent from 1.62 percent, is to encourage banks to lend more money, although the banks are still under administrative controls governing the total volume of their loans. Unexpectedly strong increases this year in exports, industrial production and consumer price inflation, together with a jump in fixed-asset investment announced today, are prompting many economists to begin questioning whether Chinese leaders can follow through on pledges to slow the growth rate of the economy to 8 percent this year, from 9.5 percent last year. 'We have an economy that is stronger than we thought; the slew of January and February numbers is pretty impressive,' said Jonathan Anderson, a UBS economist here. If growth continues to accelerate in China this year, creating greater demand for raw materials, it could push even higher the prices of crude oil and other commodities that China already imports in enormous quantities. Copper prices jumped 2 percent today in London to a record $3,307 a ton as Chinese companies placed large orders, while oil prices were down slightly after member countries of the Organization of Petroleum Exporting Countries agreed to increase production by 2 percent. The big question now is whether the Chinese economy's vigor, combined with a huge inflow of both speculative and long-term investment, will feed inflation within China, which could be socially and even politically disruptive. While consumer prices were 3.9 percent higher last month than a year earlier, some economists are less worried now about inflation than they were in the spring of last year, as the pace of growth has become more even among many sectors of the economy. Construction of new steel mills, which boomed in early 2004, has slowed. Some of the fastest growth this year has been in exports, while investment spending has soared fastest this year in areas that proved bottlenecks to growth last year, notably coal mining, electricity generation, oil refining and transportation. Liang Hong, a Goldman Sachs analyst, said that she had no plans to increase her forecast that consumer prices in China would rise just 2.6 percent this year, even though she expects growth to exceed the government's target of 8 percent. 'It seems to be close to 9 rather than close to 8,' she said. Qu Hongbin, an HSBC economist, said Chinese regulators had been effective in persuading banks to slow the annual growth rate in loans, to less than 15 percent now from 24 percent at the end of 2003. This will start slowing investment spending and the rest of the economy soon, he predicted. But Andy Xie, a Morgan Stanley economist, was more pessimistic, contending in a research note that China faced an overheating economy and a property bubble. Vigorous economic growth and rising exports combined with currency speculation are increasing the pressure on China to allow greater flexibility in its currency, which is known as the yuan or renminbi and has been effectively pegged at 8.28 to the dollar for almost a decade. Prime Minister Wen Jiabao surprised financial markets on Monday by mentioning that if China acted on the currency, it would do so unexpectedly, although he also cautioned that there would be risks to the global economy from any revaluation. China's foreign currency reserves jumped nearly $100 billion in the fourth quarter alone as the central bank exchanged yuan for the flood of dollars pouring into the country mostly through unofficial channels. Raghuram Rajan, the research director of the International Monetary Fund, urged China in a speech here on Tuesday to let the yuan trade in a wider range, a step that would likely result in its appreciation in the short term, saying that steps like interest rate controls, bond sales and capital controls could not indefinitely prevent the inflow of money from feeding inflation. 'The inflation genie can indeed be bottled up,' he said. 'Eventually, however, it will get out as all these controls lose their effectiveness. Long-term undervaluation is simply too difficult to manage.' Investment in factories, office buildings and other fixed assets in urban areas climbed 24.5 percent in the first two months of this year compared with a year earlier, an acceleration from a year-over-year increase of 21.3 percent in December, China's National Bureau of Statistics said today. Data for the first two months of the year are often combined in China because of difficulties in adjusting for the shifting dates for the beginning of Chinese New Year celebrations, which depend on a lunar calendar.

Subject: Video from Krugman/Tanner debate?
From: Ted
To: All
Date Posted: Wed, Mar 16, 2005 at 21:15:53 (EST)
Email Address: Not Provided

Message:
Does anyone know if/where I can find a recording of the debate between Krugman and Cato's Michael Tanner at the NY Society for Ethical Culture on Tuesday? Thanks.

Subject: Vanguard Indexes
From: Terri
To: All
Date Posted: Wed, Mar 16, 2005 at 15:34:01 (EST)
Email Address: Not Provided

Message:
Vanguard has changed almost all of index funds to the Morgan Stanley index family. The Morgan Stanley indexes have the advantgae of lower turnover, more tax saving because of lower turnover, weights that are based not on total stock outstanding in a company but on shares that are actually traded. The Morgan Stanley indexes are generally broader than the previous indexes. I find the changes in indexes most agreeable.

Subject: Weighting of Insiders
From: johnny5
To: Terri
Date Posted: Wed, Mar 16, 2005 at 21:34:02 (EST)
Email Address: johnny5@yahoo.com

Message:
I don't know how all this ties in terri but didn't morgan stanley get in on the funny side of all this mess going on the past few years with the scandals? They have many bad things to say about morgan stanley here is one: http://www.kamalsinha.com/morganstanley/mutual-funds/ Mutual Funds July 15. SEC Investigating Morgan for high fees of its S&P index funds. Normally index funds' annual expenses are around 0.2 percent to 0.5 percent while more traditional funds requiring significant research cost more. Morgan Stanley's Standard and Poor's fund cost 1.5 percent in expenses each year. Why? SEC wants to know. Here is another: http://lawprofessors.typepad.com/whitecollarcrime_blog/2005/01/goldman_sachs_a.html January 26, 2005 Goldman Sachs and Morgan Stanley Settle SEC Complaints About IPO Allocations The SEC announced that it filed and settled complaints against Goldman Sachs and Morgan Stanley relating to the allocation of shares in Initial Public Offerings (IPO) to clients of the firms by requiring those receiving shares to place orders to purchase additional shares, thereby raising the price of the stock. Each firm agreed to pay a civil penalty of $40 million. Maybe I am not comprehending what going to an MS index means but why would vanguard who has kept above all this mess associate in any way with such a name? I don't understand. I need some of you more astute people to help me understand this new weighting. Now over the years of reading silicon investor I read about many naked short scams where people illegally short stocks without borrowing shares - or other kinds of short scams - I think it works like this - a company issues shares to some guy - a ceo or insider or whoever for whatever reason - this guy has an offshore account - the float is increasing because of his shares - so he shorts the stock and then dumps his shares and sells them - they issue him more shares - through his offshore account he shorts the stock even more and dumps more shares - and down and down the stock go. Usually the people making the decision to short the stock are the same ones receiving it and dumping the shares through crafty transactions. Now take XOM recently, someone just dumped a HUGE pile of shares right after the price of oil reached a new high taking XOM and the price of oil down - now if this was an insider and his shares weren't counted in the weightings but only the regular traded stocks - can this not distort an indexers view of the fair market value of companies composing the index. I mean doesn't total stock outstanding give you a more accurate picture of what can happen to the stock if a ton of insiders decide to dump? Or am I really confused again and wether the insiders dump or not should not affect someone wishing to try and guess the future price of a stock?

Subject: Perfect for Investors
From: Jennifer
To: johnny5
Date Posted: Wed, Mar 16, 2005 at 21:59:49 (EST)
Email Address: Not Provided

Message:
Indexes are statistical models, that are formed by companies such as Morgan Stanley or Standard and Poors or Merrill Lynch or Goldman Sachs and others. The MSCI indexes are perfect for investors. We can however use what we wish.

Subject: Re: Perfect for Investors
From: johnny5
To: Jennifer
Date Posted: Wed, Mar 16, 2005 at 22:06:53 (EST)
Email Address: johnny5@yahoo.com

Message:
But haven't every one of the companies you listed gotten in big trouble for lies and deceit - there are huge ethical issues here - and it seems to me you are saying - well that lied about all that other stuff that distorted the markets and got in trouble but they won't lie on their statistical models to distort the market and hurt the little guy and I don't comprehend why?? They scammed us jennifer- MSDW, Goldman - all of them - why trust a snake to be a bunny rabbit in any thing when all he knows how to do is bite you and inject poison?

Subject: Explosive Mix in Mexico's Politics
From: Emma
To: All
Date Posted: Wed, Mar 16, 2005 at 12:28:22 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/16/international/americas/16letter.html?pagewanted=all&position= The Explosive Mix in Mexico's Politics By JAMES C. McKINLEY Jr. MEXICO CITY - For months the political debate in Mexico has been dominated by an escalating war between the populist mayor of this giant capital city and President Vicente Fox. On the surface, the fight seemed to be an endless shouting match about the rule of law and the meaning of democracy until both sides called a temporary cease-fire to the mudslinging last week. The president and his aides repeatedly charged the mayor with putting himself above the law, while the mayor accused the Fox administration of using a trumped-up charge of contempt of court to knock him off the presidential ballot in 2006. Underlying the dispute, however, is something much more explosive: an abiding fear among business leaders and conservatives of Mayor Andrés Manuel López Obrador, a messianic leftist who has become the most popular politician in the Democratic Revolutionary Party and a man whom they suspect of harboring a secret agenda of rolling back 10 years of economic liberalization and introducing lavish social programs the government cannot afford. The paradox, some political analysts are saying, is that in their determination to preserve the economic changes, the conservatives may be undermining something even more precious: Mexico's fragile democracy. Conservatives, among them Mr. Fox himself, appear to think that Mr. López, if elected, may take up the mantle of Hugo Chávez, the leftist president who has roiled politics in Venezuela. And they are willing to support nearly any measure that would keep him from winning, even if it means banning him from the ballot with a relatively minor conviction for ignoring a court order. 'Fox sees López Obrador and he thinks populist, he thinks Chávez, he thinks devaluation, the end of the economic liberalization model he has tried to keep afloat,' said Denise Dresser, professor of political science at the Autonomous Technological Institute of Mexico. 'I think he's reacting very much with his gut.' For his part, Mr. López has dismissed the comparison to President Chávez as a gross simplification meant to scare voters. 'Every people has its own history, leaders; they are distinct realities; there are no twins,' he said last month. 'I am the product of very special circumstances, so I have nothing to do with Chávez.' Still, Mr. López has put forward an ambitious plan aimed at the working class that flies in the face of the current government's mission to nurture private business. For instance, he rejects any plans to privatize Mexico's oil and energy industries. He has promised national food subsidies for people over 65 and free medicine and medical care for every citizen. He also wants to investigate a fund set up in 1998 to bail out banks. 'When you talk about populism, you have to be careful,' he said to a reporter recently. 'One talks about it when there are programs to help poor people, but rescue the bankers and we call it development.' Santiago Creel, the current secretary of government who is seen as the most likely candidate for president from Mr. Fox's conservative National Action Party, known as PAN, made it plain in a recent interview he thought a López presidency would be an economic disaster. 'What is clear is that he has rejected all the economic reforms that we have put forward, all of them,' Mr. Creel said. 'And it's clear that his government has raised the level of public debt in a very important way and has also raised the levels of subsidies, making a pretty artificial economy.' Whether the conservatives' fears about the economy are well founded or not, Mr. López, who is enormously popular, does have a history of challenging entrenched interests. After he lost the fraud-ridden 1994 election for governor of Tabasco, his native state, he and his supporters took their grievances to the streets, taking over oil wells, holding sit-ins and blocking highways. Similar unrest in 2006 would taint Mr. Fox's claim to have constructed a true democracy, and Mr. López, with characteristic pugnacity, has already vowed to run a martyr's campaign from behind bars if the court case against him goes forward. Besides provoking ugly street protests, political analysts fret that the move to nip Mr. López's candidacy in the bud with a legal move would most likely cause widespread disillusionment with the elections. More than 50 of the nation's most respected intellectuals signed a public letter urging the Congress to drop the effort and let Mr. López be judged at the ballot box rather than in court. To many Mexicans, the crime that Mr. López is charged with does seem trivial by past standards. The prosecutors in Mr. Fox's Justice Department say officials in the mayor's administration ignored a judge's order to halt the construction of a road to a private hospital. Whether the mayor knew of the order is not known. Still, a conviction would disqualify him from the presidential race under Mexican law. The president and his aides have cast their fight against the mayor as one to preserve the rule of law, which they see as one of Mr. Fox's few accomplishments. Speaking about the mayor, the president said the country must consolidate the culture of complying with the law and added, 'There cannot be, nor must there be, exceptions.' Mayor López has made fun of these pronouncements, saying President Fox is no better than past party bosses and even dictators. 'It's gotten into the citizen president's head that I shouldn't be on the 2006 electoral ballot, and they are trying to push me aside,' he said. Some political analysts even see a new, antileft alliance forming between Mr. Fox's party and the old governing party he defeated in 2000, the Institutional Revolutionary Party, or PRI, an idea leaders of both parties deny. The theory is that the conservatives would rather see the PRI back in the president's mansion and themselves in the role of loyal opposition than see their economic reforms shredded. Other political analysts say the fears among conservatives of a López presidency are overblown. Congress is not likely to change much, they argue, and no party will have a majority. So Mr. López will have the same trouble passing his agenda that Mr. Fox has had. Still, it remains to be seen whether the president and the leaders of the PRI will opt to let the voters decide whether a leftist should get a chance to head the state. 'For the first time a leftist could possibly become president,' Ms. Dresser said. 'It's immensely threatening to them.'

Subject: Yuan and Dollar
From: Emma
To: All
Date Posted: Wed, Mar 16, 2005 at 11:01:30 (EST)
Email Address: Not Provided

Message:
The peg Yuan dollar will be changed, though likely when we least expect. I would guess a basket of currencies may replace the single currency peg. I would guess a stepwise increase in value of the Yuan. Remember, for a century as Brad DeLong writes economists did not find convergence in development finally began to doubt it would happen. Certainly development models proved faulty again and again. Then, there is China and with China there is India and South Africa and Brazil. Speak with an African, and there is intense optimism about China as a model; if only.

Subject: Growth and Currency
From: Emma
To: Emma
Date Posted: Wed, Mar 16, 2005 at 11:13:39 (EST)
Email Address: Not Provided

Message:
China will have a currency reserve loss when the Yuan increases in value against the dollar. But, China will have a more valuable Yuan and China will have developed apace having weathered a currency crisis in 1998 and slowing international growth periods before and after 1998.

Subject: OPEC changes its story
From: Pete Weis
To: All
Date Posted: Wed, Mar 16, 2005 at 10:49:57 (EST)
Email Address: Not Provided

Message:
This won't be good for the current account problem: OPEC says it's lost control of oil prices Cartel producers say they can't keep up with strong global demand MSNBC Updated: 4:51 p.m. ET March 15, 2005 With world oil prices north of $50 a barrel and rising, OPEC ministers meeting in Iran Wednesday will be grappling with a problem they haven’t confronted in the cartel’s 45-year history. In the past, OPEC tried to cool overheated prices by pumping more when supplies got too tight. But most OPEC producers say they’re already pumping as fast as they can. And despite the high cost of a barrel of crude, world demand shows no signs of slowing. As a result, some OPEC ministers say, they’ve run out of options in trying to rein in the price of crude. Global oil demand has taken up most of the slack in extra OPEC capacity. Consumption is now believed by many analysts to be pressing up against the limits of what the world can produce. Saudi Arabia is the only country believed to have any surplus production left, and even then the Saudis are pumping close to 90 percent of capacity, according to the U.S. Department of Energy. 'There is not much we can do,” Algerian Oil Minister Chakib Khelil told reporters Tuesday in Isfahan, Iran, the site of Wednesday’s meeting. 'OPEC has done all it can do.” Qatar Oil Minister Abdullah al-Attiyah said. “This is out of the control of OPEC.' But that hasn’t eased political pressure on the cartel. On Tuesday, several oil ministers said they had received calls from U.S. Energy Secretary Sam Bodman. Sen. Ron Wyden (D Ore.) said Tuesday he’s not convinced that OPEC’s hands are tied by global demand reaching the limits of production capacity. “This is their claim,” said Wyden. “But the fact of the matter is that nobody knows what their capacity is.” Though data on OPEC’s oil production capacity have always been hard to come by, there’s little disagreement on the rapid growth of global consumption -- especially in China and India. With worldwide demand this year rising by roughly 2 million barrels per day, whatever excess capacity is out there will be gone soon, according to Marshal Adkins, an oil industry analyst at Raymond James “Maybe this year, but certainly in ‘06 there won’t be any excess capacity,” he said. “We haven’t been in that kind of market in our lifetime. You’ve always have more capacity than demand.” That’s little solace to energy consumers, who are watching rising crude oil prices push pump prices to record levels. Though U.S. economy has yet to show signs of slowing and inflation remains low, a continued rise in oil prices will eventually slow growth, analysts say. “We will find the price level that will slow demand,” said Adkins. “It may be $60; it may be $100. I think it’s fair to say its going to be in that price band.” Seasonal lull? Analysts say OPEC typically eases back on production at this time of year because demand slows as the winter heating season winds down and drivers haven’t yet hit the road for summer vacations. But with prices nearly double levels just 18 months ago, production cutbacks are unlikely, say analysts. “OPEC’s only real option is to maintain the status quo for now,' said Smith Barney Citigroup oil analyst Doug Leggate in a recent research report. Oil prices have also risen for a variety of other factors over which OPEC has no control, according to Adkins. Tanker prices haven jumped from $3 a barrel to $10 a barrel during the recent run-up in crude prices. To increase output, Saudi Arabia has been selling lower grade crude, which has boosted the price of more desirable light, sweet crude. And the falling dollar has effectively cut the value of oil payments to OPEC producers. “When were looking on our screens seeing $45 oil, Saudis are cashing checks for $25 oil,” he said. “So in their mind -– their $25 price (target) -– that’s what they’re getting.” As rising demand has approached the world’s production limits, OPEC’s decisions have less impact on prices. In the past, the cartel has 'controlled' oil prices (or tried to) by adding or withholding production. By holding back oil, the market remained 'tight' and prices stayed relatively high. The 'oil shortages' of the 1970s were engineered by OPEC -- not the result of a true lack of supply. But production quotas have had mixed success. For starters, many OPEC producers have 'cheated' over the years -- agreeing cut back at OPEC meetings but then pumping more when they went home. A big run-up in inventories in 1997, for example, came just in time for the Asian economic meltdown in 1998. OPEC couldn’t cut production fast enough and oil prices fell to $10 a barrel. But eventually cutbacks sent prices back up above $30 a barrel by 2000. Then came the U.S. stock market crash, Sept. 11 and recession -- which sent oil back down to $15. OPEC cut production again, and prices began their run back to $30 -- and beyond. Now, with prices above $50, OPEC risks seeing prices tumble again if high energy costs put a damper on world growth. That’s why – despite relatively high crude oil inventories for this time of year – Saudi Arabia has proposed boosting production by 2 percent, to 27.5 million bpd. 'We're concerned about prices, we're also concerned about economic growth and we're particularly concerned about economic growth in developing countries,' said Saudi Oil Minister Ali al-Naimi. 'Hopefully I will be convincing enough to move the rest to my thinking.' But ministers from Iran, Kuwait and Nigeria have recommended postponing any increase until May 1 to see if demand eases as it usually does in the second quarter. And some OPEC ministers don’t think oil prices at current levels will slow the global economy. Some U.S. analysts concur, noting that the U.S. economy is less dependent on oil than it was during the “oil shocks” of the 1970s, when oil hit $80 a barrel when measured in today’s dollars. 'Even at $60 we see no economic impact,' Libyan Energy Minister Fathi Omar Bin Shatwan told reporters.

Subject: Learn About Vanguard
From: Terri
To: All
Date Posted: Wed, Mar 16, 2005 at 10:31:54 (EST)
Email Address: Not Provided

Message:
There is a reason to learn all that may be learned about Vanguard. There are other fine companies, but Vanguard has long been the leader in investor concern and orientation.

Subject: Berkshire Hathaway and Insurance
From: Emma
To: All
Date Posted: Wed, Mar 16, 2005 at 10:27:30 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/16/business/16buffett.html Even Buffett Can't Avoid Dark Clouds Settling Over Insurance Industry By JOSEPH B. TREASTER He embodies the Middle American archetype of the plain-speaking, straight-shooting businessman. In the age of imperious chief executives, he is cheered by investors at annual gatherings that include barbecue and baseball. After years of corporate scandals, Warren E. Buffett, 74, nearly stands alone as a paragon of management. But an accelerating investigation into certain insurance practices has ensnared one of Mr. Buffett's main businesses, raising the possibility that the most gleaming reputation in corporate America may be tarnished. Insurance is at the core of Mr. Buffett's company, Berkshire Hathaway. The Securities and Exchange Commission and the New York attorney general have been investigating a deal between a Berkshire unit, General Re, and American International Group, the world's leading insurer, that may have artificially bolstered A.I.G.'s finances. That inquiry led to the departure Monday of the man who built and ruled A.I.G. for nearly four decades, Maurice R. Greenberg. And investigators are looking into other so-called finite insurance deals by Mr. Buffett's companies. 'Some of his transactions may come back to haunt him,' said Andrew J. Barile, an insurance consultant. 'He did a lot of the kinds of deals they're looking at.' At company headquarters in Omaha, a spokeswoman, Debbie Bosanek, said Mr. Buffett would not comment. In defense of Mr. Buffett, insurance experts say Mr. Buffett's management of Berkshire is very different from Mr. Greenberg's time at A.I.G. While Mr. Greenberg had his hands on practically every aspect of A.I.G., Mr. Buffett, known more for his investing acumen than management prowess, prefers to delegate. 'If there is damage, it might be limited to the insurance units, without having a major impact on the Berkshire dynasty,' said Ric Marshall, chief analyst at the Corporate Library in Portland, Me. 'This won't have a personal impact on Buffett in the way it did with Hank Greenberg. It's a matter of personal style and involvement.' Mr. Buffett has not been named in any of the insurance investigations. Still, General Re is also under investigation by the Justice Department for its role in providing policies to a failed liability insurance company that operated in Virginia, Tennessee and other Southern states. And it has been named as a defendant in lawsuits by two insurance regulators. Last May, the Australian unit of General Re agreed to pay a $27.2 million settlement with the Australian Securities and Investments Commission over coverage to two Australian insurers that eventually collapsed. The transaction took place before Berkshire bought General Re in mid-1998. But Berkshire must still deal with Australian officials on the consequences of the transactions. In his annual report to investors this month, Mr. Buffett said the liquidator of the two Australian companies planned to file claims against Berkshire, maintaining that General Re contributed to the downfall of the companies by helping them with improper accounting. Yesterday, Berkshire disclosed that it had received a notice to show cause from the Australian Prudential Regulation Authority. Berkshire said General Re had until March 29 to show why it should not be investigated. Berkshire says it is cooperating with all of the investigations. There are other differences between Mr. Buffett and Mr. Greenberg. Like many chief executives, Mr. Greenberg was keenly aware of his company's quarterly performance. Mr. Buffett, on the other hand, has always managed for the long run and discouraged trading of Berkshire shares. One of his techniques to accomplish this was to refuse to split the stock into shares of manageable trading size. The stock closed yesterday at $89,900, down $700. Since Berkshire was not trying to show consistent quarterly gains, the insurance experts said, it is extremely doubtful that Berkshire would have bought the kind of coverage that Mr. Greenberg is said to have arranged to strengthen his balance sheet. Nonetheless, Mr. Buffett often speaks almost rhapsodically of his enthusiasm for insurance and he most certainly has overseen some of the major deals done by Berkshire units. And, along with the other major reinsurers, General Re and other Berkshire units have widely offered the kind of insurance that has been the latest focus of investigators, financial reinsurance, or finite insurance as it is often called. 'It is possible that Gen Re, through the sale of some of these finite insurance products, could have some financial liability,' said Kevin Lampo, an analyst with Edward Jones in St. Louis. Finite insurance allows companies, often insurers, to spread their risk of loss on an asset or business over time and also distribute risk among other insurers willing to take it on in exchange for premiums. It becomes questionable when it appears not to be insurance - that no risk was transferred from one party to another - but essentially a loan. Much finite insurance does involve a transfer of real risk. Even so, one insurance executive said, it is probable that investigators 'will find a lot of transactions they don't like very well,' because the risk factor may have been minimal if present at all. David Schiff, the editor of Schiff's Insurance Observer, an industry newsletter, said investigators may focus on the intentions of buyers and sellers of financial insurance and treat the suppliers of the coverage less harshly than buyers who sought to distort their financial statements. 'If a seller calls up a buyer and says, 'We've got a great form of insurance if you want to phony up your books,' that's one thing,' Mr. Schiff said. 'But it may be another if someone calls up and says, 'I want to buy it,' and the answer is, 'Yeah, we'll do it.' ' Ira Zuckerman, an analyst at the Stanford Financial Group in Boca Raton, Fla., said it seemed highly unlikely that Mr. Buffett's reputation would take a big blow as a result of the insurance investigations. 'If in fact he was involved in any of this and if the deals were wrong, then he has some responsibility,' Mr. Zuckerman said. 'But I don't think it tarnishes his image a whole hell of a lot considering what he's built from ground zero. I would think it's a smudge, but it's not a smear.'

Subject: China: Stability and Development
From: Emma
To: All
Date Posted: Wed, Mar 16, 2005 at 10:24:18 (EST)
Email Address: Not Provided

Message:
I think we must detach ourselves from an American vantage to an extent, especially so with regard to China and likely Asia in general. We have always had difficulty understanding China. There are 1.3 billion people in China. For most of the last century, economic development was terribly slow and there were repeated setbacks. By adopting increasingly broad market structures, and careful macro economic control China is now on what appears to be a sustained rapid economic growth path that might continue for decades as she closes with well developed countries. However, market development has produced significant economic imbalances from rural to urban, in infrastructure, in social services, in income and wealth. China's leaders and advisors to leadership are aware of the imbalances, and the leadership is aware of instability that imbalance can bring in its wake. There is development, there is concern about stability. Which is the prime concern? Stability. Much of what the leadership is about is assuring a stable development process. We must look at the adoption of economic and political policy from this vantage. The currency peg of Yuan to dollar has helped foster astonishing growth but also stability. The Chinese central bank will always opt for stability, and consider the price of holding American debt small when this is achieved. Growth is so much the better, and growth there surely has been.

Subject: A Contract
From: Jennifer
To: All
Date Posted: Wed, Mar 16, 2005 at 06:14:25 (EST)
Email Address: Not Provided

Message:
When wishing to cancel a contract during a grace period, it would be a proper idea to have a witness present, put everything in writing, have all necessary papers signed, keep copies of all papers, and do all that is necessary this very day. A bank signature guarantee is simple to gain. Act immediately.

Subject: Contract
From: Jennifer
To: Jennifer
Date Posted: Wed, Mar 16, 2005 at 06:18:39 (EST)
Email Address: Not Provided

Message:
Put everything in writing, keep copies of each document, have a witness, have a bank signature, call an attorney if there is the least problem. Act at once.

Subject: Act at Once
From: Jennifer
To: Jennifer
Date Posted: Wed, Mar 16, 2005 at 07:21:50 (EST)
Email Address: Not Provided

Message:
Please act at once in the way you wish. All must be done as you wish this day. I wish you well.

Subject: Signature Guarantee
From: Jennifer
To: Jennifer
Date Posted: Wed, Mar 16, 2005 at 08:26:10 (EST)
Email Address: Not Provided

Message:
A signature guarantee can be had from any bank, from any account person, this should be gotten immediately along with a copy. State precisely what is to happen with the contract. Please act at once, so all will be done by the contract deadline.

Subject: Excellent advice....
From: Pete Weis
To: Jennifer
Date Posted: Wed, Mar 16, 2005 at 10:30:18 (EST)
Email Address: Not Provided

Message:
and extremely important. Johnny should get his uncle to an attorney, especially one who is experienced in these matters, immediately.

Subject: Re: Excellent advice....
From: Ari
To: Pete Weis
Date Posted: Wed, Mar 16, 2005 at 11:04:38 (EST)
Email Address: Not Provided

Message:
Stopping the contract should be easy as long as you are in the time limit, so you must act now. Then, you can chhose again with more knowledge. Vanguard may be ideal.

Subject: Thanks everyone
From: johnny5
To: Ari
Date Posted: Wed, Mar 16, 2005 at 11:27:55 (EST)
Email Address: johnny5@yahoo.com

Message:
He is going to the bank at 1 to get a signature gaurantee. I really appreciate everyone's help and will give him all the advice, I am going through the phone book for attorneys now!

Subject: Re: Thanks everyone
From: Jennifer
To: johnny5
Date Posted: Wed, Mar 16, 2005 at 12:00:17 (EST)
Email Address: Not Provided

Message:
The signature guarantee and a an immediate visit to the boker, should solve the problem at once.

Subject: Raymond James lying to my uncle
From: johnny5
To: All
Date Posted: Wed, Mar 16, 2005 at 03:02:09 (EST)
Email Address: johnny5@yahoo.com

Message:
AN update for you Pete: Well my uncle according to law had 10 days after receipt of the annuity contract to get out of it, he went to their office yesterday to do so - already 5 days into his 10 days. The broker first said who is telling you this is bad - my uncle told them VANGUARD - she said VANGAURD are fools - this is the best thing for you. Then he said I never wanted to lock my money away for 30 years - the contract lasted until 2035 - the agent said huh - you are only locked in for 7 years and this did go along with what was in the original brochure about the contract which said 7 years - but what he got from the jackson national life was 30 years - so my uncle showed the front page of the annuity that showed it was for 30 years - not the 7 the agent assumed - I don't know if the agent was truly this ignorant or out right lying - but after this the agent said well look - you have 30 days to think it over - so take the annuity home and get back with me in a few weeks - don't be hasty - and then he showed the agent again where the contract said he only had 10 days and 5 days were already passed - the agent feigned ignorance I believe but took my uncles contract and said fine she has never had this happen ever in her 15 years in the business but will refund his contract. Well we called jackson national life today (the guy was in india - so they are offshored) and they had not heard anything from the agent, they said my uncle would have to send them a signature gaurantee (from a bank officer I believe) saying he wanted out of the contract to refund his money. Why does congress and our regulators allow an industry where this kind of crap is happening? Or am I just over-reacting again? Old people have serious impaired mental facilities and to unleash thier finances on these wolves seems a serious disservice to me, but I really get the feeling a lot of these insurance salesman have been fed the company line for so long they feel this is the BEST investment for old retiring clients without looking at each case individually.

Subject: Sad to say.............
From: Pete Weis
To: johnny5
Date Posted: Wed, Mar 16, 2005 at 10:25:44 (EST)
Email Address: Not Provided

Message:
that the investment industry, nowadays, is full of corrupt and unethical practices. There is little to no government oversite and few laws have been enacted to protect the small investor. Look at the constant barrage in the news regarding investors losing their life savings - whether we are talking about predatory annuities, phony corporate accounting (which continues), ineffective corporate governance, failing hedge funds, and stock analysts still on the take. It's almost to the point of taking a lawyer with you, who is experienced in the securities business and annuity contracts, when you sit down with a broker. It might not be a bad idea for your uncle to contact a lawyer pronto. It's truely sad. We must rely on ourselves and get the education we need to navigate these dangerous investment waters.

Subject: 3 Times I have seen the light
From: David E...
To: All
Date Posted: Wed, Mar 16, 2005 at 02:12:20 (EST)
Email Address: Not Provided

Message:
at the end of the tunnel. 3 times the light was a train heading for me. I am a fool, but no more. The first time was the destruction of Saddam's castle. The second time was 'Mission Completed'. The third time was elections in Iraq and the mideast. Every time the relief was followed by knowledge that these events obscured a knowledge that the situation was worse than imagined.

Subject: The trouble is Minnie - there aint no light
From: johnny5
To: David E...
Date Posted: Wed, Mar 16, 2005 at 02:35:13 (EST)
Email Address: johnny5@yahoo.com

Message:
http://www.prudentbear.com/internationalperspective.asp In April, 2003, just weeks after the invasion of Iraq, Vice-President Cheney echoed many Wall Street predictions that by the end of the year Iraq would be able to raise its oil output as much as fifty per cent over prewar levels. Before the war, the Iraqi National Oil Company was pumping about two and a half million barrels a day. Now, with the help of money, personnel, and equipment provided by the American government, it is pumping about 1.8 million barrels a day—at least, on those days when insurgent attacks on pipelines and storage facilities don’t force a cut in production.

Subject: When does bush stumble off the stage?
From: johnny5
To: johnny5
Date Posted: Wed, Mar 16, 2005 at 02:44:06 (EST)
Email Address: johnny5@yahoo.com

Message:
http://www.cmt.com/news/articles/1491022/09162004/williams_sr_hank.jhtml Country gospel is genuine currency of the realm, a timeless message that transfers seamlessly from generation to generation. Williams himself, who was the original country star who set the pattern for sinning on Saturday night and seeking redemption on Sunday morning, seemingly looked into the face of eternity with the lyrics of 'I Saw the Light.' He wrote it in 1948: I wandered so aimless, my life filled with sin/I wouldn't let my dear savior in/Then Jesus came like a stranger in the night/Praise the Lord, I saw the light. The melody, ironically, is identical to that of the Chuck Wagon Gang's 1935 country gospel song 'He Set Me Free.' Melodies back then -- like now -- were fluid vehicles to be liberally borrowed from. Williams -- who granted virtually no interviews in his life -- never talked about the circumstances of writing that song. But his mother, Lillian, after his death, said the idea stemmed from an evening early in his career. She explained, 'We was drivin' back from doin' a show in Georgiana [Alabama], and I was drivin' and Hank had his head in my lap, and he said, 'Oh, Mamma, I'm tired, so tired, but I know we're almost home because I saw the light.'' The light he mentioned was from the beacon at the airport. Toward the end of his life, Williams was so drunk or drugged one night in San Diego that he stumbled off stage after finishing only two songs in the first show of a two-show evening gig. Minnie Pearl and the show promoter's wife drove him around town to try to sober him up enough to do the second show. They tried to get him to sing along with them to revive him. He sang only one verse of 'I Saw the Light' before stopping. 'Minnie,' Williams said, 'I don't see no light. There ain't no light.'

Subject: Soviets spent themselves into oblivion
From: johnny5
To: All
Date Posted: Tues, Mar 15, 2005 at 22:08:07 (EST)
Email Address: johnny5@yahoo.com

Message:
A reason why the 2cnd greatest superpower ever collapsed - http://afgen.com/dollar_decline.html When the bismark sunk the hood, the smart germans did not rejoice in her defeat, but shrieked in horror that such a powerful ship could fall so quickly - for it meant the bismark could fall as well as it eventually did. But after watching such a great nation crumble, who asks can the USA spend themselves into oblivion too? I wish more of these gold people would realize GOLD is not what the world wants, OIL is, and it is the dollars relation to OIL that made oil pricing a determinant of excess monetary inflation - not gold and silver pricing as this guy argues - well with oil prices up and rising and looking to stay that way - doesn't this lead to the fact monetary inflation is up and the printing presses are running at warp speed?

Subject: Re: Soviets spent themselves into oblivion
From: johnny5
To: johnny5
Date Posted: Tues, Mar 15, 2005 at 22:32:37 (EST)
Email Address: johnny5@yahoo.com

Message:
http://www.a1-guide-to-gold-investments.com/risky-scheme.html Again another new article arguing for GOLD - but johnny5 has been all over the world, and lived in many places and seen many things, and when it comes to people, he never saw land made of gold, or a house made of gold, or food made of gold, what johnny5 did see was people needing land and houses and food and usually some cigarettes and moonshine to make them forget all their troubles. When gold is a good house material, or used to grow our food, then johnny5 will agree with these guys - but from rich to poor and black to white and peaceful to warlord - johnny5 sees certain trends, oil, land, food, if you had bought $100 worth of gold coin in 1925 and $100 of oil in 1925 and $100 of fine wine in 1925 and $100 worth of s&p 500 in 1925 - which one would be worth more today? http://experts.about.com/q/1615/2910196.htm I've tried all my sources, but none have been able to come up with a viable 1925 wine. There were a few out there with private collectors, but they weren't willing to part with the bottles because they were part of verticals of a particular wine. Sorry. It seems NO PRICE can buy the 1925 wine - hmmm. Too bad here in florida there are no basements for a good wine cellar.

Subject: ...all wrong...?
From: Pancho Villa
To: All
Date Posted: Tues, Mar 15, 2005 at 21:39:14 (EST)
Email Address: nma@hotmail.com

Message:
Fed chief: Expect Social Security cuts Greenspan tells Congress that cuts in future retirement benefits are all but inevitable. March 15, 2005: 5:12 PM EST By Kathleen Hays, CNN economics correspondent NEW YORK (CNN/Money) - Federal Reserve Chairman Alan Greenspan told Congress that the mounting financial pressure of a wave of retiring baby boomers is so great that cuts in future government retirement benefits are all but inevitable. Fed Chairman Alan Greenspan told Congress that without reform, Social Security costs could cause the economy to 'stagnate or worse.' NEW YORK (CNN/Money) - Federal Reserve Chairman Alan Greenspan told Congress that the mounting financial pressure of a wave of retiring baby boomers is so great that cuts in future government retirement benefits are all but inevitable. The Fed chairman told the Senate Special Committee on Aging that the nation has about three years to work out a fix. 'In 2008, the leading edge of what must surely be the largest shift from retirement in our nation's history will become evident as some baby boomers become eligible for Social Security,' he said in his prepared remarks. By that date, the population 65 years and older will be more than one-fourth of the adult U.S. population, Greenspan said, referring to forecasts by the Social Security trustees. That would be up from 17 percent currently. 'This huge change in the structure of our population will expose all our financial retirement systems to severe stress and will require adjustments for which there are no historical precedents,' he said. This huge demographic shift is the main reason why Social Security and Medicare are facing enormous financial obligations that he says cannot be met without some choices that most in government are loathe to make. 'At present, the Social Security trustees estimate that the unfunded liability over the indefinite future to be $10.4 trillion,' Greenspan noted in his prepared remarks. 'The shortfall in Medicare is calculated at several multiples of the one in Social Security.' 'These numbers suggest that either very large tax increases will be required to meet the shortfalls or benefits will have to be pared back,' he said. Greenspan also stressed that rising spending on Social Security, Medicare and Medicaid is one more reason why the federal budget 'is on an unsustainable path, in which large deficits result in rising interest rates and ever-growing interest payments that augment deficits in future years.' 'Unless the trend is reversed, at some point these deficits would cause the economy to stagnate or worse,' he said. Senator Hillary Clinton challenged the Fed chairman on his support for tax cuts early in President Bush's first term. Many Democrats blame the tax cuts for helping turn the budget surplus that existed at the end of President Clinton's first term into record deficits, and lately more and more have accused Greenspan of favoring Bush policies, contrary to his official status as an independent chairman of the Federal Reserve. Greenspan said most leading economists at the time had expected budget surpluses to stretch into the future, citing forecasts by the Office of Management and Budget as well as by the bipartisan Congressional Budget Office. And he said that he had also pushed for tight rules on Congressional spending and more fiscal discipline. 'I don't think that the issue is a question of taking a wholly different view... It turns out we were all wrong,' he said, referring to the prevailing budget surplus forecasts. He also said that he would take the same position again if he was faced with the same circumstances. Senator Clinton finished her questioning with a quick parting shot: 'Just for the record, we were not all wrong, but many people were wrong.' Greenspan also repeated his support for some kind of private investment accounts. The main reason he gave is that putting part of people's retirement taxes in a private account would be like putting them in a 'lock-box' so that the funds could not be diverted into spending on other government programs. http://money.cnn.com/2005/03/15/commentary/column_hays/greenspan_socialsecurity/index.htm?cnn=yes

Subject: Re: ...all wrong...?
From: johnny5
To: Pancho Villa
Date Posted: Tues, Mar 15, 2005 at 21:58:40 (EST)
Email Address: johnny5@yahoo.com

Message:
'Greenspan said most leading economists at the time had expected budget surpluses to stretch into the future, citing forecasts by the Office of Management and Budget as well as by the bipartisan Congressional Budget Office. And he said that he had also pushed for tight rules on Congressional spending and more fiscal discipline. 'I don't think that the issue is a question of taking a wholly different view... It turns out we were all wrong,' he said, referring to the prevailing budget surplus forecasts. He also said that he would take the same position again if he was faced with the same circumstances. ' These guys need to take some classes on quantitave finance at thier local university and some demographic planning courses at their local community college. Why can't they just print more dollars - if more people are gonna need there 500 dollar SS paycheck, just buy a few more printing presses right? Oh thats right, they already did.

Subject: Paul Krugman was Right
From: Jennifer
To: johnny5
Date Posted: Wed, Mar 16, 2005 at 08:28:53 (EST)
Email Address: Not Provided

Message:
Paul Krugman was right as usual in warning repeatedly against the excessive and imbalanced and unfair tax cuts.

Subject: It's strange.......
From: Pete Weis
To: Jennifer
Date Posted: Wed, Mar 16, 2005 at 10:46:55 (EST)
Email Address: Not Provided

Message:
to hear a fed chairman not very concerned about the current account deficit 'because America is such a good place for foreigners to invest and therefore they will continue to pump their surplus dollars right back into our economy', and yet so worried about a social security system which begins to run into trouble 35-40 years from now. Rescind the tax cuts on the wealthy and pump the extra tax revenue in the social security system and up the age one can begin to collect on SS 10-20 years down the road and you solve this problem. But we had better act quickly, now, to reduce the twin deficits or we will find ourselves in trouble in a hurry.

Subject: Re: It's strange.......
From: Terri
To: Pete Weis
Date Posted: Wed, Mar 16, 2005 at 11:06:19 (EST)
Email Address: Not Provided

Message:
There will soon be a paper about by Paul Krugman on domestic economic policy. Possibly a week.

Subject: China wants OIL, not dollars
From: johnny5
To: All
Date Posted: Tues, Mar 15, 2005 at 21:09:40 (EST)
Email Address: johnny5@yahoo.com

Message:
Well after they unleash their dollar hordes into buying oil - what do you predict this will do to XOM? http://www.iii.co.uk/news/?type=afxnews&articleid=5236224&subject=markets&action=article (AFX UK Focus) 2005-03-14 08:53 GMT: China foreign exchange chief suggests buying oil with forex reserves - report Article layout: reformatted BEIJING (AFX) - China could use some of its huge foreign exchange reserves to purchase imported oil, Guo Shuqing, director of the State Administration of Foreign Exchange, was quoted as saying. The China Business Post reported Guo as saying in an interview: 'Such a move would not cost us too much of our foreign exchange reserves... Purchasing 100 mln tons of oil would require only some 30 bln usd.' China had foreign exchange reserves of 609.9 bln usd as of the end of last year, ranking it second only to Japan. Guo made the suggestion during the recent session of the Chinese People's Political Consultative Conference, an advisory body to the nation's parliament. Guo noted this was not official policy and was a personal opinion though he added that the nation's foreign exchange reserves were higher than necessary. allen.feng@xinhuafinance.com al/wk Central banks Oil, oil products Foreign exchange

Subject: Recession?
From: Pete Weis
To: All
Date Posted: Tues, Mar 15, 2005 at 14:49:23 (EST)
Email Address: Not Provided

Message:
From the San Diego Tribune: Economists forecasting a recession By Dean Calbreath UNION-TRIBUNE STAFF WRITER March 15, 2005 The U.S. economy will likely face a recession before President Bush leaves office, and growth in the California economy will be tepid at best for the next several years, according to a report released yesterday by the economists of UCLA's respected Anderson Forecast. Rising interest rates and declining government spending are setting the stage for a recession, the economists warned. And economic stimuli such as tax cuts have run their course. Although no recession is likely this year, one could occur as soon as next year and will likely take place before Bush leaves office in 2008, said Edward Leamer, director of the forecast. 'From the height at which we are standing today, there is only one way to go – down,' Leamer said. Leamer added that as early as this summer, weakness in the national real estate market could begin slowing down the economy. That is especially true in California, which has relied heavily on real estate to boost its weak employment levels. 'The real estate market will begin to cool over 2005 and with it one of the primary drivers of the current economic expansion in the state,' said Christopher Thornberg, a senior economist at the Anderson Forecast. 'Whether or not you believe there is a real estate bubble, it is clear that the primary driver of California growth over the past few years cannot maintain its current trend on any level.' Thornberg noted that the housing boom over the past several years has helped boost consumption – by making homeowners believe that they have a greater net worth – and employment. Of the 243,000 private payroll jobs that California has added over the past two years, 122,000 are directly related to the housing market – either in construction, real estate or home financing, Thornberg said. But once home prices slow down or decline, California's consumption rates and job market also will slow, he said. Other economists share the concerns expressed in the Anderson Forecast. 'I agree that there's not a chance of a recession in 2005, but there could be one in 2006 or 2007,' said Esmael Adibi, an economist at Chapman University in Orange. 'And if there is a recession at that time, it will be driven by consumers who are feeling the pinch from rising interest rates and oil prices.' The mood among California consumers – whose spending habits typically account for about 70 percent of economic growth – is already beginning to sour, according to a report released yesterday by Chapman's Anderson Center for Economic Research, which is not affiliated with the Anderson Forecast. Over the past two quarters, California's consumer sentiment – reflected in polls measuring the public's attitude about the economy – has declined 10 percent to its baseline of 100 points, while U.S. consumer sentiment has risen 5 percent to 104 points, the report said. That marks the first time in two years that California's mood has dipped below the U.S. average. 'Although job creation has gained momentum, persistent high gasoline prices and higher expected inflation are making consumers pessimistic about current economic conditions,' Adibi said. 'And their outlook about future economic conditions has also become less optimistic.' Adibi said one reason consumer sentiment has cooled in California rather than in the rest of the nation is that gasoline prices have risen faster here than elsewhere. 'Every $10 increase in the price of a barrel of oil – if it's sustained for six months or a year – shaves off half a percentage point from the gross domestic product and also adds to inflationary pressures,' he said. The price of a barrel of oil has doubled from the mid-$20s to the mid-$50s since the beginning of last year. A growing number of market watchers say they do not expect prices to decline anytime soon. 'Until global oil supplies catch up to Asia's soaring demand, there is the risk that oil prices hovering around $50 per barrel will remain the rule rather than the exception,' said Joseph Quinlan, chief market strategist for Banc of America Capital Management. Besides high oil prices, rising interest rates are another omen of economic slowdown. Although interest rates are still low by historical standards,the Anderson Forecast report warns that a sudden rise in rates – especially as mortgage rates catch up with the rate increases imposed by the Federal Reserve – could cause home prices to implode, sparking another recession in California and the United States. 'Rising interest rates are the biggest threat to this expansion,' said economist Leamer, adding that the tail ends of all previous expansions were marked by rising interest rates. Even though it appears that the country is still recovering from its last recession – especially in terms of employment levels – Leamer said that by historical standards, the recovery already has lasted longer than most expansions. The current expansion, which officially began in the first quarter of 2002, is now 13 quarters old. Five of the past nine expansions have ended at 14 quarters or less. Only three have lasted more than 20 quarters. By historical standards, Leamer said, the current recovery seems like a 'middle-aged expansion [that] is going to the nursing home.' The only thing that could revive the economy, Leamer said, is a dramatic boost in exports, driven by the low value of the dollar. 'The declining value of the dollar relative to the euro is sure to stimulate exports in the year ahead,' Leamer said. Other economists and market watchers question that assertion, saying the dollar has declined for the past two years, and the growth in exports continues to lag far behind the growth in imports. 'The fall of the dollar against the euro and yen is not reducing the trade deficit,' said Peter Morici, economist at the University of Maryland. 'Americans continue to buy Japanese and German cars even if those cost more, and German and Japanese automakers can accept narrower profits to defend market shares.' Peter Schiff, head of Euro Pacific Capital, added that the falling dollar 'only exacerbates the trade deficit by increasing the cost of imports.'

Subject: Re: Recession?
From: Terri
To: Pete Weis
Date Posted: Tues, Mar 15, 2005 at 16:38:39 (EST)
Email Address: Not Provided

Message:
http://news.yahoo.com/news?tmpl=story&u=/latimests/20050315/ts_latimes/realestatereliancemayhurtcalifornia Real Estate Reliance May Hurt California This is the Los Angeles Times article on the Anderson forecast. A key to understanding what may happen may be the how quickly and how much the Federal Reserve raise rates from here.

Subject: Re: Recession?
From: Terri
To: Terri
Date Posted: Tues, Mar 15, 2005 at 20:17:04 (EST)
Email Address: Not Provided

Message:
http://www.timesheraldonline.com/Stories/0,1413,296~31519~2763501,00.html Report: Cal economy will be tepid growth as housing boom wanes More on Pete's article....

Subject: If the dollar falls
From: johnny5
To: Terri
Date Posted: Tues, Mar 15, 2005 at 20:58:41 (EST)
Email Address: johnny5@yahoo.com

Message:
Tourism from the rich euros and yens should go up as they visit our country on their great wealth, they will come to disneyworld and disneyland and wish to take a little piece of sand home with them maybe. As an international traveler I want to see the great natural wonders and great cities of a nation and also their small rural places to observe thier older culture. The majority of my money in foreign lands was spent on food and hotels and busses and tour guides. In the usa certainly most of that will go to california, florida, new york, washington DC and the grand canyon and hoover dam. Maybe the amish in lancaster, PA and the mormons in SLC, Utah will get some of that business too.

Subject: Demand for Dollars
From: Terri
To: All
Date Posted: Tues, Mar 15, 2005 at 14:38:27 (EST)
Email Address: Not Provided

Message:
Interestingly, there were 91 billion dollars of net interenational securities purchases in America in Janaury. Using Euros or Pounds or Australian and Canadian dollars or Yen to buy the S&P makes sense to me. There is the limit to a decline in dollar value; the value of our assets.

Subject: Re: Demand for Dollars
From: johnny5
To: Terri
Date Posted: Tues, Mar 15, 2005 at 20:35:25 (EST)
Email Address: johnny5@yahoo.com

Message:
To the external world what would be worth having in the USA, what makes us special to a foreign investor. We do have land, we can grow food on that land, we can build industries on that land, we can extract oil from that land, we can teach people science on that land. Well I live in france say, I don't need american land - have my own, I don't need american oil - cheaper elsewhere or I will ride my bike, I don't need american food cheaper elsewhere or I will grow my own, I don't need an american car cheaper elsewhere, I don't need an american education - I can get on the internet and learn virtually. To this guy in france, america is worthless. Now bin laden blows up paris - well if America can ensure my children a global peace and wack that guy - maybe I do need an want and value an american military - but I don't think he does - so you say our assets have value to him - other than what the gubbment can extract from the US taxpayer to honor its burden on treasury debt he bought - what other value would this self sufficient french guy see in american assets?

Subject: S&P a definite loss for most....
From: Pete Weis
To: Terri
Date Posted: Tues, Mar 15, 2005 at 15:03:30 (EST)
Email Address: Not Provided

Message:
overseas investors. 'There is the limit to a decline in dollar value; the value of our assets.' Yes but where is that limit. Presently demand for dollars is less than supply. That's why the dollar has been falling now for the last three years. Over the last year the nominal return on the S&P has been tepid at best. Anyone who has invested in the S&P index has lost money in 'real' terms. Certainly Europeans are among the first to notice this since any investment by Europeans in the S&P made a year ago would return them fewer Euros presently than the amount of Euros they had originally invested. I believe all the currencies you listed would have meant losses for any investment in the S&P - isn't that correct? As long as we have a current account deficit and a budget deficit which requires heavy borrowing because we spend more than we make, the dollar will continue to fall.

Subject: The value of our assets...
From: Pete Weis
To: Pete Weis
Date Posted: Tues, Mar 15, 2005 at 15:07:15 (EST)
Email Address: Not Provided

Message:
can certainly decline also. Besides ownership of 'our' assets via our borrowing is being transfered overseas to boot.

Subject: Re: The value of our assets...
From: Terri
To: Pete Weis
Date Posted: Tues, Mar 15, 2005 at 16:46:05 (EST)
Email Address: Not Provided

Message:
From a Euro country, as an investor, I would not be buying American bonds but would be buying American stocks. Bonds are being bought either by foreign central banks or hedge funds playing interest rate spreads or companies that must hold liquid assets here.

Subject: Investing in Europe
From: Terri
To: All
Date Posted: Tues, Mar 15, 2005 at 13:44:26 (EST)
Email Address: Not Provided

Message:
Before we turn away from investing in Europe, we should remember that productivity growth and corporate income are easily competitive with us. There are terrific corporations through Europe, and countries that have consistently fine economic growth and fine stock market returns. If demographic and aging are so much of a looming problem, why is Sweden so robust? Why does 'socialist' Sweden have such a robust stock market? We need to look closely.

Subject: Re: Investing in Europe
From: johnny5
To: Terri
Date Posted: Tues, Mar 15, 2005 at 20:23:35 (EST)
Email Address: johnny5@yahoo.com

Message:
I agree this is important for our diversication issues, now I am an old man in france that likes cheese and wine. And Saft Battery is making the bucks on the world market, I am gonna get my buds together and we are gonna vote in politicians that really stick it to the young workers, to the big profitable companies, and anyone else we can stick it too so that my check keeps coming and I can sit around and drink wine and eat cheese. How are the young workers supposed to escape this or the profitable french companies? The can leave france and move to africa and south america can't they?

Subject: Investing in Developed Countries
From: Terri
To: All
Date Posted: Tues, Mar 15, 2005 at 13:18:29 (EST)
Email Address: Not Provided

Message:
There has been little study on population growth and decline patterns and market effects, this depite such effects often being speculated about. The problem with such study is the time constraint. Population changes generally are exceedingly slow. There is speculation that population declines developing in Japan and Europe will slow economic growth, while the aging of the populations strains the ability of governments to provide social services. Will this be so? Can lower economic growth in Japan and Europe than in America be attributed to quicker aging? Will American growth slow as we age? What about even China, which will age rapidly? I do not know the answers, but since changes in population are so slow in coming effects that develop will do so slowly. Investment planning for a possible demographic effect will be difficult because of the subtle emerging of any effects. Then there is technology. Can productivity increases compensate for muted population growth? The difficulty of answering these questions should make us wary of investing as if we knew the answers.

Subject: Re: Investing in Developed Countries
From: johnny5
To: Terri
Date Posted: Tues, Mar 15, 2005 at 20:18:35 (EST)
Email Address: johnny5@yahoo.com

Message:
Emma I love technology, I embrace it and dream about it and use it as much as I can, I read alvin tofflers future shock and say when does it get too hard - but that is me - for most around me (my siblings and relatives) futureshock has hit and they can't watch tv or use their cellphone because it is beyond them. Now in my youth I saw so many things that I thought needed fixing and technology fixed them, but I see far fewer things today technological advancements can realistically bring. The free energy boom of oil is gone - demand is outsripping supply channels - we need some new energy tech to revolutinize extraction, production and distribution - I don't see much growth in those areas. Population wise we had lots of land - but the earth is just one ball of dirt among many and if we want to move people off this planet we need major tech advances in space and materials - I hope the carbon nanotube science and space elevator kick off that age. And then their is the human mind, it can only reasonably store so much knowledge and information depth and breadth wise - I would wager on a systemic level our society may can never approach some of our fanciful visions because the human brain factor is the limiting one - only AI will succumb that limitation and we are not making a lot of tech progress there yet either - but maybe quantum science and biology will bring new advances there. I find most of the people in the park here unable to keep all the viruses off their computer, or spam off thier phone text messages, or hackers stealing thier credit card or bank accounts for nefarious purposes. It's one thing to expect grandma millie to protect her gold coin under her mattress - how does she protect herself against the digital cowboy jesse james when she can't even spell computer? The solution it seems has been to turn it over to the STATE to protect them - but that gives a lot of power to a few and even if those few are good, the temptation is great.

Subject: Developing and Developed Nations
From: Emma
To: All
Date Posted: Tues, Mar 15, 2005 at 09:59:22 (EST)
Email Address: Not Provided

Message:
There are about 575 million people in southern Africa, and we must hope for and assist in their well being and development of their 47 countries. But, they will not develop unless we participate. Therein lies their hope and ours. I am optimistic about a sustained period in which development becomes truly widespread, but we will benefit immensely if this becomes so. America and Europe and Japan and Australia and Canada can well bind themselves more tightly to nations of lesser development, for our own sakes.

Subject: World Melting Pot
From: johnny5
To: Emma
Date Posted: Tues, Mar 15, 2005 at 20:06:07 (EST)
Email Address: johnny5@yahoo.com

Message:
How long has it taken the warring europeans to make long lasting peace - oops - how long has it taking the warring asians to make long lasting peace - oops - how long has it taking the warring arabs to make long lasting peace - oops - how long has it taken the warring latins to make long lasting peace - oops - umm I am not so confident emma that africa is going to overcome thier tribal roots and wars and violence. Why do you think they will given most other parts of the world with thousands of years of history have not. Back when I was in college the foreign exchange people wanted to send me to tanzania - well a couple of people had just gotten swung from a tree because of color - they were white - I chose france instead - they said make love not war - but I hear lately they are having a problem with muslims. Gates is giving africa billions in medicine, and the UK sends them lots of clothes, and if china perfects thier pebble nuclear reactors then africa can have lots of safe localized energy - but will this make warring tribes stop wanting to kill their neighbor?

Subject: Investing
From: Emma
To: All
Date Posted: Tues, Mar 15, 2005 at 08:14:19 (EST)
Email Address: Not Provided

Message:
There are lovely and optimistic reasons to invest. We wish to secure ourselves of course, but we also can and should wish that our investments will help others, that there should be imagination behind the success of our investments. The resources of America are of the intellect and effort as well as of the surrounding environment. We need to think biologically and ecologically in investing, and not merely of limits such as of who we shall care for because of a sudden limit in Medicaid as we are experiencing.

Subject: Re: Investing
From: johnny5
To: Emma
Date Posted: Tues, Mar 15, 2005 at 19:57:35 (EST)
Email Address: johnny5@yahoo.com

Message:
I just got through watching on cspan the national science budget and how we can't afford to teach our young or the immigrants coming in a good science education anymore - Aren't the dreams of immortality and an end to cell death and future human expansion beyond planet earth very dependent on putting more money into the young engineers of the future than they are subsidizing the last months of life of the sick and old? If this nation would simply scale back on an average new home size of 2000 square feet to maybe 1200 square feet think of the savings in energy, but grandma and grandpa need thier space no? I look at all the new homes being built around here in florida and my god the space in them is unbelievable, the 10 and 12 foot vaulted ceilings, the huge saunas and baths, the overly expansive dens and kitchens, I live in a singlewide 1974 14x60 - certainly the energy for my home is much less than those.

Subject: Biological Resources
From: Emma
To: All
Date Posted: Tues, Mar 15, 2005 at 07:18:12 (EST)
Email Address: Not Provided

Message:
Can we afford to preserve that which is most precious to us and about us? There is the biologically based question we must ask to form the rationale to continually develop our biological resources and services. What after all is life with no butterflies?

Subject: Why invest in Europe?
From: johnny5
To: All
Date Posted: Tues, Mar 15, 2005 at 06:30:16 (EST)
Email Address: johnny5@yahoo.com

Message:
First off the BULL run of 1950-2005 is GONE my friends - there will still be SOME growth in latin america and africa - but nothing like we have experienced recently. Expect a muddle through world economy. Certain african and latin american centers will prosper and have tremendous growth. http://www.prb.org/Content/NavigationMenu/PRB/Educators/Human_Population/Population_Growth/Population_Growth.htm When you look at this trend, I conclude american growth has had it, latin america and africa are the places to be. Given this, and given that europe is going to see the WORST decline - shorting europe and going long africa/latin america seems to be the best long term strategy if you were a warren buffet and wanted to do long term currency bets. Of course ENERGY is even more important than demographics because cheap OIL made this 1950-2005 population growth possible. Perhaps this chart will go negative in the future for world population growth if our energy supplies have run up against the wall.

Subject: Re: Why invest in Europe?
From: johnny5
To: johnny5
Date Posted: Tues, Mar 15, 2005 at 06:35:38 (EST)
Email Address: johnny5@yahoo.com

Message:
Developed nations have had it, you can forget about BOOMS in population to contribute to wildly growing bull markets like the past 50 years have seen, just a slow steady trend of world population growth with better numbers in africa and latin america, they will need energy and food and commodities - what use do they have over the next 20-30 years for a green piece of paper with franklin on it from a country that doesn't have a lot of energy or food to export?

Subject: Re: Why invest in Europe?
From: RL
To: johnny5
Date Posted: Tues, Mar 15, 2005 at 08:50:27 (EST)
Email Address: rafaelloring@yahoo.es

Message:
your prediction has some weakenesses. When developed nations have economic problems developing ones go in deep trouble. Developed nations are not only the big market where developing ones sell their exports, growth in those countries is also financed by investors of ODCE's. Developing countries can catch up in good times bad in bad times they usually do very bad. RL

Subject: Re: Why invest in Europe?
From: Institutional Investor
To: RL
Date Posted: Tues, Mar 15, 2005 at 10:40:21 (EST)
Email Address: Not Provided

Message:
Johnny, what model are you using to come up with GDP. Using the cobb-douglas model, solow showed that the greatest impact in GDP was due to increases in technology, not increases due to capital or labor.

Subject: Re: Why invest in Europe?
From: RL
To: Institutional Investor
Date Posted: Thurs, Mar 17, 2005 at 03:48:13 (EST)
Email Address: rafaelloring@yahoo.es

Message:
Totally agree. Demographic growth has had little impact in developed countries since WWI. As you suggest technology is the main source of growth and the solow model shows is the only way to increase GDP per capita in the long term (when the K* is reached). In developing countries one can even argue in many cases that demographic growth has been an obstacle to growth(making labour so cheap that investing in capital or technology is not worth it and reducing GDP per capita, education, and health resources). That has been the case in many African countries. RL

Subject: How much tech growth is left?
From: johnny5
To: Institutional Investor
Date Posted: Tues, Mar 15, 2005 at 19:47:08 (EST)
Email Address: johnny5@yahoo.com

Message:
Very good comments II - I will read up on solow and try to find some good academic studies. I am most worried about impacts on mine and terri's and the rests economic future and investments in the us stock market and vangaurd funds and wether european investment would be a prudent choice for diversification - GDP growth rates may strongly correlate to that or not. No model II, just my intuition from working on a farm with migrant workers that a 40 acre farm can only sustain so many people and become so productive - there are limits to labor and tech and financing - and if day 1 I have just myself on the 40 acre farm and 50 years later 300 people are working on this 40 acre farm can we really squeeze out much more productivity by increasing labor or technology? When considering economies of scale and that we went from about 2 billion to 7 billion from the 1950's to 2005 a 3x increase and from here on out we will see NOWHERE near that population growth maybe a .5x increase over the next 50 years at best - the world just can't have the BOOM in growth it has had in people or credit as that flows better than oxygen already it seems - the people just won't be there to keep adding to the global population to sustain growth and money in the AIR with RFID credit cards that have already taken financing to new levels. Sure we can bring education and modern development to the third world, but that same page says already 2/3 of the globe are URBAN and not rural - so that is not gonna be a huge increase either. So short of some massive technological upheavel that makes nuclear tech, communication tech, and computer tech look like kindergarden level tech - I don't see tech growth doing much to help world GDP growth over the coming years. Back on the farm I may can get rid of 300 workers and let them sit down and feed them with an interest only financed farm using oil based fertilizer and oil based tractors but I don't see that there will be much new tech to feed the 600 kids that those 300 non workers may produce. No tech boom, no energy boom, no comm boom, no population boom, we had all those the past 100 years - academic papers that make future predictions using data that only takes into account the multiplicative effects of these booms on each other may sell a very rosy picture to vanguard investors for the next 10-20-50 years. In the 80's I used to see around me so many things I thought could get better with tech - today I don't.

Subject: Re: How much tech growth is left?
From: RL
To: johnny5
Date Posted: Thurs, Mar 17, 2005 at 04:05:43 (EST)
Email Address: rafaelloring@yahoo.es

Message:
J5, the thing with tech is that you never know how one where it would make a break throuth. But I can imgine many ways... for a start a cheap and endless energy source could create a huge expansion of productivity

Subject: Re: How much tech growth is left?
From: johnny5
To: RL
Date Posted: Thurs, Mar 17, 2005 at 06:09:26 (EST)
Email Address: johnny5@yahoo.com

Message:
I watch stargate atlantis and they have magic zero point modules to give them amazing power, and I watch star trek and they have dilithium crystals for amazing power. Then I open my haliday, resnick and walker physics book and realize most of that stuff truly is fantasy. Cheap endless energy would change things, but we live in a universe of conservation of energy. We can do nuclear, and that will give us a great boost, but it is not going to be cheap or endless. we have lots of energy from the sun and lots of matter from all the particles around us on the earth - but there are limits.

Subject: Re: How much tech growth is left?
From: RL
To: johnny5
Date Posted: Thurs, Mar 17, 2005 at 07:16:18 (EST)
Email Address: rafaelloring@yahoo.es

Message:
This is all speculation and again reality allways have surprises but let me also play Star Trek.... Yes conservation of energy...., take sea water for example (H2O) contains Hydrogen and Oxygen. Is from our perspective (as well as solar energy) and endless source of energy.

Subject: Re: How much tech growth is left?
From: johnny5
To: RL
Date Posted: Thurs, Mar 17, 2005 at 08:55:14 (EST)
Email Address: johnny5@yahoo.com

Message:
http://www.futurereality.org/modules.php?op=modload&name=News&file=article&sid=36&mode=thread&order=0&thold=0&PHPSESSID=70febc321ed30fdc6372473e906d6ee6 This was something I read that seems to feel solar is the future, but 10 billion requiring solar and not the saved solar that has been stored in hydrocarbons may be too much demand to keep them all alive and get switched over in time.

Subject: Re: How much tech growth is left?
From: RL
To: johnny5
Date Posted: Fri, Mar 18, 2005 at 05:20:38 (EST)
Email Address: rafaelloring@yahoo.es

Message:
'Of all hydrogen used today, about 97% comes from fossil fuels (primarily precious natural gas) and 3% from electrolysis of water. What long-range sense does it make to use our finite fuel sources just to make a different form of energy? In the case of electrolysis, it takes more energy to separate the hydrogen than is returned when the hydrogen recombines with oxygen.' solar 'One very important fact to remember as we move to a civilization fueled by incoming solar energy is that it takes considerable energy to melt and process the silicon into photovoltaic cells. Initially, this input energy was more than the cell would produce in its lifetime. With steady improvements, this pay back period is now as low as one year, which means that it takes the first year of electrical output just to provide the seed energy to make additional solar cells.' steady improvements????, isn't that techonolgy? and just in the lapse of only a couple of decades, couldn't it happen the same with electrolisis, or maybe even other way of separating H2 from O?

Subject: Our Biological Resources
From: Emma
To: All
Date Posted: Tues, Mar 15, 2005 at 06:23:40 (EST)
Email Address: Not Provided

Message:
Though I refer to health care, I am thinking broadly of biologically related resource services. Thinking of environmental or ecological needs is to me related to thinking of health care. There is information technology, and there is the information technology advance that can and must allow for increased ecological sensitivity.

Subject: Health Care as our Resource
From: Emma
To: All
Date Posted: Tues, Mar 15, 2005 at 06:15:33 (EST)
Email Address: Not Provided

Message:
Health care and allied services can be perceived as a precious resource for us. There is no reason why demand for health care services should not increase indefinitey as we grow, and why such services may not be a source of comparative trade advantage. We must think creatively here, and question assumptions that would limit how creatively the resource can grow as we grow.

Subject: Health Care as a Precious Resource
From: Emma
To: All
Date Posted: Tues, Mar 15, 2005 at 06:05:25 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/13/magazine/13HEALTH.html?ei=5070&en=2e33226b719725ce&ex=1110949200&pagewanted=all&position= The Quality Cure? By ROGER LOWENSTEIN David Cutler hit what seemed to be the peak of his career at 28, when as a junior faculty member at Harvard he was whisked down to Washington to help draft a health-care bill under the tutelage of Ira Magaziner and, of course, Hillary Clinton. The project produced a dispiriting result: nothing. Corporations, consumers, the uninsured and doctors had all been clamoring for reform, and the question of why the project failed has nagged at Cutler ever since, especially as the problems have continued to worsen. In the years since he left Washington, which was in 1994, the ranks of the uninsured have surged, from 35 million people to 45 million. There are also serious gaps in the quality of care, and there is a deep dissatisfaction with the way the system functions -- in how it seems to make adversaries of patients, doctors and insurers, for instance. Arguably, Americans want health-care reform more urgently than anything else. Yet designing a national health-care policy has become a kind of taboo. Congress provided prescription drugs for seniors, and President Bush, not normally thought of as timid, has backed some modest initiatives: legislation to limit malpractice suits, individual health savings accounts. But Washington has done nothing on the scale that a social engineer -- a Robert Moses or a Daniel Patrick Moynihan -- might to reinvent the system. Cutler has thought about this ever since his failed experience in Washington, and his diagnosis has shaken up the health-care-policy world. ''The real reason health-care reform has not succeeded,'' he has written, ''is that it is rooted in a misconception of what health-care reform should accomplish.'' Virtually every would-be reformer, Democrat and Republican alike, starts with the presumption that the major problem in health care is high costs. This is understandable: America now spends 15 percent of its gross domestic product on health care. That's a higher percentage than any country has ever spent in the history of the planet, and the figure is increasing. The United States spends more on health care than on automobiles; we spend more on health care than China spends on tea; in fact, as Cutler likes to point out, we spend more on health than the Chinese spend, per capita, on everything. And health care threatens (far more than Social Security) to consume the federal government. Medicare, the health-care program for retirees, and Medicaid, which provides basic services for the poor, already account for one-fifth of the federal budget, and their share could double in a generation. Curbing such growth has been the aim of every reformer, and according to Cutler, it is the reason reform has failed. The Clinton team proposed to pay for universal coverage by limiting increases in spending (partly through mandatory caps). But limiting spending also meant limiting service. The proposed legislation was never put to a vote. Managed care was next at trying to contain costs. It succeeded for a while, until it became clear that Americans did not want health-maintenance organizations to limit their choices any more than they wanted the government to. Since then, reform has languished. The Medicare drug bill is suggestive of why. The Republican Congress promised restraint but then passed a hugely expensive law that barred Medicare from using its clout to negotiate prices with drug companies. The pattern has been failed efforts to control costs, followed by a void of new ideas. Cutler's approach is radically different. He says that most health-care spending is actually good. Spending has been rising, he says, because it delivers positive, and measurable, economic value, and because it can do more things that Americans want. Therefore, Cutler says, we should focus on improving the quality of care rather than on reducing our consumption of it. Rather than pay less, he wants to pay more wisely -- to encourage health-care providers to do more of what they should and less of what is wasteful. This, as it turns out, is exactly what some of the most innovative health-plan sponsors -- from Kaiser Permanente to General Electric -- are doing. To them, the Cutler approach of focusing on quality offers a way out of the void and possibly, over the longer term, an acceptable route to restraining costs. To understand how Cutler has upended conventional thinking, you first have to understand the political straitjacket in which health care has found itself. Health care ''lefties,'' as Cutler refers to some of his colleagues, favor a European system -- universal insurance financed by a single payer (the government) and some sort of rationing to hold down the screaming increase in high-tech procedures. Canada rations by limiting access: Ontario, with one-third the population of California, has one-tenth the number of open-heart-surgery facilities. While Cutler acknowledges the merits of such an approach, he also sees its problems. The British may be accustomed to waiting for hip replacements, but Americans do not like rationing. Also, systems with just one payer do not encourage innovation and experimentation. Imagine America if everyone were on Medicare. Doctors and hospitals would do whatever Medicare approved and nothing more. Right-wingers go for a market approach -- it's not the technology they object to, but people's cheap access to it. If people paid for their own angioplasties, so the theory goes, they would have fewer of them. This is the theory behind Bush's health savings accounts, initiated during his first term: let people buy insurance from their own (tax-sheltered) pockets. Apart from the obvious objection that low-income people find it hard to save for those accounts, Cutler points out another shortcoming: Most of the dollars spent on health care are spent on people with serious illnesses or conditions. Those with coverage quickly move into the territory covered by insurance. Few people really pay for their own angioplasties, so few care what they cost. Moreover, it's not clear that we want people to be too price-sensitive, especially people with chronic conditions, lest they try to starve themselves of care. ''My grandmother used to say, 'Why should I take the blue pill -- I'm feeling better,''' Cutler recounts. ''The blue pill was why she was feeling better.'' As Cutler told me in the first of our many conversations, ''Ultimately, every discussion of health care turns personal.'' A tweedy, self-effacing 39-year-old, Cutler is a seriously modified lefty. He envisions a system in which everyone could get insurance while free-market incentives would motivate health-care providers to be more effective as well as more efficient. Instead of suppressing the market by rationing care, restraining prices or regulating doctors, he wants to liberate it. It is neither Clinton nor Bush -- but closer to Bill Bradley, whose 2000 campaign Cutler advised. Dr. Robert Galvin, head of global health care at General Electric, says, ''David has showed everyone that the way to rein in costs is not to squash innovation.'' The soft-spoken Cutler was a star even as a Harvard undergraduate, when he assisted an up-and-coming economics professor named Larry Summers. Finance -- not health care -- was the hot field among economists, but as a graduate student, Cutler wrote a still cited dissertation on how changes in Medicare's compensation scheme caused hospitals to release patients after shorter stays. It proved, Cutler says, that doctors were incredibly and, in some cases, ''horribly,'' responsive to incentives. Hired onto the economics faculty at Harvard, he was urged by Summers to continue in health care. After his stint in Washington, Cutler continued to think of ways of rationing care until, at lunch one day, an economist named Zvi Griliches asked him, ''Why is it you think I get too much health care?'' He said it in a thick Polish accent -- ''Vy is it?'' Cutler immediately saw his point. He was looking at the wrong side of the ledger; instead of worrying about the cost of health care, he should think about the benefits. This sounds obvious, but almost no one was looking at it this way. Thinking of people he knew -- ''all health care is personal'' -- Cutler wondered if Americans might be spending more because they were getting more and better treatment. Joining with Dr. Mark McClellan, another economist, he zeroed in on heart disease. The pair discovered a curious fact: heart attacks were occurring less frequently, thanks to drugs for treating high blood pressure and to reductions in smoking, but spending on heart attacks was rising. Surgery rates -- $25,000 for an angioplasty, $40,000 for a bypass -- had been relatively stable. But as the technology improved, the operation was being performed far more often. Was that an example of waste? Looking at the data, they discovered that, on average, heart attack victims were surviving eight months longer than in the 1980's. In economic terms, they argued, the increased spending was ''worth it.'' Subsequently, Cutler concluded that a 45-year-old American could expect to spend $30,000 over the course of his life on all forms of cardiac care and that, thanks to improvements in cardiac technology alone, he could expect to live three years longer. That worked out to $10,000 a year of added life. Cutler can rattle off figures to prove that Americans value life even more. (Air bags cost something like $100,000 per year of life saved, for instance.) But you don't need to be an economist to believe that $30,000 for three extra years is a pretty good deal. McClellan now runs Medicare, where he is experimenting with paying doctors for better results -- a Cutler-like departure from the old policy of simply trying to restrain costs. But it is Cutler, now the dean of social sciences at Harvard College, who has plainly broken from the health-care establishment. In a book published last year, ''Your Money or Your Life,'' Cutler summarized his research as follows: ''The evidence shows clearly that spending more has been good; we get a lot more out of the medical system than we put in.'' The book won praise from The New England Journal of Medicine and other publications. ''It's good to see in Cutler's study an analysis of some of what has gone right,'' a reviewer in The Los Angeles Times commented. Critics responded that good health care could be much less expensive. Canada spends only 10 percent of its G.D.P. on health care, but according to common yardsticks like longevity and infant mortality, Canadians are just as healthy. Dr. John Wennberg, a health-care expert at Dartmouth, and his colleague Jonathan Skinner point out that some areas of the United States, like Boston and Miami, spend far more than others, like Minneapolis, without any noticeable improvement in mortality. This leads them to conclude that the additional spending is fruitless. Ira Magaziner, who ran the Clinton effort, says that project was meant to eliminate just such redundancy and also to make a serious dent in administrative costs. ''There is a lot of waste you can take out of the system before you get to questions of rationing,'' he says. In any case, the Clinton plan's complexity, as well as the secretive style in which it was developed, probably did as much to torpedo it as rationing, which is what Cutler has focused on. Cutler, who reads as many medical journals as economics ones, does not dispute that America buys more health care than it needs. He estimates that 20 percent of spending (such estimates are all over the map) is unnecessary, much of it for tests and specialist consultations. Indulgent Boston, for instance, has 1.7 times as many specialists per capita as frugal Minneapolis. But it is extremely difficult to weed out only the ''bad stuff,'' Cutler says. Oregon, he notes, tried to proscribe ''unnecessary'' procedures for Medicaid patients. It ended up relenting on almost everything. In any case, the idea that America could trim spending to Canadian levels is probably unrealistic. American doctors earn more than those in Canada. Our culture tolerates, even approves of, greater disparities in income; Congress is not likely to legislate a change. Canada also enjoys a ''free rider'' benefit. Drug makers earn a return on their investment in the United States, and so are willing to accept price caps in the smaller Canadian market. And since Canada has just one insurer (the government), its doctors spend less on administration. However, health-care costs in Canada have increased at nearly the same rate as in the United States. In fact, spending growth in most developed nations -- regardless of how they finance and organize care -- has been moving ahead at similar rates. Since 1960, costs in six of the G-7 countries have risen, on average, by 4.9 percent a year. The rise in costs in the United States, at 5.1 percent annually, is close to the middle of the pack. Sherry Glied, of Columbia's School of Public Health, concludes that ''no particular characteristic of any health-care regime is the main determinant of growth in costs.'' Technology is. Critics of America's profligate ways fret about the relentless character of spending increases, and they have a point. Even when technologies lower costs, they increase spending by broadening the market. More people have gallbladders removed because laparoscopic surgery is less invasive. More people take medication for depression because the Prozac-era drugs have fewer side effects than earlier drugs. In fact, doctors diagnose depression more often. Better treatments lead to higher use. Contrary to the fears of many on the left, higher prices are not the chief culprit. Thanks to continued pressure from H.M.O.'s, doctors' rates have been held in check. So have the prices of pharmaceuticals already on the market. But because new drugs are more expensive, and because people take more pills, total spending on drugs since 1990 has quadrupled. As Cutler says, medical spending isn't increasing because of inflation so much as because of people consuming more ''good stuff.'' This view is beginning to course through the health-care world. Scanning the literature, you now happen upon sentences like, ''We believe that some of the concern about the growth in spending may be misplaced'' (Health Affairs) and ''On average . . . society is better off exchanging more money for better health'' (The Journal of Economic Perspectives). No one disputes that spending will continue to increase; limiting the rate of growth is the most we can hope for. Since he reckons that most of what we get is beneficial, Cutler puts primary emphasis on improving the quality of care. ''Most of economics is about the cost of things,'' he notes. ''There has been little effort to figure out what the benefits are. That's often more difficult. How do you value clean air, lower crime or improved health?'' What Cutler has in mind is a twofold plan. First, he proposes a variant of the voucher system. Let the government finance people's -- everyone's -- health care, with tax credits to be spent on private providers or insurers. But vouchers would only broaden the system, not improve it. To accomplish the latter, Cutler wants insurers, both public and private, to redesign the way doctors and hospitals are compensated, to give them an incentive to compete on quality. At first blush, this struck me as pretty naive -- the sort of mushy academic theory that could lead, ultimately, to higher bills. Cutler's former mentor Summers, now Harvard's president, shares that skepticism. How, after all, do you measure performance in health care? It turns out that there are lots of ways. People (like me) often assume that the American system, while expensive, is about as effective as possible. That turns out to be wrong. People are prescribed pills for hypertension and don't take them. Diabetics are supposed to monitor their blood sugar and don't. According to a study by the RAND Corporation, people get only 55 percent of the care recommended for them. Doctors themselves are surprisingly inconsistent. Alarmingly, many heart attack patients do not receive beta blockers, inexpensive pills that significantly reduce mortality. Dr. Donald Berwick, a pediatrician obsessed with the shortcomings in health-care quality, has shown that it is possible to improve care rather significantly. Berwick, who runs the Cambridge-based Institute for Healthcare, teamed with the Robert Wood Johnson Foundation for a trial in which six hospitals and one H.M.O. focused on improving overall performance. The results were stunning. Tallahassee Memorial Hospital reduced mortality after heart attacks from 12 percent to 6 percent in two years. It also lowered mortality for strokes by 41 percent and for pneumonia by 32 percent. The improved cardiac performance was a result of systematically administering beta blockers and aspirin, making sure EKG's arrived promptly and prodding the emergency-room doctor and the cardiologist to be in closer touch. These procedures ''were being done'' before the project began, says Winnie Schmeling, an administrator at Tallahassee Memorial. ''They just weren't being done every time.'' According to Berwick, Tallahassee's experience is common. ''Hospitals are out to save lives, but they won't necessarily track survival rates, or compare themselves to others, or think about what they could be doing better,'' he says. There is an aphorism for such behavior in the business world: ''You manage what you measure.'' If doctors measure how long it takes to deliver an EKG, then EKG's are delivered faster. America's fee-for-service system does not require doctors to measure. It rewards them for each instance of delivered ''care,'' Cutler notes, but not necessarily for the end result -- for ''health.'' This is especially true for chronic patients, whose well-being depends on following a long-term regimen of care. Diabetics, for instance, should receive yearly eye exams, regularly monitor blood sugar and cholesterol and take other steps to avoid problematic (and expensive) complications. ''Doctors say, 'You really should get your eyes examined,''' Cutler notes. ''There is no follow-up. Every doctor you talk to says: 'I know we don't do a good job on that. We don't get paid for it.' My way, we would pay them.'' How would ''paying for performance'' work? In the late 90's, HealthPartners, a not-for-profit health plan in Minneapolis with 630,000 members, instituted a bonus system to providers. It paid doctors extra if their diabetic patients got blood sugar and cholesterol below certain levels, ceased smoking and took aspirin daily. In 1996, 5 percent of patients met all criteria. By 2003, 17 percent did. Similar gains were registered with heart patients. ''These clinics are trying to provide quality care,'' says Dr. George Isham, the plan's medical director. ''What we're doing is putting a measurement on it.'' In 2003, the plan awarded a total of $9 million to doctors on merit. But was it worth it? At Isham's request, Cutler and a team of colleagues analyzed the economic payoff. They found that the program reaped huge rewards. It cost $330 a patient and was expected to save roughly $30,000 over each patient's life. While the analysis is not precise, Cutler wrote, it ''illustrates a general point that professionals in health care have known intuitively for some time: . . . comprehensive disease-management programs are clearly worth the investment.'' The rub is that the investment was only marginally worth it for HealthPartners. The gains went to the patients, in the form of better health, and to their employers, who were expected to suffer less absenteeism. HealthPartners did recoup some of its investment, as members were hospitalized less frequently. But some of those people would change jobs and change insurers, so the benefits were largely reaped by someone else. Ultimately, as patients retire, they will be reaped by Medicare. This ''exemplifies some of the problems inherent in our current system,'' Cutler wrote. A program with huge benefits for society (and for patients) offered only a marginal incentive to the health plan to create it. HealthPartners did not have the option of simply raising its rates, because healthy patients would have departed for a cheaper plan. This is why closed-loop systems -- systems in which patients made healthy don't leave -- tend to work best. Kaiser Permanente, the huge health plan based in California, is something of an example. Both insurer and provider, Kaiser pays its doctors a fixed salary regardless of how much (or little) they do. Its doctors also receive a bonus tied to measures of performance. The theory is that its integrated approach will pay off both in terms of patients' health and economically. So far, the approach has shown significant improvement in health and after some missteps has been able to stay competitive (though it is hardly cheap). Other major health plans in the state recently agreed to a similar system of quality bonuses, so California could become something of a closed loop. General Electric is another intriguing case. Despite its supposed fervor for quality, until recently G.E. had been shelling out more than $2 billion a year in health coverage without regard to the quality of care. Robert Galvin set out to change that. In 2000, G.E. and several other companies began a program to reward doctors in certain cities on the basis of quality. Specifically, the companies split with doctors the savings that flowed from better care of diabetes and heart disease. According to G.E., the average cost of caring for diabetics who are properly treated drops by $350 a year, even before factoring in the cost of the long-term complications of leaving the disease untreated. Maybe pay-for-performance won't work for an earache, Galvin allows, ''but we have found a business case for diabetes.'' Clinician groups that hit their quality targets can earn up to $20,000 a year. Predictably, G.E. started with two conditions -- diabetes and heart disease -- that afflict large numbers and for which care guidelines are well established. G.E.'s next experiment was less predictable. Cutler and others (including President Bush) have been pushing the health industry to invest in computers. Many doctors still write prescriptions and keep records manually, and Cutler says that digitizing the health-care system would save considerable administrative expense and improve quality. It would minimize prescription errors, speed paperwork and make a patient's medical history portable. But the big kick is what information technology could do for the doctor's understanding of his own performance. Most doctors' offices have no idea, say, what the average blood pressure is of their patients being treated for heart disease. In fact, most clinics could not tell you how many heart patients they have or how many have been prescribed a particular drug. Cutler envisions a medical world in which doctors routinely get readouts of their patients' blood-pressure levels, insulin, smoking rates -- the lot. This, of course, is how most of the business world already operates. So the G.E. program is paying doctors' offices up to $15,000 a year for investing in, and using, computers. G.E. and other companies have asked RAND to analyze the financial payoff, but in the meantime they decided to kick-start doctors, some of whom have reacted warily to any sort of proposed changes, into the digital age. If you look at why Americans are going to the doctor, it strengthens the economic case for performance goals. Half of the growth in spending is for chronic conditions like asthma, obesity and diabetes. With proper treatment, including preventive care, chronic patients require less intensive care and less hospitalization. In their case, particularly, Cutler argues, quality will pay. One criticism is that pay-for-performance still rewards doctors for doing something. It doesn't motivate them to cut waste -- to not do things. Another is that doctors could game the system, just as C.E.O.'s with performance bonuses can. Nonetheless, McClellan, the Medicare administrator and former Cutler collaborator, is taking a gamble that pay-for-performance will work. Medicare has started half a dozen pilot programs to test various incentives. In one, hospitals scoring in the top 10 percent in a set of quality measures for certain conditions will be given a 2 percent bonus. Medicare is also testing incentives that reward doctors for savings. The American Medical Association is nervous about anything that smacks of encouraging doctors to withhold care (a battle it fought with H.M.O.'s in the 90's), but it appears to be willing to look at schemes that link pay to quality. Medicare hopes that by making providers think about both quality and efficiency, modern doctors might acquire some of the wisdom of those old-time family practitioners who, so we like to recall, had their patients' health uppermost in mind without losing all regard for their pocketbooks. ''Speaking as an economist,'' McClellan says, ''it's clear that doctors respond to incentives.'' Cutler says that Medicare's willingness to experiment is hugely important. Private health plans do not have the clout to force a clinic to purchase software or adopt performance goals. But Medicare is so big that were it to adopt performance targets, it would force every doctor to adjust. ''Medicare could really jump-start'' pay-for-performance, Galvin says. Then H.M.O.'s would surely begin to mimic Medicare and adopt similar targets. Reoriented to managing ''health'' rather than merely costs, H.M.O.'s might again become a useful part of the health-care landscape, Cutler says. Managing care, he says, was a necessary idea that went off the tracks as H.M.O.'s became remote, single-minded cost-control freaks. His models for the future are the progressive organizations (he calls them hippie places) like Kaiser that employ their own doctors, invest in computers and ''engage'' their patients. They manage quality as well as cost. This does sound sort of pie-in-the-sky, but Kaiser and the other California health plans are already paying bonuses to doctors who score high on patient surveys. Just imagine: a doctor paid to make you feel better. Cutler says that the next step is for Medicare to go beyond trials and move from a fee-for-service model to, in part, pay-for-performance. ''If Medicare has to pay more to doctors -- which it will, given current projections -- don't raise fees across the board,'' he explains. ''Set up a bonus fund that goes to M.D.'s who follow guidelines or have the best measures of outcome.'' Similarly, Medicare could pay more for operations that are clearly indicated, less for procedures (or drugs) that seem discretionary. By such steps, Medicare would come to resemble a large, progressive H.M.O. All this would ease the way to Cutler's ultimate goal, which would be to abolish the distinction between Medicare and private plans. That America has a separate plan for seniors is an accident of history: it was a compromise adopted in the 60's when business and the American Medical Association lobbied to defeat universal coverage. Many corporations, however, are now quite eager for the government to resolve the mess. And the present hodgepodge system (or nonsystem) simply has no logic to support it. As former Senator Bob Kerrey testified in 2002, ''There are six main ways a resident of the United States can become eligible for insurance'': wait until he is 65, demonstrate that he is disabled, ''get blown up in a war,'' prove he is poor and ''promise to remain poor,'' work for the federal government or find a job with an employer who offers insurance. Those who fall through the cracks get only half as much care as people with insurance. To make coverage universal, Cutler advocates a $6,000 credit for poor families (and less, on a sliding scale, for others, tapering off to a small credit for people earning $50,000 and up). The credits would be redeemable as a sort of health-insurance voucher. Significantly, Cutler would extend credits to everyone -- even to people who are covered now. Many employers, for competitive reasons, would still offer coverage, but access to care would no longer depend on either employment status or age. Vouchers are a leap for a Democrat, but the idea is popular with conservatives. Bush has also proposed tax credits, though on a smaller scale and for only the uninsured. Stuart Butler of the Heritage Foundation prefers Cutler's universal model. Butler points out that the government already subsidizes people in corporate plans, who do not have to declare their employers' contributions as income. This is a huge break: it costs the United States Treasury more than the mortgage deduction. It is also distributed, illogically, only to people whose employers provide a subsidy. As Cutler declared in his book, ''Health insurance is not something that is made better by tying it to employment.'' Even the A.M.A. has come around and favors having the government finance universal access. Cutler's idea is to preserve the diversity of America's system while subsidizing people's access to it -- to let the G.E.'s and the HealthPartners of the world, and also the Mercks, continue to innovate. Cutler says that under his scheme, the government might spend an additional $100 billion a year. Some of that would represent new spending for people who previously did not have insurance; some would represent a transfer to the government of costs now borne by others -- employers, or hospitals that provide charity care. That's a big number, but, to keep it in perspective, spending for Medicare and Medicaid currently totals just over $500 billion. More problematic is that Cutler's plan would seem not to brake the projected future escalation of spending. By 2040, according to various projections, that spending could rise from its present $1.8 trillion to something like $3 trillion -- that is, to 20 percent of G.D.P. or conceivably 25 percent. This is why so much attention is focused on cost. According to Henry Aaron of the Brookings Institution, ''We can't continue to provide all care for all people.'' Cutler's answer to these fears is not exactly cavalier, though some might find it so. If we institute a more results-oriented, and a more health-conscious, system, our dollars will buy us better care and probably cheaper care. By emphasizing prevention and effective treatments for the chronically ill, we might also reduce the rate at which spending grows. We'll still consume more health care -- more ''good stuff,'' in Cutler's trademark colloquialism. But the drive to keep spending down will forever be challenged by technology's efforts to overcome it. If it turns out that gene therapy delivers a cure for cancer, and if that turns out to be something that most Americans want, we should be prepared to pay for it and indeed to tax for it, Cutler says. Spending a fifth, even a quarter, of our resources on life-enhancing and life-prolonging miracles would not be the worst of fates.

Subject: Data cowboy steal yer money - cspn3 10am
From: johnny5
To: All
Date Posted: Mon, Mar 14, 2005 at 19:25:55 (EST)
Email Address: johnny5@yahoo.com

Message:
10:00 am on CSPAN3 or on the web if you don't have cable. 2:00 (est.) LIVE Senate Committee Identity Theft Banking, Housing and Urban Affairs Paul S. Sarbanes , D-MD Richard C. Shelby , R-AL The beginning and end of this live program may be earlier or later than the scheduled times. Senate Committee Identity Theft Banking, Housing and Urban Affairs Washington, District of Columbia (United States) ID: 185919 - 03/15/2005 - 2:00 - No Sale Sarbanes, Paul S., U.S. Senator, D-MD Shelby, Richard C., U.S. Senator, R-AL The Senate Banking, Housing and Urban Affairs Committee will hold a hearing on identity theft, the security of sensitive consumer information, and maintaining personal information on large computer databases.

Subject: The MATRIX has you Jennifer - GUILTY
From: johnny5
To: All
Date Posted: Mon, Mar 14, 2005 at 18:51:45 (EST)
Email Address: johnny5@yahoo.com

Message:
This guy calls them idiots, but he is the one with egg on his face. Now the computer can convict me with faulty algorithms - oh great! http://www.palmbeachpost.com/business/content/business/epaper/2005/03/12/a1f_asher_0312.html Data broker vanguard defends its technology Hank Asher says the system does far more good than harm. By STEPHEN POUNDS Palm Beach Post Staff Writer Saturday, March 12, 2005 Hank Asher has been called a lot of things, but trailblazer isn't one of them. Truth is, the blunt, gruff and combative software programmer extraordinaire-turned-multimillionaire inventor was front and center in the data brokerage industry when it was formed in the early 1990s. He founded DBT Online in 1992 and Seisint in 1998 in Boca Raton, creating two cogs in the nation's growing data broker industry. Now they are owned by Georgia-based ChoicePoint and British publishing giant Reed Elsevier Plc, respectively. Asher, 53, with homes in Boca Raton and Naples, is the thread that connects these two data giants that identity thieves have recently infiltrated. The digital consumer information breaches at ChoicePoint and Seisint in the past month compromised the personal records of 175,000 Americans, putting data aggregators on the defensive. He took a paternalistic view Friday in defending the companies, saying they do far more good than bad and calling the hackers 'idiots.' 'Since they leave an enormous trail of electronic fingerprints,' he said, 'They are certain to be caught.' Asher was on his yacht this week north of the Dominican Republic with a satellite phone with poor reception as his only form of communication. He responded to e-mail questions through his attorney, Derek Dubner. Asher doubted that the problem at either company was the result of inadequate internal technology. 'ChoicePoint simply allowed fictitious customers to gain accounts,' he said. 'The Seisint problem is much different, where legitimate customers allowed their user IDs and passwords to be compromised.' Using the recent data breaches as a flash point, Congress is talking about regulating data brokers as the number of identity thefts in the U.S. has grown to more than 9 million a year. If the industry must be regulated, Asher said, beef up laws against the high-tech thieves and not the companies. He compared the problem with that of an automobile driven by a drunken driver. 'The solution is to sanction the drunken driver not the automobile,' he said. 'These systems are used millions of times a day to protect commerce, our identities and our country.' Asher now pours his time and money — at least $10 million last year — into a cancer research nonprofit, the JARI Research Foundation, an initiative inspired by his sister who is battling cancer of the blood. He stepped aside from running DBT and Seisint after revelations of his short-lived days as a drug smuggler in the early 1980s scared off customers. His notorious earlier life has never stopped him from helping law enforcement. Asher came up with the idea for a computer system known as Matrix, short for Multistate Anti-Terrorism Information Exchange, within 48 hours of the Sept. 11 attacks to help snare terrorists and criminals. Before launching it, Asher gave Florida and U.S. authorities the names of 120,000 people who showed a statistical likelihood of being terrorists. It sparked some investigations and arrests. But it also brought a torrent of criticism of Asher. Still, Asher worries that it will take another major terrorist attack before computer programs like Matrix are fully embraced. Although Asher has taken his share of heat, he has many supporters. Dubner described the inventor as a colorful, creative nonstop worker unafraid to shock people. Beth Givens, director of the nonprofit Privacy Rights Clearinghouse in San Diego, called him 'brilliant.' 'He has developed two incredible data products,' Givens said. But he also is 'the ultimate data cowboy.' Givens questioned whether the early corporate culture at both DBT and Seisint allowed them to be 'not very careful about who they let in the door' as clients paying for access to sensitive online files.

Subject: Nonsense
From: Ari
To: johnny5
Date Posted: Mon, Mar 14, 2005 at 19:39:49 (EST)
Email Address: Not Provided

Message:
This article is incomprehensible, and has nothing at all to do with the company mentioned. Why mention a fellow board poster who has always been helpful?

Subject: Blue pills for you! hehe
From: johnny5
To: Ari
Date Posted: Mon, Mar 14, 2005 at 19:43:19 (EST)
Email Address: johnny5@yahoo.com

Message:
This article has to do with identity theft - if you will look down a few posts I had a lengthy dicussion with Jennifer about that issue. Further into the article they talk about the MATRIX system by this same guy that takes innocent peoples names and gives them to law enforcement - if you had watched a movie called - THE MATRIX - Morpheus says to NEO the hero - the MATRIX has you - and agent smith 'the law' came to get the poor computer hacker and hurt him - my title was meant to be humorous that now a computer can take innocent people and provide their data to lawmen to stalk us poor citizens based on quants and stats - the guy that programmed this system used to run with drug runners and has a shady past - this guy is one of the key people in the data brokerage industry - draw your own conclusions.

Subject: Before you all go crazy again
From: johnny5
To: johnny5
Date Posted: Mon, Mar 14, 2005 at 19:59:30 (EST)
Email Address: johnny5@yahoo.com

Message:
The title was not an ATTACK on jennifer - it was simply to futher illustrate her data could be in a computer somewhere - it could be stolen - or it could be used to profile her as a terrorist and convict her as GUILTY without any PROOF - therefore the matrix has you jennifer - GUILTY even though I think she is a great person and helpful - the computer might not - this was meant to frown on the intrusion of our privacy by an ex drug smuggler - not calling jennifer GUILTY of anything - I fear context is easily lost. I think this smells rotten in denmark that our data brokerage industry - probably one of THE MOST IMPORTANT security issues in all of our lives has such a person so central to it's core and such a person with such ethics as to invade mine and your's and jennifers privacy with statistical measurements of our guilt passed on to Agent Smiths. I am not your enemy Ari or Jennifers either - I am your friend - that computer doesn't have a heart though, and those hungry hackers in russia don't care if you go broke and lose all your money in an electronic heist.

Subject: Some movies to watch
From: johnny5
To: johnny5
Date Posted: Mon, Mar 14, 2005 at 20:32:29 (EST)
Email Address: johnny5@yahoo.com

Message:
The Matrix, Blade Runner, Code 46, 1984, Total Recall, ExistenZ, Dark City, Johnny Mnemonic, Virtuosity, Tron, Strange Days, Lawnmower Man, Brainstorm, Minority Report, Dreamscape, I Robot, AI, Equilibrium, and then watch some Blake's 7 and maybe you will have the same nightmares I have - HAHA! Maybe throw in a little sprinkle of Usual Suspects and LA confidential and you will cower in fear like johnny at all these thoughts floating around in film-makers heads!!

Subject: Re: Before you all go crazy again
From: Ari
To: johnny5
Date Posted: Mon, Mar 14, 2005 at 20:09:16 (EST)
Email Address: Not Provided

Message:
I understand. I never saw the film.

Subject: Re: The MATRIX has you Jennifer - GUILTY
From: johnny5
To: johnny5
Date Posted: Mon, Mar 14, 2005 at 18:58:55 (EST)
Email Address: johnny5@yahoo.com

Message:
Red pills and blue pills, I will take them both - further into the rabbit hole we go. http://www.palmbeachpost.com/business/content/business/epaper/2005/03/12/a1f_hedge_0312.html Hedge fund virtually bare All that may be left of KL Financial's assets – provided by many Palm Beach investors – is about $1.5 million. By DAVID SEDORE Palm Beach Post Staff Writer Saturday, March 12, 2005 There was more bad news Friday for the many rich Palm Beach investors who had put money in the West Palm Beach hedge fund firm that abruptly closed last week after federal authorities raided its offices. After the Securities and Exchange Commission obtained a federal court order freezing the assets of KL Financial and its principals, the SEC thought there was at least $11 million of assets preserved. The SEC feared at least $70 million of investors' money was gone, and alleged KL Financial engaged in a 'massive hedge fund fraud' that claimed huge profits while actually losing investor money. During a conference call with investors and their lawyers Friday, Guy Lewis, the court-appointed overseer of the money management firm, said $9 million of the $11 million was drained from a KL Financial account held with Penson Financial Services in Dallas. That leaves just $1.5 million in a $2 million account the investment firm held at Bank of America. Lewis said $500,000 from that bank account was pledged as collateral for KL Financial's lease on its former 17th-floor offices in the Esperante building in downtown West Palm Beach. While Lewis and his Miami attorney partner, Mike Tein, said they would go after the money in the Penson account if it was wrongly taken, the news that it was gone illustrates the difficulty authorities face in making the hedge fund's investors anywhere near whole. About 300 KL Financial investors lost somewhere between $81 million and $300 million as a result of the firm's high-risk securities trading. The investment firm was based here and had offices in San Francisco and Irvine, Calif. 'The one thing we can promise is aggressive action,' said Lewis, a former U.S. attorney for South Florida. Penson Financial is a brokerage firm that cleared investment trades for KL Financial. When the SEC moved to shut down the hedge fund firm and freeze its assets on March 3, it found about $11 million in two accounts, including about $9 million at Penson. Tein said Penson officials now say the money was held in a margin account — meaning it was borrowed by KL Financial and owed to the brokerage. When Penson liquidated the account, it had a zero balance. Tein said it's possible that Penson's move to liquidate the account violated the federal court order temporarily freezing KL Financial's assets. Lewis will interview Penson officials under oath next week. Penson executives Phil Pendergraft and Daniel Son were unavailable for comment Friday. Meanwhile, Tein said KL Financial principal John Kim, a Jupiter resident, is not cooperating with efforts to recover assets. During a deposition Friday, Kim declined to answer questions regarding assets, citing his Fifth Amendment right to remain silent. The firm's other principals, Won Sok Lee and Yung Kim, John Kim's brother, have fled the area and probably the country. Tein also said Lewis' office is working with federal authorities who are continuing a probe of KL Financial's trading activity and its operators. Where did the money go - they thought a short of GOOG at 200 was a good bet - I would have to agree - but that would have been the wrong bet apparently.

Subject: Who will you call if you have no mouth
From: johnny5
To: johnny5
Date Posted: Mon, Mar 14, 2005 at 19:07:02 (EST)
Email Address: johnny5@yahoo.com

Message:
I am going to make sure and pray that NEO comes to save us - that Agent Smith is a wicked dude! http://www.palmbeachpost.com/business/content/business/epaper/2005/03/10/c1a_idtheft_0310.html Hackers swipe ID data on 32,000 from Boca firm Thieves used stolen passwords to infiltrate the database of Seisint in the latest major data breach. By STEPHEN POUNDS Palm Beach Post Staff Writer Thursday, March 10, 2005 For the second time in less than a month, a large national data broker has revealed that thieves stole the identities and private information of thousands of Americans. Reed Elsevier Plc, the British owner of information company LexisNexis, disclosed Wednesday that hackers slipped past computer security and stole the passwords of its business customers in February to break into the computer database at its Seisint division in Boca Raton and, in turn, swiped the personal information of 32,000 Americans. Have you been a victim? If you have been the victim of identity theft in the Seisint, ChoicePoint or any other case, please contact Post reporter Stephen Pounds at (561) 820-4412 or by e-mail at stephen_pounds@pbpost.com and tell your story. What Seisint is doing Steps Seisint's owner is taking for consumers whose private information was stolen: • Notifying in the next few days those whose personal information was stolen; they will be told what action to take and given a toll-free telephone number to call if they have questions. • Conducting credit-report monitoring for all 32,000 victims to catch any attempts to fraudulently use their personal data. • Providing credit counseling in cases when a person's identification is used for illicit purposes. The Seisint computer breach was detected when employees found abnormal billing activity by some of its business customers. After sneaking into the system, the thieves peeled off with names and addresses, and in some cases Social Security and driver license numbers. No personal credit or medical records were pilfered. Seisint stores tens of billions of personal records on millions of Americans in Boca. That personal information is sold to corporations, individuals and government entities for employee background checks, debt collection and other purposes. After learning of the breach, LexisNexis notified the Secret Service, which investigates counterfeiting and cyber crime. The company plans to notify individuals by mail over the next few days that their personal data was stolen. Residents in all 50 states and Puerto Rico are affected, but the company wouldn't provide a state-by-state count. The computer break-in marked the second time in a month that it was revealed thieves made a mockery of the intense security measures at a large U.S. data broker, and both companies have major computer centers in Boca Raton. Earlier in February, ChoicePoint, an information giant based in Alpharetta, Ga., with 300 to 400 employees here, acknowledged that thieves had taken sensitive data on 145,000 people, including 10,000 Floridians. In that instance, 750 people around the country were defrauded when their personal information was used for illicit purposes. So far, no identity fraud is known to have occurred because of the Seisint breach. But LexisNexis will provide each of the 32,000 individuals affected with ongoing credit report monitoring. And in cases in which a person's identity is used fraudulently, the company will offer counseling on how to repair the person's credit history. 'There was no medical information, no financial information and no credit histories taken,' said Jim Peck, chief executive of LexisNexis' risk management division. 'As far as the investigation is concerned, a group of people in the company is working with law enforcement . . . obviously those in Boca are included.' Peck said the incidents at ChoicePoint and Seisint were different. With ChoicePoint, thieves used stolen identifications to set up bogus businesses, such as check-cashing and debt-collection companies, signed the businesses up as ChoicePoint customers and then accessed its records. With Seisint, they just stole customer identification numbers to enter the computer database. Still, Peck conceded that the information heists, taken together, make it more likely that Congress and the states will toughen regulations on the data brokerage industry. 'The issue is obviously heating up because of these incidents,' Peck said. 'We are going to try to understand all sides . . . to strike the right balance between regulation and providing these kinds of services.' Ted Julian, vice president of marketing at Application Security Inc. in New York, which writes software for database security, said computer hackers are looking for bigger and better targets. 'The short answer is hackers are growing up,' Julian said. 'They used to brag about how many (computer) networks they own. Now they're looking at quality over quantity. There's more money in it.' In Florida, state Sen. Dave Aronberg, D-Greenacres, pledged last week to amend a bill that would make it a crime for telemarketers to misrepresent themselves to unwitting consumers, collect data from them and use that information or sell it to other telemarketers. California is the only state in the nation with such protection. Aronberg plans to amend the bill to force companies such as LexisNexis and ChoicePoint to immediately disclose when an individual's personal information is stolen. LexisNexis learned its own computer database system had been mugged in February as it blended Seisint into its risk management unit. Reed Elsevier bought Seisint last July for $775 million and folded it into LexisNexis. Last year Seisint made national headlines over its controversial criminal-information project known as Matrix. The firm gave U.S. and Florida authorities the names of 120,000 people who showed a statistical likelihood of being terrorists, sparking some investigations and arrests. Matrix, which is short for Multistate Anti-Terrorism Information Exchange, combined state records and data culled by Seisint to give law enforcement investigators fast access to information on crime and terrorism suspects. It was launched in 2002. Because the system included information on innocent people as well as known criminals, Matrix drew objections from privacy groups. Millionaire Hank Asher founded Seisint and was the brains behind developing Matrix. Asher stepped down from Seisint's board of directors in 2003 after revelations of his past ties to drug smugglers. Asher also started DTB Online in Boca Raton, a firm that ChoicePoint purchased in 2000. These digital cowboys can't stop all the liquidity problems this is going to cause - if johnny5 is bidding on a gold coin on ebay and 400 hackers with fake credit card accounts bid up the coin - inflation is gonna kill johnny.

Subject: Arguing Stocks and Bonds
From: Terri
To: All
Date Posted: Mon, Mar 14, 2005 at 18:26:11 (EST)
Email Address: Not Provided

Message:
Robert Shiller's projection of real growth in stocks over the coming decade is 4.6%. This is a conservative projection to which I could easily agree. With current dividends on the S&P Stock Index of 1.6% after Vanguard costs, and stock buybacks worth about 1%, all that is needed is economic growth of 2% to get 4.6% returns in stocks. Then, there is going to be a pronounced relative problem for bond holders over the coming decade. Investment grade bonds should return about 2.1% given current after Vanguard cost yields. That gives stocks a 2.5% annual edge in real returns. A potential doubling of the returns to an asset class means bond holders may well be at a serious disadvantage. Note to mention that bond are already tax disadvantaged.

Subject: No energy
From: johnny5
To: Terri
Date Posted: Mon, Mar 14, 2005 at 18:46:12 (EST)
Email Address: johnny5@yahoo.com

Message:
So buying the tax free vanguard bond funds would not be a prudent strategy? All my relatives live in florida and I see vanguard has a FL LT Tax-Exempt Investor fund, I signed up today for an account, and wanted to get into the vangaurd energy fund but it said it was closed.

Subject: Bonds and Energy
From: Terri
To: johnny5
Date Posted: Mon, Mar 14, 2005 at 18:55:09 (EST)
Email Address: Not Provided

Message:
These are just arguments with myself. For a conservative household in a high tax bracket, tax free bonds make perfect sense even if they trail another asset class in return. Vanguard closes funds with no warning when asset flows threaten to limit investment possibilities for the fund managers. Money is flowing to energy. When the energy fund flow eases, the fund will open. This is all done to protect shareholders. However Vanguard has an energy index, and index funds will not close since allocation of funds is no problem.

Subject: Energy Viper
From: johnny5
To: Terri
Date Posted: Mon, Mar 14, 2005 at 19:13:14 (EST)
Email Address: johnny5@yahoo.com

Message:
The energy fund was closed, but the energy viper may not have been, I didn't check, should I get the energy viper instead of the energy fund if I want energy exposure, are there benefits to the vangaurd funds versus the vangaurd vipers?

Subject: Imagine Life With no Butterflies
From: Emma
To: All
Date Posted: Mon, Mar 14, 2005 at 16:45:29 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/14/international/americas/14mexico.html?8hpib=&pagewanted=all&position= Chain Saw Thins Flocks of Migrants on Gold Wings By JAMES C. McKINLEY Jr. CONTEPEC, Mexico - Homero Aridjis, a poet and naturalist, can remember years when monarch butterflies filled the streets here in his hometown like a living torrent of orange and black and stayed all winter on the fir-covered mountain rising above the village. Not this year. The colony of butterflies that arrived here in November was tiny and retreated up the mountain, as far away as possible from the lower slopes where loggers have thinned or destroyed the forest the butterflies depend on. 'There used to be rivers of butterflies, but now there are years when there are no butterflies at all,' Mr. Aridjis said as he climbed the mountain of his youth recently. 'This is a village full of ghosts, not of people, but of nature, a paradise lost.' The tourists still come, but there is not as much for them to see. This is a small town of 10,000, like many in Mexico, dominated by a church and a school in rolling fields at the foot of Cerro Altamirano. The country people here still work on their small farms, but in recent decades the town's adobe houses have been replaced by uglier cinderblock buildings, and rusting automobiles outnumber burros and horses. Not only are there comparatively few monarchs in Contepec, but the numbers that came to weather the winter at five other forest sanctuaries in central Mexico also dropped sharply this year. Two storms killed most of the butterflies spending winter here in 2003 and 2004. But these reproductively hardy insects have bounced back before. In 2002, a storm killed about 80 percent of wintering butterflies, but the next summer, they found perfect breeding conditions in the central United States and southern Canada. Last summer, though, cold and wet weather in the American corn belt kept the diminished population from regrouping. The number arriving this winter was the smallest since Mexico and the World Wildlife Fund began keeping records in the 1970's, down three-quarters from the winter before, the wildlife fund and independent biologists said. Biologists and nature lovers say bad weather is not the whole story. They warn that logging in Mexico and herbicides in the United States have endangered these almost miraculously migratory insects, which flutter thousands of miles. Hardier genetically altered corn and soybean crops in the United States and Canada, in the breadbasket areas that are the monarch's main summer conjugal grounds, have enabled farmers to use stronger herbicides to eliminate weeds. That has drastically depleted the supply of flowers on which the butterflies feed, as well as common milkweed, on which the monarch lays its eggs in the spring and summer and on which its larvae feed, several biologists say. The drop in butterfly counts is staggering. In 2004, at a monitoring site in Cape May, N.J., for instance, scientists registered the lowest number of butterflies heading to Mexico since the program began in 1991, according to scientists in the field. Similar results were found in Virginia. Scientists from the University of Minnesota who have been counting larvae in the Midwest since 1997 recorded their lowest numbers. Some environmentalists say that preventing permanent devastation of the monarch population might require concerted action by Mexico, the United States and Canada, though these countries have not put the issue on their foreign affairs agendas. 'We have a trinational crisis,' said Mr. Aridjis, who helped set up sanctuaries in Michoacán State for the butterflies in the 1980's. In August, as the days shorten, the last monarch generation hatched in the summer stops reproducing and goes into a sort of sexual hibernation. The monarchs fly south to the forested hills in Michoacán and the State of Mexico, where their ancestors have spent winter for millennia. There, they find the perfect balance of coolness and humidity to remain alive for several months, without laying eggs. In February, they mate. Finally, in March, they return to the southern United States to lay their fertilized eggs and die. In Mexico, illegal logging in these protected forests has shrunk the monarchs' habitat and forced the insects to higher elevations, where they are vulnerable to the cold. The government protects the forests with armed federal agents during winter, but large logging operations have continued to eat away at the dense stands of Oyamel fir trees here. Satellite photos compiled by United States scientists show that vast numbers of trees in the 140,000-acre Monarch Butterfly Biosphere Reserve , 75 miles east of Mexico City, have been logged and carted out, often by armed gangs who pay off the authorities, people tracking the fate of the butterflies say. The northeast face of Cerro Pelón, one of the mountains in the core of the reserve and a former winter home of butterflies, is stripped of trees now. 'The deforestation is increasing per year in each period we studied,' said Daniel A. Slayback, a United States scientist studying the butterflies who has compared satellite photos from 1976 through 2004. 'Whatever measures the Mexicans are taking, they are totally ineffective.' A group of 11 biologists who study the monarch concluded in a paper distributed Feb. 17, 'Monarchs have proven resilient to many environmental stresses but the ongoing deterioration and loss of habitat in Mexico, the United States and Canada has the potential to drive the population below a level from which it can recover.' Lincoln P. Brower, a biologist at Sweet Briar College in Virginia who is one of the world's foremost Monarch specialists, said the population had been cut so severely that one more bad storm over the winter might have finished it. 'I would say the monarch is in a precarious situation now,' he said. One reason is poverty. Martin Uilshes Maya, 35, a farmer from Contepec who loves the butterflies, is typical of many people in the region. He said he had 10 acres of land to feed his wife and two children. He grows enough corn and wheat to make about $3,600 a year, but the need for firewood sometimes drives him and his neighbors into the forest. 'Clearly, we are destroying the forest, but that is what life is giving us,' he said sadly. 'It's a very beautiful phenomenon, the butterflies, that gives us so much life.' 'But,' he said, 'we don't have any way to make money off tourism.'

Subject: Conservative Investing
From: Terri
To: All
Date Posted: Mon, Mar 14, 2005 at 12:05:55 (EST)
Email Address: Not Provided

Message:
There is no reason for an investor to take significant risks, especially an investor who has assets that are sufficient to live on comfortably or who is trying to conserve assets. We can always choose to conserve assets. That seems to me the beauty of bond funds with reasonably constant durations. Bond yields rise and fall as investors change projections of inflation. Over time, yields will adjust and remain higher than inflation. An investment grade bond portfolio, whether taxable or tax free, can be used to any extent. The Vanguard Intermediate Term Bond Index has a yield of about 4.5% and a 5 year duration. The bonds are extrmely high in quality and the portfolio so diverse that credit risk is of no account. For each hundred thousand dollars invest in the fund the return will be about 4,500 dollars a year for the next five years. A large asset base in such a fund will provide a nice secure income, and the yield will gradually adjust to any price change for the fund. Though I find no reason not to included stocks in a portfolio, there is no reason why bonds can not be the focus.

Subject: Re: Conservative Investing
From: johnny5
To: Terri
Date Posted: Mon, Mar 14, 2005 at 18:37:56 (EST)
Email Address: johnny5@yahoo.com

Message:
Secretary Peterson recommended International Bond funds with low expenses - does the Vanguard intermediate bond fund invest internationally or just in american bonds?

Subject: Re: Conservative Investing
From: Terri
To: johnny5
Date Posted: Mon, Mar 14, 2005 at 20:56:35 (EST)
Email Address: Not Provided

Message:
There is no international bond exposure at Vanguard. John Bogel believed international stocks were a better long term balance in a portfolio than international bonds.

Subject: Bubbles - whose at fault?
From: Pete Weis
To: All
Date Posted: Mon, Mar 14, 2005 at 10:14:11 (EST)
Email Address: Not Provided

Message:
Certainly all those who participate in them. But if our economy is to survive don't our central bankers and our political leaders have a need to be pro-active and forward looking? Will our economy and the stock markets survive a bursting of a housing bubble which is now the primary boost to consumption in the absence of overall wage increases? From MSN Money: The Fed sees bubbles -- and keeps them secret In public, the Federal Reserve says there's no housing bubble. But the Fed also said there was no stock market bubble in 1999. Behind closed doors, the governors knew there was. By Bill Fleckenstein Our Fed chairman has argued (most recently last October, in a speech to America’s Community Bankers Annual Convention) that for a variety of reasons, real estate cannot experience a bubble. Yet anyone with a pulse can see wild speculation taking place all around them. At the height of the stock-market bubble in the first quarter of 2000, it was becoming progressively more difficult for me to adequately describe (in my daily column) the market action. So, in an attempt to capture the mood of the day, I began to share stories of insane behavior that were being e-mailed to me by regular readers. I dubbed this series 'The Mania Chronicles,' and you'll find excerpts from it in Chapter 3 of the Archives section of my Web site. (Readers of the Contrarian Chronicles can access the site for the next week by using the password/username: mania/mania.) The kind of maniacal behavior that we saw then toward stocks and which we are seeing now in real estate tends to come at the end of a speculative mania. It is almost always coincident with rising supply, which helps to satiate the inflated demand. Banks and insurers check your credit. So should you. As I have pointed out, the true danger in the real-estate bubble is that folks are often speculating with more than 100% leverage. When it all ends (and though we don't have a timeline for exactly when that will be), the banking system and other financial entities will be left with the bad assets, which will severely impact the economy. Condominium-mania So, even though I offer up the following vignette in a somewhat lighthearted way, everyone should be aware that the current insanity it demonstrates is very dangerous. Each e-mail I have received reveals a variety of preposterous assumptions made by the people depicted, but what the vignettes share is: The belief that one can't lose. Incredible greed. The absence of any common sense. 'In Chicago this weekend, there was an apartment conversion to condos where 200 people slept out overnight for a chance to be one of the first people to have a chance at buying a condo. I personally knew five people who stayed out all night, and these people were only buying on spec, with the thought of flipping the property in the next year or so. They believe it is impossible to lose money on this deal. It reminded me of when everybody would line up at stock-quote machines to check all their winning stocks.' Truth outed by a Fed transcript Today's housing bubble is a consequence of policies designed to ameliorate the effects of the bursting of the stock-market bubble. All long-term readers know that I place the blame for the stock and real-estate bubbles squarely on Alan Greenspan and his easy-money comrades at the Fed. Consequently, it was with interest that I read 'Fed Officials Worried in 1999 About Managing Stock 'Bubble'' in last Monday's Wall Street Journal. The article discusses the fact that in 1999, Fed officials were aware of the stock-market bubble, even though they claimed before and after not to have known. Related news and commentary on MSN Money • Housing bubble is real, report says • Don’t get trapped in a housing bubble • Home prices still headed high in 2005 • Housing mania will end in tears • The housing bubble doesn’t add up Since those days, I have been waiting to see the contents of the 1999 minutes, which are released with a five-year lag, to learn what the Fed was really saying, as opposed to what it said in public. With the Journal story serving as a reminder, I went to the Federal Reserve's Web site to review the just-released December 1999 Federal Open Market Committee minutes. I was shocked by what I found. Lone wolf amidst bull bankers In an introductory presentation to the FOMC, Fed economist Mike Prell noted the lunacy as follows: 'I refer to the incredible run-up in 'tech' and e-commerce stocks, some which have entered the big-cap realm without ever earning a buck. To illustrate the speculative character of the market, let me cite an excerpt from a recent IPO prospectus: 'We incurred losses of $14.5 million in fiscal 1999, primarily due to expansion of our operations, and we had an accumulated deficit of $15 million as of July 31, 1999. We expect to continue to incur significant . . . expenses, particularly as a result of expanding our direct sales force. . . . We do not expect to generate sufficient revenues to achieve profitability and, therefore, we expect to continue to incur net losses for at least the foreseeable future. If we do achieve profitability, we may not be able to sustain it.' 'Based on these prospects, the VA Linux IPO recorded a first-day price gain of about 700% and has a market cap of roughly $9 billion. Not bad for a company that some analysts say has no hold on any significant technology. The warning language I’ve just read is at least an improvement in disclosure compared to the classic prospectus of the South Sea Bubble era. . . . 'But, I wonder whether the spirit of the times isn't becoming similar to that of the earlier period. Among other things, it may be noteworthy that the tech stocks have done so well of late in the face of rising interest rates. Earlier this year, those stocks supposedly were damaged when rates rose, because, people said, quite logically, that the present values of their distant earnings were greatly affected by the rising discount factor. At this point, those same people are abandoning all efforts at fundamental analysis and talking about momentum as the only thing that matters (and that’s just like right now!). 'If this speculation were occurring on a scale that wasn't lifting the overall market, it might be of concern only for the distortions in resource allocation it might be causing. But it has, in fact, been giving rise to significant gains in household wealth and thereby contributing to the rapid growth of consumer demand -- something reflected in the internal and external saving imbalances that are much discussed in some circles. Whether our assumed 75 basis-point increase in the fed funds rate would be a sufficient shock to halt this financial locomotive is open to question.' (The emphasis is mine.) Failing to follow the bouncing bubble One can quickly see that this particular Fed staffer understood what was going on, although without knowing more of his thoughts or talking to him, I'm not sure if even he comprehended just how misallocated capital was at the time. We must also remember that this was only December 1999, with another 50% rally in the Nasdaq Composite ($COMPX) yet to come. In any case, one might have thought that after such a powerful introduction by Prell, some of the Fed governors might have had their curiosity piqued. But near as I could tell in going through the Q&A that followed his remarks, most of the governors were much more concerned about economic minutiae than the epic bubble they had blown. Y2K was supposedly a concern at the time, though I read with interest that 'bankers around the (Philadelphia Fed) district reported that they believe that Y2K will be a non-event.' Given the concern by some Fed staff members that a bubble was brewing and that certain district reports thought Y2K might be a non-event, one might have thought that a sober band of concerned citizens might have tried to ensure that the liquidity the Fed was forcing into the economy wouldn't be used for more speculation. But, of course, that was not the case. When Greenspan discussed the stock market in passing during the meeting, he said, 'It is only a question of how much of a bubble there is in the process.' In public, he repeatedly said the opposite. (Still denying it was possible to spot one, even after the blow-off of the first quarter of 2000, in a Q&A before Congress in April 2000, he stated: 'That presupposes I know there is a bubble. I don't think we can know there is a bubble until after the fact.') Considering how out-of-control the mania was in 1999, I was struck that this group of clueless buffoons spent nearly half the time (according to the transcript of this meeting) arguing about whether the post-séance communiqué should contain the language 'asymmetric,' 'symmetric' or a little of both, etc., rather than spending any time discussing what their actions had wrought in the stock market and the economy. Al was so pleased with himself in the lead-up to the voting that he opined: 'Having said all that, my view on policy is, if I may reference Governor Kelley's comment about raising his hand and saying present, that I almost think the best way we could have gotten through this period would have been somehow to cancel this meeting. The reason is that markets, as far as I can see, seem to be pretty much where we as a Committee would like them to be.' (The emphasis is mine.) Bouncing from bubble to bubble There you have it: The most incompetent and irresponsible Fed chairman in the history of the world thinks nothing of talking from both sides of his mouth about whether he can identify a bubble. He blows the biggest one in history, claims he didn't know it was happening. And then he bails it out with a housing bubble that he says can't exist because real estate can't experience a bubble. What I'd like to know is, given not just Alan Greenspan's record but also what he says in public (and what we can now see he says behind the public's back), how can this menace to society have any credibility whatsoever? I certainly don't know. I encourage everyone to read through these minutes just to get a flavor for how completely untrustworthy and shallow these people are.

Subject: Bond and Stocks
From: Terri
To: All
Date Posted: Mon, Mar 14, 2005 at 08:34:02 (EST)
Email Address: Not Provided

Message:
Though I believe the bull market in bonds is over, I am not concerned about holding a moderate duration bond fund portfolio through the Federal Reserve tightening cycle. Still, at these low interest rates a reasonably priced stock fund has to be an attractive alternative. The secular bull market in bonds began in 1981, and through the cycles since then interest rates have come down cycle to cycle. We may find a long period of relative stability from here. I could as easily however expect rates to rise or fall from here.

Subject: Building a Bond Portfolio
From: Terri
To: All
Date Posted: Mon, Mar 14, 2005 at 08:06:23 (EST)
Email Address: Not Provided

Message:
Different investors have different perspectives, which is what makes a market at any time. Buying and selling bonds is a complex process and I have nowhere near the knowledge to build and maintain a portfolio of individual bonds. Since Vanguard offers the most credit worthy diverse portfolios of bonds, with controlled durations, with fine fair costs, ease of liquidity, monthly distributions, and various services, I can not imagine why I would build a bond portfolio on my own. Through these last years, I have found person after person regret the difficulty individual bond issues represent for them even and especially during a wonderful bond bull market. I prefer simplicity to complexity in building a bond portfolio. I prefer Vanguard.

Subject: Buying and Selling Bonds
From: Terri
To: All
Date Posted: Mon, Mar 14, 2005 at 06:25:54 (EST)
Email Address: Not Provided

Message:
There is always a range in corporate credit ratings however corporation health in America and Europe is in general excellent. Balance sheets and income statements show excellent health in general. There is no meaningful danger in holding a basket of high grade corporate debt. Buying and selling a basket of bonds on one's own however is most troublesome and requires far more knowledge of the bond market than investors usually have. I have never thought for a moment that I could buy and sell bonds more intelligently or safely than Vanguard. The quality and diversity of portfolios are excellent, the cost is always fair, and I surely could never hope to match any Vanguard investment grade portfolio on my own. The same can be said for tax free and government agency bond portfolios.

Subject: Re: Buying and Selling Bonds
From: johnny5
To: Terri
Date Posted: Mon, Mar 14, 2005 at 06:43:32 (EST)
Email Address: johnny5@yahoo.com

Message:
www.fmsbonds.com - it doesn't get any easier than this and no annual expense ratios - bogle would be proud.

Subject: Corporate bonds risky?
From: Pete Weis
To: All
Date Posted: Mon, Mar 14, 2005 at 00:28:55 (EST)
Email Address: Not Provided

Message:
From the Financial Times: Growing fears credit boom may implode >By Dan Roberts and David Wighton in New York and Peter Thal Larsen in London >Published: March 13 2005 21:42 | Last updated: March 13 2005 21:42 >> Bankruptcy advisers are hiring extra staff amid fears that an end to the global credit boom could spark a surge in business failures in the US and Europe. Unusually loose lending conditions have encouraged record borrowing by speculative-grade companies, with leveraged buy-outs and debt refinancing on both sides of the Atlantic generating more than $100bn of deals in the past eight months. But last week's fall in the price of US Treasury bonds, coinciding with signs that bankers are struggling to complete riskier corporate bond issues, has added to a sense of nervousness in some quarters. Although corporate default rates remain low, some fear the legacy of recent private equity buy-outs and hedge fund investments in distressed debt will be a swath of over-leveraged companies ill-equipped to survive in less benign conditions. PwC, the largest corporate recovery adviser, said it was hiring insolvency specialists in sectors such as retailing, utilities and telecommunications in preparation for the expected fall-out. Scott Bok, president of Greenhill & Co, an investment bank specialising in merger advice and restructuring, also predicts the cycle will end with a lot of companies in trouble. “In many of the deals being done today you can foresee the debt restructurings to come in a year or two,” he said. Last week, the Financial Stability Forum, a group of national and international central banks and regulators, pointed to the levels of liquidity as one of the main risks to the stability of the global financial system. Following a meeting in Tokyo, the FSF said that, according to some of its members, tight credit spreads and low long-term interest rates suggested some in the market might be underpricing risks. It urged banks and investors to monitor their exposures by stress-testing what would happen in the event of a market shock. Chuck Prince, chief executive of Citigroup, said: “The possibility of a liquidity bubble around the world concerns me. A very cautionary thing is that it feels like the world is changing and traditional indices may not give a complete picture.” Some say markets are becoming more nervous. Paul Hsi, a senior analyst at Moody's, said: “There is a little bit more caution in the market right now as some of the weaker credits come up with ‘me-too' offerings and investors take a harder look.” Ian Powell, head of European business recovery for PWC, added: “You only need one of these really big financing deals to go sour and confidence will evaporate very quickly.” However, investors say the market is more aware of the risks than in previous credit cycles and that funds are managing their exposure accordingly. “People are on ‘bubblewatch' since almost every market got burnt in the last five years,” said Stephen Peacher, head of high-yield investment at Putnam, the fund manager. “We know that bond prices are certainly not cheap but, given that default rates are so very low, we feel comfort

Subject: Re: Corporate bonds risky?
From: johnny5
To: Pete Weis
Date Posted: Mon, Mar 14, 2005 at 00:42:43 (EST)
Email Address: johnny5@yahoo.com

Message:
why not get tax free, amt free, non callable AAA insured muni bonds and hold to maturity and be done with all this risk and sleep good Pete? My uncle does not need huge profits, he needs capital preservation and small income - the people we keep talking too never recommend tax free bonds though - why is that? They always want to sell him annuities or funds with high expense ratios.

Subject: Re: Corporate bonds risky?
From: johnny5
To: johnny5
Date Posted: Mon, Mar 14, 2005 at 00:58:20 (EST)
Email Address: johnny5@yahoo.com

Message:
http://www.washingtonpost.com/wp-dyn/articles/A55780-2004Oct22.html Teresa Heinz Kerry released her 2003 income tax Form 1040 the other day, and the right-wing commentariat claims to find her tax situation deeply ironic. On income of over $5 million, she paid federal income taxes of just $627,150, or 12.4 percent. As a Wall Street Journal editorial last Monday put it, this 'means she is paying a lower average rate than nearly all middle-class taxpayers.' More than half of Teresa Kerry's 2003 income was interest from tax-exempt bonds. The Journal hilariously described these on Monday as 'the kind of investments that rich people can afford to hire lawyers and accountants to steer their money into.' And the paper predicted that 'mega-millionaires such as Mrs. Kerry' will avoid her husband's higher taxes through 'tax shelters' like this one, leaving ordinary $200,000 taxpayers to shoulder the burden. In fact, tax-exempt bonds are hardly an exotic tax-avoidance technique requiring lawyers and accountants. Anyone with a hundred bucks can buy into a mutual fund of tax-exempt bonds with a simple call to Fidelity or Charles Schwab. The Wall Street Journal got it precisely wrong: The remarkable thing about Teresa Kerry's tax return is that this fabulously rich woman apparently has most of her income-producing wealth stashed in an utterly mundane and non-exclusive form of investment. The Journal returned to Teresa's taxes on Wednesday, declaring carefully that a 'huge reader response' had been 'helpful in illuminating the issue.' This second bite at the apple begins by noting that Teresa Kerry's investment income is exempt from the Social Security payroll tax. 'This is fine by us,' the editorial says. Next, the editorial concedes that 'millions of other Americans' invest in tax-exempt bonds,' and 'we have nothing against' that either. http://www.sptimes.com/2004/04/16/Columns/Tax_returns_show_Chen.shtml Even Kerry has a second mortgage pete!

Subject: Excellent posts Johnny
From: Pete Weis
To: johnny5
Date Posted: Mon, Mar 14, 2005 at 09:28:47 (EST)
Email Address: Not Provided

Message:
It's interesting to note that some of the wealthiest investors are primarily out of the markets and into the most conservative investments.

Subject: Re: Excellent posts Johnny
From: johnny5
To: Pete Weis
Date Posted: Mon, Mar 14, 2005 at 18:31:59 (EST)
Email Address: johnny5@yahoo.com

Message:
Yah, aren't most of the corporate insiders sitting on the sidelines with cash still? That does it, I have to get my mom to sell her west palm beach house, locking in profits is more important than getting greedy with frothy bubbles. I would rather her lose future profit than current gains.

Subject: Our Currency, Your Problem
From: Emma
To: All
Date Posted: Sun, Mar 13, 2005 at 19:05:59 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/13/magazine/13WWLN.html?pagewanted=all&position= Our Currency, Your Problem By NIALL FERGUSON Every congressman knows that the United States currently runs large ''twin deficits'' on its budget and current accounts. Deficit 1, as we well know, is just the difference between federal tax revenues and expenditures. Deficit 2 is generally less well understood: it's the difference between all that Americans earn from foreigners (mainly from exports, services and investments abroad) and all that they pay out to foreigners (for imports, services and loans). When a government runs a deficit, it can tap public savings by selling bonds. But when the economy as a whole is running a deficit -- when American households are saving next to nothing of their disposable income -- there is no option but to borrow abroad. There was a time when foreign investors were ready and willing to finance the U.S. current account deficit by buying large pieces of corporate America. But that's not the case today. Perhaps the most amazing economic fact of our time is that between 70 and 80 percent of the American economy's vast and continuing borrowing requirement is being met by foreign (mainly Asian) central banks. Let's translate that into political terms. In effect, the Bush administration's combination of tax cuts for the Republican ''base'' and a Global War on Terror is being financed with a multibillion dollar overdraft facility at the People's Bank of China. Without East Asia, your mortgage might well be costing you more. The toys you buy for your kids certainly would. Why are the Chinese monetary authorities so willing to underwrite American profligacy? Not out of altruism. The principal reason is that if they don't keep on buying dollars and dollar-based securities as fast as the Federal Reserve and the U.S. Treasury can print them, the dollar could slide substantially against the Chinese renminbi, much as it has declined against the euro over the past three years. Knowing the importance of the U.S. market to their export industries, the Chinese authorities dread such a dollar slide. The effect would be to raise the price, and hence reduce the appeal, of Chinese goods to American consumers -- and that includes everything from my snowproof hiking boots to the modem on my desk. A fall in exports would almost certainly translate into job losses in China at a time when millions of migrants from the countryside are pouring into the country's manufacturing sector. So when Treasury Secretary John Snow insists that the United States has a ''strong dollar'' policy, what he really means is that the People's Republic of China has a ''weak renminbi'' policy. Sure, this is bad news if you happen to be an American toy manufacturer. But there are three good reasons that the administration is tacitly delighted by the Asian central banks' support. Not only is it keeping the lid on the price of American imports from Asia (a potential source of inflationary pressure). It is also propping up the price of U.S. Treasury bonds; this in turns depresses the yield on those bonds, allowing the federal government to borrow at historically very low rates of interest. Reason No. 3 is that low long-term interest rates keep the Bush recovery jogging along. Sadly, according to a growing number of eminent economists, this arrangement simply cannot last. The dollar pessimists argue that the Asian central banks are already dangerously overexposed both to the dollar and the U.S. bond market. Sooner or later, they have to get out -- at which point the dollar could plunge relative to Asian currencies by as much as a third or two-fifths, and U.S. interest rates could leap upward. (When the South Korean central bank recently appeared to indicate that it was shifting out of dollars, there was indeed a brief run on the U.S. currency -- until the Koreans hastily issued a denial.) Are the pessimists right? The U.S. current account deficit is now within sight of 6 percent of G.D.P., and net external debt stands at around 30 percent. The precipitous economic history of Latin America shows that an external-debt burden in excess of 20 percent of G.D.P. is potentially dangerous. Yet there is one key difference between the United States and the countries south of the Rio Grande. Latin American economies have trouble with their foreign debts because those debts are denominated in foreign currency. The United States' external liabilities, by contrast, are almost entirely denominated in its own currency. It therefore makes more sense to compare the United States with other members of that exclusive club of countries that have produced -- and hence been able to borrow -- in international currencies. The most obvious analogy that springs to mind is the United Kingdom 60 years ago. During the Second World War, Britain financed its wartime deficits partly by borrowing substantial amounts of sterling from the colonies and dominions within her empire. And yet by the mid-1950's, these very substantial debts had largely disappeared. Unfortunately, this was partly because the value of sterling itself fell significantly. Moreover, sterling's decline and fall did not reduce the U.K.'s chronic trade deficit, least of all with respect to manufacturing. On the contrary, British industry declined in tandem with the pound's status as a global currency. And, needless to say, the decline of sterling coincided with Britain's decline as an empire. From an American perspective, all this might seem to suggest worrying parallels. Could our own obligations to foreigners presage not just devaluation but also industrial and imperial decline? Possibly. Yet there are some pretty important differences between 2005 and 1945. The United States is not in nearly as bad an economic mess as postwar Britain, which also owed large sums in dollars to the United States. The American empire is also in much better shape than the British empire was back in 1945. Even the gloomiest pessimists accept that a steep dollar depreciation would inflict more suffering on China and other Asian economies than on the United States. John Snow's counterpart in the Nixon administration once told his European counterparts that ''the dollar is our currency, but your problem.'' Snow could say the same to Asians today. If the dollar fell by a third against the renminbi, according to Nouriel Roubini, an economist at New York University, the People's Bank of China could suffer a capital loss equivalent to 10 percent of China's gross domestic product. For that reason alone, the P.B.O.C. has every reason to carry on printing renminbi in order to buy dollars. Though neither side wants to admit it, today's Sino-American economic relationship has an imperial character. Empires, remember, traditionally collect ''tributes'' from subject peoples. That is how their costs -- in terms of blood and treasure -- can best be justified to the populace back in the imperial capital. Today's ''tribute'' is effectively paid to the American empire by China and other East Asian economies in the form of underpriced exports and low-interest, high-risk loans. How long can the Chinese go on financing America's twin deficits? The answer may be a lot longer than the dollar pessimists expect. After all, this form of tribute is much less humiliating than those exacted by the last Anglophone empire, which occupied China's best ports and took over the country's customs system (partly in order to flood the country with Indian opium). There was no obvious upside to that arrangement for the Chinese; the growth rate of per capita G.D.P. was probably negative in that era, compared with 8 or 9 percent a year since 1990. Meanwhile, the United States may be discovering what the British found in their imperial heyday. If you are a truly powerful empire, you can borrow a lot of money at surprisingly reasonable rates. Today's deficits are in fact dwarfed in relative terms by the amounts the British borrowed to finance their Global War on (French) Terror between 1793 and 1815. Yet British long-term rates in that era averaged just 4.77 percent, and the pound's exchange rate was restored to its prewar level within a few years of peace. It is only when your power wanes -- as the British learned after 1945 -- that owing a fortune in your own currency becomes a real problem. As opposed, that is, to someone else's problem.

Subject: The Quality Health Care Cure?
From: Emma
To: All
Date Posted: Sun, Mar 13, 2005 at 18:57:36 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/13/magazine/13HEALTH.html?8hpib=&pagewanted=all&position= The Quality Cure? By ROGER LOWENSTEIN David Cutler hit what seemed to be the peak of his career at 28, when as a junior faculty member at Harvard he was whisked down to Washington to help draft a health-care bill under the tutelage of Ira Magaziner and, of course, Hillary Clinton. The project produced a dispiriting result: nothing. Corporations, consumers, the uninsured and doctors had all been clamoring for reform, and the question of why the project failed has nagged at Cutler ever since, especially as the problems have continued to worsen. In the years since he left Washington, which was in 1994, the ranks of the uninsured have surged, from 35 million people to 45 million. There are also serious gaps in the quality of care, and there is a deep dissatisfaction with the way the system functions -- in how it seems to make adversaries of patients, doctors and insurers, for instance. Arguably, Americans want health-care reform more urgently than anything else. Yet designing a national health-care policy has become a kind of taboo. Congress provided prescription drugs for seniors, and President Bush, not normally thought of as timid, has backed some modest initiatives: legislation to limit malpractice suits, individual health savings accounts. But Washington has done nothing on the scale that a social engineer -- a Robert Moses or a Daniel Patrick Moynihan -- might to reinvent the system. Cutler has thought about this ever since his failed experience in Washington, and his diagnosis has shaken up the health-care-policy world. ''The real reason health-care reform has not succeeded,'' he has written, ''is that it is rooted in a misconception of what health-care reform should accomplish.'' Virtually every would-be reformer, Democrat and Republican alike, starts with the presumption that the major problem in health care is high costs. This is understandable: America now spends 15 percent of its gross domestic product on health care. That's a higher percentage than any country has ever spent in the history of the planet, and the figure is increasing. The United States spends more on health care than on automobiles; we spend more on health care than China spends on tea; in fact, as Cutler likes to point out, we spend more on health than the Chinese spend, per capita, on everything. And health care threatens (far more than Social Security) to consume the federal government. Medicare, the health-care program for retirees, and Medicaid, which provides basic services for the poor, already account for one-fifth of the federal budget, and their share could double in a generation. Curbing such growth has been the aim of every reformer, and according to Cutler, it is the reason reform has failed. The Clinton team proposed to pay for universal coverage by limiting increases in spending (partly through mandatory caps). But limiting spending also meant limiting service. The proposed legislation was never put to a vote. Managed care was next at trying to contain costs. It succeeded for a while, until it became clear that Americans did not want health-maintenance organizations to limit their choices any more than they wanted the government to. Since then, reform has languished. The Medicare drug bill is suggestive of why. The Republican Congress promised restraint but then passed a hugely expensive law that barred Medicare from using its clout to negotiate prices with drug companies. The pattern has been failed efforts to control costs, followed by a void of new ideas. Cutler's approach is radically different. He says that most health-care spending is actually good. Spending has been rising, he says, because it delivers positive, and measurable, economic value, and because it can do more things that Americans want. Therefore, Cutler says, we should focus on improving the quality of care rather than on reducing our consumption of it. Rather than pay less, he wants to pay more wisely -- to encourage health-care providers to do more of what they should and less of what is wasteful....

Subject: Re: The Quality Health Care Cure?
From: johnny5
To: Emma
Date Posted: Mon, Mar 14, 2005 at 00:31:21 (EST)
Email Address: johnny5@yahoo.com

Message:
secretaries rubin and peterson said we spend too much money in the last few months of life on stroke victims who have a lot of tubes in them and have no quality of life - if we would send these people home to die of flu like they do in european countries instead of prolonging thier misery for a couple more months, we could fix the healthcare problem. I watched a canadian movie called the barbarian invasions where this hypocritical socialist used the money of his capitalistic son to buy his way out of the healthcare system he voted for many years earlier - and then after all this money is spent - the guy gets on heroin on OD's! What a waste.

Subject: Weaken Dollar
From: Fur
To: All
Date Posted: Sun, Mar 13, 2005 at 14:17:33 (EST)
Email Address: dfasdfa@yahoo.com

Message:
Hey guys... just want to ask your opinion... It looks like US is having a trade largest trade deficit last month. i am a little worried about the current situation since the dollar has gone weaker. It looks like the US economy is not really doing well under the Bush Administration. Are we heading for recession ???

Subject: Perhaps
From: johnny5
To: Fur
Date Posted: Sun, Mar 13, 2005 at 16:07:37 (EST)
Email Address: johnny5@yahoo.com

Message:
Perhaps we are, but if so maybe some of that high coastal property in south florida will come down to very good price levels and you can make a killing in the real estate market if you come here. The property taxes and house insurance are getting so bad I am hearing many cubans talking about leaving florida going back home where the oppression was not so great.

Subject: Re: Weaken Dollar
From: Fur
To: Fur
Date Posted: Sun, Mar 13, 2005 at 14:19:55 (EST)
Email Address: afasdfa@yahoo.com

Message:
sorry for my english... i am an investor in Cuba. I am into real estate .

Subject: Three Proofs that TSM is Efficient
From: Emma
To: All
Date Posted: Sun, Mar 13, 2005 at 10:27:59 (EST)
Email Address: Not Provided

Message:
http://homepage.mac.com/j.norstad/finance/index.html#tsmproofs January 28, 2005 Three Proofs that TSM is Efficient By John Norstad Many people do not understand why the cap-weighted total US stock market (TSM) plays such a central role in financial economics. They believe that TSM is just one of many possible US stock portfolios, with no good reason to believe that it is special or superior to other kinds of US stock portfolios. They often present alternatives which they claim offer a higher expected return than TSM with less risk. In technical terms, these alternatives are 'more efficient' than TSM. We give three proofs that, under three different assumptions, TSM is efficient, in the sense that no other US stock portfolio can be more efficient than TSM (have lower risk and higher expected return). The three assumptions are: The Efficient Market Hypothesis. The Capital Asset Pricing Model. The Fama-French Three Factor Pricing Model. If any one of these assumptions is true, TSM must be efficient. If any other US stock portfolio has a higher expected return than TSM with lower risk, we must reject all three of the assumptions.

Subject: Berkshire Hathaway
From: johnny5
To: Emma
Date Posted: Sun, Mar 13, 2005 at 16:29:42 (EST)
Email Address: johnny5@yahoo.com

Message:
Great find Emma, I will being reading it now, first some initial thoughts. On the CAPM we have this: http://socialize.morningstar.com/NewSocialize/asp/FullConv.asp?forumId=F100000079&convId=115736 ..I believe Buffett's concern is that, according to the CAPM equation, a stock that has fallen 50% versus the market is considered more 'risky' versus a stock that has risen 25%. Beta is a measure of volatility and doesn't really take into account the direction of prices. This is counter-intuitive to a value investor, because a stock that has fallen significantly in value is generally considered less risky and more attractive than a stock that has risen in value. 9. 3 factor model arielb| 02-01-05 | 02:17 PM Eugene Fama and Ken French have also thrown out beta and CAPM Yes, the originator of EMH is also a value investor Given EMH - How does warren continue to outperform? I think I read on morningstar he has only been under the s&p 6 years out of the past 40? http://news.morningstar.com/doc/document/print/1,3651,121436,00.html Buffett has never been a fan of spreading his bets. Diversification may reduce volatility, but it doesn't necessarily reduce risk. The two concepts are often confused. Volatility can actually help reduce risk because it allows more opportunities for a savvy investor like Buffett to load up on an asset when prices are attractive. Buffett argues that the best way to reduce risk is to focus on companies you know extremely well and companies that boast strong competitive positions. If their earnings or share price happen to bounce around a lot in the short term, who cares? Although Buffett often gets pigeonholed as a value investor, only 4% of Berkshire's portfolio resides in value stocks as Morningstar defines them. Berkshire's largest equity holdings--American Express, Coca Cola, and Gillette--currently reside in the core column of Morningstar's Style Box. Among the growth stocks in the Berkshire portfolio: First Data, Comcast CMCSA, Moody's MCO, and Shaw Communications SJR. There is an article on the diehards message board on another group seriously underperfoming. http://socialize.morningstar.com/NewSocialize/asp/FullConv.asp?forumId=F100000015&convId=139787&minReplySeq=1#replyTop I came across an article while searching for papers on Graham and Dodd. It isn't entirely on topic for the Diehards but it is a reasonable rebuttal of common arguments that the market is efficient (and therefore there is no such thing as skill and therefore it is not possible to consistently outperform or underperform) and the argument that institutional investors are always smart cookies who take advantage of all inefficiencies and rapidly arbitrage them away before the small investor ever gets to see them. I read much of this paper in a state of open-mouthed horror and barely comprehending disbelief. AXA Investments and Trusts: The awful truth - full report If the market was efficient there is no way that someone could have had such bad performance over such a long period of time, especially an institutional investor, it takes an enormous level of negative skill to underperform over the space of so many decades. Please respond with your comments Emma - My uncle's retirement is dependant on not making a foolish choice. Should he just buy berkshire hathaway and be content and forget about vanguard?

Subject: The President's Stealthy Tax Increase
From: Emma
To: All
Date Posted: Sun, Mar 13, 2005 at 10:14:07 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/13/opinion/13sun1.html Mr. Bush's Stealthy Tax Increase President Bush is presiding over a big middle-class tax hike. As recently as 2000, only about one million taxpayers owed the alternative minimum tax, created by a provision in the federal tax code that is supposed to prevent multimillionaires from using loopholes to avoid paying their fair share. But by the time Americans file their 2005 taxes, some 3 million taxpayers will owe the alternative tax and by 2010, nearly 30 million taxpayers will be hit - among them, a staggering 94 percent of married filers who have children and make $75,000 to $100,000. Big families in high-tax states - New York, New Jersey, California and Massachusetts - will bear the heaviest burden, largely because the alternative tax increasingly disallows write-offs for dependents, state income taxes and local property taxes. On average, by 2010, people who make under $100,000 and owe the alternative tax will pay an additional $1,321 in federal income taxes, while alternative tax payers who make between $100,000 and $200,000 will owe an additional $2,592. Meanwhile, and most outrageous, only 35 percent of taxpayers who earn $1 million or more will owe the alternative tax. • Why does the alternative tax increasingly afflict middle-rung taxpayers for whom it was never intended, while largely ignoring the highest-end taxpayers it is meant for? First, the alternative tax is not adjusted for inflation, so over time, more and more middle-income taxpayers find themselves owing it. Second, and crucially important, is the interplay of the alternative tax and Mr. Bush's first-term tax cuts. When the tax cuts were enacted, no long-term corresponding changes were made to the alternative tax system - even though the administration was well aware that was a recipe for disaster. Not only will many families that thought they were in for lower income taxes wind up feeling shortchanged, some will find that the Bush tax cuts have done nothing at all to cut their taxes. Here's why: The alternative tax applies to people whose income tax bills are low relative to their income. So as tax cuts reduce the liability on a filer's Form 1040, the alternative tax kicks in. In effect, it claws back all or part of the supposed savings from the Bush tax cuts. By 2010, the Bush tax cuts alone will cause an additional 17 million taxpayers to owe the alternative tax. By 2014, assuming the Bush tax cuts are made permanent, 40 million taxpayers will owe the alternative tax, nearly half of whom would never have faced it but for the tax cuts. Meanwhile, the people who should be paying the alternative tax do not. Mr. Bush's administration, more than any other, has bestowed tax breaks on wealthy investors in the form of superlow rates on capital gains and dividends. But the alternative tax system - which regards deductions for property taxes or state income taxes as a kind of tax shelter - does not recognize this preferential treatment of investment income. That is a huge loophole. The alternative tax, whose very purpose is to prevent excessive sheltering, ignores the biggest tax breaks of all: special, low rates on capital gains and dividends that allow investors to avoid paying tens of billions of dollars in taxes every year. Ever since the first round of Bush tax cuts were enacted, Congress has passed temporary relief measures to keep most middle-income taxpayers from owing the alternative tax, but the problem is becoming too big, too fast, for stopgaps to keep working. Mr. Bush, for his part, says that he wants to shield the middle class from the alternative tax and that his tax reform commission will recommend a solution when it makes its report in July. • But Mr. Bush needs the alternative tax - he relies on its projected revenue to mask the debilitating cost of making his tax cuts permanent. Congressional estimates say that extending them permanently will cost $281 billion in 2014. But that estimate assumes that nothing will be done to prevent the alternative tax from further burdening the middle class. If the middle class is fully protected, the cost of extending the tax cuts will mushroom to $356 billion - 27 percent higher than the official estimate. The federal budget deficit would explode. The obvious answer is to restore the alternative tax to its true antisheltering purpose, by making inflation adjustments that will exempt the middle class once and for all and by fully taxing capital gains and dividends under the alternative system. But Congress and the administration are currently heading in precisely the wrong direction. The Bush tax breaks for investment income are scheduled to expire in 2008, but both the president and Congressional leaders are calling for extending them, at least through 2010, while proposing no corresponding long-term change in the alternative tax. • Bush administration officials and their antitax allies seem to believe that if taxpayers become angry enough at having to pay the alternative tax, they will throw their support behind any tax reform plan the administration puts forth. That is fomenting a crisis in order to appear to solve it. Is it too much to ask not to put the country through that kind of cynical exercise yet again?

Subject: Why do the Republicans punish the rich?
From: David E...
To: Emma
Date Posted: Sun, Mar 13, 2005 at 14:01:23 (EST)
Email Address: Not Provided

Message:
1% of taxpayers is caught up in AMT through 2000. 67% will be caught up by 2010. Grover Norquist says 'Why in the world would we cross the street to solve the Democrats' problem that they created -- that primarily first screws their constituents and then everybody else? The answer is yes, we'll fix it... After we've gotten rid of the death tax, and the capital gains tax and droppe marginal tax rates, we'll work on it.' (1) This take no prisoners stance of the Republican party is ugly, gives the lie to claims of bipartisanship, and is dangerous because Americans believe in fair play. I believe this is one more talking point that needs to be pounded into a republican coffin. Label them as recalcitrants and the major source of the coming grief. (1) San Diego Union Tribune - Mar 13, 2005 - Copley News Service, Dana Wilkie and Finlay Lewis)

Subject: Re: Why do the Republicans punish the rich?
From: Paul G. Brown
To: David E...
Date Posted: Mon, Mar 14, 2005 at 02:45:50 (EST)
Email Address: Not Provided

Message:
Wow! Well, you learn something new every day. I had some respect for our Grover. I didn't like the ideas he was advocating, and I distrusted his monomania. But I believed him to be a sincere warrior in the cause of reducing the size of the state. But if this statement accurately reflects his thinking, then he's really nothing more than a much less honorable warrior in the class war. 'Stuff the rest of you!', he seems to be saying. Plutocracy and timocracy forever! No other word for it. The bastard!

Subject: Re: Why do the Republicans punish the rich?
From: David E...
To: Paul G. Brown
Date Posted: Mon, Mar 14, 2005 at 13:03:10 (EST)
Email Address: Not Provided

Message:
I doubt that Grover's plan to reduce the size of the state will meet american standards of fair play. I have to imagine this, but why would republicans want to run deficits? The only reason I can imagine is to create a crisis which calls for the 'amputation' of many federal programs. This is a familiar tactic, most recently seen with the Social Security 'crisis'.Here is a link where he reaffirms his 'drowning government in a bathtub' speech on PBS. The language is softened here - but his objective is still very clear. Here is a excerpt of a recent speech he gave in Spain. He gloats about America's greatest generation dying. 'Yes, because in addition their demographic base is shrinking. Each year, 2 million people who fought in the Second World War and lived through the Great Depression die. This generation has been an exeception in American history, because it has defended anti-American policies. They voted for the creation of the welfare state and obligatory military service. They are the base of the Democratic Party. And they are dying. And, at the same time, all the time more Americans have stocks. That makes them defend the interests of business, because it is their own interest. Because of that, it's impossible to bring to the fore policies of social hate, of class warfare”' Notice the last sentence. He is talking about making class warfare and hate disappearing, but from his language I find reason to believe that he is a strong hater himself. There is no kindness or tenderness expressed about the passing of the 'Greatest Generation'. Paul, I too am surprised by the viciousness, cunning, and hate in the plans of Grover Norquist. When I verify the original sources I find nothing to make me think that the quotes are bogus. The two quotes today can be found numerous times with Google. Yesterday's quote is from a newservice owned by the San Diego Union, a Republican paper. I welcome information that could change my beliefs about this. I would like to live in a time like the 50's with an Eisenhower republican president.

Subject: China to Cut School Fees For Poorest
From: Emma
To: All
Date Posted: Sun, Mar 13, 2005 at 09:39:53 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/13/international/asia/13china.html China Plans to Cut School Fees for Its Poorest Rural Students By JIM YARDLEY BEIJING - China will begin eliminating rural school fees this year in response to growing criticism that the education system is increasingly corrupt and discriminates against poor rural students. The new policy, announced last week by Prime Minister Wen Jiabao at the opening of the annual National People's Congress, will begin by removing fees for 14 million students in the country's poorest counties, and will continue expanding until 2007, when all rural students will receive a free primary education. The program is part of a broader domestic agenda outlined by Mr. Wen to address increasing inequality in China, where urban residents earn three times as much as farmers and other rural residents. Education fees are particularly crippling for rural families, who often survive on only a few hundred dollars a year. 'Without fairness in education, there can be no fairness in society,' said Zhou Hongyu, a delegate to the National People's Congress, China's legislative body. 'The main injustice in education now is the imbalance between cities and the countryside.' Recent studies show that an overwhelming percentage of government education spending is dedicated to cities, despite the fact that two-thirds of the 1.3 billion Chinese live in the countryside. Li Shi, a prominent sociologist, wrote last month in the official English-language newspaper, China Daily, that the country dedicated only 23 percent of its education budget to the countryside in 2002. He said this disparity meant that rural students often missed out on an adequate education 'just by being in the wrong place, at the wrong time.' In February, a group of retired educational officials in Hunan Province published a broader, more blistering critique that detailed how the cost of supporting and building rural schools in Hunan fell largely on farmers who were already among the poorest members of society. This critique, in China Youth Daily, said rural students were further disadvantaged because a growing number of high schools and universities were lowering standards for wealthier students whose parents could make cash payments for admission, leaving less room for poor students to be admitted on merit. In addition, many universities are required to admit quotas of local city students. At a time when China is annually increasing military spending and pouring money into infrastructure projects, spending on education has fallen below projections established by the government in 1993 and is below the international average of developing countries. Mr. Wen's promise to eliminate school fees may ultimately be difficult to carry out in a country where changes announced by the central government are often circumvented locally. China already promises nine years of free compulsory education to all students. But faced with reduced government support, schools have attached a variety of special fees to make up for the lost revenues. For rural families, these fees can account for a quarter or more of their annual income and often are a primary reason that parents leave the farm for migrant work. Last year, financial pressure was a contributing factor in several high-profile suicides or rage killings by rural high school and university students. Hu Xingdou, a professor of governmental economics at Beijing Institute of Technology, said that Mr. Wen's new policy moved China in the right direction but added that the government needed to assume all costs of compulsory education and eliminate corrupt practices that gave preference to wealthy or politically connected families. 'The rural education system is on the verge of collapse,' Mr. Hu said. Taiwan Leader Urges Protest TAIPEI, Taiwan, March 12 (Reuters) - President Chen Shui-bian of Taiwan called Saturday for a million people to take to the streets of Taipei, Taiwan's capital, on March 26 to protest against China's anti-secession bill, which allows for the use of force against the island. Mr. Chen, in his first public comments on the proposed Chinese legislation since Beijing unveiled its details on Tuesday, called China a 'major threat to regional stability' and said the legislation would increase tension in the Taiwan Strait. China's Parliament is expected to pass the bill on Monday.

Subject: Tianemen redux
From: johnny5
To: Emma
Date Posted: Sun, Mar 13, 2005 at 16:01:20 (EST)
Email Address: johnny5@yahoo.com

Message:
Ths is great news for the chinese children, I am glad to see them learn more with good elementary education, this will be a great mesh with thier fine rural values. I see college people today in america and feel thier advanced education may not have been as useful as a few good summers working on a farm and learning agricultural lifestyles. Don't the nike's of the world realize when they educate all these farm kids they are not gonna be happy being slave labor in a sweatshop? On the taiwan issue, this is definitely a conundrum, but we invaded iraq and china did nothing, so I guess holding all our dollars they expect us to do nothing when they take taiwan. Poor taiwan. They need to learn to embrace thier new masters.

Subject: 'Every Man a Speculator'
From: Emma
To: All
Date Posted: Sun, Mar 13, 2005 at 09:36:22 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/13/books/review/13EVANS.html?pagewanted=all&position= 'Every Man a Speculator': Follow the Money By HAROLD EVANS EVERY MAN A SPECULATOR A History of Wall Street in American Life. By Steve Fraser. TRY a multiple choice question. Which phrase best describes Wall Street: (a) a den of thieves; (b) the engine room of innovation; (c) a conspiracy of oligarchs; (d) Babylon on the Hudson (e) the yellow brick road to a property-owning democracy? In his rollicking history over two centuries, Steve Fraser nominates all of the above. He is notably assiduous. He plots the roller coasters of boom and bust from the panics of 1792, 1837, 1873 and 1893, through the Jazz Age and the Great Depression to the ''socially negligent and narcissistic'' second Gilded Age of the Reagan 80's and on to today's ''shareholder nation.'' He examines the biographies of the icons and the rap sheets of the scoundrels, but he also eyes the Street in succeeding eras through the critical prisms of literature and the movies. Yes, Gordon (''greed is good'') Gekko rubs shoulders with J. P. Morgan. This is not so much a financial as a cultural history. Fraser's ambition is to examine ''how Wall Street has entered into the lives of generations long passed and those alive today . . . the way the character of America has changed.'' He recognizes the dubiousness of fixing a unitary character on a polymorphous people, but argues that if you distill all the histories, all the satiric cartoons, the brimstone sermons, the exposes, the Horatio Alger storybooks -- all the Wall Streets of the mind -- Wall Street becomes ''a window into the souls of Americans.'' That is a tough image to hold fast when one decade we are frolicking in the Elysian Fields with the ticker tape registering at $549 stock we bought at $85.25 a year before, the next we are weeping in Dante's Purgatory with Charles Ponzi, Ivan Boesky & Company (more recent candidates are crowding the anteroom). The popular mood pictured in ''Every Man a Speculator'' is volatile. It swings from loathing in the bad years to irrational exuberance in the good. Mostly, it seems to have been one of irritable ambivalence. But Fraser, also the author of ''Labor Will Rule: Sidney Hillman and the Rise of American Labor,'' has a keen grasp of his material, and his vivacious style and historical perspective carry us through the tumults. Rather surprisingly, at the end he suggests that today ''most of the hoary suspicions'' have faded away. He concludes that back home in living rooms all across America, where culture wars are ultimately settled, popular hostility to the Street has been revised ''even in the teeth of the most stunning Wall Street frauds since the crash of 1929.'' His explanation for this, and for Democratic rhetoric no longer demonizing the Street, is the explosion of institutional investing through pension funds and mutual funds. The largest pension funds own 60 percent of the largest corporations. For the first time roughly half of the population participates in the stock market, up from 10 percent in 1960. Only a minority may be involved actively, but Fraser considers their mortgages and college anxieties and dreams to be intertwined directly and intimately with Wall Street in a way not seen before. One would have thought this would make people a tad cross about having their pockets picked, say by investment bankers posing as disinterested analysts (as Charles Gasparino lays out in his chilling new book, ''Blood on the Street''), but Fraser stoutly maintains that in a society obsessed with consumption the ''homely motivations'' of the suburban capitalists have ''removed the taint of avariciousness that had always discolored the market.'' He appears to think the common-sense charisma of a Warren Buffett of Berkshire Hathaway or a Peter Lynch of Magellan looms large enough in the average man's mind to obscure Kenneth Lay of Enron, Bernard Ebbers of WorldCom, Jack Grubman of Salomon Smith Barney, Henry Blodget of Merrill Lynch, etc., alas, etc. Fraser is by no means an undiscriminating booster. He writes discerningly on the nexus of politics and finance. He offers an appraisal of the 19th-century Populist agitation about ''the money trust'' sucking blood out of the agrarian heartland that is uncommonly sympathetic and on the mark. The Wall Street gold bugs were dumb to inflict such a prolonged deflation on the country after the Civil War. It is a pity Fraser does not bring quite the same skepticism to conventional history when he arrives at Black Tuesday, 1929, and the Great Depression. The long shadow fixed in the popular imagination is that the stock market crash came first, precipitating bank closures and bankruptcies and then the long free fall of output, incomes and employment. It was not quite like that. No major company fell in the crash. The wave of business liquidations was a full year off. There were no immediate bank failures. The market recovered; it was firm from November 1929 to April 1930. This is not to say the great bull market was sound. Professor William Z. Ripley was justified in trying to arouse President Coolidge in 1928 to the ''prestidigitation, double-shuffling, honey-fugling, hornswoggling and skulduggery.'' But concentrating on the crash as the simple cause of 10 years of misery diverts attention from the shift in tectonic plates: by mid-1928, mass purchasing power no longer sustained the economy because industrial wages and farm incomes had fallen way behind output and profits. No amount of new regulation of Wall Street would have saved America from what followed unless demand had been stimulated and a thoroughly unbalanced budget embraced -- something even Franklin Roosevelt did not countenance until 1942. In the end it was the engineers, not the financiers, who saved the world. Fraser briefly acknowledges the work of a new generation of scholars and economists in putting Black Tuesday in proper perspective, but he concentrates on the way the crash ''invoked the whole historic iconography of shame that had shadowed the Street since the days of Thomas Jefferson.'' There is nothing he relishes more than a good scandal. In his lineups, he mostly and entertainingly identifies the right people. Here going off to Sing Sing in his bowler hat and black coat is the president of the Stock Exchange, Richard Whitney, who has raged against Roosevelt's New Deal reforms while stealing from the exchange's own gratuity fund and embezzling from the New York Yacht Club (is nothing sacred?). And here is former President Coolidge, the Democratic Party chairman John Jakob Raskob, the World War I hero Gen. John J. Pershing and numerous C.E.O.'s, all without a blush secretly accepting insider prices on Morgan confections. Fraser skewers crony capitalism while being oddly gentle with its apotheosis, the lordly plutocrat Andrew Mellon. Was a tax-evading Treasury secretary whose answer to the Great Depression he helped to bring on was to ''liquidate labor, liquidate stocks, liquidate the farmers'' really a ''great man''? At the same time, Fraser in his appetite for villainy is sometimes a little too like the Queen in ''Alice in Wonderland'': sentence first, trial later. Michael Milken does not deserve his place in the tumbrel; he was not guilty of insider trading, and his financial and business innovations were significant. Fraser is cavalier in his treatment of Samuel Insull. It matters to get Insull's story right. He is one of history's answers to the crucial question Fraser poses in his introduction: Has Wall Street been vital to the nation's efficiency, innovation and growth? Fraser describes Insull as a creator of ''a cloud of paper wealth'' and says he was guilty of ''the grossest fleecing in American financial history.'' He has taken his text from John Dos Passos in ''Big Money,'' the third volume of the trilogy ''U.S.A.''; and it is a caricature. In truth, Fraser's ''king for a day'' worked nearly 50 years to electrify America. He was a lowly English clerk who started as Thomas Edison's gofer at 21 and helped build the company that became General Electric. In 1892, at 37, he took over a tiny power station in Chicago and conceived of a way -- power produced by huge generators and marketed at peak and off-peak rates -- to bring ever cheaper electricity to industry, street cars and the homes of millions of people otherwise dependent on gas. Insull made two errors on the onset of the Depression. He believed President Hoover that it would soon be over, and he kept expanding. When recovery did not come, his companies crashed. He was saved from jail not by ''a swarm of high priced lawyers,'' as Fraser would have it, but by his own moving testimony. The prosecution had been a politically motivated witch hunt, and the jury took five minutes to clear him of all charges. In the end, about 40 percent of the stock of all American corporations was forfeited; that of Insull's electrical and gas operating companies fell by less than 1 percent. Insull was not a crook. He was an innovator of the first degree, supported by Wall Street only, in Lenin's phrase, as a rope supports a hanging man. It was the same in 1932 with Amadeo Giannini, the heroic pioneer in California of popular banking and branch banking, ignored in Fraser's history. Giannini's triumph over the ''Wall Street gang,'' as he called his enemies around John Pierpont Morgan Jr., in one of the country's great takeover battles enabled him to finance the recovery in California. The Bank of America is his monument today. Curiously for his expansively researched book, Fraser is not excited much to investigate the relationships between money and invention. He refers to new mass-market technologies driving the 20's boom, like radio, sound movies, electric appliances, synthetic fabrics and Bakelite; he sketches the dot.com bubble of the 90's. But he does not examine how these innovations were brought from lonely brain wave to the bustle of the marketplace. There is a downside to the ''shareholder nation.'' It intensifies the stock market's appetite for a quick buck at the expense of the fortitude required to establish a new business or plan for growth in the long term. The luminous former Treasury Secretary Robert Rubin has remarked that an analyst who forecasts the five-year prospects for the Ford Motor Company will probably never make a living. Rubin laments the way the pension funds, the mutuals and amateur speculation -- every man a speculator! -- have put traditional Wall Street's short-term thinking into overdrive, to the detriment of the long term and risky innovation. Multibillion-dollar private equity groups have come more and more to the fore, irrigating the seeds of such now established companies as Genentech, Intel and Google. It is a remarkable sign of the ingenuity and enterprise in the broader Wall Street today. Georges Doriot, scanted like Giannini, deserves at least a friendly nod. He so despaired of Wall Street's reluctance to catch up with postwar technological change that he founded the first publicly owned venture capital investment company in 1947 (the American Research and Development Corporation). Out of that came the first interactive minicomputer. A historian as dedicated as Fraser will no doubt repair omissions in due course. Meanwhile, he deserves a cheer for his long ascent to the summit. He affords us a panoramic view of decades of high endeavor and low greed. Wisely, he does not attempt to crown his endeavors by forecasting the course of the Dow. Nobody can say it better than J. P. Morgan. When asked what the market would do, he summoned all his authority and gravely pronounced: ''It will fluctuate.''

Subject: Beyond Our Interests
From: Emma
To: All
Date Posted: Sun, Mar 13, 2005 at 06:54:39 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/12/business/worldbusiness/12africa.html?ei=5070&en=7abbed303d42e158&ex=1111294800&pagewanted=all&position= Dollar's Fall Silences Africa's Garment Factories By MICHAEL WINES MAPUTSOE, Lesotho - Buy a T-shirt at Wal-Mart, fleece sweats at J. C. Penney or Hanes panties anywhere in the United States, and there's a halfway decent chance that they were stitched together here, in an acre-size garment factory crammed with thousands of frantically clacking sewing machines. Virtually its entire output, 25,000 items of clothing daily, is America-bound. These days, that is a disaster. 'Two thousand people work here, and unfortunately last week I had to retrench 500 people, because there are no orders,' Boodia Heman, director of the Ever Unison Garments factory, said in a recent interview. 'The American buyer is not coming to Lesotho to buy.' Actually, the problem is not so much the buyers from America. It is the American dollar, and its headlong plunge in value. Three years ago, Lesotho's garment factories had to sell only $56 worth of clothes to stores in the United States to cover the monthly wage of 650 maloti for a sewing-machine operator. Today, that same salary consumes $109 in sales. When the dollar is worth 8.5 maloti or more, Mr. Heman said, 'we break even and we are satisfied.' Right now, the weak dollar fetches less than 6 maloti. The dollar could not have shrunk at a worse time for southern Africa....

Subject: Re: Beyond Our Interests
From: Terri
To: Emma
Date Posted: Sun, Mar 13, 2005 at 18:14:26 (EST)
Email Address: Not Provided

Message:
We think about a strong dollar a weak dollar and how each would effect us and even our prime trade partners, but we do not think how this might affect smaller countries in Latin America or Africa.

Subject: Risk and Time
From: Emma
To: All
Date Posted: Sun, Mar 13, 2005 at 06:43:56 (EST)
Email Address: Not Provided

Message:
http://homepage.mac.com/j.norstad/finance/risk-and-time.html January 28, 2005 Risk and Time By John Norstad A collection of arguments disputing the ubiquitous popular opinion that the risk of investing in volatile assets like stocks decreases as one's time horizon increases. This is an attempt to make some sense out of a profoundly important and deep issue which all investors should take seriously. We discuss the fallacy of time diversification, the utility theory argument, the inadequacy of using probability of shortfall as a risk measure, an argument based on the theory of option pricing, and the impact of human capital on the problem.

Subject: Short term puts and calls
From: johnny5
To: Emma
Date Posted: Sun, Mar 13, 2005 at 23:29:54 (EST)
Email Address: johnny5@yahoo.com

Message:
OK I have read the page and it seems this person or whoever the originator of the 2 threads this page referenced on diehards was heavily invested in one particular TECH company stock (thier employer I believe) and this was in march 2000 - so johnny5 is gonna take a guess and bet they lost their ass bigtime and wanted to discover how this could have happened. Johnny5 walks away from this page with a bigger brain and thinks why didn't more independent people with LARGE monies in the market buy laddered short term future's contracts against their S&P 500 holdings as PROTECTION for their large monies. Johnny5's grandfather lost his 40 acre farm during the early years of this country because he was not sophisticated enough to understand future's and protection. His crop did bad one year and the old man was wiped out and never recovered. Now johnny5 wonders why these annuities being sold his uncle does not have an extra level of sophistications and on top of investing in mutual funds for growth - invest in futures in case of collapse and really smooth out that potential loss of principle - certainly this is something that should have dawned on jackson natiional life, prudential, and raymond james. Johnny5 is going to ask this question on the financial-planner board where they already don't like johnny5 and see what he can come up with.

Subject: Running on Empty afterthoughts
From: johnny5
To: All
Date Posted: Sat, Mar 12, 2005 at 22:52:22 (EST)
Email Address: johnny5@yahoo.com

Message:
Did anyone else get to watch it? Some more thoughts, the panelists agreed that rubin had military budgets he could cut to get the deficit in order - not gonna happen in this new age of terrorism, also one audience member said we had unused human capital in people that were not college educated - just smarten them up and we will get richer - and they shot him down because they said the scientists are from abroad now much more than here in the USA and that the smart cheap engineers of china and india are taking over. One of the audience was from germany and it was like he had no clue that his demographic and entitlement problems back home in europe was MUCH worse than here in America - even though they are really bad here. This surprised me as I think all the people in the room were educated and older economists - I even recognized the guy from the annenberg/CPB series on economics that I watch on PBS a lot - if they are still so unclear to the real problems facing us - how can you blame the general populace. Even Rubin said smart economists he knew that were invested in the market admitted the titanic will sink soon, but they didn't know when and wouldn't limit thier exposure to the markets even though they were certain a hard landing was in the nearer future - this is not prudent according to warren I think - you don't ride it to the top - you get out when you see a problem. Rubin seemed to give the impression these people should know better and should get thier money out of the greater fool runup but weren't doing so. Does anyone that got to see it have any insight to the views presented? They really picked on alan greenspan bad - he couldn't finish his cheesecake without an insult to make him choke - I can't believe he set himself up for that abuse.

Subject: Re: Running on Empty afterthoughts
From: johnny5
To: johnny5
Date Posted: Sat, Mar 12, 2005 at 22:58:28 (EST)
Email Address: johnny5@yahoo.com

Message:
Oh and before I forget most of them seemed to agree benefit reduction is going to have to be the majority of the fix - whatever happens with taxes - so I guess me and all the other people under 50 can expect much more benefit reduction over the next 10-20 years and if stocks don't do so hot we won't make up for it before we retire. I see the current poor retirees here in the trailer park and don't want to live poorer than them and they retired in good bull years with lots of bennys :(

Subject: National Index Returns
From: Terri
To: All
Date Posted: Sat, Mar 12, 2005 at 17:46:40 (EST)
Email Address: Not Provided

Message:
http://www.msci.com/equity/index2.html National Index Returns [Dollars] 12/31/04 - 3/11/05 Australia 7.1 Canada 4.9 Denmark 7.5 France 5.0 Germany 1.5 Hong Kong -2.2 Japan 1.6 Netherlands 7.3 Norway 9.9 Sweden 2.9 Switzerland 4.3 UK 4.6

Subject: Re: National Index Returns
From: johnny5
To: Terri
Date Posted: Sat, Mar 12, 2005 at 18:03:47 (EST)
Email Address: johnny5@yahoo.com

Message:
Terri what percentage of your asset allocation is domestic versus international stocks and bonds? Are you holding any cash or fully invested in the markets?

Subject: Allocation
From: Terri
To: johnny5
Date Posted: Sat, Mar 12, 2005 at 18:36:24 (EST)
Email Address: Not Provided

Message:
Rather than hold cash, I use a Vanguard bond fund. Since I always have a bond fund holding, there may be capital gains or losses but over time the interest earned will be more than in a money market fund and the added interest in a difficult bond market will make up in time for a decline in share price. The GNMA Fund is a conservative holding at a time when long term rates may finally rise. Though I expect little from bonds, the ratio I hold has been reduced to about 60% stock fund and 40% bond fund from 75% to 25%. For stock allocation I lean to value and about 50% domestic to 50% international.

Subject: Sounds great
From: johnny5
To: Terri
Date Posted: Sat, Mar 12, 2005 at 21:20:31 (EST)
Email Address: johnny5@yahoo.com

Message:
Sounds like a very smart strategy, everything I am reading says you want value stocks long term and want to diversify internationally. This is what warren is doing on a macro scale. Value companies and international currencies. Secretary Peterson recommended in his running on empty talk the best strategy for these privatized accounts being proposed was to buy international bond index funds to keep the administrative costs down. If I could just get my uncle to be comfortable with using the internet for his money - but he is very old fashioned and wants a person he can see face to face. He does not even know how to spell computer and talking to him about buying international value i-shares would be like teaching a pig to fly.

Subject: Re: Sounds great
From: Terri
To: johnny5
Date Posted: Sat, Mar 12, 2005 at 21:34:40 (EST)
Email Address: Not Provided

Message:
Possibly your uncle can try calling Vanguard. The representatives are knowledgeable and helpful and patient. Though the representatives are not advisors, they know the company thoroughly.

Subject: Re: Sounds great
From: johnny5
To: Terri
Date Posted: Sat, Mar 12, 2005 at 23:03:45 (EST)
Email Address: johnny5@yahoo.com

Message:
Thanks for the suggestions Terri - I am trying to get him into vanguard since he has a lot of money. He has called and talked to several people at vanguard, gotten their packets and prospectuses and asset management information - he just doesn't feel comfortable in this new age of data - about 2 years ago someone got his data and opened credit cards in his name and lived la vida loca in michigan for about six months. He still has bad credit data on his file because of that which has presented problems to him in dealing with realtors and banks and everytime that commercial comes on with some old man talking with a young womans voice how she bought all this stuff on his stolen identity makes him preturbed. He doesn't like our new society much and hates all the technology and is easily confused and that was true before the stroke.

Subject: Re: Sounds great
From: Jennifer
To: johnny5
Date Posted: Sun, Mar 13, 2005 at 08:45:34 (EST)
Email Address: Not Provided

Message:
Please then use the most conservative possible investment only. The most conservative of mutual funds, like the Wellesley Fund. The most conservative.

Subject: Re: Sounds great
From: Jennifer
To: Jennifer
Date Posted: Sun, Mar 13, 2005 at 14:02:12 (EST)
Email Address: Not Provided

Message:
The more conservative the better. Your uncle could be completely secure with the 60% bond to 40% stock mix of Wellesley Fund. A 70% bond index to 30% stock index mix would make sense as well. Vanguard will be completely secure, and no other company would be needed.

Subject: Slashdot.org
From: johnny5
To: Jennifer
Date Posted: Sun, Mar 13, 2005 at 15:43:27 (EST)
Email Address: johnny5@yahoo.com

Message:
Thank you for the comments Jennifer. I guess what we have here is fundamental difference in the belief of the information age and security. Say my uncle does have 70% bond and 30% stock or even 100% cash in a bank of america checking account and a good russian hacker breaks into their database - steals his account info - or simply compromises his password and gets into his vanguard account. Bank of america just admitted to losing a huge data file with credit cards and account info of even US senators - where they had their money electronically - it made no difference - their security was compromised and bank of america had a huge stolen identity crisis that I feel the press did not properly report. Harvard I think was just broken into by applicants who were able to find out early wether they were accepted or not. Remember Jennifer - this is just the stuff we are hearing about, I assure you there are many things you are not. I worked at IBM for several years, my degree is in computer science and there is a lot of funny business out here on the digital frontier that many people are not aware of. We have a credit system and electronic money and underground markets that literally are anyone's guess at this point - the amount of subterfuge and funny business is increasing more and more. This did not worry me much until I had several friends and my uncle and my mother all victims of this new information age mostly through identity theft - a few of my friends bankrupted from this problem and through no fault of thier own. Jennifer I am reading on the morningstar boards in the fidelity forums how people are having 100K magically deposited in their 401K accounts and it taking fidelity days and weeks to discover their error - I have had a similar problem or should I say fortune (hehe) at an e-trade account a couple of years ago. I guess we should just disregard one of the largest investment institutions in existance making errors as silly and not concern ourself with it. If a fiat system based on paper was a fear of thomas jefferson - I wonder how these digital dollars make him turn in his grave. I knew several hackers that lived better than millionaires from being cyber cowboys on this digital frontier. In the old days to put $100K of gold coins accidentally in the wrong person's safe required an error of much greater stupidity than messing up on an electronic fidelity account. The system we have built in the virtual world may be beyond the competency of the general investing public and their guardians and distort things horrendously. But it seems reality and fundamentals are not key to investing, what is key is market perception, and if the world is about to be struck by a comet but the people on the planet are living la vida loca - it is foolish to try and go against the flow. So if the madding crowd jumps into vanguard and fidelity and does not concern themselves with 100K account errors - then it is prudent to adopt the mass psychology. The markets can remain irrational longer than you can remain solvent. I guess I will keep drinking from the punchbowl until all the juice is gone. My uncle sadly does not embrace this concept after his personal experience with identity theft and it has been a challenge to even get him to invest with a local person - much less someone over the internet. I am going to spend more time with him and try to convince him that market perception is all that really matters and fact and fundamentals as he perceives them are irrelevant when everyone else thinks the opposite.

Subject: Fidelity Competence
From: David E..
To: johnny5
Date Posted: Sun, Mar 13, 2005 at 18:52:32 (EST)
Email Address: Not Provided

Message:
Our Human Resources department needed to coordinate with Fidelity. It was a pain in the butt because they needed their stuff in 80 byte records. That's right, IBM card size. I am sure they weren't using cards, just reluctant to spend money on their data files and programs. So the Fidelity tradition continues and now their systems are so poorly designed that data errors take days and weeks to analyze. David E...

Subject: Human Capital
From: johnny5
To: David E..
Date Posted: Sun, Mar 13, 2005 at 23:45:09 (EST)
Email Address: johnny5@yahoo.com

Message:
It was my experience that the sophistication of new younger blood coming in on top of the old fortran programmers was very lacking in many companies. So many systems and so much data required a complete overhaul. They were learning new languages and hardware, but their fundamental education in algorithms and data types was depressing, they sure could code a nice webpage in java though. For the most part I am very impressed with the progress we have made, but when I hear things like this about major financial institutions I have nightmares of digital systemic risk. http://math.hws.edu/javanotes/c9/s1.html In 1985, a computer at the Bank of New York started destroying records of on-going security transactions because of an error in a program. It took less than 24 hours to fix the program, but by that time, the bank was out $5,000,000 in overnight interest payments on funds that it had to borrow to cover the problem.

Subject: There is no Worry
From: Jennifer
To: johnny5
Date Posted: Sun, Mar 13, 2005 at 18:34:55 (EST)
Email Address: Not Provided

Message:
There is no need to deal with Vanguard by Internet. All business can easily be done over the phone. There is insurance carried, and funds such as the GNMA or Treasury Funds are backed by Congress. I do not worry about Vanguard accounts for a moment.

Subject: Re: There is no Worry
From: Jennifer
To: Jennifer
Date Posted: Sun, Mar 13, 2005 at 18:46:05 (EST)
Email Address: Not Provided

Message:
There is no need of course to ever invest, but I prefer to and I am perfectly secure.

Subject: Re: There is no Worry
From: johnny5
To: Jennifer
Date Posted: Mon, Mar 14, 2005 at 00:10:23 (EST)
Email Address: johnny5@yahoo.com

Message:
This is the number 1 problem cited by the FTC, 50 billion estimated lost last year, all these hungry hackers add liquidity to the system that is not accounted for. When hard times fall these hungry hackers are not gonna turn in db coopers money bag. It didn't worry me much Jennifer until personal friends were hit hard by this theft. Now they have and it has crippled their financial lives. A few of them still invest, they buy collector coins that they put in a safe deposit box at the bank or they buy land and real estate. Identity Theft: Prevalence and Cost Appear to be Growing GAO-02-363 March 1, 2002 PDF Identity theft involves 'stealing' another person's personal identifying information, such as their Social Security number (SSN), date of birth, or mother's maiden name, and using that information to fraudulently establish credit, run up debt, or take over existing financial accounts. Precise, statistical measurement of identity theft trends is difficult for several reasons. Federal law enforcement agencies lack information systems to track identity theft cases. Also, identity theft is almost always a component of one or more white-collar or financial crimes, such as bank fraud, credit card or access device fraud, or the use of counterfeit financial instruments. Data sources, such as consumer complaints and hotline allegations, can be used as proxies for gauging the prevalence of identity theft. Law enforcement investigations and prosecutions of bank and credit card fraud also provide data. GAO found no comprehensive estimates of the cost of identity theft to the financial services industry. Some data on identity theft-related losses indicated increasing costs. Other data, such as staffing of the fraud departments of banks and consumer reporting agencies, presented a mixed or incomplete picture. Identity theft can cause victims severe emotional and economic harm, including bounced checks, loan denials, and debt collection harassment. The federal criminal justice system incurs costs associated with investigations, prosecutions, incarceration, and community supervision.

Subject: Gauging the Economy by Interest Rates
From: Terri
To: All
Date Posted: Sat, Mar 12, 2005 at 17:41:22 (EST)
Email Address: Not Provided

Message:
Robert Rubin watched the bond market rather than the stock market to gauge the health of the economy. I have done the same. The bond market has served well as a gauge for 25 years. There is an argument however that the bond market is no longer a proper gauge. Suppose long term interest rates are artificially low because international central banks are buying longer term bonds to support the dollar. Also, suppose speculators are borrowing short term funds and lending long term funds to play the spread in rates. This could be keeping long term rates lower than might be expected. This is the argument. I can not judge the correctness.

Subject: Running on Empty watch on web tonight
From: johnny5
To: All
Date Posted: Sat, Mar 12, 2005 at 16:29:03 (EST)
Email Address: johnny5@yahoo.com

Message:
Tonight on cspan3 at 6:54pm tonight - you can watch this over the web if you don't have cable. Greenspan is there with rubin and many other economists taking a lot of abuse - would appreciate the pkarchive comments on this 'alarmist' Forum Running on Empty Institute for International Economics Washington, District of Columbia (United States) ID: 183041 - 08/09/2004 - 1:41 - $29.95 Bergsten, C. Fred, Director, Institute for International Economics Rubin, Robert E., Secretary (1995-99), Department of the Treasury Peterson, Peter G., Chairman, Blackstone Group Mr. Peterson talked about his book Running On Empty: How The Democratic and Republican Parties Are Bankrupting Our Future and What Americans Can Do About It, published by Farrar, Straus and Giroux. Mr. Peterson argued that America is headed towards an economic meltdown because of the large deficit the country runs every year. He asserted that big tax cuts and heavy spending have contributed to the massive debt the country currently has and warned that if measures are not taken soon the economy will suffer dramatically. Following Mr. Peterson's remarks he joined Robert Rubin and C. Fred Bergsten in a panel discussion. Audience questions were also answered. At 5:11 pm you can watch this: http://inside.c-spanarchives.org:8080/cspan/cspan.csp?command=dprogram&record=164557288 Forum The Cheating of America Borders Books & Music Washington, District of Columbia (United States) ID: 163845 - 04/03/2001 - 0:52 - $29.95 Lewis, Charles, Executive Director, Center for Public Integrity Allison, Bill, Author Mr. Lewis and Mr. Allison talked about their book The Cheating of America: How Tax Avoidance and Evasion by the Super Rich Are Costing the Country Billions, and What You Can Do About It, published by William Morrow & Co. The book asserts that the federal treasury loses billions of dollars each year as a result of unpaid taxes. The authors developed statistics about the extent of the problem of tax evasion and what they feel is an inadequate response by the Internal Revenue Service. After the presentation the authors answered questions from members of the audience.

Subject: Possessions and Status
From: Emma
To: All
Date Posted: Sat, Mar 12, 2005 at 14:12:51 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/12/books/12happ.html?adxnnl=1&adxnnlx=1110654025-KTdB6mldRo4vupVUtSNvcQ&pagewanted=all&position= In New Book, Professor Sees a 'Mania' in U.S. for Possessions and Status By IRENE LACHER LOS ANGELES - Aldous Huxley long ago warned of a future in which love was beside the point and happiness a simple matter of consuming mass-produced goods and plenty of soma, a drug engineered for pleasure. More than 70 years later, Dr. Peter C. Whybrow, the director of the Semel Institute of Neuroscience and Human Behavior at the University of California, Los Angeles, has seen the future, and the society he describes isn't all that distant from Huxley's brave new world, although the soma, it seems, is in ourselves. In his new book, 'American Mania: When More Is Not Enough' (W. W. Norton & Company), Dr. Whybrow argues that in the age of globalization, Americans are addictively driven by the brain's pleasure centers to live turbocharged lives in pursuit of status and possessions at the expense of the only things that can truly make us happy: relationships with other people. 'In our compulsive drive for more,' writes Dr. Whybrow, 64, a professor of psychiatry and bio-behavioral science, 'we are making ourselves sick.' His book is part of a new critical genre that likens society to a mental patient. The prognosis is grim. In 'American Mania,' he argues that the country is on the downswing of a manic episode set off by the Internet bubble of the 1990's. 'It's a metaphor that helps guide us,' he said, perched on a chair in the study of his rambling high-rise apartment near U.C.L.A. 'I think we've shot through happiness as one does in hypomania and come out the other end, and we're not quite sure where we are. 'In fact, I think happiness lies somewhere behind us. This frenzy we've adopted in search of what we hope is happiness and perfection is in fact a distraction, like mania is a distraction.' 'American Mania' is his fourth book for the general public about meaty psychiatric matters. An expert in manic depression and the endocrinology of the central nervous system, he has dissected depression and its relatives ('A Mood Apart' and 'Mood Disorders') as well as the winter blahs ('The Hibernation Response'). Educating the public has been an abiding concern in a long career that began with training in psychiatry and endocrinology in his native London and in North Carolina. In 1970, Dr. Whybrow became chairman of the psychiatry department at Dartmouth Medical School and at the University of Pennsylvania. He moved to U.C.L.A. in 1997. While the Gordon Gekkos of the world have long had their critics, Dr. Whybrow sees the Enrons and the Worldcoms - the mess left by unfettered capitalism - not as a moral problem, but as a behavioral one. 'The outbreak of greed we've seen, especially in business, is partly a function of the changing contingencies we've given businessmen,' he said. 'If I say to you, 'You can make yourself extremely rich by holding up the share price until such time that you cash out your shares, which are coming due in another six months,' it takes an incredibly unusual person who'll say: 'The share price is going down? I'm afraid I lost that one.' There is an offer of affluence there which the person cannot refuse. They don't need that extra money, but they want that extra money.' People are biologically wired to want it, he contends. We seek more than we need because consumption activates the neurotransmitter dopamine, which rewards us with pleasure, traveling along the same brain pathways as do drugs like caffeine and cocaine. Historically, he says, built-in social brakes reined in our acquisitive instincts. In the capitalist utopia envisioned by Adam Smith in the 18th century, self-interest was tempered by the competing demands of the marketplace and community. But with globalization, the idea of doing business with neighbors one must face the next day is a quaint memory, and all bets are off. Other countries are prey to the same forces, Dr. Whybrow says, but the problem is worse here because we are a nation of immigrants, genetically self-selected to favor individualism and novelty. Americans are competitive, restless and driven to succeed. And we have succeeded.

Subject: Possessions and Status - 1
From: Emma
To: Emma
Date Posted: Sat, Mar 12, 2005 at 14:13:14 (EST)
Email Address: Not Provided

Message:
But the paradox of prosperity is that we are too busy to enjoy it. And the competitiveness that gooses the economy, coupled with the decline of social constraints, has conspired to make the rich much richer, he asserts, leaving most of the country behind while government safety nets get skimpier. Dr. Whybrow cites United States government statistics that are sobering. Thirty percent of the population is anxious, double the percentage of a decade ago. Depression is rising too, especially among people born after 1966, with 10 percent more reporting depression than did people born before that year. With the rise of the information age in the 1990's, when the global marketplace began staying open 24 hours a day, American mania reached full flower, Dr. Whybrow said. And now that the nation has retreated from that manic peak, we should stop and survey the damage. 'Neurobiology teaches us that we're reward-driven creatures on the one side, which is great,' he said. 'It's a fun part of life. But we also love each other and we want to be tied together in a social context. So if you know that, why aren't we thinking about a civil society that looks at both sides of the balance rather than just fostering individualism? Because fostering individualism will be great for us and it will last a little bit longer, but I believe it's a powerful negative influence upon this country and it's not what was originally intended. Should we be thinking about whether this is the society we had in mind when we started this experiment 200 years ago or are we perhaps moving too fast for our own good?' Dr. Whybrow's analysis of the mania afflicting contemporary society has been praised as acute, but he has been faulted for failing to prescribe any political or economic action as an antidote. 'Whybrow does offer an interesting version of the social and cultural contradictions of capitalism,' Michael Roth, president of the California College of the Arts, wrote in a review last month in The San Francisco Chronicle, 'but it is one that leaves us without much sense of how we might reconstruct the social and political system to create more meaningful work and a more equitable distribution of wealth and of hope.' But for Dr. Whybrow, with globalization here to stay, the solution lies with the individual: It's up to each of us to ruminate on our lives and slow down enough so that we can limit our appetites and find a better balance between work and family. He suggested following the example of a man his friend saw running along the beach: 'A high tide washed all the little fish onto the beach where they were all gasping for breath. So here's this fellow scooping up each fish and throwing them back into the sea, and my friend goes up to the fellow and says: 'This is a fruitless task. It's not going to make any difference.' And the fellow picks up a fish, throws it into the sea and says, 'To this one it does.' '

Subject: The solution of the past
From: johnny5
To: Emma
Date Posted: Sat, Mar 12, 2005 at 15:56:27 (EST)
Email Address: johnny5@yahoo.com

Message:
In the past the tower of babel had to be disperesed - we returned to small usufruct socieities where the right hand and the left hand knew what the other was doing. People were not so detached from each others needs and wants and suffering. This happened in rome as the state gave way to large farmers and land owners and those to even smaller tribes as rome fell. The head died. In the old days the rich lived just a few blocks from the poorest - now the poorest are nations away killing each other over a breadcrumb and the rich are arguing over thier spot in line at the $500 dollar restaurant in NY. The classes are becoming too divided once again perhaps. Thomas Jefferson- Self-interest, or rather self-love, or egoism, has been more plausibly substituted as the basis of morality. But I consider our relations with others as constituting the boundaries of morality. With ourselves, we stand on the ground of identity, not of relation, which last, requiring two subjects, excludes self-love confined to a single one. To ourselves, in strict language, we can owe no duties, obligation requiring also two parties. Self-love, therefore, is no part of morality. Indeed, it is exactly its counterpart. Letter to Thomas Law (1814)

Subject: Monetary Policy
From: Emma
To: All
Date Posted: Sat, Mar 12, 2005 at 13:49:27 (EST)
Email Address: Not Provided

Message:
Increasing international trade, especially with developing nations, and productivity advance have helped limit inflation. Federal Reserve policy however has certainly been effective at limiting inflation and protecting growth. The Fed has been forward looking since the days of Paul Volker, and continues to be, for that is the only way they can fill the mandate for a balance between price moderation and employment growth. As to the price indexes, neither producer nor consumer indexes show we have an inflation problem whether the overall or core data are used. Developing economic indexes is very complex, and there have been and will be modifications, but I find no reason to object to the data. The evidence of Fed effectiveness resides in gradually declining long term bond yields since 1981.

Subject: BABY-SITTING THE ECONOMY
From: Terri
To: All
Date Posted: Sat, Mar 12, 2005 at 11:42:47 (EST)
Email Address: Not Provided

Message:
http://www.pkarchive.org/ BABY-SITTING THE ECONOMY By Paul Krugman Twenty years ago I read a story that changed my life. I think about that story often; it helps me to stay calm in the face of crisis, to remain hopeful in times of depression, and to resist the pull of fatalism and pessimism. At this gloomy moment, when Asia's woes seem to threaten the world economy as a whole, the lessons of that inspirational tale are more important than ever. The story is told in an article titled 'Monetary Theory and the Great Capitol Hill Baby-Sitting Co-op Crisis.' Joan and Richard Sweeney published it in the Journal of Money, Credit, and Banking in 1978. I've used their story in two of my books, Peddling Prosperity and The Accidental Theorist, but it bears retelling, this time with an Asian twist. The Sweeneys tell the story of--you guessed it--a baby-sitting co-op, one to which they belonged in the early 1970s. Such co-ops are quite common: A group of people (in this case about 150 young couples with congressional connections) agrees to baby-sit for one another, obviating the need for cash payments to adolescents. It's a mutually beneficial arrangement: A couple that already has children around may find that watching another couple's kids for an evening is not that much of an additional burden, certainly compared with the benefit of receiving the same service some other evening. But there must be a system for making sure each couple does its fair share. The Capitol Hill co-op adopted one fairly natural solution. It issued scrip--pieces of paper equivalent to one hour of baby-sitting time. Baby sitters would receive the appropriate number of coupons directly from the baby sittees. This made the system self-enforcing: Over time, each couple would automatically do as much baby-sitting as it received in return. As long as the people were reliable--and these young professionals certainly were--what could go wrong? Well, it turned out that there was a small technical problem. Think about the coupon holdings of a typical couple. During periods when it had few occasions to go out, a couple would probably try to build up a reserve--then run that reserve down when the occasions arose. There would be an averaging out of these demands. One couple would be going out when another was staying at home. But since many couples would be holding reserves of coupons at any given time, the co-op needed to have a fairly large amount of scrip in circulation. Now what happened in the Sweeneys' co-op was that, for complicated reasons involving the collection and use of dues (paid in scrip), the number of coupons in circulation became quite low. As a result, most couples were anxious to add to their reserves by baby-sitting, reluctant to run them down by going out. But one couple's decision to go out was another's chance to baby-sit; so it became difficult to earn coupons. Knowing this, couples became even more reluctant to use their reserves except on special occasions, reducing baby-sitting opportunities still further. In short, the co-op had fallen into a recession. Since most of the co-op's members were lawyers, it was difficult to convince them the problem was monetary. They tried to legislate recovery--passing a rule requiring each couple to go out at least twice a month. But eventually the economists prevailed. More coupons were issued, couples became more willing to go out, opportunities to baby-sit multiplied, and everyone was happy. Eventually, of course, the co-op issued too much scrip, leading to different problems ... If you think this is a silly story, a waste of your time, shame on you. What the Capitol Hill Baby-Sitting Co-op experienced was a real recession. Its story tells you more about what economic slumps are and why they happen than you will get from reading 500 pages of William Greider and a year's worth of Wall Street Journal editorials. And if you are willing to really wrap your mind around the co-op's story, to play with it and draw out its implications, it will change the way you think about the world. For example, suppose that the U.S. stock market was to crash, threatening to undermine consumer confidence. Would this inevitably mean a disastrous recession? Think of it this way: When consumer confidence declines, it is as if, for some reason, the typical member of the co-op had become less willing to go out, more anxious to accumulate coupons for a rainy day. This could indeed lead to a slump--but need not if the management were alert and responded by simply issuing more coupons. That is exactly what our head coupon issuer Alan Greenspan did in 1987--and what I believe he would do again. So as I said at the beginning, the story of the baby-sitting co-op helps me to remain calm in the face of crisis. Or suppose Greenspan did not respond quickly enough and that the economy did indeed fall into a slump. Don't panic. Even if the head coupon issuer has fallen temporarily behind the curve, he can still ordinarily turn the situation around by issuing more coupons--that is, with a vigorous monetary expansion like the ones that ended the recessions of 1981-82 and 1990-91. So as I said, the story of the baby-sitting co-op helps me remain hopeful in times of depression. Above all, the story of the co-op tells you that economic slumps are not punishments for our sins, pains that we are fated to suffer. The Capitol Hill co-op did not get into trouble because its members were bad, inefficient baby sitters; its troubles did not reveal the fundamental flaws of 'Capitol Hill values' or 'crony baby-sittingism.' It had a technical problem--too many people chasing too little scrip--which could be, and was, solved with a little clear thinking. And so, as I said, the co-op's story helps me to resist the pull of fatalism and pessimism. But if it's all so easy, how can a large part of the world be in the mess it's in? How, for example, can Japan be stuck in a seemingly intractable slump--one that it does not seem able to get out of simply by printing coupons? Well, if we extend the co-op's story a little bit, it is not hard to generate something that looks a lot like Japan's problems--and to see the outline of a solution. First, we have to imagine a co-op the members of which realized there was an unnecessary inconvenience in their system. There would be occasions when a couple found itself needing to go out several times in a row, which would cause it to run out of coupons--and therefore be unable to get its babies sat--even though it was entirely willing to do lots of compensatory baby-sitting at a later date. To resolve this problem, the co-op allowed members to borrow extra coupons from the management in times of need--repaying with the coupons received from subsequent baby-sitting. To prevent members from abusing this privilege, however, the management would probably need to impose some penalty--requiring borrowers to repay more coupons than they borrowed. Under this new system, couples would hold smaller reserves of coupons than before, knowing they could borrow more if necessary. The co-op's officers would, however, have acquired a new tool of management. If members of the co-op reported it was easy to find baby sitters and hard to find opportunities to baby-sit, the terms under which members could borrow coupons could be made more favorable, encouraging more people to go out. If baby sitters were scarce, those terms could be worsened, encouraging people to go out less. In other words, this more sophisticated co-op would have a central bank that could stimulate a depressed economy by reducing the interest rate and cool off an overheated one by raising it. But what about Japan--where the economy slumps despite interest rates having fallen almost to zero? Has the baby-sitting metaphor finally found a situation it cannot handle? Well, imagine there is a seasonality in the demand and supply for baby-sitting. During the winter, when it's cold and dark, couples don't want to go out much but are quite willing to stay home and look after other people's children--thereby accumulating points they can use on balmy summer evenings. If this seasonality isn't too pronounced, the co-op could still keep the supply and demand for baby-sitting in balance by charging low interest rates in the winter months, higher rates in the summer. But suppose that the seasonality is very strong indeed. Then in the winter, even at a zero interest rate, there will be more couples seeking opportunities to baby-sit than there are couples going out, which will mean that baby-sitting opportunities will be hard to find, which means that couples seeking to build up reserves for summer fun will be even less willing to use those points in the winter, meaning even fewer opportunities to baby-sit ... and the co-op will slide into a recession even at a zero interest rate. And this is the winter of Japan's discontent. Perhaps because of its aging population, perhaps also because of a general nervousness about the future, the Japanese public does not appear willing to spend enough to use the economy's capacity, even at a zero interest rate. Japan, say the economists, has fallen into the dread 'liquidity trap.' Well, what you have just read is an infantile explanation of what a liquidity trap is and how it can happen. And once you understand that this is what has gone wrong, the answer to Japan's problems is, of course, quite obvious. So the story of the baby-sitting co-op is not a mere amusement. If people would only take it seriously--if they could only understand that when great economic issues are at stake, whimsical parables are not a waste of time but the key to enlightenment--it is a story that could save the world.

Subject: Who will watch warrens Baby?
From: johnny5
To: Terri
Date Posted: Sat, Mar 12, 2005 at 15:24:20 (EST)
Email Address: johnny5@yahoo.com

Message:
Warren wanted his baby sat - he looked at all the scripps - the futures on the scripps - the 30:1 leverage - he saw that when brittney came to town everyone was going to go out and no one would be home to watch the babies - so people rushed to cash in thier futures and get delivery - or cash in thier scripss - and no one would take a scripp because everyone was going to see brittney - and so the system collapsed and warren had no one to watch his baby - everyone had to stay home and watch thier own baby cause no one else was taking scripps anymore and brittney went broke because no one came to her concert - poor britney :(

Subject: Africa's Garment Factories
From: Emma
To: All
Date Posted: Sat, Mar 12, 2005 at 09:53:54 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/12/business/worldbusiness/12africa.html?ei=5070&en=7abbed303d42e158&ex=1111294800&pagewanted=all&position= Dollar's Fall Silences Africa's Garment Factories By MICHAEL WINES MAPUTSOE, Lesotho - Buy a T-shirt at Wal-Mart, fleece sweats at J. C. Penney or Hanes panties anywhere in the United States, and there's a halfway decent chance that they were stitched together here, in an acre-size garment factory crammed with thousands of frantically clacking sewing machines. Virtually its entire output, 25,000 items of clothing daily, is America-bound. These days, that is a disaster. 'Two thousand people work here, and unfortunately last week I had to retrench 500 people, because there are no orders,' Boodia Heman, director of the Ever Unison Garments factory, said in a recent interview. 'The American buyer is not coming to Lesotho to buy.' Actually, the problem is not so much the buyers from America. It is the American dollar, and its headlong plunge in value. Three years ago, Lesotho's garment factories had to sell only $56 worth of clothes to stores in the United States to cover the monthly wage of 650 maloti for a sewing-machine operator. Today, that same salary consumes $109 in sales. When the dollar is worth 8.5 maloti or more, Mr. Heman said, 'we break even and we are satisfied.' Right now, the weak dollar fetches less than 6 maloti. The dollar could not have shrunk at a worse time for southern Africa. In January, China's powerful apparel industry was freed from the so-called multifiber arrangement, which for decades set nation-by-nation quotas and capped its garment exports to the developed world. Now China, which keeps its currency tightly pegged to the dollar, has begun to pursue the American market much more avidly. American shoppers may register the dollar's fall, if at all, as an irritating uptick in the prices of imported goods. In tiny, dirt-poor Lesotho, it is more than an irritation; it is potentially fatal. Since December, 6 of the nation's 50 clothes factories have shut down, unable to match the prices of foreign competitors and still make a profit. That has eliminated 5,800 of the 50,000 garment-making jobs here. Layoffs have claimed at least 6,000 more. Garment makers who might otherwise decide to ride out the dollar's slide 'are starting to realize that they're losing their shirts,' said Mark Bennett, who advises the government on textile issues for the nonprofit ComMark Trust, based in South Africa, which aims to foster development. The government has stepped in, seeking to resurrect three of the closed factories and offering incentives for others. And for good reason: garment makers represent more than 9 in 10 manufacturing jobs in this impoverished nation. Those efforts largely depend, however, on the vagaries of the dollar. Garment makers here, most of them foreign-owned, say that if the dollar drops another 20 percent against the South African rand, as some economists predict, a new wave of factory closings will be inevitable. Across southern Africa, industries that depend on American customers or compete with American producers are feeling the effects of the dollar's fall. South Africa, which surrounds Lesotho, has lost an estimated 30,000 textile jobs since 2002. In neighboring Swaziland, nearly three in four textile factories say they have no firm orders beyond March.

Subject: Africa's Garment Factories - 1
From: Emma
To: Emma
Date Posted: Sat, Mar 12, 2005 at 09:55:40 (EST)
Email Address: Not Provided

Message:
South Africa's fabled gold-mining industry lost 11,000 jobs from January 2003 to June 2004, in part because income from its dollar-denominated exports fell sharply. Botswana's budget tipped from a surplus to a $325 million deficit last year as its dollar income from diamond sales was diluted by a 10 percent rise in its currency, the pula. All these nations, and nearby Namibia, share a common problem: their currencies are pegged one-to-one to South Africa's rand, which has recorded a big rise against the dollar (Botswana's pula is pegged to a basket of currencies dominated by the rand.) The euro has risen 52 percent against the dollar since February 2002, but the rand, driven by a boom in commodities like gold, has nearly doubled in value. 'The weak dollar is bad economic news for countries that are not on a dollar-parity system,' said Anthony Twine, a senior economist at Econometrix, a Johannesburg consultant. In places like Lesotho, a nation of 1.8 million that is already wrestling with AIDS and drought, the news is perhaps most wrenching. Lesotho's garment industry - and therefore its manufacturing base - rests on the faltering premise that Americans will buy all the clothes that it can sew. That premise originates in a law, the African Growth and Opportunity Act, which Congress enacted in 2000 in an effort to help sub-Saharan nations lift themselves from poverty. Nations meeting the law's criteria, which range from political pluralism to support for free markets, are allowed to export any of 1,600 products to the United States duty-free. With a progressive government and extremely low tax rates, Lesotho was one of the biggest winners: clothing exports to the United States ballooned to $500 million last year, from just $100 million in 2001 - nearly a third of all clothing exports by the 37 nations given duty-free status. The textile boom was a salvation to Lesotho, which lost 60,000 jobs in the 1990's as South Africa reduced migrant labor at its gold and coal mines. Textile factory employment rose from 20,000 jobs before the law to more than 50,000 last year. When the dollar was more robust, some companies from Taiwan built projects - modern, efficient factories and a mill to produce denim fabric - that is vital to the industry's long-term health. By late 2007, garment makers must make or buy their fabrics in sub-Saharan Africa or lose their right to ship goods duty-free to the United States. That denim mill probably assures that Lesotho's blue-jeans makers, who turn out 26 million pairs a year, will survive in some form. But the dollar's slide has damped prospects for a knitted-fabric mill. In Maputsoe, a dog-eared settlement of about 10,000, two of nine garment factories closed in December and January, leaving their workers stunned and, often, penniless. Itumeleng Khasane was in her fourth month of sewing Old Navy T-shirts at TW Garments in Maputsoe when she went to collect her paycheck on Dec. 17 during the factory's Christmas break. At her last payday in mid-November, it was clear that the factory was struggling: she received only about $54, half the wages due for a month's work. But when she arrived at the factory that day, she said recently, nobody was there. 'We didn't get our money,' she said. 'We didn't get a salary; we didn't get a holiday bonus; we didn't get a termination payment.' More recently, Ms. Khasane was standing in a crowd of women, along with a few men, outside Johnson Work Wear, a uniform maker that hired a handful of workers in January. It was, they said, their only prospect for another job. Many had arrived at dawn, carrying umbrellas to ward off the midday sun. At 21, with a seventh-grade education, Ms. Khasane had been the sole wage-earner for a family of five - two sisters, a brother and her jobless father. Her mother died in 2002 at age 38. The family gets by now on handouts. The second Maputsoe factory, Vogue Landmark Garments, shut down even more unexpectedly; workers say there was no hint of financial problems until they returned after the holiday break on Jan. 12 and found the doors locked. Masello Motsosi, a 27-year-old sewing machine repairman, was supporting his wife and two boys, his parents and his in-laws on his $135-a-month salary. He used his last savings in January to pay the boys' school fees. 'Now, there's nothing,' he said. Lesotho garment factories have closed before, and been snapped up quickly by other producers. But with the American market increasingly unprofitable, few expect that to happen this time. Nor is it easy to diversify away from United States buyers: Canada and Australia, among others, offer American-style tariff breaks, but their markets are too small to replace American orders. And the Chinese, with lower shipping costs and quicker turnaround times, loom ever larger as a competitor. In response, the nation's biggest garment makers are slashing costs - and praying for an exchange-rate turnaround. 'Denim isn't profitable right now,' said Oliver Li, the manager of the Global Textiles factory owned by the Nien Hsing Textile Company. It is one of three factories that still churn out up to 70,000 pairs of jeans daily. 'It's not only the appreciation of the rand, but other things like electricity and water,' Mr. Li said. 'They're all more expensive than before because we pay for them with our dollar income.' At its three factories in Maseru, the Taiwan-based Nien Hsing has dimmed lights, switched from cellphones to two-way radios for communications between plants and even told its staff to carpool to save gasoline. Not long ago, Lesotho government officials and textile factory managers blitzed Congress, the White House, major retailers in New York and San Francisco and a trade show in Las Vegas with a well-honed argument: Lesotho may not always be cheapest, but it is dependable, honest and squeaky clean on human rights and sweatshop issues that have embarrassed American retailers like Nike in the past. That, the nation's trade minister, Mpho Malie, says bluntly, may not always be true of certain competitors. 'We're not only talking about the quality of garments, but also the quality of workers' conditions on the factory floors - labor issues, environmental issues,' he said in an interview in his Maseru office. 'Because in the future, a client will come to you and say, Where are you sourcing from, and what are you doing about the welfare of the people you are sourcing from?' That argument seems to have won over some of the more socially conscious garment buyers in the United States, like Levi Strauss and Gap, which have maintained or increased their orders here. Whether it will play with mainstream American retailers for whom price is the bottom line is more problematic. 'As a country, we think that we are doing something right,' Mr. Malie said. 'We're saying that tomorrow, there will be questionable things about China - things that are not only a government question, but that your consumers in the long run are going to question.' He said that when the honeymoon with Chinese suppliers was over, 'those questions will have to be answered.'

Subject: Sector Stock Indexes
From: Terri
To: All
Date Posted: Sat, Mar 12, 2005 at 09:31:24 (EST)
Email Address: Not Provided

Message:
http://flagship2.vanguard.com/VGApp/hnw/FundsVIPERByName Sector Indexes 12/31/04 - 311/05 Energy 17.4 Financials -2.0 Health Care -0.8 Info Tech -5.9 Materials 5.6 REITs -6.2 Telecoms -4.4 Utilities 3.4

Subject: Vanguard Returns
From: Terri
To: All
Date Posted: Sat, Mar 12, 2005 at 09:25:36 (EST)
Email Address: Not Provided

Message:
http://flagship5.vanguard.com/VGApp/hnw/FundsByName Vanguard Returns 12/31/04 to 3/11/05 S&P Index is -0.6 Large Cap Growth Index is -2.1 Large Cap Value Index is 1.0 Mid Cap Index is 0.8 Small Cap Index is -2.0 Small Cap Value Index is -1.6 Europe Index is 3.9 Pacific Index is 2.1 Energy is 15.2 Health Care is 0.8 REIT Index is -6.3 High Yield Corporate Bond Fund is 0.7 Long Term Corporate Bond Fund is 0.6

Subject: Re: Vanguard Returns
From: johnny5
To: Terri
Date Posted: Sat, Mar 12, 2005 at 15:10:10 (EST)
Email Address: johnny5@yahoo.com

Message:
Terri what vanguard funds are you allocated into? What is your makeup between stock funds, bond funds and cash?

Subject: Monetary Policy
From: Emma
To: All
Date Posted: Sat, Mar 12, 2005 at 08:29:14 (EST)
Email Address: Not Provided

Message:
Alan Greenspan, Alan Blinder, Ben Bernanke believe the key to understanding the Federal Reserve innovation since 1987 was coming to understand that money supply guidelines for policy formation were less and less important. The need was to watch the mix of interest rates, rather than use money supply guides to short term interest rate changes. This was the critical innovation. Greenspan believes the change actually began about 1980. I completely agree. The Fed has been successful at maintaining growth with less and less inflation from Volker through Greenspan.

Subject: Re: Monetary Policy
From: Pete Weis
To: Emma
Date Posted: Sat, Mar 12, 2005 at 11:23:08 (EST)
Email Address: Not Provided

Message:
Has low 'inflation' been mostly the result of Federal Reserve actions and the 'mix of interest rates'? Or has it been mostly due to the deflationary pressures of cheap labor over seas in economies like China? What about the boost to productivity that hightech advancements added to the design and manufactured of goods - has this been a greater influence on reducing inflation for many hard goods than has Federal Reserve actions? What types of goods have experienced little inflation and why? Was it really actions taken by our central bankers since Volker's retirement? What about the increasing costs of food, housing, insurance, energy, etc. - should these be left out of the 'core' inflation rate which is the rate most often quoted? Has our federal reserve been instituting policies which have helped to guide our economy relatively smoothly through stormy seas or has it simply been reactionary to the busts of 'irrational exuberance'? In short, is our federal reserve forward looking?

Subject: competition
From: joseph hill
To: All
Date Posted: Sat, Mar 12, 2005 at 08:22:55 (EST)
Email Address: joe_hill39@yahoo.com

Message:
With the advent of plagiaristic Professor Ward Churchill, Professor Krugman has (arguably) been replaced as the farthest left whack job currently receiving media attention. Does anyone know if he has any plans to recapture his status as the icon of leftist absurdity? Joe

Subject: Ben Bernanke on the Trade Deficit
From: Emma
To: All
Date Posted: Sat, Mar 12, 2005 at 07:24:30 (EST)
Email Address: Not Provided

Message:
Ben Bernanke as far as I can tell is not adopting a political explanation. The explanation of why America is able to import saving from other countries suggests we have been able to run a persistent trade deficit because investment opportunities in America have been perceived as superior to opportunities abroad. Since we have long grown faster than the western European economies or Japan it is reasonable that investors should find opportunities here. There will be a change in time, possibly soon, possibly central banks with increasing purchases of our debt are showing the change is already on us. When the change comes the dollar will decline in value, but the decline can well be orderly and gradually lessen our trade deficit. This explanation is optimistic and there are far more worrisome descriptions of the government deficit and low household saving rate driving the trade deficit. We should think over and argue about the possibilities.

Subject: Re: Ben Bernanke on the Trade Deficit
From: Pete Weis
To: Emma
Date Posted: Sat, Mar 12, 2005 at 11:50:38 (EST)
Email Address: Not Provided

Message:
This is exactly the same line Alan Greenspan was trying to sell before Congress. But the rates on US treasuries are low and they are denominated in a dollar which has been falling at a rate of about 10% per year against a 'basket of currencies' and considerably greater against commodities. Every economist agrees that it will fall much further over the coming years. So the reason for buying US treasuries by foreign central banks is not to keep US consumers buying Asian goods as everyone else is saying - it's because it's simply a good money making investment according to Bernanke and Greenspan. Now I realize that some foreign private investors buy US corporate bonds which provide high yields. But there is a reason some US corporations pay high yields in a low interest rate environment - they have a high risk of default. So Bernanke and Greenspan believe, despite starting in a 10% annual hole, that overseas investors believe US investments are so good that they can absorb that loss and still make better gains than they would elsewhere the world?

Subject: Re: Ben Bernanke on the Trade Deficit
From: johnny5
To: Pete Weis
Date Posted: Sat, Mar 12, 2005 at 15:00:40 (EST)
Email Address: johnny5@yahoo.com

Message:
Pete you have to stop being so negative - if we can convince those 15 trillion worth of private investors to keep sending wealth here the fundamentals do not matter and warren is gonna lose his butt - only thier PERCEPTION that this is a great place to invest matters - everytime you down america you hurt us US centric investors - as long as we can get oil rich countries to give us oil for green paper we will be fine - don't rock the boat - or as you said - it will flip over and sink us even faster. I got the prospectus in for the Prudent Bear fund yesterday and am looking over their data - it seems one guy is making all the decisions - do you have any info on this guy beyond what is provided in the prospectus.

Subject: Re: Ben Bernanke on the Trade Deficit
From: Pete Weis
To: johnny5
Date Posted: Sat, Mar 12, 2005 at 23:55:13 (EST)
Email Address: Not Provided

Message:
If you are going to invest in their Bearx fund you will need to be patient through the periods of small losses before they have some big gains. They probably are a good hedge against a broad market downturn the way bond funds won't be this time around - they had a 62% gain in 2002. David Tice has been in this business since the late 80's so you would think he knows what he's doing. I've invested in his safe harbor fund (now the prudent bear global income fund) which is basically a hedge against the falling dollar. Here's some of his commentary from 1999: Prudent Bear Market Commentary Today's reports of stronger than expected productivity gains and less than expected unit labor costs will only incite more giddy chatter of a 'new era' miracle economy. Amazingly, a very strong consensus has developed that we live in a period of profound price stability, and that today's 'Internet economy' can continue at current growth rates of 5% or better without any worry of developing inflation. Yesterday on CNBC, an economist went so far as to state that with one more 25 basis point interest rate increase next week the Fed would 'nail the coffin shut on inflation.' Such talk confirms our belief that many brains are suffering from overexposure to the bull market. Today, there are truly momentous misconceptions about the true underlying health of the economy and the soundness of our financial system. Unfortunately, an historic asset bubble has not only distorted the financial system and real economy, it has worked its magic on perceptions and judgements as well. And although it is to be expected that an euphoric Wall Street would buy into 'new era' analysis, we are continually amazed that virtually the entire US economic community has followed. And while the stock market mania has certainly impaired the objectivity of analysis, it is increasingly apparent that some very serious flaws in the understanding of basic economic concepts are at play as well. Nowhere is this more apparent than in contemporary discussions of inflation. Today, the inflation debate centers almost exclusively on consumer prices. And since a designated basket of consumer goods is showing only moderate price increases, this is accepted as proof positive that Greenspan and the Federal Reserve have mastered the art of price stability. Undoubtedly, however, the great old economists, particularly from the Austrian school, would today scoff at such shallow and nonsensical analysis. Instead of a narrow focus on price changes for a basket of consumer goods, their analysis would center on the general monetary environment as the best indicator of true inherent inflationary pressures. In the past, only stable money and credit conditions would be accepted as conducive to general price stability and sound economic growth. We subscribe very strongly to the view that excessive money and credit growth invariably has inflationary manifestations that fuel dangerous financial and economic distortions. Importantly, these distortions work to disrupt market-pricing mechanisms, and can develop in various forms and with unpredictable timing. Generally, excessive money and credit creation leads to higher prices of consumer goods, asset prices and/or trade deficits. Of the three, consumer price inflation is the least dangerous, as it is both easily recognized and resolved by restrictive monetary policy. As is patently obvious today, asset inflation and trade deficits are a much different animal, as they are easily, and conveniently, identified as the outcome of anything but monetary inflation. Today, these inflationary consequences are deemed 'wealth creation' and the wonderful fruits of a miracle economy. Hence, this type of inflation is particularly problematic as it has great potential to be revered by Wall Street, investors, bankers, businessmen, politicians and the general populace, as well as being susceptible to protracted accommodation by central bankers. This is absolutely the situation today. Over time, escalating asset prices and trade deficits lead to severe distortions to both the financial system and real economy, as we have discussed in previous commentaries. Clearly, the US in the 1920's and Japan in the 1980's are examples of the seductive and destructive nature of asset inflation. With this in mind, there is absolutely no doubt that we are currently in a very dangerous inflationary environment. Sure, the extent of these powerful forces are not visible in consumer prices, but keep in mind that much of what we consume is produced elsewhere. In fact, imports of goods and services this year will total about $1.2 trillion, as our trade and current account deficits escalate to the largest levels ever. At the same time, inflationary forces could not be more conspicuous, in the data as well as in ballooning asset prices. The data presents clearly that we are in the midst of the greatest money and credit excesses in history. And, importantly, already gross excesses took a dramatic turn for the worse last year. During the eighteen months ended this past June (most recent available data), total domestic non-financial debt increased $1.553 trillion, or more than 10%. At the same time, our financial system took on unprecedented leverage. Financial sector borrowings grew $1.626 trillion, or almost 30%. Household mortgage debt increased $563 billion, while corporate debt expanded $642 billion. Since June 30, 1998, broad money supply (M3) has increased $662 billion, or almost 12%. Money market fund assets have grown $357 billion, or 30%. This unprecedented money and credit explosion has had a profound effect, adding incredible fuel to the US financial and economic bubble. Nowhere has this been more conspicuous than in the stock market, where, since the lows of early October of 1998, the Dow Jones Industrials gained 40%, the NASDAQ100 160%, the Morgan Stanley High Tech index more than 200%, the NASDAQ Telecommunications index 170%, the Philadelphia Semiconductor index 240%, and The Street.com Internet index 480%. And as we have highlighted repeatedly, residential real estate has been another major asset class to experience exceptional price inflation. Interestingly, many economists are today caught in a trap. By comparing year-over-year money supply growth, they erroneously conclude that the money supply is now expanding only moderately. We look at the numbers much differently, seeing incontrovertible evidence that an historic episode of money and credit profligacy runs unabated. Importantly, our financial system has been creating truly excessive money and credit since 1995. For example, during the first five years of this decade, total broad money supply (M3) expanded $273 billion, or about $55 billion annually. During the last five years (less the remaining two months of this year), M3 has increased by almost $2 trillion, or about $400 billion each year. Last year, M3 literally exploded, increasing $645 billion, or more than double total growth for the first five years of the decade. And while M3 growth will likely not exceed $400 billion this year, keep in mind that M3 grew by $77 billion in 1994 and $66 billion in 1993. And looking at total non-financial debt, we see growth last year exceeded $1 trillion, and is on track for similar growth this year. For comparison, non-financial debt growth averaged $571 billion during the first five years of the decade. Nowhere, however, has credit inflation run more rampant than in the reckless flood of financial credit creation. Financial system borrowings, after expanding at an average of about $285 billion annually during the first half of the decade, expanded by almost $1.1 trillion last year and are on course to surpass this during 1999. Also, margin debt, having ended 1995 at $77 billion, has surged to $180 billion. How can any serious analyst not recognize this unprecedented orgy of money and credit growth? And how can the Federal Reserve not appreciate that credit excess has fueled a massive asset bubble and bubble economy? Today, there is evidence everywhere of credit excess-induced inflationary pressures. Outside of the momentous stock market and residential real estate bubbles, we see surging prices for a wide variety of things. In past commentaries we have expounded on the major inflation taking place with media properties, particularly radio and television stations, cable franchises and professional sports teams. In this regard, we recently read that the Cleveland Indians are being sold for a record $320 million, after being purchased in 1986 for $45 million. The NFL's Washington Redskins were sold for $800 million in July. Last month, the NFL awarded an expansion franchise to Houston for $700 million, surpassing the previous record price of $530 million paid last year for a team in Cleveland. Of course, the Houston franchise owners have plans for a new $310 million stadium, with much of the financing provided by local government. Elsewhere, we see the stock market now values the World Wrestling Federation, with revenues last quarter of $76 million, at $1.6 billion. We also see that the average price for an NBA ticket for this season has increased almost 14%. The LA Lakers raised the average ticket price 60%, to almost $82. The average price for a New York Knicks ticket increased 9% to almost $87. For this season, the NBA can boast of six sparkling new arenas. Prices for NHL tickets are rising as well. Toronto, with its new $160 million AirCanada Center, now has the highest price in the league at almost $70, a 65% increase from last year. Higher ticket prices, after all, are necessary as the average NHL player salary has increased more than 50% during the past five seasons. The Wall Street financial bubble was again very prevalent during the World Series. The prices for 30-second advertisements were between $350,000 and $450,000, up from the average of about $300,000 last year. E*Trade, with its $300 million annual advertising budget, was a major advertiser, as was Fidelity and Merrill Lynch. According to the New York Times, online brokers purchased more World Series advertising than any other industry. Also, according to the Television Bureau of Advertising, brokers, insurance companies and other financial service providers bought $474 billion of network advertising during the first six months of this year, up a staggering 52% from last year. Similarly, the prices paid to rename sporting venues are rocketing. Federal Express recently agreed to pay $200 million to rename the Washington Redskin's stadium. This is inflation in its truest form and increasingly destructive to the real economy. Yet, these astonishing inflationary manifestations, apparently, do not worry Greenspan or the Federal Reserve. And as the Fed continues to sit back, relax, and watch as this wild party gets completely out of hand, Greenspan's hero status only grows by the day. Certainly, he is deserving of a hero's welcome from the folks at NASCAR. Yesterday, Fox network, NBC and Turner Sports won a bidding war by agreeing to pay $2.4 billion to broadcast NASCAR auto races for the next six years. This huge sum is four times the current contract price. Interestingly, despite all the hype, national ratings so far this year for NASCAR have increased only 1% from last year. But with so many networks competing for programming, and with money so easy to come by, rationality is clearly not the leading determinant of prices. This is the case with the NASCAR contract, with home prices in Silicon Valley, salaries for executives as well as software programmers, and, of course, a hot stock. It used to be that a common definition of inflation was 'too much money chasing too few goods.' Well, today way too much money and credit is chasing too many things. And just because the world is awash in virtually all basic consumer goods, this does not, in anyway, detract from the fact that unprecedented money and credit growth continues to feed a buying frenzy in real and financial assets. And, importantly, after years of accommodating credit excess, the Greenspan Fed must accept the fact that it has fostered the firm entrenchment of inflationary psychology, particularly in asset markets. This will prove a catastrophic error and not one easily rectified. Quite simply, the stock market has absolutely run amuck. It has come to be completely dominated by wild speculation and other distortions that make it absolutely impossible to function effectively in its critical role of capital allocation. Today, Amazon has more than double the market capitalization of Sears. Semiconductor equipment manufacturer Applied Materials, with 1999 revenues of about $4 billion, has a greater market value than Boeing with annual revenues surpassing $50 billion. The market also values UPS, this week's star IPO, at more than the entire US airline industry. And Qualcomm, with $4 billion in 12-month revenues, has a value more than one-third greater than General Motors. Let's face it, today's marketplace is no more than one big gambling parlor. And, importantly, it is certainly our view that all the fun and games and b.s. have been allowed, and seemingly encouraged, for so long that the stock market has truly passed the point of no return. As such, we simply don't see how things can return to any semblance of normalcy, except possibly after a crash or significant market washout. Quite simply, too much money has gravitated away from sound investing, choosing instead to join the teeming party of wild speculating. And since the aggressive speculators have profited most from this extraordinary mania, they have attracted immense assets, made converts out of previously prudent investors, and have come to completely rule the marketplace. This is most unfortunate. David W. Tice November 1999

Subject: Household Debt
From: Terri
To: All
Date Posted: Fri, Mar 11, 2005 at 22:09:11 (EST)
Email Address: Not Provided

Message:
The Federal Reserve governors appear convinced that households are able to handle current debt levels even if long term interest rates rise from here. I place much weight on this assessment. Though Greenspan and Bernanke are criticized on liquidity and debt issues, I find the criticism contradictory. Tightening interest rates significantly to cut liquidity will accentuate debt problems.

Subject: Re: Household Debt
From: johnny5
To: Terri
Date Posted: Sat, Mar 12, 2005 at 03:02:03 (EST)
Email Address: johnny5@yahoo.com

Message:
Terri a man came out and said he was part of assassinations of real people and part of an economic hit man team - do you think he was lying? He said our country can no longer do these types of things and was outing the government - you feel this will have no affect on our ability to stay number 1? Chavez is not drinking the american kool-aid. The congressmen of 1933 charged the 'fed' with stealing america. Congressman, Louis T. McFadden 1932 congressional record: http://www.worldnewsstand.net/today/articles/mcfadden_speech_1932.htm 'A few days ago, the President of the United States with a white face and shaking hands, went before the Senate of behalf of the moneyed interests and asked the Senate to levy a tax on the people so that foreigners might know that these United States would pay its debt to them. They are putting the United States Government in debt to the extent of $100,000,000 a week, and with the money they are buying our Government securities for themselves and their foreign principals. Our people are disgusted with the experiences of the Fed. The Fed is not producing a loaf of bread, a yard of cloth, a bushel of corn, or a pile of cordwood by its check-kiting operations in the money market. 'Recently in one of our States, 60,000 dwelling houses and farms were brought under the hammer in a single day. 71,000 houses and farms in Oakland County, Michigan, were sold and their erstwhile owners dispossessed. The people who have thus been driven out are the wastage of the Fed. They are the victims of the Fed. Their children are the new slaves of the auction blocks in the revival of the institution of human slavery. 'Is there one law for the Baltimore and Ohio Railroad and another for the hungry veterans it threw off its freight cars the other day? Is there one law for sleek and prosperous swindlers who call themselves bankers and another law for the soldiers who defended the flag? 'The R.F.C. is taking over these worthless securities from the Investment Trusts with United States Treasury money at the expense of the American taxpayer and the wage earner. 'Why should we promise to pay the debts of foreigners to foreigners? Why should the Fed be permitted to finance our competitors in all parts of the world? Do you know why the tariff was raised? It was raised to shut out the flood of Fed Goods pouring in here from every quarter of the globe- cheap goods, produced by cheaply paid foreign labor, on unlimited supplies of money and credit sent out of this Country by the dishonest and unscrupulous Fed. The people of these United States are being greatly wronged. They have been driven from their employments. They have been dispossessed from their homes. They have been evicted from their rented quarters. They have lost their children. They have been left to suffer and die for lack of shelter, food, clothing and medicine. 'Mr. Chairman, the United States is bankrupt: It has been bankrupted by the corrupt and dishonest Fed. It has repudiated its debts to its own citizens. Its chief foreign creditor is Great Britain, and a British bailiff has been at the White House and the British Agents are in the United States Treasury making inventory arranging terms of liquidations! 'Roosevelt's next haul for the International Bankers was the reduction in the pay of all Federal employees. 'Next in order are the veterans of all wars, many of whom are aged and inform, and other sick and disabled. These men had their lives adjusted for them by acts of Congress determining the amounts of the pensions, and, while it is meant that every citizen should sacrifice himself for the good of the United States, I see no reason why those poor people, these aged Civil War Veterans and war widows and half-starved veterans of the World War, should be compelled to give up their pensions for the financial benefit of the International vultures who have looted the Treasury, bankrupted the country and traitorously delivered the United States to a foreign foe.

Subject: Re: Household Debt
From: Ari
To: johnny5
Date Posted: Sat, Mar 12, 2005 at 09:49:17 (EST)
Email Address: Not Provided

Message:
When a person writes a book such as this, the person and the book are not worth even a look. Of course the writer knows no truth. The 1933 criticism of FDR by a radical Republican pretending to care for anyone other than himself is worse than laughable. Pay no attention to such fools and falseness.

Subject: Re: Household Debt
From: johnny5
To: Ari
Date Posted: Sat, Mar 12, 2005 at 14:49:16 (EST)
Email Address: johnny5@yahoo.com

Message:
Perhaps you are right Ari and all this is to be disregarded - perception of this world is very important - maybe you and i have very different perceptions of this world. After Enron and worldcom and the ongoing congressional investigations into the mutual funds and freddie and fannie accounting scandals and warren buffet saying to short the dollar and Greenspan cutting SS - why is your view of things not as negative as mine and giving this negative stuff more weight? Is congress being silly? Warren over-reacting? If a lot of people see one event as negative and others as positive and we can get to the root causes of this difference in perception then a lot of progress could be made. I blew most of this stuff off as mumbo jumbo until warren went short 2 years ago - does that not give pause to maybe reconsider some of our recent history? Thomas Jefferson was no fool Ari, he took great offense to central banking and fiat currencies - was he just an irrational hypocritical slave owner? I just watched the cspan showing the the SEC budget for 2006 yesterday, the congressmen of today had very bad things to say to the head of the SEC about oversight - how should I take that? They were not praising him for taking care of US investors - but instead attacking him vehemetly for allowing us to be suckered and funding EVIL. They showed pictures of blown up people from hind helicopters that were funded by the USA and charged halliburton with funding growth in IRAN - a terrorist enemy of our nation I thought - are they being silly? If so, why are they wasting my tax dollars with such foolishness and sillyness? If mine and warrens bearish outlook are in error and silly it would do us great service to understand why you fundamentally believe that - there have been academic papers published showing people like to fool themselves with rosy colored glasses. Most importantly with many investors here depending on getting the perception of future investors so they can have some retirement if their benefits get cut - it would be good for them to know why people like warren or myself are getting out the usa dollar and have lost faith in the fed while other people have not and disregard a lot of this negative bear talk. I would not disregard a radical republican of 1933 - the history is there to learn from - you now have a senate, house, and presidency of radical republicans and you better learn how these people think and act or you are gonna be behind the curve. These guys are dismantling the new deal of FDR - when a hit man guy says we do bad things, the leaders of those countries affirm those events as facts - we are to disregard that as a lie? Chavez is lying when he says we tried to assassinate him? His ability to affect oil is to not be considered? Perhaps I am giving far too much consideration to these negative congressmen and book authors and world events and history - I should just listen to that guy who is retiring next year - greenspan right?

Subject: Thanks
From: Ari
To: johnny5
Date Posted: Sat, Mar 12, 2005 at 18:44:58 (EST)
Email Address: Not Provided

Message:
A considered answer. Thanks. I will just add then that there was a struggle to free fiscal and monetary policy during the Depression. The Fed was overly conservative by a long way. Adding to the money supply to keep an economy healthy is just what should be done. The analysts who go on about fiat money would cripple the Fed.

Subject: 16 tons and what do you get?
From: johnny5
To: Ari
Date Posted: Sat, Mar 12, 2005 at 20:59:23 (EST)
Email Address: johnny5@yahoo.com

Message:
I agree most of what I have read says the fed being too tight caused the problem in the 20's and 30's - but that the problem was ENGINEERED - manipulated to the benefit of a few at the cost a millions of americans. We forgave war debts back then - do you think the world is going to forgive our debts today? It is only fair isn't it? Too tight and too loose can both cause calamity for the little guy - if the rich want to cause calamity for the little guy like jefferson said - first through inflation and then through deflation the little guy will lose this country. The problem being a centralized source of power is easier to manipulate through too tight or too loose damage than a power dispersed amongst the people. I get tired Ari of bailing out the LTCM richies of the world by increasing the taxes on me and my children - this happend in 1933 and still going on today. Kill the fed - not gonna happen - realize you live in a manipulated world and if the rich bankers want to make all the money and transfer all the risk to the little guy like they did earlier in this country - same old story - I owe my soul to the company store. Invest accordingly.

Subject: Emma called it
From: johnny5
To: johnny5
Date Posted: Sat, Mar 12, 2005 at 21:09:05 (EST)
Email Address: johnny5@yahoo.com

Message:
Read some of the recent posts by Emma, she makes the point - the richies are making the money - while the little guy is taking on the risk. In the article about baby sitting above it shows that too few scripps can be bad so we do need to be able to add money, I don't think terri went into how specifically it is bad with too many scripps - but the other option is what if people altogether stop taking scripps? What if the issuer of scripps is this one evil bank dude that want to take over the wealth through inflation and deflation of the scripps and control all your babies while he babysits them?

Subject: Stocks and Bonds
From: Terri
To: All
Date Posted: Fri, Mar 11, 2005 at 21:59:54 (EST)
Email Address: Not Provided

Message:
The questions now in investment seem to come down to whether long term interest rates continue to rise and whether the price of energy will have a slowing effect on growth along with higher interest rates. So, we are in a pattern similar to last year. A slightly negative stock market, with value stocks leading growth. Small stocks are weaker than large. Though mid caps are positive. Health care is positive, REITs are negative and energy is positive. International stocks are positive in domestic and dollar currencies, with value stocks leading. Long term bonds are slightly positive.

Subject: Welcome to SANTA-CLAUS.com?
From: Pancho Villa
To: All
Date Posted: Fri, Mar 11, 2005 at 20:50:36 (EST)
Email Address: nma@hotmail.com

Message:
http://www.americanprogress.org/site/pp.asp?c=biJRJ8OVF&b=397907

Subject: But didn't XOM say this was a cycle?
From: johnny5
To: All
Date Posted: Fri, Mar 11, 2005 at 18:16:04 (EST)
Email Address: johnny5@yahoo.com

Message:
Oil is infinite isn't it? The hydro-carbons will flow forever - like magic! So I got to put hydrogen in my car now - johnny5's car only runs on gas and johnny likes driving all over florida to see the attractions - a bicycle won't cut it. IEA says world must turn away from oil By Kevin Morrison and Javier Blas in London Published: March 11 2005 12:17 | Last updated: March 11 2005 12:17 The rapid rise in global oil demand should lead the industrialised world to promote alternatives to oil as well as energy conservation, the International Energy Agency said on Friday. The warning, from the West's energy policy adviser, signals a sharp turnaround by the IEA, which has previously tried to cool oil markets by blaming prices on speculators and short-term supply disruptions. “The reality is that oil consumption has caught up with installed crude and refining capacity,” the Paris-based agency said. “If supply continues to struggle to keep up, more policy attention may come to be directed at oil demand intensity in our economies and alternatives.” The agency's view carries special weight because it was created in the mid-1970s after the Arab oil embargo to advise consuming governments about energy security and how to conserve oil so as to protect their economies from fluctuations in its price. Any revival of talk about energy efficiency is likely to alarm the Organisation of Petroleum Exporting Countries, which meets next week in the Iranian city of Isfahan. The IEA's warning comes at a time when prices are close to their record nominal levels, a signal that high prices are not denting consumption. Brent, Europe's benchmark oil price, hit a record high of $54.30 a barrel this week. On Friday Brent was trading at $53.25 a barrel, up 59 cents on the day. US benchmark crude prices were 66 cents higher at $54.20. In its March report, the IEA raised its 2005 global oil demand growth forecast by 290,000 barrels a day, to 1.81m b/d, because of higher demand in the US and China, the world's two largest oil consumers. The higher forecast gave average daily consumption for 2005 of 84.3m b/d. At the same time, the world's spare refining capacity has shrunk as demand for oil products has grown faster than the addition of new capacity. In the lead-up to Friday's comments, the IEA has privately raised the question of energy efficiency with consuming governments. “We will try to drive the attention of governments to energy efficiency,” said an agency official. The agency also plans to release a report next month entitled Saving Oil In A Hurry, which will cover among other issues the topic of energy efficiency in consuming nations. Energy analysts said a new drive on energy efficiency could be difficult because most of the increase in oil consumption is in transportation, where there are few economic alternatives. In the 1970s and 1980s the focus on energy efficiency was on the industrial sector, which contributes a small proportion of new oil demand increase. The IEA's emphasis on energy efficiency was endorsed by President George W. Bush, who on Friday said conservation was a key part of his proposed energy bill. http://news.ft.com/cms/s/f20cfb8a-920d-11d9-bca5-00000e2511c8.html

Subject: Meet the Press
From: Howard
To: All
Date Posted: Fri, Mar 11, 2005 at 15:17:06 (EST)
Email Address: hjohnson@core.com

Message:
Thanks for including a link to last Sunday's show, because Krugman's cluelessness was clearly on display, particularly when he rather inarticulately tried to explain why he doesn't like Hilary Clinton for President. Apparently it's because Bill Clinton 'managed to sort of triangulate,' which seems to mean that he wasn't a hard-core, uncompromising liberal. Fortunately, Joe Klein called Krugman on his idiocy. Unfortunately, Krugman, and worse, the Democratic Party still don't get it.

Subject: Re: Meet the Press
From: Paul G. Brown
To: Howard
Date Posted: Fri, Mar 11, 2005 at 17:22:08 (EST)
Email Address: paul_geoffrey_brown@yahoo.com

Message:
Hi Howard! Sorry - I guess you must have missed the memo. 'Triangulation' is/was a political strategy advocated by Clinton advisor Dick Morris. He's recently taken to using the same language to explain George W. Bush's political success. I guess that means W 'wasn't a hard-core, uncompromising' conservative. (Now, I think Mr Morris is overstating the extent of W's triangulation, but who am I (or you) to disagree with the architect of the idea.) Now, Joe & PK did have a disagreement over the prospects of a Clinton presidency. Progressives tend to be more variable in their thinking than conservatives. But we tend to have our arguments straight up, without lying about each other, like you're lying outright when you type that PK 'doesn't like Hilary Clinton for President'. In fact, he says later 'I'm actually not opposed to her, right?'. I'm not sure what this says about clues and who has 'em. But there it is.

Subject: Re: Meet the Press
From: Howard
To: Paul G. Brown
Date Posted: Fri, Mar 11, 2005 at 21:12:34 (EST)
Email Address: hjohnson@core.com

Message:
Paul, Sorry, I'll try not to be subtle if I post here again. Of course I know all about Dick Morris and triangulation. You missed the point. Krugman doesn't like Bill Clinton's 'triangulation,' because it meant that Clinton picked up on and took the lead on popular Republican ideas such as welfare reform. Krugman is the progressive analogue of idiots such as Rush Limbaugh. If a conservative takes a position, Krugman predictably takes a position precisely 180 degrees away. Brainpower not required. Compromise is anathema. Thus, in Krugman's mind, Bill Clinton is too conservative because he triangulated. Frankly, I tired of Krugman's NYT column quickly because of his inability to think outside the 180-degree line. Heck, he's almost as bad as David Brooks. I agree with you that Morris overstates Bush's triangulation. Bush, in his own odd way, is, like Clinton, a pretty good salesman. Bush, however, doesn't bother with thinking things through, or giving a damn about the long-term consequences of what he does. But, again, that has nothing to do with my original point. Joe Klein caught Krugman at his game, and called him on it. Twice. Cheers.

Subject: Re: Meet the Press
From: Paul G. Brown
To: Howard
Date Posted: Sat, Mar 12, 2005 at 19:04:17 (EST)
Email Address: Not Provided

Message:
Howard - I'm not sure I agree completely. I mean, I don't see the position PK is 'precisely 180 degrees away' from. 'Triangulation' is a political tactic; not a policy position. In some circumstances--as when working with a Congress dominated by the other party--it makes sense. Other times it doesn't. PK even says that he 'liked the way he [Clinton] ran he [Clinton] ran the country', and as I pointed out, he 'isn't opposed' to Hillary. PK's point, as I see it, is that the tactics which Bill Clinton used and which he anticipates Hillary would also use--triangulation--would lead to all kinds of compromises with what PK (and many on the progressive side of politics) consider to be a much more radical conservative movement than existed in the 1990's. Newt never proposed gutting Social Security, for example. And its interesting to note that on issues like law and order (read: number of cops on the beat) the Bush administration has gone soft on crime. Triangulation as a political tactic would tend to lead to policy outcomes PK (and many progressives) would disagree with. Other approaches to governing--splitting the opposition by taking positions that pit religious fundamentalists against corporate interests by promoting universal health care, for example--might have better outcomes. Could PK have made his point more clearly? Sure. But does that make him 'clueless'? And if you tired of PK's column, why are you here? I've yet to tire of Brook's (or Kristol) even when I disagree with them. From time to time I wince, but I read 'em. And that little phrase 'outside the box (or line)' is rapidly becoming the bane of my existance. You haven't earnt the right to think 'outside the box' until you have demonstrated that you have a solid understanding of the box you propose to think outside of. (Help! Editor!) So Joe and PK had an exchange of words which clarified their views. I'll accept that PK was a bit inept in his presentation but I thought his observation--once it had been clarified--was an interesting take.

Subject: Re: Meet the Press
From: Howard
To: Paul G. Brown
Date Posted: Sat, Mar 12, 2005 at 21:06:03 (EST)
Email Address: hjohnson@core.com

Message:
Paul, This is nothing against you, honestly, but I'm not sure it's worth belaboring what really is a fairly minor point. I imagine that in most regards I agree with you. I only came here because I just happened across this website, gave it a quick glance and saw the MTP link. Since I'd seen the end of that particular show I knew that Krugman was, charitably, not at his best that day. So I thought I'd jump in and vent a bit, since I really don't care for Krugman. I'll begrudgingly acknowledge, however, that he did, ineptly, make a valid observation. I’m not so sure that in the grand scheme of things it’s a particularly important one. Your point about 'outside the box' is well-taken. That phrase can be almost as annoying as that darned Where's the Cheese nonsense was. Actually, I read all of David Brooks' columns, but he has recently had a tendency to make specious arguments to support putting large groups of people into very distinct boxes. His bobo book was actually pretty funny and made some sense, but he now seems to be struggling in an attempt to duplicate that success. I like Kristof a lot, Friedman is always great, and I loved Safire, even though I rarely agreed with him. Triangulation is, in a sense, just a new term for compromise. The difference is, as you essentially note, traditional compromise isn't always possible when one party dominates. It's far worse here in Ohio, where the Republicans hold every statewide office, have overwhelming majorities in both houses, and hold all but one seat on the State Supreme Court. Here, even triangulation doesn't work. I'll close by throwing something new into the mix. As background, I happen to be a very devout and active Christian who has come to deeply resent the claim that the Republican Party represents people of faith. (And the press is as responsible for fostering this claim as anyone.) All my political beliefs are supported first by my faith, and second by our Constitution. Where my faith leads me is to a place that looks vastly different from where the Republicans are going. Unfortunately, the Democratic Party, still trying its best to hold onto its traditional disparate elements, hasn't yet recognized this void in many faith communities that is begging to be filled. To wit, there is a great need for a truly prophetic voice to respond to the culture of fear that the religious right has helped GWB create. Many progressives in the political world are starting to get it, however, and I think Hillary is certainly one of them. By the way, for anyone who shares these concerns, God's Politics by Jim Wallis is an excellent articulation of the problem and some solutions. With that, I'll lay off Krugman and move on. Best wishes.

Subject: Re: Meet the Press
From: Paul G. Brown
To: Howard
Date Posted: Sun, Mar 13, 2005 at 12:58:25 (EST)
Email Address: Not Provided

Message:
Howard, not to put too fine a point on it, but you've been most Christian throughout this whole conversation. I wouldn't label myself 'devout', and would demure 'active', but I'd sign up for 'fellow traveller'. I think the perception that people of faith are innately conservative and have a 'natural home' in the GOP is a relatively recent one, and has been constructed in recent times over a very narrow range of issues. Religious zealots--and I am using the term in sense of the disciple Simon--have played an important part informing the development of progressive politics for centuries; from William Wilberforce to Rev. Martin Luther King. Even today the progressive political program is built on the roughly Christian moral foundations: care for the least among us, emphasis on the 'weighter aspects of the law', an anti materialism (camels, eyes of needles). Hey! Even environmentalism! We consider the lilies of the field! :-) Hillary C. may or may not be 'starting to get it' (she once wrote a book 'It Takes a Village' which was saturated with communitarian and approximately Christian values) but she isn't the first, and she won't be the last. I would concede that a great many progressives would do well to actually read the Bible, rather than accept the warped picture of its message(s) they see filtered through Dobson/Roberts/Phelps et al. Thanks for the interesting conversation, Howard. You ought to hang around. Being largely economists, we tend to sweat a lot about money, which, while certainly the root of all evil, is fascinating all the same. I'd appreciate your contributions. KR Pb

Subject: Re: Meet the Press
From: Howard
To: Paul G. Brown
Date Posted: Sun, Mar 13, 2005 at 20:30:14 (EST)
Email Address: hjohnson@core.com

Message:
Paul, Thank you for the interesting conversation. I really didn't intend to look back here after my first post, and each subsequent post was meant to be my last, but your compelling responses have been too good to ignore. While I certainly have an interest in economics, I have no expertise in the area, other than some training and experience with engineering economics. By day I'm a chemical engineer, and much of the rest of my time is taking up by work in the areas of peacemaking, social justice and public policy advocacy. I haven't really been particularly involved in political activism, primarily because I don't care all that much for partisan politics, but I'm recently hearing a call to become more active, for reasons I discussed previously. I think the Democratic Party has lost its way since Bill Clinton, and frankly it had been losing its way for years before Clinton. After two very weak Presidential candidates who nearly won office only because they were running against an especially weak Republican, one would hope the Party would finally start to see the light. But now the party is led by Howard Dean, who proudly boasted that his politics has nothing to do with his faith. Granted, Dean has started to utter a few of the right things with respect to transforming the Party, but he's a long way from convincing me that he's driven by values or is capable of affecting real change. You're absolutely correct that progressive politics are largely built on foundations that look very much faith-based. The problem is that while many progressives still make the connection, Democratic leadership treats the party as a collection of constituencies rather than a set of values. (Of course the party is a collection of constituencies, but it was the shared values that brought them into the party in the first place.) It’s time for me to go. Up to this point, the only posts I’ve read on this message board have been yours, and in the interest of time, that may be how it stays. But I will try to check back once in a while. Best wishes. Howard

Subject: new s&p 500
From: johnny5
To: All
Date Posted: Fri, Mar 11, 2005 at 15:08:16 (EST)
Email Address: johnny5@yahoo.com

Message:
When It's Time to Change, You've Got to Rearrange Bernie Schaeffer 3/9/2005 8:57 AM ET Equity investors are on the eve of quite a notable change in the way Standard & Poor's comprises its U.S. stock indices. At the present time, equities within all S&P indices (including the widely-followed S&P 500 Index) are weighed according to their market capitalization, or the number of outstanding shares multiplied by the shares' current price. In an effort to divvy things up a bit more fairly, S&P is instituting a gradual shift from this weighting classification to a 'free-float weighted' basis. A stock's float is defined as the number of shares outstanding that are available for public trading (i.e., not held by insiders, who are historically unlikely to unload their shares). On March 18 (next Friday), S&P indices will be arranged on a half market-cap, half float-weighted basis. The shift will conclude on September 16, when float-weighting takes over entirely. The effects of such moves are as follows: some stocks, which have a sizeable portion of their cap held by insiders, may see their SPX rankings fall, while other stocks, with market floats that are nearly equal to their total cap, could move higher on the SPX roster. As such, the days around March 18 and September 16 could endure unusual buying and selling activity, resulting in rocky trading. In short, stocks losing ground in the index could face selling pressure, while equities that increase their respective weightings may attract some additional buying power. The first table below lists the 40 stocks that will see the largest upward move within the SPX, thanks to the adjustment. The difference was derived by taking the stock's original SPX ranking (derived by market cap) and subtracting this from its new ranking (calculated by a formula that averages the stock's market cap with its 'float cap,' or the float times the stock's current price). For example, UST Inc. (UST: sentiment, chart, options) ranks at number 287 in the current index. Once the stock's float is figured into the mix, accounting for half of the formula, UST will rank number 273, an advance of 14 slots. More at the link (subscription required) http://www.schaeffersresearch.com/members/services/gold/bgscommentary.aspx?ID=65

Subject: Dollar exits?
From: johnny5
To: All
Date Posted: Fri, Mar 11, 2005 at 14:59:05 (EST)
Email Address: johnny5@yahoo.com

Message:
No Exit by Charles Mackay, Friday March 11 2005 http://wallstreetexaminer.com/ Japanese Prime Minister Junichiro Koizumi found out Thursday that there is no exit from the ad-hoc Bretton Woods II US dollar regime. Friday's edition of the Japan Times quotes Koizumi as saying, when talking to a parliamentary committee about diversifying foreign exchange assets, 'I think it's necessary to have diversity. At the same time, taking into account what is profitable and what is safe, the overall situation must be considered'. Yes, the situation that must be considered is that there is no way for Japan, China, and others like South Korea and Taiwan, to leave the dollar based currency regime. Both the Ministry of Finance and the Bank of Japan quickly discounted what Koizumi had stated, with comments like 'it would be unwise for us to be selling dollars'. Like some existential play, the actors played by the foreign central banks, can't find a way to leave the dollar regime. They are left to attack each other, over and over again. The loss of one leg of support, especially if it is from Japan or China, could bring the entire support system for the dollar crashing down. Virtually the entre world has come to realize that it is the foreign central banks of the world which hold the dollar up. This view is not shared at the Fed. Back in the states Thursday, Alan Greenspan and Ben Bernanke both made an impressive tag team performance - battering worries about the rapidly growing current account deficit. In official, but separate speeches at different locations, the duo blamed the current account deficit on excess savings and low inflation expectations. Bernanke's speech was entitled 'The Global Saving Glut and the U.S. Current Account Deficit'. The title almost says it all. Other countries are to blame here. The US is just a good place for other countries to invest. Greenspan's comments were simply called 'Globalization'. The Maestro believes that Adam Smith's 'invisible hand' remains at work on a global scale. Although he does perceive the current account as huge, the US will make a smooth transition to a lower current account deficit. Somehow. Yes, these shows will end one day, thankfully. The dollar can not survive current account deficits of over $700 billion per year indefinitely. The Asian central bankers will find a way out - eventually - and Koizumi can pursue a retirement career out of the theater. Greenspan will retire, and maybe Bernanke will just move on to the Council of Economic advisors. Meanwhile, we better all start looking for the dollar exits. posted Friday March 11, 12 27 AM ET

Subject: Americans funding hezbollah
From: johnny5
To: All
Date Posted: Fri, Mar 11, 2005 at 13:13:25 (EST)
Email Address: johnny5@yahoo.com

Message:
Right now on cspan - talking about how haliburton and others are funding the terrorists and iran and mr. sec says oh well!! just like prescott bush funded hitler - all the holocaust victims asked was that we not forget - why did we forget? House Committee Fiscal Year 2006 Securities and Exchange Commission Budget Appropriations, Science, State, Justice, and Commerce, and Related Agencies Washington, District of Columbia (United States) ID: 185861 - 03/11/2005 - 2:00 - No Sale Wolf, Frank R., U.S. Representative, R-VA Mollohan, Alan B., U.S. Representative, D-WV Donaldson, William, Chairman, Securities and Exchange Commission Mr. Donaldson testifies about operational funding for the Securities and Exchange Commission. Among the topics he is likely to address are the integrity of the securities market, federal regulation of business practices, and recent cases involving charges of corporate fraud and mismanagement.

Subject: Pathetic
From: Bobby
To: All
Date Posted: Fri, Mar 11, 2005 at 11:53:40 (EST)
Email Address: robert@pkarchive.org

Message:
So I log in to Rollcall for the first time in months today. These are the first two stories I see right next to each other. First Headline: Georgia House Passes New Map Thursday, Mar. 10; 03:45pm In a vote with national implications, the Georgia House passed a newly proposed Congressional map this afternoon, clearing a major hurdle for state Republicans seeking to undo the lines they argue were unfairly drawn by Democrats in 2001. Second Headline: Democrats Nix Illinois Remap Illinois Democrats on Capitol Hill said Wednesday they have essentially shut the door on revisiting the state’s Congressional map as a means of retaliation for GOP-led redistricting efforts elsewhere in the country, citing a lack of consensus here and back home on how to proceed.

Subject: Adaptability indeed!
From: johnny5
To: Bobby
Date Posted: Fri, Mar 11, 2005 at 12:07:11 (EST)
Email Address: johnny5@yahoo.com

Message:
There was a program on the science channel about natural arms races in mother nature - one of these arms races was between a newt and a snake in oregon I think. The newt was the most poisonous creature in the country - thousands of times more poisonous than the scientists could understand why - well they had one natural predator - this particular snake that had a resistance to this particular poison - well through natural selection the newts got more and more poisonous and the snakes are getting more and more tolerant - thier biological arms race killed several hikers that tried to eat one of those newts. And so it is with red and blue - thier arms race to stay competitive and survive is killing everyone on the outside. Our government can no longer adapt to serve the people in time with these politics - Rubin and Peterson think this can only end in a bad way.

Subject: Red Snakes eating Blue Newts
From: johnny5
To: johnny5
Date Posted: Fri, Mar 11, 2005 at 12:16:05 (EST)
Email Address: johnny5@yahoo.com

Message:
http://newsinfo.iu.edu/news/page/normal/519.html IU scientist finds snakes that are keeping pace in toxic arms race Nerve cell resistance to tetrodotoxin the key The rough-skinned newt, whose skin is poisonous enough to kill an adult human many times over if it is eaten, poses no threat to a tiny garter snake that has evolved changes in its nerves and muscles, say scientists from Indiana University and Utah State University. The researchers present new evidence in this week's Science magazine that a co-evolutionary 'arms race,' in which a western U.S. garter snake has acquired the ability to eat the mega-toxic newts, has also made the snakes physically sluggish. Their finding is among the first to link small changes in physiology to real-world species interactions in the wild. 'The newt toxin, tetrodotoxin or TTX, affects a sodium channel that the snakes' nerve and muscle cells need to function,' said IU biologist Edmund Brodie III, who directed the research. 'The snakes have evolved resistance to TTX, but the resistance itself seems to have a negative impact on the snakes' ability to crawl.' TTX is a defensive compound found in many different animals, including pufferfish, octopuses and primitive chordates called tunicates. It is used in low concentrations to treat morphine and heroine addicts, and it has been identified as Haitian voodoo's 'zombie' drug. Evolutionary biologists have long been able to see the results of arms races between predators and prey. Prey often acquire wildly exaggerated traits, such as flying fishes' airborne abilities or the porcupine's armor of quills. But the exact way predators, prey and their genes change over time during such races has largely stumped the scientists. With their new report, the researchers pinpoint a basic mechanism by which the garter snakes keep themselves alive and maintain access to a valuable food source -- even if the cost is that the snakes are a little less spry. 'Normally you might expect a highly advantageous trait -- like TTX-resistance -- to sweep the population, but that hasn't happened here,' Brodie said. 'Clearly a trade-off between the snakes' speed and their ability to resist the newt's toxin is playing a role in the variation we're seeing.' The research team examined four populations of the garter snake Thamnophis sirtalis that eat toxic newts of the genus Taricha in California, Oregon and Washington. They found not only variation in the amount of TTX produced by individual newts, but also a large variation among individual snakes in their tolerance of the newt toxin. The most resistant snakes can survive a toxin concentration 1,000 times that tolerated by the least resistant snakes. The researchers also learned that snake TTX-resistance varies geographically. Garter snakes from the Washington population tend to be more sensitive to TTX but live among newts that produce less toxin. The California garter snakes, found to be considerably more toxin-resistant than their Washington and Oregon counterparts, live among newts laden with TTX. Brodie said the garter snakes and newts provide an excellent model for researchers to learn how vastly different levels of biology interact. 'Linking evolution, ecology and physiology has been a major challenge for scientists,' Brodie said. 'But doing so allows us to start addressing some really interesting questions, such as how nerves change over evolutionary time in a particular ecological setting.' Utah State University biologists Shana Geffeney, Edmund Brodie Jr. and Peter C. Ruben also contributed to this report. Geffeney was responsible for the neurophysiological work. This research was supported by grants from the National Institutes of Health and the National Science Foundation. Citation: 'Mechanisms of Adaptation in a Predator-Prey Arms Race: TTX-Resistant Sodium Channels,' Science, Aug. 23, 2002, vol. 297, no. 5585

Subject: How Long Can G.M. Tread Water?
From: Emma
To: All
Date Posted: Fri, Mar 11, 2005 at 11:21:04 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/11/business/11auto.html?pagewanted=all&position= How Long Can G.M. Tread Water? By DANNY HAKIM DETROIT - Since the Depression, General Motors has reigned as the world's largest automaker and a pillar of American economic might. But now the company is broadly struggling and facing the humbling possibility that it will be displaced by Toyota at the top of the auto industry within a few years. General Motors, which controlled nearly half the American market as recently as the late 1970's, held about one-quarter in February. Last week, the company said that it would produce 300,000 fewer cars and trucks in North America in the first half of this year, a 10 percent drop from a year ago. Its European operations have lost money for five consecutive years and rising interest rates are expected to cool its lending division. With its shrinking profits dwarfed by those of Nissan and Toyota, G.M.'s debt is threatened with a downgrade to a junk bond rating, a move that could force it to pay more to borrow money. The company's financial health is no trivial matter. With 7,600 dealers across the country, its eight brands, from Chevrolet to Cadillac, have long been American icons. The company has operations in 32 states; in Michigan and Ohio, both G.M. and Delphi, its struggling former parts subsidiary, are top 10 employers. G.M. is also the nation's largest private health care payer, giving coverage to 1.1 million Americans. Hundreds of thousands of retirees depend on the company's pension checks. G.M. might be in better shape than it was when it lost $23 billion in 1992 and was on the brink of bankruptcy, but many analysts say it will be treading water for years to come and extending economic distress across the industrial heartland around the Great Lakes. Company executives, while acknowledging that G.M. faces serious problems, say they are confident they can weather any storm. 'We've been ahead for 73 years in a row,' Rick Wagoner, G.M.'s chief executive, said in response to a question at a January news conference about Toyota's looming presence. 'I think the betting is we'll be ahead for the next 73 years.' 'Is it a birthright?' he added. 'Absolutely not. Could we blow it next year? I doubt it. Could we blow it in 10 years? For sure. We could do anything in 10 years.' Mr. Wagoner declined to be interviewed for this article. With the company's stock down about 50 percent on his watch, his legacy is on the line, as is the company's. Five years ago, at 47, Mr. Wagoner became G.M.'s youngest chief executive. He was a protégé of John F. Smith Jr., who became chief executive after a boardroom coup in 1992. Mr. Smith pulled the company from record losses to a record profit by 1999. Mr. Wagoner did not promise to reinvent G.M. 'The state of business at General Motors Corporation is strong,' he told shareholders in 2000, adding later that the company's success 'gives us a great chance to build off what we're doing.' Today, however, many analysts say G.M. is still unable to solve some of the problems it had in 1992, namely the seemingly unstoppable surge of efficient foreign competitors like Toyota. The strategy of Mr. Wagoner, now also G.M.'s chairman, has been to continue his predecessor's work of pushing global expansion even as he is now moving to shrink G.M.'s disparate global operations into a single manufacturing, design and engineering organization. Few industry analysts call him a visionary leader, but many see him as a skilled executive who has held the company together despite being dealt a difficult hand. Others say G.M. needs a more radical approach to ensure its survival. 'It's not like this tide can't turn,' Mr. Wagoner said in January. 'It's not going to turn by cheerleading or me convincing you here; it's going to be great products. It's going to be helped if exchange rates get in line with what they should be so companies that don't need to get subsidies aren't getting them.' At 6-foot-4, Mr. Wagoner briefly played college basketball while attending Duke University and remains an avid Blue Devil fan. He has approached his job more like a coach than an authoritarian chief, assembling a management team of prominent industry executives. Mr. Wagoner is a career G.M. employee who came up through the company's huge finance operations and is not considered one of Detroit's 'car guy' executives. Filling that role is Robert A. Lutz, the 73-year-old former Chrysler president Mr. Wagoner hired in 2001 to shake up G.M.'s product development. Mr. Lutz, a former Marine who commutes to work in a copter, commands most of the company's spotlight. Far from undermining his authority, Mr. Wagoner's willingness to delegate has earned him praise. 'What's remarkable about Rick's leadership is the strength of the team that he has been able to attract,' said Mike Jackson, chief executive of AutoNation, the largest G.M. dealer. Gerald Meyers, a University of Michigan professor and the former head of American Motors, now part of DaimlerChrysler, called Mr. Wagoner 'superb,' adding that his drive to globalize could not be accomplished quickly. 'That's a long tough road and it takes almost a generation of executive teams to make that happen,' he said. The problem, he added, is 'no matter how much they are improved, there are a couple guys out there running faster.' Others are less charitable in their assessment. Sean Egan, managing director of the independent debt rating firm Egan Jones, said Mr. Wagoner was performing 'miserably,' adding that 'some drastic action is needed in the very near future to even have a chance of turning around this slow slide to irrelevance.' The prevailing view among financial analysts is that G.M. is not close to bankruptcy because it is still clinging to profitability and has more than $23 billion in cash in its automotive operations. While it has roughly $30 billion in debt, those payments are stretched out over decades. Mr. Egan thinks bankruptcy is a real possibility because, he says, G.M. can burn through large amounts of cash quickly; he does not recommend buying G.M. bonds with maturities of more than two and a half years. But Craig Hutson, an analyst at another independent bond rating firm, Gimme Credit, thinks G.M. has 'the liquidity to withstand even a worst-case draconian scenario.' Mary Ann Keller, a longtime analyst and author, said, 'they're careening from one mess to another,' adding, 'the only thing that could make things better is a major restructuring.' She says that G.M.'s management lacks urgency and cites the fact that G.M. continues to pay more than $1 billion in annual dividends, as opposed to reinvesting that money in the business. She and other analysts also say G.M.'s recent agreement to pay $2 billion to extract itself from a soured alliance with Fiat does not reflect well on management. As part of the deal in 2000, Fiat won the right to sell its troubled auto business to G.M. at any time over a period of five years. In the end, G.M. paid $4.5 billion to begin and end that bargain and largely abandon its partnership. John Casesa, an analyst at Merrill Lynch, said the Fiat deal 'came at a large cost with little benefit.' While sales globally increased last year, in G.M.'s crucial home market they continue to decline even though G.M. spends more on incentives than any other company and is adding rebates, most about $1,000, on models that have sat on dealer lots for four months. Nearly half of G.M.'s North American production capacity is either idled or being used to produce cars and trucks sold on the cheap to rental car companies, business fleets or employees and their friends and family, according to a recent Morgan Stanley report. Labor contracts forbid the company to simply close plants to address this stark inefficiency. The company also has to maintain its size so it can generate enough cash to pay for its health care and pension benefits, which cost more than $1,800 for each vehicle produced in the United States annually. Automakers based in countries with more socialized systems are not similarly burdened. In recent speeches, Mr. Wagoner has emphasized this problem, stressed the need for tort reform and criticized the Japanese government for intervening in the currency market. But critics say that many of G.M.'s biggest problems are self-inflicted and that too many of its vehicles lack the verve that once characterized American cars. To them, the revival of G.M.'s Cadillac brand after years of cultural dormancy only demonstrates that the company can do better. While G.M. has made huge strides on quality surveys by J. D. Power & Associates, the surveys also show that most of its brands lag in appeal. Only three of eight had sales growth last year - Chevrolet, Cadillac and GMC. The company has tried advertising gimmicks and brand revivals. G.M. paid to place its new Buick LaCrosse sedan on 'Desperate Housewives' and to feature Aerosmith's 'Dream On' in LaCrosse commercials, but sales of Buicks still continue to dive. Saturn, Saab, Pontiac? Revivals for all three are in various stages. Both G.M. and Ford Motor have made huge bets on sales of large sport utilities and pickup trucks in the United States, a wager that some analysts say is at risk as gas prices rise. G.M. has upped the ante by creating a new brand around Hummer, the least fuel-efficient brand in the industry. Still, G.M. executives say their fortunes will improve considerably in 2006 and 2007 as a new generation of large sport utility vehicles and large pickup trucks hits the market. In Detroit, the unfortunate measure of success is not which of the Big Three automakers is doing best, but which is doing the least badly. Three years ago, that was clearly G.M., if for no other reason than that Ford and the Chrysler division of DaimlerChrysler were losing billions of dollars. Three years later, Chrysler is on the upswing and Ford has returned to profitability, though it is hardly a picture of health. One thing Mr. Wagoner is not betting on is a government bailout, given that steel companies and airlines have been left to fend for themselves. 'That has not gone unnoticed by me and therefore motivated us to think about, well, maybe we shouldn't just wait for somebody else to fix this problem for us,' he said.

Subject: Re: How Long Can G.M. Tread Water?
From: johnny5
To: Emma
Date Posted: Fri, Mar 11, 2005 at 11:55:21 (EST)
Email Address: johnny5@yahoo.com

Message:
Remember as Pete posted GM and Ford were 2 huge backers of that new bankruptcy reform bill that is gonna shaft poor americans. And like Emma said they are passing the buck down. http://www.stpetetimes.com/2003/04/20/Columns/_Money_market__doesn_.shtml Money market investments may offer paltry yields, but at least they are safe -- or so we hope. But that's no longer something we can take for granted when we see the phrase 'money market.' A reader recently raised the question regarding his investment in the Ford Money Market Account, which has a juicy yield of 3 to 3.4 percent, depending on account size. 'Has any money market fund failed in the last 20 years?' he asked. The answer is 'no,' but the question was the wrong one to ask. The Ford Money Market Account is neither a money market mutual fund, which legally would have to be diversified, nor a bank money market account, which would carry FDIC insurance. So what is it? A convenient way to lend money to Ford, the automaker. As Ford Financial explains on its Web site, 'Your funds are used to purchase demand notes issued by Ford Motor Credit Co.' The account offers above-average yields because it carries above-average risks. The auto industry is suffering from the downturn in the economy, and Ford's credit rating is being closely watched. Ford may very well make good on its obligations, but investors need to be aware of the risks. An account like this isn't the place to stash your entire life savings. A good rule of thumb is that investors should not have more than 10 percent of their money in the securities of any single issuer -- and a 5 percent limit is even safer. Ford stock, the Ford Money Market Account and other Ford debt should be counted together to apply the limits. Mutual funds are already diversified, so defaults pose much less risk. But even some money market mutual funds would have suffered losses in the past had their sponsors not stepped in and bailed them out. That's a reason not to have all your eggs in one or two baskets, even if those baskets are traditionally safe money market funds

Subject: Five Years After the Bubble
From: Emma
To: All
Date Posted: Fri, Mar 11, 2005 at 11:18:31 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/11/business/11norris.html Five Years After the Bubble, Have Its Lessons Been Forgotten? By FLOYD NORRIS FIVE years later, the great bubble of 2000 does not look so bad. The conventional wisdom now is that it was not all that important, certainly nothing like the great bubbles of 20th-century stock market history, those of the United States in 1929 and Japan in 1989. But there are similarities indicating that it could be a very long time before technology stocks as a group become good long-term investments again. First, look at the differences. In 1929, the world economy entered the Great Depression. In 1990, Japan began a long period of poor economic performance. It was not a depression, but there has yet to be a period of sustained growth there since the end of the bubble. The United States bubble in 2000 was different both in breadth and in economic impact. That bubble did not infect the entire stock market, but instead was concentrated in technology stocks, with a lesser bubble in the largest stocks, the ones that dominated the Standard & Poor's index of 500 stocks. The economic aftermath included only a mild recession and a slow recovery. When the bubble was at its peak, the Federal Reserve chairman, Alan Greenspan, turned aside advice, some of it from this column, that he should do something to restrain the speculation. He offered a confident forecast that if and when the bubble did burst, he would know what to do to minimize the damage. And he seems to have been right, even if some fear that superlow interest rates simply created another bubble, this one in home prices. The image of a bubble bursting is not a perfect one. Any child knows that soap bubbles blown into the air seem to float along, and then suddenly vanish. They do not shrink, and they do not reinflate. But the history of stock market bubbles is different. Charles P. Kindleberger, the M.I.T. economist whose book 'Manias, Panics and Crashes' remains the best work on the subject, notes that the path down from a peak is neither sudden nor straight. Instead, investors come back to be disappointed time and again. When all are dismayed, prices can be low enough to prompt another great bull market. But that can take a very long time. How long? Adjusted for inflation, the Dow Jones industrial average was below its 1929 peak in the early 1990's. (That calculation uses the consumer price index, which is by no means a perfect measure of inflation and is not adjusted to reflect dividend payments. But it provides a rough approximation of the purchasing power of a basket of stocks in different eras.) While many American stocks are higher than they were in 2000, the area where the frenzy was greatest remains low. Adjusted for inflation, the Nasdaq 100 is off about 70 percent from its peak. That performance is quite similar to the one turned in by the Dow industrials in the first five years after 1929, and worse than the performance of the Nikkei 225 after 1989. When the stock market fell to its post-bubble lows in late 2002, there was much talk that the lesson was that even if a technology is revolutionizing the world, the profits are more likely to go to those who use the technology than to those who develop it. Now investors are back buying hot technology stocks, and that lesson appears to be forgotten. That is perfectly consistent with the history of previous bubbles. The second five years after a historic high can produce some big gains, but they can also produce losses that wipe out those gains. Technology investing in the next five years may be more exciting than profitable.

Subject: Re: Five Years After the Bubble
From: william bishop
To: Emma
Date Posted: Fri, Mar 11, 2005 at 12:47:13 (EST)
Email Address: d2wob22@efn.org

Message:
http://www.nytimes.com/2005/03/11/business/11norris.html Five Years After the Bubble, Have Its Lessons Been Forgotten? By FLOYD NORRIS FIVE years later, the great bubble of 2000 does not look so bad. The conventional wisdom now is that it was not all that important, certainly nothing like the great bubbles of 20th-century stock market history, those of the United States in 1929 and Japan in 1989. But there are similarities indicating that it could be a very long time before technology stocks as a group become good long-term investments again. First, look at the differences. In 1929, the world economy entered the Great Depression. In 1990, Japan began a long period of poor economic performance. It was not a depression, but there has yet to be a period of sustained growth there since the end of the bubble. The United States bubble in 2000 was different both in breadth and in economic impact. That bubble did not infect the entire stock market, but instead was concentrated in technology stocks, with a lesser bubble in the largest stocks, the ones that dominated the Standard & Poor's index of 500 stocks. The economic aftermath included only a mild recession and a slow recovery. When the bubble was at its peak, the Federal Reserve chairman, Alan Greenspan, turned aside advice, some of it from this column, that he should do something to restrain the speculation. He offered a confident forecast that if and when the bubble did burst, he would know what to do to minimize the damage. And he seems to have been right, even if some fear that superlow interest rates simply created another bubble, this one in home prices. The image of a bubble bursting is not a perfect one. Any child knows that soap bubbles blown into the air seem to float along, and then suddenly vanish. They do not shrink, and they do not reinflate. But the history of stock market bubbles is different. Charles P. Kindleberger, the M.I.T. economist whose book 'Manias, Panics and Crashes' remains the best work on the subject, notes that the path down from a peak is neither sudden nor straight. Instead, investors come back to be disappointed time and again. When all are dismayed, prices can be low enough to prompt another great bull market. But that can take a very long time. How long? Adjusted for inflation, the Dow Jones industrial average was below its 1929 peak in the early 1990's. (That calculation uses the consumer price index, which is by no means a perfect measure of inflation and is not adjusted to reflect dividend payments. But it provides a rough approximation of the purchasing power of a basket of stocks in different eras.) While many American stocks are higher than they were in 2000, the area where the frenzy was greatest remains low. Adjusted for inflation, the Nasdaq 100 is off about 70 percent from its peak. That performance is quite similar to the one turned in by the Dow industrials in the first five years after 1929, and worse than the performance of the Nikkei 225 after 1989. When the stock market fell to its post-bubble lows in late 2002, there was much talk that the lesson was that even if a technology is revolutionizing the world, the profits are more likely to go to those who use the technology than to those who develop it. Now investors are back buying hot technology stocks, and that lesson appears to be forgotten. That is perfectly consistent with the history of previous bubbles. The second five years after a historic high can produce some big gains, but they can also produce losses that wipe out those gains. Technology investing in the next five years may be more exciting than profitable.
---
The trouble with all this is 'What is Money'. The printing of money is supposed to be the prerogative to the USGov. The BUBBLES are nothing more or less than the printing of money called Stock Certificates and lo and behold these Certificates fluctuate in value according to the dictates of the Exchanges. The old system was the Gold Standard. Under that system the Banks could loan five times the value of the Gold they held in their vaults. Then whenever they decided they didn't have enough Gold to cover they would declare default or bankruptcy and the Depositors were out their Gold. Hey that sounds strangely like the Stock Exchanges. JK Galbraith,s book on Money was a beginning primer on money for me as was the book on 'Gold' by a New York banker. But a couple of things that were more enlightening for me was taking us off the Gold Standard by Nixon and Paul Krugman's story about the Washington DC Babysitting group who when they ran out of script, just printed some more. I understand he recommended that system to the Japanese Govt and it didn't work too well. My own take on all this is that money is not a thing but a belief or an idea; the willingness of people to accept some medium of exchange for something someone else wants, simple as that. Now that the latest news indicates a growing unwillingness to accept Dollars our line of 'Credit' (Money?) is drying up; in other words the Dollar is a Bubble!

Subject: Kindleberger
From: johnny5
To: Emma
Date Posted: Fri, Mar 11, 2005 at 11:44:46 (EST)
Email Address: johnny5@yahoo.com

Message:
He was going to write a book on the current housing boom before he left us. Google at its current levels makes no sense to me. Still the hedge fund guys in west palm that shorted it are broke now. In japan people are holding yen and not buying anything, the deflation of assets makes holding cash the best investment.

Subject: Teaching Samba to G.M. Brazil
From: Emma
To: All
Date Posted: Fri, Mar 11, 2005 at 11:17:09 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/11/business/worldbusiness/11brazil.html?pagewanted=all&position= Teaching Some New Samba Steps to G.M. Brazil By TODD BENSON SÃO PAULO, Brazil - Since taking over at General Motors in Brazil just over a year ago, Ray G. Young has given the country's automobile industry a lot to talk about. In October, Mr. Young became the impromptu star of São Paulo's auto show when he danced enthusiastically to the Paul Rodgers song 'All Right Now' as G.M. showcased its latest vehicles. And last month, the Brazilian media published pictures of him trying out some samba steps at a celebration of G.M.'s 80th anniversary in the country. But his penchant for dancing is not the only thing attracting attention. With his youthful energy and hands-on management style, the 43-year-old managing director has helped breathe new life into a downtrodden, money-losing operation. Last year, though the unit did not manage a profit, it did claw its way to the top of Brazil's volatile auto market in sales volume for the first time, increased exports aggressively and moved closer to turning a profit - all while adding jobs. For G.M., the world's No. 1 automaker, this rebound in Brazil, its sixth-largest market, has been a bright spot as the company extricates itself from a soured alliance with Fiat of Italy and continues to atrophy in its biggest markets, the United States and Europe. Still, sales numbers in Brazil sank in January, and G.M. abruptly fell back into third place, behind Volkswagen and Fiat, respectively. The Ford Motor Company, traditionally in fourth place in Brazil, held steady in that slot. 'Clearly the January market share is disappointing,' Mr. Young said. 'It puts us in a bit of a hole right now in 2005, but I'm confident we're going to come back.' Sales numbers for February showed G.M. already closing the gap again on its rivals. Part of G.M.'s success here in 2004 was driven by Brazil's strong economic rebound, which helped woo consumers into showrooms for the first time in years. Auto sales in the country shot up 10.5 percent, to 1.6 million vehicles, with all major manufacturers chalking up hefty gains. Nevertheless, many industry analysts say that Mr. Young also deserves lots of credit for the turnaround at General Motors do Brasil. 'He has brought a sense of purpose to General Motors that they didn't seem to have before,' said Ricardo Durazzo, a vice president at the consulting firm A. T. Kearney in São Paulo. 'He is charismatic and he's a likable person,' Mr. Durazzo added, important qualities in Brazil. In an interview at the company's headquarters in São Caetano do Sul, an industrial hub outside São Paulo, Mr. Young said: 'When I arrived here, it was an organization that was a little tired. It went through so many years of retrenchment, cost-cutting, in order to stop the financial bleeding. So one of my first priorities when I came here was to try to rebuild morale.' He came to Brazil with 18 G.M. years under his belt, his entire professional career. The son of Chinese émigrés to Canada, Mr. Young joined G.M.'s Canadian unit in 1986 after receiving his M.B.A. from the University of Chicago, and quickly climbed the corporate ladder. Over the years, he held posts on three continents, spending much of his time on the financial side, crunching numbers most recently in Detroit as G.M. North America's chief financial officer. Here in Brazil, where he succeeded Walter Wieland, a more somber executive whose tenure coincided with a slumping auto market, Mr. Young set out to rally his troops around two objectives: achieving market leadership and becoming profitable. He started distributing monthly assessments to all employees, including factory workers, so everyone could keep track of the company's performance. He also began holding ceremonies to thank employees publicly for their work. The work force has responded in kind; on a recent stroll through a factory, workers stopped him to ask for an autograph. 'I've had the chance to work around the world, but one thing about Brazil is you've got to appeal to the emotions,' Mr. Young said. 'It's amazing what happens when people feel proud working for the company.' Volkswagen and Fiat have long battled for the top spot in Brazil. But in Mr. Young's first year on the job, G.M. edged out both to finish 2004 as the market leader, with 23.1 percent of Brazil's auto market. G.M.'s exports from Brazil, a growing part of its business here, also surged in 2004, to $1.6 billion, from $1.2 billion in 2003 and just $900 million in 2002. Like other major multinational automakers, which make up the entire auto market here, G.M. is increasingly using Brazil to make low-cost vehicles for other emerging markets, including Argentina, Mexico and South Africa. Though the company does not break out financial results by country in Latin America, Mr. Young said G.M. cut its losses in Brazil by more than 60 percent in 2004 and made an operating profit in the fourth quarter. That helped G.M.'s Latin America, Africa and Middle East division earn $85 million last year after losing $331 million in 2003. This year, Mr. Young expects G.M. to make its first net profit in Brazil since 1997. Still, the resurgence in Brazil has not been without controversy. Some industry analysts say the automaker won market leadership last year only because G.M. dealers preregistered new cars in December before they had actually been sold, a common practice among dealers in Brazil. G.M. sold a mere 15,796 vehicles in January 2005, down from 44,557 in December and from 23,833 in January 2004, according to the Brazilian automakers' association. (By comparison, Volkswagen's sales dropped to 25,927 in January from 36,120 in December, while Fiat's slipped to 24,647 from 37,468.) 'Why did the numbers drop so much?' said Joel Leite, who owns a Web site called Autoinforme that tracks Brazil's auto sector. 'Because G.M. dealers sold cars in January that they had already registered as sold in December.' He added that the practice, while frowned upon, is not illegal. Mr. Young denied any preregistration or year-end sales inflation, saying, 'We don't do that.' He attributed the company's poor performance in January, in the slow summer season here, to a miscalculation that led to a drop in Internet and direct-from-the-factory fleet sales. G.M. shifted almost all its vehicles to dealer lots in December, he said, leaving too few to be sold over the Web and to fleet customers the next month. G.M.'s sales bounced back in February, jumping by 6,823 vehicles from the previous month, to 22,619. Fiat and Volkswagen, meanwhile, increased sales by just 2,446 and 854 autos from January, respectively. The parent company appears confident that 2004 was not a fluke. It is spending $240 million to increase capacity at the G.M. plant in Gravataí, in the southern state of Rio Grande do Sul, where it intends to create 1,500 new jobs by the end of 2006. And recently it announced plans to invest about $192 million to develop a new version of its Chevrolet Vectra sedan at its São Caetano plant for the domestic and export markets. Already, G.M. is the only automaker in Brazil offering models in all market segments, from its big-selling Celta compact to the popular Meriva minivan. Still, obstacles lie ahead for all carmakers here. The sales tax on vehicles in Brazil, about 30 percent, is twice that of other emerging markets, like China, forcing up the price on new cars in a country where the minimum wage is less than $100 a month. Interest rates are among the world's highest, making consumer financing largely unaffordable. Parts makers also have limited access to credit, and that interferes with production each year. And the Brazilian currency, the real, has rallied in the last few months to its strongest level in almost three years, gnawing away at profit margins for exporters. Mr. Young and his competitors are lobbying the government to reduce auto taxes and lower interest rates, and to create special credit lines for small-scale parts manufacturers. 'It's a tough place to sell cars and make money,' Mr. Young said. 'You have to be nimble on your feet.'

Subject: Allez les verts!!!!
From: Setanta
To: All
Date Posted: Fri, Mar 11, 2005 at 11:05:57 (EST)
Email Address: Not Provided

Message:
I know this is a financial/political discussion board but i'd like to take this opportunity to wish the Irish Rugby team the best of luck against the French tomorrow. Rugby is the only sport and occasion where the entire island of Ireland is united. both Southern Catholics and Northern Protestants don the green jersey with the shamrock crest when ireland as a nation and undivided is represented internationally on the field. our results so far in the 6 Nations Championship: Ireland 28 - 17 Italy Ireland 40 - 13 Scotland Ireland 19 - 13 England ...the Grand Slam is still on the cards and should we win tomorrow, we will meet Wales on saturday week for the Grand Slam Decider (Wales are unbeaten too). Allez les verts!!!! Ireland's Call Come the day And come the hour Come the power and the glory We have come to answer Our country's call... From the four proud provinces of Ireland Chorus Ireland, Ireland Together standing tall Shoulder to shoulder We'll answer Ireland's call. From the mighty Glens of Antrim From the rugged hills of Galway From the walls of Limerick And Dublin Bay From the four proud provinces of Ireland (chorus) Hearts of steel And heads unbowing Vowing never to be broken We will fight, until We can fight no more... For the four proud provinces of Ireland. (chorus) ....and i've got a ticket!!!!

Subject: The Flow of Credit: Ben Bernanke
From: Emma
To: All
Date Posted: Fri, Mar 11, 2005 at 06:18:10 (EST)
Email Address: Not Provided

Message:
http://www.federalreserve.gov/boarddocs/speeches/2005/200503102/default.htm March 10, 2005 Ben S. Bernanke: 'To be more specific, I will argue that over the past decade a combination of diverse forces has created a significant increase in the global supply of saving--a global saving glut--which helps to explain both the increase in the U.S. current account deficit and the relatively low level of long-term real interest rates in the world today. The prospect of dramatic increases in the ratio of retirees to workers in a number of major industrial economies is one important reason for the high level of global saving. However, as I will discuss, a particularly interesting aspect of the global saving glut has been a remarkable reversal in the flows of credit to developing and emerging-market economies, a shift that has transformed those economies from borrowers on international capital markets to large net lenders.'

Subject: The Flow of Credit
From: Emma
To: Emma
Date Posted: Fri, Mar 11, 2005 at 06:25:40 (EST)
Email Address: Not Provided

Message:
http://www.federalreserve.gov/boarddocs/speeches/2005/200503102/default.htm March 10, 2005 The Global Saving Glut and the U.S. Current Account Deficit By Ben S. Bernanke Sandridge Lecture, Virginia Association of Economics On most dimensions the U.S. economy appears to be performing well. Output growth has returned to healthy levels, the labor market is firming, and inflation appears to be well controlled. However, one aspect of U.S. economic performance still evokes concern among economists and policymakers: the nation's large and growing current account deficit. In the first three quarters of 2004, the U.S. external deficit stood at $635 billion at an annual rate, or about 5-1/2 percent of the U.S. gross domestic product (GDP). Corresponding to that deficit, U.S. citizens, businesses, and governments on net had to raise $635 billion on international capital markets.1 The current account deficit has been on a steep upward trajectory in recent years, rising from a relatively modest $120 billion (1.5 percent of GDP) in 1996 to $414 billion (4.2 percent of GDP) in 2000 on its way to its current level. Most forecasters expect the nation's current account imbalance to decline slowly at best, implying a continued need for foreign credit and a concomitant decline in the U.S. net foreign asset position. Why is the United States, with the world's largest economy, borrowing heavily on international capital markets--rather than lending, as would seem more natural? What implications do the U.S. current account deficit and our consequent reliance on foreign credit have for economic performance in the United States and in our trading partners? What policies, if any, should be used to address this situation? In my remarks today I will offer some tentative answers to these questions. My answers will be somewhat unconventional in that I will take issue with the common view that the recent deterioration in the U.S. current account primarily reflects economic policies and other economic developments within the United States itself. Although domestic developments have certainly played a role, I will argue that a satisfying explanation of the recent upward climb of the U.S. current account deficit requires a global perspective that more fully takes into account events outside the United States....

Subject: Re: The Flow of Credit
From: Pete Weis
To: Emma
Date Posted: Fri, Mar 11, 2005 at 10:23:33 (EST)
Email Address: Not Provided

Message:
Clearly Bernanke is getting ready to minimize Bush administration and Federal Reserve responsibilities regarding the budget deficit's and current account deficit's powerful downward effect on the US dollar.

Subject: Understand and Argue
From: Emma
To: Pete Weis
Date Posted: Fri, Mar 11, 2005 at 11:01:07 (EST)
Email Address: Not Provided

Message:
What is most important is for us to understand how our most important central bankers are thinking. These are our most important central bankers, and there is reason to believe they well reflect the Federal Reserve policy makers. We can argue, but we have to understand.

Subject: Absolutely
From: Pete Weis
To: Emma
Date Posted: Fri, Mar 11, 2005 at 15:19:11 (EST)
Email Address: Not Provided

Message:
But what I've gathered from Bernanke's statements in the past would be that he believes we should continue down the same course we are headed presently. He seems to be focusing on outside factors as a cause for our current account deficit. While what he says certainly has some truth, he is ignoring, to some degree, internal factors which we might be able to do something about - an aggressive energy policy which might reduce our consumption and dependency on oil for instance. He has always pushed for pumping liquidity and so he has a tendency to downplay the dangers of growing debt. I have a feeling the Bush administration will find much comfort in his statements.

Subject: Globalization: Alan Greenspan
From: Emma
To: All
Date Posted: Fri, Mar 11, 2005 at 06:03:31 (EST)
Email Address: Not Provided

Message:
http://www.federalreserve.gov/boarddocs/speeches/2005/20050310/default.htm March 10, 2005 Remarks by Chairman Alan Greenspan Globalization At the Council on Foreign Relations The U.S. economy appears to have been pressing a number of historic limits in recent years without experiencing the types of financial disruption that almost surely would have arisen in decades past. This observation raises some key questions about the longer-term stability of the U.S. and global economies that bear significantly on future economic developments. Among the limits that we have been pressing against are those in our external and budget balances. In the United States, we have been incurring ever-larger trade deficits, with the broader current account measure moving into the neighborhood of 6 percent of our gross domestic product. Yet the dollar's real exchange value, despite its recent decline, remains above its 1995 low. Meanwhile, we have moved from a budget surplus in 2000 to a deficit that is projected by the Congressional Budget Office to be around 3-1/4 percent of GDP this year. In addition, we have enacted commitments to our senior citizens that, given the impending retirement of our huge baby-boom generation, will create significant fiscal challenges in the years ahead. Yet the yields on Treasury notes maturing a decade from now remain at low levels. Nor are households experiencing inordinate financial pressures as a consequence of record-high levels of household debt relative to income. *** Has something fundamental happened to the U.S. economy that enables us to disregard all the time-tested criteria for assessing when economic imbalances become worrisome? Regrettably, the answer is no; the free lunch has still to be invented. We do, however, seem to be undergoing what is likely, in the end, to be a one-time shift in the degree of globalization and innovation that has temporarily altered the specific calibrations of those criteria. Globalization has altered the economic frameworks of both advanced and developing nations in ways that are difficult to fully comprehend. Nonetheless, the largely unregulated global markets, with some notable exceptions, appear to move smoothly from one state of equilibrium to another. Adam Smith's 'invisible hand' remains at work on a global scale. Because of deregulation, increased innovation, and lower barriers to trade and investment, cross-border trade in recent decades has been expanding at a far faster pace than GDP. As a result, many economies are increasingly exposed to the rigors of international competition and comparative advantage. In the process, lower prices for some goods and services produced by our trading partners have competitively suppressed domestic price pressures. Production of traded goods and services has expanded rapidly in economies with large, low-wage labor forces. Most prominent are China and India, which over the past decade have partly opened up to market forces, and the economies of central and eastern Europe, which were freed from central planning by the fall of the Soviet empire. The consequent significant additions to world production and trade have clearly put downward pressure on prices in the United States and in the economies of our trading partners. Over the past two decades, inflation has fallen notably, virtually worldwide, as has economic volatility. Although a complete understanding of the reasons remains elusive, globalization and innovation would appear to be essential elements of any paradigm capable of explaining the events of the past ten years. If this is indeed the case, because the extent of globalization and the speed of innovation are limited, the current apparent rapid pace of structural shift cannot continue indefinitely. While the outlook for the next year or two seems reasonably bright, the outlook for the latter part of this decade remains opaque because it is uncertain whether this transitional paradigm, if that is what it is, is already far advanced and about to slow, or whether it remains in an early, still-vibrant stage of evolution. *** Globalization--the extension of the division of labor and specialization beyond national borders--is patently a key to understanding much of our recent economic history. With a deepening of specialization and a growing capacity to conduct transactions and take risks throughout the world, production has become increasingly international.1 The pronounced structural shift over the past decade to a far more vigorous and competitive world economy than that which existed in earlier post-World War II decades apparently has been adding significant stimulus to world economic activity. This stimulus, like that which resulted from similar structural changes in the past, is likely a function of the rate of increase of globalization and not its level. If so, such impetus would tend to peter out as we approach the practical limits of globalization. Full globalization, in which production, trade, and finance are driven solely by risk-adjusted rates of return and in which risk is indifferent to distance and national borders, will likely never be achieved. The inherent risk aversion of people, and the home bias that is one manifestation of that aversion, will limit how far globalization can proceed. But because so much of our recent experience has little precedent, as I noted earlier, we cannot fully determine how long the current globalization dynamic will take to play out. And even then we have to be careful not to fall into the trap of equating the achievement of full globalization with the exhaustion of opportunities for new investment. The closing of our frontier at the end of the nineteenth century, for example, did not signal the onset of a new era of economic stagnation. *** The increasing globalization of the post-World War II era was fostered at its beginnings by the judgment that burgeoning prewar protectionism was among the primary causes of the depth of the Great Depression of the 1930s. As a consequence, trade barriers began to fall after the war. Globalization was enhanced further when the inflation-ridden 1970s provoked a rethinking of the philosophy of economic policy, the roots of which were still planted in the Depression era. In the United States, that rethinking led to a wave of bipartisan deregulation of transportation, energy, and finance. With respect to macropolicies, there was a growing recognition that inflation impaired economic performance.2 Moreover, a tightening of monetary policy, and not increased regulation, came to be seen by the end of that decade as the only viable solution to taming inflation.3 Of course, the startling recovery of war-ravaged West Germany following Ludwig Erhard's postwar reforms, and Japan's embrace of global trade, were early examples of the policy reevaluation process. It has taken several decades of experience with markets and competition to achieve an unwinding of regulatory rigidities. Today, privatization and deregulation have become almost synonymous with 'reform.' *** By any number of measures, globalization has expanded markedly in recent decades. Not only has the ratio of international trade in goods and services to world GDP risen steadily over the past half-century, but a related measure--the extent to which savers reach beyond their national borders to invest in foreign assets--has also risen. Through much of the post-World War II years, domestic saving for each country was invested predominantly in its domestic capital assets, even when there existed the potential for superior risk-adjusted returns from abroad. Because a country's domestic saving less its domestic investment is essentially equal to its current account balance, such balances, positive or negative, were therefore generally modest, with the exception of the mid-1980s. But in the early 1990s, 'home bias' began to diminish appreciably, and, hence, the dispersion of current account balances among countries has increased markedly. The widening current account deficit in the United States has come to dominate the tail of the distribution of external balances across countries. Nonetheless, the worldwide dispersion of current account balances has risen since the early 1990s, even excluding the United States. 4 Thus, the decline in home bias, or its equivalent, expanding globalization, has apparently enabled the United States to finance and, hence, incur so large a current account deficit. As a result of these capital inflows, the ratio of foreign net claims against U.S. residents to our annual GDP has risen to approximately one-fourth. While some other countries are far more in debt to foreigners, at least relative to their GDPs, they do not face the scale of international financing that we require. A U.S. current account deficit of 6 percent of GDP would probably not have been readily fundable a half-century ago or perhaps even a couple of decades ago.5 The ability to move that much of world saving to the United States in response to relative rates of return almost surely would have been hindered by the far-lesser degree of both globalization and international financial flexibility that existed at the time. Such large transfers would presumably have induced changes in the prices of assets that would have proved inhibiting. Nonetheless, we have little evidence that the economic forces that are fostering international specialization, and hence cross-border trade and increasing dispersion of current account balances, are as yet diminishing. To be sure, as I pointed out earlier this year, we may be approaching a point, if we are not already there, at which exporters to the United States, should the dollar decline further, would no longer choose to absorb a further reduction in profit margins. An acceleration of U.S. import prices, of course, would impede imports and give traction to the process of adjustment in our trade balance. Moreover, international investors, private and official, faced with an increasing concentration of dollar assets in their portfolios, will at some point choose greater balance in their asset accumulation. That shift, over time, would likely induce contractions in both the U.S. current account deficit and the corresponding current account surpluses of other nations. To date the proportional shift out of dollars from the total of official and private sector foreign currency accounts has been modest, when adjusted for exchange rate changes.6 Of course, the shift has been larger on an unadjusted dollar equivalent basis. However, the market has absorbed this change in an orderly manner. The more-rapid aging of European and Japanese populations relative to the aging of the U.S. population should slow the flow of foreign saving available to the United States. Although those population dynamics are already in train, little evidence as yet of slowed savings transfers has surfaced. *** Can market forces incrementally defuse a buildup in a nation's current account deficit and net external debt before a crisis more abruptly does so? The answer seems to lie with the degree of market flexibility. In a world economy that is sufficiently flexible, as debt projections rise, product and equity prices, interest rates, and exchange rates presumably would change to reestablish global balance. We may not be able to usefully determine at what point foreign accumulation of net claims on the United States will slow or even reverse, but it is evident that the greater the degree of international flexibility, the less the risk of a crisis.7 Should globalization continue unfettered and thereby create an ever-more flexible international financial system, history suggests that current account imbalances will be defused with modest risk of disruption. Two Federal Reserve studies of large current account adjustments in developed countries, the results of which are presumably applicable to the United States, suggest that market forces are likely to restore a more long-term sustainable current account balance here without substantial disruption.8 Indeed, this was the case in the second half of the 1980s. I say this with one major caveat. Protectionism, some signs of which have emerged in recent years, could significantly erode global flexibility and, hence, undermine the global adjustment process. We are already experiencing pressure to slow down the expansion of trade. The current Doha Round of trade negotiations has faced difficulties largely because the low-hanging fruit available through negotiation has already been picked in the trade liberalizations that have occurred since the Kennedy Round. On a more encouraging note, some recent indications of progress may be pointing to a heightened probability of completion of the Doha Round. *** The remarkable technological advances of recent decades have doubtless augmented and fostered the dramatic effect of increased globalization on economic growth. In particular, information and communication technologies have propelled the processing and transmission of data and ideas to a level far beyond our capabilities a decade or two ago. The advent of real-time information systems has enabled managers to organize a workforce without the redundancy required in earlier decades to ensure against the type of human error that technology has now made far less prevalent. Real-time information, by eliminating much human intervention, has markedly reduced scrappage rates on production lines, lead times on purchases, and errors in many forms of recordkeeping. Much data transfer is now electronic and far more accurate than possible in earlier times. The long-term path of technology and growth is difficult to discern. Indeed, innovation, by definition, is not forecastable. In the United States, we have always employed technologies at, or close to, the cutting edge, and we have created many innovative technologies ourselves. The opportunities of many developing economies to borrow innovation is not readily available to us. Thus, even though the longer-term prospects for innovation and respectable U.S. productivity growth are encouraging, our productivity growth has rarely exceeded an average rate of 3 percent annually for any protracted period. *** We have, I believe, a reasonably good understanding of why Americans have been able to reach farther into global markets, incur significant increases in debt, and yet not suffer the disruptions so often observed as a consequence. However, a widely held alternative view of the past decade cannot readily be dismissed. That view holds that the postwar paradigm is still largely in place, and key financial ratios, rather than suggesting an evolving economic structure, reflect extreme values that have materialized within an unchanged structure and must eventually adjust, perhaps abruptly. To be sure, even with the increased flexibility implied in a paradigm of expanding globalization and innovation, the combination of exceptionally low saving rates and historically high ratios of household debt to income can be a concern if incomes unexpectedly fall. Indeed, virtually any debt burden doubtless will become oppressive if incomes fall significantly. But rising debt-to-income ratios can be somewhat misleading as an indicator of stress. Indeed the ratio of household debt to income has been rising sporadically for more than a half-century, a trend that partly reflects the increased capacity of ever-wealthier households to service debt. Moreover, a significant part of the recent rise in the debt-to-income ratio reflects the remarkable gain in homeownership. Over the past decade, for example, the share of households that own homes has risen from 64 percent to 69 percent. During the decade, a significant number of renters bought homes, thus increasing the asset side of their balance sheets as well as increasing their debt. It can scarcely be argued that the substitutions of debt service for rent materially impaired the financial state of the new homeowner. Yet the process over the past decade added more than 10 percent to outstanding mortgage debt and accounted for more than one-seventh of the increase in total household debt over that period.9 Thus, short of a period of appreciable overall economic weakness, households, with the exception of some highly leveraged subprime borrowers, do not appear to be faced with significant financial strain. With interest rates low, debt service costs for households have been essentially stable for the past few years. Accounting for other fixed charges such as rent, utilities, and auto-leasing costs does not materially alter this assessment of stability. Even should interest rates rise materially further, the effect on household expenses will be stretched out because four-fifths of debt is at fixed rates and varying maturities, and it will take time for debt to mature and reflect the higher rates. Despite the almost 2-percentage-point rise in mortgage rates on new originations from mid-1999 to mid-2000, the average interest rate on outstanding mortgage debt rose only slightly, as did debt service. In a related concern, a number of analysts have conjectured that the extended period of low interest rates is spawning a bubble in housing prices in the United States that will, at some point, implode. Their concern is that, if this were to occur, highly leveraged homeowners would be forced to sharply curtail their spending. To be sure, indexes of house prices based on repeat sales of existing homes have significantly outstripped increases in rents, suggesting at least the possibility of price misalignment in some housing markets. But a destabilizing contraction in nationwide house prices does not seem the most probable outcome. To be sure, the recent marked increase in the investor share of home purchases suggests rising speculation in homes. (Owner occupants are rarely home speculators because to sell, they must move.)10 However, nominal house prices in the aggregate have rarely fallen and certainly not by very much. And even should more-than-average price weakness occur, the increase in home equity as a consequence of the recent sharp rise in prices should buffer the vast majority of homeowners. House prices, however, like those of many other assets, are difficult to predict, and movements in those prices can be of macroeconomic significance. There appears, at the moment, to be little concern about corporate financial imbalances. Debt-to-equity ratios are well within historical ranges, and the recent prolonged period of low long-term interest rates has enabled corporations to refinance liabilities and stretch out bond maturities. *** The resolution of our current account deficit and household debt burdens does not strike me as overly worrisome, but that is certainly not the case for our fiscal deficit, which, according to the Congressional Budget Office, will rise significantly as the baby boomers start to retire in 2008. Our fiscal prospects are, in my judgment, a significant obstacle to long-term stability because the budget deficit is not readily subject to correction by market forces that stabilize other imbalances. One issue that concerns most analysts, especially in the context of a widening structural federal deficit, is inadequate national saving. Fortunately, our meager domestic savings, and those attracted from abroad, are being very effectively invested in domestic capital assets. The efficiency of our capital stock thus has been an important offset to what, by any standard, has been an exceptionally low domestic saving rate in the United States. Although saving is a necessary condition for financing the capital investment required to engender productivity, it is not a sufficient condition. The very high saving rates of the Soviet Union, of China, and of India in earlier decades often did not foster significant productivity growth in those countries. Saving squandered in financing inefficient technologies does not advance living standards. In light of the uncertain link between saving and productivity growth, it is difficult to measure the exact extent to which our relatively low gross national saving rate will limit the future growth of an efficient capital stock. What we know for sure, however, is that the 30 million baby boomers who will reach 65 years of age over the next quarter-century are going to place enormous pressures on the ability of our economy to supply the real benefits promised to retirees under current law, and our success in attracting savings from abroad may be masking the full effect on investment of deficient domestic saving. *** Our day-by-day experiences with the effectiveness of flexible markets as they adjust to, and correct, imbalances can readily lead us to the mistaken conclusion that once markets are purged of rigidities, macroeconomic disturbances will become a historical relic. However, the penchant of humans for quirky, often irrational behavior gets in the way of this conclusion. A discontinuity in valuation judgments, often the cause or consequence of the building and bursting of a bubble, can occasionally destabilize even the most liquid and flexible of markets. I do not have much to add on this issue except to reiterate our need to better understand it. *** The last three decades have witnessed a significant coalescing of economic policy philosophies. Central planning has been judged as ineffective and is now generally avoided. Market flexibility has become the focus, albeit often hesitant focus, of reform in most countries. All policymakers are struggling to understand global and technological changes that appear to have profoundly altered world economic developments. For most economic participants, these changes appear to have had positive effects on their economic well-being. But a significant minority, trapped on the adverse side of the market's process of creative destruction, are suffering. This is an issue that needs to be more fully addressed if globalization is to sustain the public support it requires to make further progress.

Subject: Footnotes to Speech
From: Emma
To: Emma
Date Posted: Fri, Mar 11, 2005 at 06:07:42 (EST)
Email Address: Not Provided

Message:
http://www.federalreserve.gov/boarddocs/speeches/2005/20050310/default.htm Footnotes 1. Much of what is assembled in final salable form in the United States, for example, may consist of components from many continents. Companies seek out the lowest costs of inputs to effectively compete for their customers' dollars. This international competition, left unfettered, history suggests, would tend to direct output to the comparatively most efficient producers of specific products or services and, hence, maximize standards of living of all participants in trade. Given the skills and education of its workforce and a number of institutional factors, such as its legal structure, each economy will achieve its maximum possible average living standard. Return to text 2. Indeed, the Group of Seven leaders, at their 1977 economic summit, identified inflation as a cause of unemployment. Return to text 3. This had not always been the case. For example, wage and price controls were imposed in the United States in 1971 as a substitute for a tighter monetary policy and higher interest rates to address rising inflation. Return to text 4. The correlation coefficient between paired domestic saving and domestic investment, a conventional measure of the propensity to invest at home for OECD countries constituting four-fifths of world GDP, fell from 0.97 in 1990 to less than 0.8 in 2003. This correlation coefficient has been even lower recently when the United States is excluded from the sample. With rare exceptions, a decline in the correlation of countries' paired domestic saving and domestic investment implies an increased dispersion of current account balances. Return to text 5. It is true that estimates of the ratios of the current account to GDP for many countries in the nineteenth century are estimated to have been as large as, or larger, than we have experienced in recent years. However, the substantial net flows of capital financing for those earlier deficits were likely motivated in large part by specific major development projects (for example, railroads) bearing high expected rates of return. By contrast, diversification appears to be a more salient motivation for today's large net capital flows. Moreover, gross capital flows are believed to be considerably greater relative to GDP in recent years than in the nineteenth century. (See Alan M. Taylor (2002), 'A Century of Current Account Dynamics,' Journal of International Money and Finance, vol. 21 (November), pp. 725-48, and Maurice Obstfeld and Alan M. Taylor (2002),'Globalization and Capital Markets,' NBER Working Paper 8846 (March).) Return to text 6. Based on data provided by the Bank for International Settlements for cross-border bank liabilities and international bonds outstanding. Return to text 7. Although increased flexibility apparently promotes resolution of current account imbalances without significant disruption, it may also allow larger deficits to emerge before markets are required to address them. Moreover, the apparent ability of the U.S. economy to withstand the stock market plunge of 2000, the terrorist attacks of September 11, 2001, corporate governance scandals, and wars in Afghanistan and Iraq indicates a greater degree of economic flexibility than was apparent in the 1970s and earlier. Return to text 8. Caroline Freund (2000), 'Current Account Adjustment in Industrialized Countries,' Board of Governors of the Federal Reserve System, International Finance Discussion Paper 692 (December); Hilary Croke, Steven B. Kamin, and Sylvain Leduc (2005), 'Financial Market Developments and Economic Activity during Current Account Adjustments in Industrial Economies,' Board of Governors of the Federal Reserve System, International Finance Discussion Paper 827 (February). Return to text 9. For statistical methodology see Karen Dynan, Kathleen Johnson, and Karen Pence (2003),'Recent Changes to a Measure of U.S. Household Debt Service,' Federal Reserve Bulletin, vol. 89 (October), pp. 417-26. Return to text 10. A new survey by the National Association of Realtors reports that purchases of vacation homes and homes for investment amounted to more than a third of total existing home purchases last year. Mortgage originations data reported under the Home Mortgage Disclosure Act (HMDA) indicate that the share has been rising significantly since 1998. Return to text

Subject: Listen to Pete - he sees it coming.
From: johnny5
To: All
Date Posted: Fri, Mar 11, 2005 at 05:48:57 (EST)
Email Address: johnny5@yahoo.com

Message:
For those of you that think you are just going to walk away from that interest only or minimum payment loan: http://www.siliconinvestor.com/readmsg.aspx?msgid=21124302 Here's the deal. Let's say you buy a home and the market tanks. Your home is now worth less than the mortgage. If you have not refinanced, this is a purchase money loan, so you can just give the home back to the bank. Once you refinance the bank can go after you for the deficiency. This is California law a Trust Deed state, but most states are the similar. In 1990 very few lenders sought deficiency judgments because the ex-homeowner would just file for bankruptcy leaving the bank little to show for their effort. They made exceptions when they knew they borrower had enough assets. One friend was a partner in a law firm in Houston that folded in 1990 so he moved to Los Angeles with a new law firm. When his Houston home sold for $116K less than the mortgage, the bank sought the difference - which they got because he had it. This being Texas, a mortgage state, the deficiency judgment could be filed even though he had never refinanced. Under the new bankruptcy law there is additional incentive for the bank to file a deficiency judgment. The bank is not limited just to the assets of the ex-homeowner - which when you lose a home is usually close to nil. The bank will now be able to seek recovery of the deficiency judgment from the future earnings of the bankrupt ex-homeowner if they earn more than the median income in their state, or something like that.

Subject: The limits of globalism
From: johnny5
To: All
Date Posted: Thurs, Mar 10, 2005 at 23:43:12 (EST)
Email Address: johnny5@yahoo.com

Message:
This is from the same issue where krugman's declining american growth article was published: http://www.aeaweb.org/jep/contents/Winter2000.html#AN0514060 How Far Will International Economic Integration Go? Dani Rodrik This article speculates about the future of the world economy 100 years from now. It argues that the spread of markets is restricted by the reach of jurisdictional boundaries, and that national sovereignty imposes serious constraints on international economic integration. The political trilemma of the world economy is that international economic integration, the nation-state, and mass politics cannot co-exist. We have to pick two out of three. The article predicts that it will be the nation-state system that disappears HAHA! It won't appear while bush is out espousing Nationalism and 'patriot' acts and fighting a war of 'tyranny' that gives america supreme acces to oil at the cost of the starving billions everywhere else. Kerry tried to bring americans to the 'GLOBAL' test - but America gave its perception of that crap - they voted in the cowboy. Sadly many americans are too silly to realize for the world to get better and trade to flow and make good cross borders instead of guns - america as they know it must die - I live in a park with a lot of canadians - but if they fly that candian flag - oh my god - the american retirees go ballistic! When I tell them I lived in germany 4 years - oh my god - I am a nazi! Even though my dad is half mexican. http://ksghome.harvard.edu/~drodrik/papers.html More international globalism papers by this dani rodrik. I am not an Athenian or a Greek, I am a citizen of the world. ~Socrates Why is it taking so long for this idea to sink in - we have had thousands of years of exposure.

Subject: One armed economists - BWAHAH!
From: johnny5
To: johnny5
Date Posted: Fri, Mar 11, 2005 at 00:21:39 (EST)
Email Address: johnny5@yahoo.com

Message:
Bush knows we must change social security - what was it Kerry said - you can be certain and be WRONG! From the daily reckoning: 'It has been my experience that the folks that know the least about a subject are those that are the most positive and forceful in their opinions. They are so ignorant that they literally do not know that they do not know. The people that truly know 'all about' a subject can also be quite forceful. For most complex situations, no one CAN know 'all about' a subject, but knowledgeable people can see many possibilities and ramifications and tend to hedge their opinions with 'it depends,' or 'on the other hand.' (One of the more famous sayings of Harry Truman was, 'Go out and get me a one-armed economist.') It is an ironic paradox that those that know the least are the more forceful in presenting their views, while those that know the most are the most equivocal. A consequence of this paradox is the knowledgeable person's views are often discarded in favor of the more forceful presentation by the ignoramus. 'As an example, consider the present economy or present war or any large, complex phenomenon. It is my considered opinion that NO ONE 'knows' about 'the war' or 'the economy.' No one is a knowledgeable person to the point of 'certainty.' There are many opinions and many aspects of each one. As such, a person that knows 'a lot' about the subject can be quite hesitant about expressing a firm opinion, and may appear very indecisive and uncertain. A person who knows little about the subject can be quite vehement and forceful in his opinion - he is 'certain.' In a 'contest' for 'acceptance,' it is probable, perhaps likely, that the view of the person who knows little will prevail. When laymen say, 'This ain't rocket science' about a complex topic, it usually means they do not comprehend enough of the subject matter to ascertain the level of complexity involved. Many times, they are too stupid to know they are ignorant. 'There are those that know what they are doing and know they know what they are doing. They are leaders; follow them. 'There are those that know what they are doing and don't know they know what they are doing. They are fools; ignore them. 'There are those that don't know what they are doing and know they don't know what they are doing. They are students; teach them. 'There are those that don't know what they are doing and don't know they don't know what they are doing. They are dangerous; avoid them.' We couldn't have said it better ourselves...

Subject: Alan Greenspan
From: Terri
To: All
Date Posted: Thurs, Mar 10, 2005 at 20:38:48 (EST)
Email Address: Not Provided

Message:
http://www.federalreserve.gov/boarddocs/speeches/2005/20050310/default.htm This is an extremely important speech by Alan Greenspan, delivered this evening at the Council of Foreign Relations. The Chairman indicates that for the time being the very process of globalization has cushioned the developed world from significant economic shocks. We may expect this cushioning to last for a year or so longer, as the process of globalization continues. When the process begins to wane, the cushioning may wane as well, but we can not know this now. I am most impressed by the speech.

Subject: Adaptability
From: Terri
To: Terri
Date Posted: Thurs, Mar 10, 2005 at 20:56:47 (EST)
Email Address: Not Provided

Message:
Alan Greenspan has argued for a while that the American economy has become far more resilient and adaptable in the last 25 years. Imbalances and shocks have far less lasting effect than would have been expected in the past. I quite agree. There have been intelligent bears waiting for a secular bear economy and markets for 25 years, but they have been decidedly wrong however logical the arguments might have seemed. We are in a period of globalization that is adding to the adaptability of the economy, and for a while I find no reason to expect a negative secular change.

Subject: Rain on the parade?
From: johnny5
To: Terri
Date Posted: Thurs, Mar 10, 2005 at 22:23:35 (EST)
Email Address: johnny5@yahoo.com

Message:
Good thoughts Terri. Speed of adaptabilty is important. Rubin and Peterson looked at greenspan on cspan last night and said ADAPTABILITY is a HUGE problem. Our politicos have made congress such a logjam that congress cannot efficiently adapt and bring change to our laws and policies in time to react. Therefore peterson predicts we will do it the 'hard' way and collapse. They kept bringing greenspans on words against him - of which they chided him are very few: http://www.mises.org/fullstory.aspx?Id=1382 Warned Alan Greenspan, 'Some clouds of emerging protectionism have become increasingly visible on today's horizon.' Mr. Evans comments, it must be remembered, came within two weeks of the WTO’s ruling against Bush’s steel tariffs. He continues: 'Several proposals in Congress reflect the tension in our trade relations with China. One measure would repeal Permanent Normal Trade Relations with China while another would impose a 27.5% tariff on all Chinese exports to the U.S. The Bush administration opposes these proposals, but they should serve as ample warning to the Chinese government that progress—not promises—is required.' China’s only crime is selling goods too cheaply. During the early to mid-1990s, some politicians, journalists and intellectuals began to create the 'China Threat' in the minds of the public. The threat, as of then, was more or less confined to matters of military security. Reports of China’s purchase of military secrets from the U.S. only heightened Sino-U.S. tensions. As it became obvious to most casual observers that these allegations were largely untenable, the 'China-as-economic-threat' was born. Recent headlines detailing the slow, painful and quite noisy death of the manufacturing sector have added gas to the Sinophobia now infecting much of Washington. Perennial economic pessimist Pat Buchanan summarizes the new economic threat from China: 'Hamilton, Clay, Lincoln, and T.R. would recognize China’s policy for what it is and counter it. But this generation of free traders does not have a clue as to what is going on, or does not care. Either way, the consequences will be the same: de-industrialization of America, decline of the dollar, a deepening dependency on foreign countries for the necessities of our national life, diminished sovereignty, and eventual loss of our independence.' The shift from military to economic bellicosity on behalf of the U.S. government is positive in only one sense. Bastiat once wrote that guns cross boarders when goods don’t. In the case of China and the U.S., the now commercial interdependence between the two countries essentially excludes any possibility of military aggression. As the Washington Post reports, 'more than half of Chinese exports to the United States are produced by factories wholly or jointly owned by American companies, according to the China Council for the Promotion of International Trade, a government-affiliated group.' As the example of Cuba and North Korea show, belligerency and militaristic posturing move inversely with the level of capitalist integration. The United States is able to threaten Cuba and North Korea precisely because it can do so at little financial loss. A war with China is now unthinkable due to the destruction it would bring not only to the U.S. and China, but to the world in general. In short, commerce facilitates peace. Viewed in this light, the threats of protectionist action against China are more than mere blusterings in the halls of Congress. The opinion of some that our greatest trading partner also represents the gravest of military and economic threats is as ludicrous as it is dangerous. The Sinophobia now infecting the Beltway and some corporate boardrooms must not be ignored. The peace and prosperity of the world, in large part, depends on our continuing economic ties with China. In short, the fetters of economic nationalism must be broken in the hearts and minds of the American public so that the mistakes of the 20th century are not again repeated.

Subject: Re: Rain on the parade?
From: johnny5
To: johnny5
Date Posted: Thurs, Mar 10, 2005 at 22:33:23 (EST)
Email Address: johnny5@yahoo.com

Message:
Terri many US investors - including pres bush's granddad prescott Bush were big investors in Germany - they were friends of the germans, california was advocating eugenics before the nazi's. Hitler appeared in homes and garden magazine with his nice country chalet in the hills of germany and had many favorable interviews with british reporters. In fact even after the country had declared WAR on germany, special legislation had to be enacted to punish people like Prescott Bush who kept sending investment dollars to Germany while they grew auschwitz on the back of slaves. Why was the world not able to use its economic integration with germany to stop thier war machine?

Subject: You can't eat a house
From: johnny5
To: johnny5
Date Posted: Thurs, Mar 10, 2005 at 23:21:22 (EST)
Email Address: johnny5@yahoo.com

Message:
'But rising debt-to-income ratios can be somewhat misleading as an indicator of stress. Indeed the ratio of household debt to income has been rising sporadically for more than a half-century, a trend that partly reflects the increased capacity of ever-wealthier households to service debt.' They are wealthier because the speculators have driven up housing prices no? ' Moreover, a significant part of the recent rise in the debt-to-income ratio reflects the remarkable gain in homeownership. Over the past decade, for example, the share of households that own homes has risen from 64 percent to 69 percent. ' This home ownership comes with interest only or principal negative loans. The NAR said over 40% of new home ownership is being funded this way with no money down no? http://calculatedrisk.blogspot.com/2005/03/housing-excessive-leverage.html 'During the decade, a significant number of renters bought homes, thus increasing the asset side of their balance sheets as well as increasing their debt. It can scarcely be argued that the substitutions of debt service for rent materially impaired the financial state of the new homeowner.' If you don't pay your debt the interest keeps piling up the amount you owe. 'Thus, short of a period of appreciable overall economic weakness, households, with the exception of some highly leveraged subprime borrowers, do not appear to be faced with significant financial strain. With interest rates low, debt service costs for households have been essentially stable for the past few years. Accounting for other fixed charges such as rent, utilities, and auto-leasing costs does not materially alter this assessment of stability.' Well I hear interest rates are going up, and in my household, the more food and energy and gas costs, the less I can afford to pay to service my ever increasing debt.

Subject: Africa Makes Fine Films
From: Emma
To: All
Date Posted: Thurs, Mar 10, 2005 at 18:55:58 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/10/international/africa/10cinema.html Africa Makes Fine Films. Of Course, Projector May Fail. By LYDIA POLGREEN OUAGADOUGOU, Burkina Faso - With its whorls of dust kicked up by a chaotic rush of mopeds and not a spot of sea in sight, this ancient capital of the Mossi kingdom is no Cannes on the azure Riviera. The pitiless sun that would wilt the enthusiasm of even the most ardent cinephile is a constant reminder that one is far, far away from the mountains of Park City, Utah, the host of the Sundance Film Festival. No matter. The banner outside the tiny national airport says it all: Welcome to the capital of African cinema. As February yields to March in every odd-numbered year, the brightest lights of African movies and television, thousands of their fans and even a Hollywood star or two gather at Fespaco, Africa's premier film festival, held in this threadbare, dusty capital. 'As it says in the Bible, man cannot live on bread alone,' said Baba Hama, the festival's secretary general. 'Cinema is at the heart of African culture, and one cannot choose between food and culture - you need both to live.' Fespaco - the name is the French acronym for the Pan-African Film Festival of Ouagadougou - is in some ways the ultimate African feel-good happening - a complex event with a huge international audience pulled off by an impoverished, landlocked former French colony that ranks at the bottom of nearly every measure of human well-being. For nearly 40 years it has been a biennial reminder that even in places racked by death, famine, war and disease, culture remains as essential as air. At the Independence, the down-at-heel hotel that the festival's auteurs prefer, passionate, beery debates on the future of African cinema raged all week at poolside tables, reflecting not just the usual tensions that filmmakers everywhere face, between art and commerce, between accessibility and artistic expression, but also the essential questions Africa faces today. Just after dusk one evening, as bats circled overhead, a group of filmmakers from French-speaking countries bemoaned the overweening influence of the former colonial power, which has been the main patron of African cinema, denouncing its efforts as neocolonialism. At another table earlier in the day, the sun blazing through the fine mist of dust blowing down from the Sahara, another group of directors and actors debated whether African filmmakers have a duty to be social activists or should be free to make purely artistic films. 'Cinema is the language in which we explore our past and future,' said Jean-Marie Teno, a Cameroonian filmmaker whose most recent documentary, 'The Colonial Misunderstanding,' examines the role German missionaries played in the brutal colonial regime in Namibia. 'It is how we come to understand where we came from and where we are going.' But nearly 40 years after the festival was established, many filmmakers here wondered what exactly Fespaco has achieved. Always hampered by logistical problems, it was particularly troubled this year. The problems began at the opening ceremony, where a huge crowd straining to get into the free event caused a stampede that killed two children and wounded dozens of others. At least a dozen screenings were canceled or postponed because of equipment problems. The sleepiest of West African capitals most of the time, Ouagadougou comes alive for Fespaco. But its infrastructure is clearly strained by the 4,000 arrivals. 'This is a castle built on air,' said Cherif Keita, a Malian director whose documentary about John Dube, the founder of the African National Congress, was to be screened here. A standing-room-only crowd assembled for the screening, including a grandson of Mr. Dube, flown specially to Ouagadougou at the request of South Africa's president, Thabo Mbeki. But the projector did not work. 'Almost 40 years and we are still looking like amateurs,' Mr. Keita said. Indeed, for African cinema, these are the best of times and the worst of times. African films have won big this season at other festivals - an Angolan film called 'The Hero' about an amputee from that country's nearly 40-year civil war won a prize at Sundance. South Africa's booming film industry has also won notice - a reinterpretation of Georges Bizet's musical 'Carmen' done entirely in Xhosa stormed the Berlin film festival, and a Zulu-language film about a woman who is H.I.V.-positive won an Oscar nomination. For the first time a South African film, 'Drum,' won Fespaco's top award, the coveted Gold Stallion of Yennenga. Yet despite all the attention, African films do not reach African audiences. With no real distribution network for African movies, an African cinemagoer is more likely to see Jackie Chan's latest kung fu extravaganza than anything made on the continent. Here in Ouagadougou signs for American blockbusters were hastily plastered over in favor of homegrown films on the festival roster. But as soon as Fespaco ends, people here say, the blockbusters return. 'Getting African films to African audiences is still the big hurdle,' said Zeze Gamboa, director of 'The Hero,' which has yet to be seen in his native Angola. 'There is no means to get it to theaters, and some countries don't even have theaters.' Efforts on several fronts to improve distribution are under way, but it will take time and money. The latter is tough to find in countries that have trouble managing to feed themselves. Which is what makes Fespaco's eight days in Ouagadougou so essential, said Zola Maseko, whose film about a crusading antiapartheid journalist in the 1950's won the top prize here. 'African cinema needs to be for and about Africans,' Mr. Maseko said. 'That's what we are all fighting for.'

Subject: The Bush administration goes soft (Huh?)
From: Pancho Villa
To: All
Date Posted: Thurs, Mar 10, 2005 at 18:30:32 (EST)
Email Address: nma@hotmail.com

Message:
The Bush administration goes soft by Joseph S. Nye The first term of George W. Bush’s presidency was marked by unilateralism and military power. The United States was the world’s only superpower, so others had to follow. The result was a dramatic decline in America’s “soft” or attractive power. Secretary of Defense Donald Rumsfeld said he did not know what soft power was. Now it is back in fashion in Washington. Bush’s second inaugural address was devoted to the power of liberty and democracy. Such rhetoric is not new to American presidents. Harry Truman spoke of defending free people everywhere, and Woodrow Wilson spoke of promoting democracy. The neo-conservatives in Bush’s first administration were in that tradition, but ignored the fact that both Wilson and Truman were also institution-builders who consulted other countries. In dropping that half of Wilson’s approach, they stepped on their own message, reducing its effectiveness. The tone at the beginning of the second Bush administration is different. As Secretary of State Condoleezza Rice said recently in Paris: “I use the word ‘power’ broadly, because even more important than military and indeed economic power is the power of ideas, the power of compassion, and the power of hope.” Bush not only chose to visit Brussels, the capital of the European Union, on his February trip to Europe, but stated that what “we seek to achieve in the world requires that America and Europe remain close partners.” Even Rumsfeld is trying to be conciliatory! Will Bush’s new approach succeed? On a recent trip to Europe, I encountered both encouragement and skepticism. Many people welcomed the new tone, but wondered if it was simply sugarcoated cynicism. Words must be matched by deeds before people are convinced. One place to look to see if deeds are forthcoming is in Bush’s latest budget. The budget cuts discretionary spending (other than defense and homeland security) by nearly 1%, and slashes as many as 150 domestic programs. Yet, in this climate of fiscal stringency, he calls for increased contributions to international organizations, the Millennium Challenge Account to provide assistance to countries with a commitment to making progress in poverty reduction, and the Global HIV/AIDS Initiative. Bush’s new budget also includes an increase in funding for public diplomacy. The allocation for the State Department’s educational and cultural exchange programs, including overseas research centers, libraries, and visitor programs, is boosted by nearly 25%. As Bush’s budget request to Congress puts it, “Rarely has the need for a sustained effort to ensure foreign understanding for our country and society been so clearly evident.” This comes after a first term in which public diplomacy was a neglected stepchild, and a Pentagon advisory panel summed up the situation as a “crisis.” Even with these increases, there is a long way to go to improve America’s standing. A recent non-partisan report by the Public Diplomacy Council called for a new Agency for Public Diplomacy within the State Department, 24-hour English-language broadcasts by the Voice of America, and a fourfold budget increase over the next five years. The Bush administration still has much to do in promoting ideas, but early indications suggest a change from the neglect of the first term. But it will not be enough for Bush to start his second term with grand rhetoric about values and increased investment in public diplomacy. A country’s attractiveness or soft power stems partly from its culture and values (where they are attractive to others), but it also grows out of a country’s policies when they are seen as legitimate, consultative, and inclusive of the interests of others. Unless the policies fit the values, the discrepancy will give rise to charges of hypocrisy. At a minimum, Bush will need to pursue policies – in a more consultative manner – that seek a political solution in Iraq and progress in the Israel-Palestine peace process. Here too, the early signs are encouraging. The 60% turnout in the January elections and the scenes of Iraqis risking their lives to vote has led to hopes that a political settlement in Iraq may be possible. The elections are but a first step; the insurgency continues; civil war remains possible. Nonetheless, the elections may have softened some of the sense of illegitimacy that has clouded Bush’s Iraq policy. Similarly, with regard to the Middle East peace process, the replacement of Yasir Arafat by Mahmoud Abbas, the Palestinian elections, and the meetings between Abbas and Ariel Sharon suggest progress. On difficult nuclear issues, such as North Korea and Iran, Bush has pursued multilateral consultation and coordination with other powers. Of course, this still leaves unresolved other multilateral issues, like the International Criminal Court and global climate change. There is little prospect that Bush will reverse his rejection of the Kyoto Treaty, but it will be interesting to see how far he accommodates Prime Minister Tony Blair’s efforts to make climate change a priority during Britain’s period as chair of the Group of Eight major economies. It is much too early for a verdict on Bush’s second term policies. As he looks ahead to the verdict of history, he seems to realize that hard power alone will not consolidate his reputation, but he remains hostage to incidents and accidents that could drive even his best-laid plans off course. Nonetheless, the most striking thing at this point in Bush’s second term is his belated discovery of the importance of diplomacy and soft power. Joseph S. Nye, a former US Assistant Secretary of Defense, is Distinguished Service Professor at Harvard, and author of Soft Power: The Means to Success in World Politics. http://www.dailystar.com.lb/article.asp?edition_id=10&categ_id=5&article_id=13171

Subject: Servicing the military killed Rome
From: johnny5
To: Pancho Villa
Date Posted: Thurs, Mar 10, 2005 at 22:11:35 (EST)
Email Address: johnny5@yahoo.com

Message:
' recent non-partisan report by the Public Diplomacy Council called for a new Agency for Public Diplomacy within the State Department, 24-hour English-language broadcasts by the Voice of America, and a fourfold budget increase over the next five years. ' No wonders Warren Buffet bought comcast cable - we are going to take over the world by making them couch potatoes who watch a lot of tv - johnny5 has seen many xboxen in iraq keeping the kids occupied driving gran turismo 4 instead of learning how to strip an AK47. Rubin specifically said cutting the military helped to save the economy in the clinton years - him and peterson agreed in this NEW WAR america - the rubin fix is off the table and therefore we can't do anything but continue to destroy our economy worse and worse going deeper into hock for those tanks.

Subject: Political Shell Game
From: johnny5
To: All
Date Posted: Thurs, Mar 10, 2005 at 18:10:51 (EST)
Email Address: johnny5@yahoo.com

Message:
The US government is no longer effective. Politics and crony capitalism have broke our dreams - they can't fix anything - even glaring real problems that everyone agrees on. If we implement the consumption tax as alan greenspan says - it will crush our new housing markets - surely sending us into the abyss. http://www.house.gov/paul/tst/tst2005/tst030705.htm Tax Reform is a Shell Game March 7, 2005 Tax reform is back in the news, brought to the political forefront by a recent meeting of the president’s advisory panel on tax reform. Once again, politicians and former politicians are lamenting the complexity of our tax laws, as though their own spending measures have nothing to do with it. But we’ve heard this song before. In fact, we’ve been promised a simpler, fairer, and better income tax system many times, most recently in 1997 and 1986 when Congress made relatively significant changes to the tax code. Yet the federal tax system remains an embarrassment, both in terms of the tax burden itself and the outrageous compliance costs engendered by its complexity. One tax reform idea tacitly endorsed by Federal Reserve chairman Alan Greenspan calls for a national retail consumption tax to replace the existing income tax. Absent the outright repeal of the 16th Amendment, however, we cannot be sure that an income tax would not reappear at some point. One can easily imagine popular support for retaining the income tax on the “very rich,” which of course is how the 16th amendment originally was sold to a gullible public in the 1910s. The president has thrown cold water on the consumption tax proposal, however, by announcing he opposes any reform that eliminates mortgage and charitable deductions. This leaves us with variations on the flat tax concept, which was savaged by the political left when advocated by the likes of House Majority Leader Dick Armey and Steve Forbes in the 1990s. Lew Rockwell of the Ludwig von Mises Institute offers a very simple test for any tax reform proposal: Does it reduce or eliminate an existing tax? If not, then it amounts to nothing more than a political shell game that pits taxpayers against each other in a lobbying scramble to make sure the other guy pays. True tax reform is as simple as cutting or eliminating taxes. No studies, panels, committees, or hearings are needed. When reform proposals seem complicated, they almost certainly don’t cut taxes. The reform debate is strictly about politics and not serious economics. Both sides use demagoguery but don’t propose truly significant tax reductions. Both sides use the outrageous expression “cost to government” when talking about the impact of tax legislation on revenues. This implies that government owns everything, and that any tax rate less than 100% costs government some of its rightful bounty. Government spending is the problem! When the federal government takes $2.5 trillion dollars out of the legitimate private economy in a single year, whether through taxes or borrowing, spending clearly is out of control. Deficit spending creates a de facto tax hike, because deficits can be repaid only by future tax increases. By this measure Congress and the president have raised taxes dramatically over the past few years, despite the tax-cutting rhetoric. The real issue is total spending by government, not tax reform. Who wants a 40% flat tax? Who wants a national sales tax if it adds 35% to the retail price of everything we buy? In other words, why change the tax structure if spending stays the same? Once we accept that Congress needs $2.5 trillion from us-- and more each year-- the only question left is from whom it will be collected. Until the federal government is held to its proper constitutionally limited functions, tax reform will remain a mirage.

Subject: Capsize point
From: Pete Weis
To: All
Date Posted: Thurs, Mar 10, 2005 at 15:25:40 (EST)
Email Address: Not Provided

Message:
A sailboat possesses a resistance to capsizing. The ballast located in its keel is part of a moment arm which resists capsizing forces due to the wind in the sails or large, steep waves which might hit the boat broadside. As the boat rotates over on its side the moment arm opposing the capsizing force increases steadily (due to the increasing horizontal distance between the center of gravity and the boats center of buoyancy), reaching a maximum at 90 degrees to vertical. Once the sailboat goes past the 90 degree point, resistance to capsizing falls off very rapidly as this horizontal distance decreases and eventually goes in the opposite direction - contributing to the capsize. You might think of the dollar as a sailboat whose resisitance to capsizing involves the general belief that since it has never capsized (similar to some Latin American currencies) that it won't in the future. But as that belief lessens there must be a real tipping point out there somewhere where capsize resistance goes to zero and beyond. Will we reach it? It depends on how much force is applied. Weak Dollar Getting Pummeled Thu Mar 10, 2005 11:26 AM ET By Jamie McGeever NEW YORK (Reuters) - The dollar weakened on Thursday against most currencies on concerns over global central bank reserve diversification, a widening U.S. trade deficit and tumbling bond prices. 'We're just in a general dollar downtrend right now,' said Sophia Drossos, currency strategist at Morgan Stanley in New York. Having slumped to multi-month lows against its major counterparts on Wednesday, the dollar suffered another blow on Thursday after Japanese Prime Minister Junichiro Koizumi told parliament that, generally speaking, diversity in foreign exchange reserves was a good thing. The Ministry of Finance, which manages the world's largest foreign reserve holding of $840.6 billion, quickly clarified that it has no plans to shift funds out of the dollars. But the specter of diversification was raised again, putting pressure on the dollar again, much like had happened after South Korea's central bank mentioned the subject in a report last month. 'Although MoF quickly suggested that they had no plans to change now, the suspicion lingers that more Asian central bank diversifiers are to appear,' wrote Goldman Sachs analysts in a research note on Thursday. Early morning in New York, the euro was up at $1.3414 and sterling was a touch stronger at $1.9253 . The dollar was down 0.4 percent at 1.1542 Swiss francs and largely flat at 103.98 yen . The yen came under some selling pressure after weak Japanese core machinery orders. The euro rose to 140.00 yen earlier in the session for the first time this year. Sterling managed to take the Bank of England's decision to kept interest rates unchanged at 4.75 percent largely in its stride. 'The 'diversification' word really spooked the market ... but the bond market selloff is weighing on the dollar big time,' said Samarjit Shankar, director of global strategy at Mellon Bank in Boston. 'The bond market is really adding that extra piece of weight on the dollar right now.' The price of U.S. Treasuries have fallen steeply this week, pushing the yield on the 10-year note up to 4.57 percent (US10YT=RR: Quote, Profile, Research) , its highest level since July last year. They're now down at around 4.487 percent on Thursday, but have convincingly broken up through key technical levels that were intact for several months. TRADE DATA IN FOCUS The rise in bond yields is sometimes seen as a supportive factor for a currency, as it offers investors a higher rate of return relative to other fixed income markets. But not in this instance. Dross at Morgan Stanley suggests the market is worried about incipient inflation pressures, and although the Federal Reserve will certainly act to keep them from building, it might not act quick enough. 'It's not a scare, but it's a concern. Inflation is never good for a currency,' she said. The massive U.S. current account deficit hasn't been particularly good for the dollar either in recent years, and a reminder of this may come on Friday morning when the Commerce Department releases January's data. The figures are expected to show a deficit of $56.5 billion, slightly wider than the previous month and what would be the second widest on record. Data released on Thursday from two of the U.S.'s biggest trading partners suggest its deficit won't be narrowing significantly any time soon. Germany, the euro zone's largest economy, appears to be coping with a strong currency, as it posted a trade surplus of 12.9 billion euros in January on record exports. And China posted a surplus of $11 billion in the first two months of the year. Meanwhile, U.S. weekly jobless claims, which rose an unexpectedly high 17,00 last week, kept the dollar under pressure too, analysts said. Economists had expected no change on the week.

Subject: Like Munger said
From: johnny5
To: Pete Weis
Date Posted: Thurs, Mar 10, 2005 at 17:31:26 (EST)
Email Address: johnny5@yahoo.com

Message:
Quit trying to quantize and analyze and fill your head with all this other info - I put it straight to you - If warren buffet and bill gates are short the dollar - what person in thier right mind thinks they are going to outperform these 2 men? Why make it any more complicated than that - Warren says go short - he put his money where his mouth was - what are people's problem with taking the sages advice? Do you feel warren is a fool and the vanguard index fund will outperform warren? Do you feel warren is a liar and trying to get you to short the USA because we are still number 1? Why is this so hard for people to believe? Empires collapse - stock markets and housing collapse - warren says go short - who is the first one here that thinks they know more than warren? I don't.

Subject: Hey, I just like sailboats...
From: Pete Weis
To: johnny5
Date Posted: Thurs, Mar 10, 2005 at 19:13:00 (EST)
Email Address: Not Provided

Message:
and saw an analogy. Probably got a little carried away. I just wondered what the Fed might do if we reached a point where the dollar really started to tank in a panic selloff.

Subject: Sailing takes me away to where I want to be
From: johnny5
To: Pete Weis
Date Posted: Thurs, Mar 10, 2005 at 22:02:50 (EST)
Email Address: johnny5@yahoo.com

Message:
Johnny5 has often wondered too, he knows the fed is SUPPOSED to try and bring stability to the world along with other central bankers - but johnny5 sees lots more private investors controlling the markets and economies than these central banks - 5 trillion verus 15 trillion right? Also the fed is really a private bank with shareholders no - how long can those shareholders lose money and the fed go negative before it collapses like most any other company would that consistently loses money year after year? Of course we can keep printing and do a huge hyperinflation - do you think that is the logical outcome if the 15 trillion dollars worth of private investors go into panic mode and start rushing for the exits? The canvas can do miracles, just you wait and see! Chris Cross

Subject: Prepay penalty - was that in fine print
From: johnny5
To: All
Date Posted: Thurs, Mar 10, 2005 at 12:50:41 (EST)
Email Address: johnny5@yahoo.com

Message:
The Prepayment Trap: Lenders Put Penalties On Popular Mortgages By RUTH SIMON Staff Reporter of THE WALL STREET JOURNAL March 10, 2005; Page D1 Many homeowners who are rushing to refinance as interest rates rise may find themselves facing some unexpected terms: Their lenders have set a trap for them if they decide to pay the loan off early. Prepayment penalties -- requiring borrowers who close out a loan in the first few years to fork over some extra cash -- have long been common on the so-called subprime mortgages issued to borrowers with blemished credit records. But they are increasingly showing up on adjustable-rate mortgages, or ARMs. The penalties, which usually kick in on loans that are repaid within one to three years, are especially common on popular 'option ARMs,' which carry low introductory rates. Between 40% and 70% of option ARMs now carry prepayment penalties, depending on the lender, according to Gyan Sinha, a senior managing director at Bear Stearns Cos. David Soleymani, a mortgage broker in Los Angeles, estimates that 'half the lenders in the country' now offer loan options with prepayment clauses. At the same time, more lenders are adding 'early-termination fees' to home-equity loans and lines of credit that can mean higher costs if the loan is closed too soon. Lenders say they offer prepayment clauses on mortgages as an option to borrowers seeking a better deal. In exchange, homeowners may pay fewer points or reduce their rate by one-eighth to one-quarter of a percentage point. Borrowers can typically pay off as much as 20% of the loan balance without triggering the penalty. But prepayment penalties can sting, particularly when mortgage rates are moving up or down at a rapid clip. During the refinancing boom, prepayment clauses made it difficult for some borrowers to refinance and take advantage of lower rates. Now that rates are moving upward, prepayment penalties can mean higher costs for borrowers who want to pull out extra cash or refinance to protect against future rate increases. State laws can affect just how much of a penalty is charged; some states, such as New Jersey and Pennsylvania, prohibit them, according to the Center for Responsible Lending, though not all lenders are subject to these rules. At World Savings, a unit of Golden West Financial Corp., borrowers who take out a mortgage with a prepayment clause typically must pay 2% of the outstanding loan balance if they pay off the loan in the first three years. Countrywide Financial Corp. offers loans with one- and three-year prepayment penalties -- typically six months' interest on 80% of the amount paid off. At Washington Mutual Inc., borrowers who elect an option ARM are required to accept a one-year prepayment penalty if they pay less than 0.5% in points. They can also choose a three-year penalty in exchange for a lower rate. Hybrid ARMs that carry a fixed rate for the first year typically have a three-year prepayment penalty unless the borrower pays at least 1% in points. (These arrangements apply to loans originated through the company's retail stores.) Prepayment penalties are attractive to lenders and investors who buy pools of mortgages because they reduce the chance that the borrower will quickly refinance -- and provide a payoff if the borrower does. In addition, mortgage brokers can often earn more if they put a customer in a loan with a prepayment penalty. 'On a big loan, it can be as much as $10,000,' says Mitchell Ohlbaum, president of Legend Mortgage Corp., a mortgage broker in Los Angeles. At some banks, loan officers can also earn extra for putting borrowers into loans with these features. Some borrowers don't even realize their mortgage has a prepayment clause. Christopher Clyne, a cardiologist in West Hartford, Conn., was surprised to find he was facing a prepayment penalty of about $15,000 when he went to refinance his $750,000 option ARM in late December. 'We found out at the 11th hour,' recalls Dr. Clyne. 'It nearly scuttled the deal.' He says his mortgage banker, Michael Menatian, convinced the lender to hold the rate on the new loan for a couple of weeks until the penalty expired. Other borrowers decide refinancing is worth the cost of the penalty. Roger Behrstock, the owner of Pride Flight Associates, a jet aviation charter company in Beverly Hills, Calif., was hit with a $8,900 prepayment penalty when he decided to refinance his $890,000 short-term ARM last year. Mr. Behrstock went ahead with the new loan anyway, because he needed extra cash for his company. The new mortgage also lowered his payments by $1,800 a month. Some lenders are stricter than others. Countrywide Financial charges a prepayment penalty if the borrower sells or refinances the property. At World Savings, prepayment penalties are waived only if the borrower refinances with World Savings or sells the home and buys another home using a World Savings mortgage. GMAC Mortgage, a unit of General Motors Corp., typically waives the penalty on its option ARM if the home is sold. Borrowers with home-equity loans can also find themselves hit with extra costs if they close their loan too soon. Some 41% of lenders now offer home-equity loans with early-termination clauses, up from 24% in 2001, according to a survey done by Benchmark Consulting International. More than 60% of home-equity lines now carry an early-termination fee, according to HSH Associates, though borrowers can pay down the line without penalty. CitiMortgage, a unit of Citigroup Inc., charges borrowers closing costs if they pay off a home-equity loan or line of credit within the first three years. At U.S. Bancorp, borrowers who close their loan or line within the first three years must pay 1% of the loan balance, with a minimum charge of $100 and a maximum fee of $350. Wells Fargo & Co. levies a $500 fee if a borrower closes the loan or line within the first three years, unless the borrower is refinancing through the bank. One reason these clauses have become more popular: More lenders are offering home-equity products with little or no upfront costs -- and lenders say they need some way to recoup their expenses if the loan drops off the books too soon. Compass Bancshares Inc. added an early-termination fee to its home-equity offerings when it revamped them two years ago. 'Home equity is really the hot business right now,' says Chris Ward, director of equity lending. 'To be competitive, we knew we had to offer a 'no-closing-costs' option to consumers.' Borrowers pay third-party closing costs -- typically $300 to $1,000 -- if a home-equity line is closed or a home-equity loan is paid off within the first two years. The fee is waived for borrowers who sell their house. At least one lender, though, has moved in the opposite direction. Bank of America Corp. last year began eliminating early-termination fees on its home-equity lines and loans. The fees were dropped as part of the lender's drive to simplify its offerings, a spokeswoman says.

Subject: Re: Prepay penalty - was that in fine print
From: Setanta
To: johnny5
Date Posted: Fri, Mar 11, 2005 at 04:30:57 (EST)
Email Address: Not Provided

Message:
interesting. when i was shopping around for a mortgage a few months ago i was informed that over here there are no penalties for early repayment in variable rate mortgages (i presume would be similar to your ARM's) and that penalties only apply to early payment of fixed rate mortgages.

Subject: Re: Prepay penalty - was that in fine print
From: Jennifer
To: Setanta
Date Posted: Fri, Mar 11, 2005 at 10:20:59 (EST)
Email Address: Not Provided

Message:
Are all European mortgages of variable or adjusted rates? Many American mortgages evidently have prepayment penalties lasting for different lengths of time.

Subject: America is number 1 er 2 um 3 no 4 uh 5?
From: johnny5
To: All
Date Posted: Thurs, Mar 10, 2005 at 12:41:13 (EST)
Email Address: johnny5@yahoo.com

Message:
Singapore surpasses US as top tech nation http://www.forbes.com/home/technology/2005/03/09/cx_0309wef.html Singapore has displaced the United States as the top economy in information technology competitiveness, according to the World Economic Forum's latest annual Global Information Technology Report released today. The U.S. drops from first to fifth in the rankings, which measures the propensity for countries to exploit the opportunities offered by information and communications technology (ICT). Jobs in jeopardy, NASA/Ames offers buyouts By Jessica Portner Posted on Wed, Mar. 09, 2005 Mercury News NASA/Ames is set to offer buyouts this week to all but 70 of its 1,400 federal employees as part of one of the most dramatic makeovers the research center has undergone in two decades. With a push from the Bush administration to streamline operations, scientists and engineers -- from aeronautics experts to computer whizzes -- will be offered a buyout package with a federally mandated cap of $25,000, Ames officials and union leaders confirmed Tuesday. Ames officials say they don't know how many employees will accept the offer to cut short their careers at the premier research facility at Mountain View's Moffett Field, where engineers developed Mars Rover technology and one of the fastest supercomputers in the world. But the buyout is aimed at cushioning the blow for many workers if the center is forced to lose as many as 700 jobs at risk under President Bush's proposed federal budget. ``Now is the time to take advantage of the buyout,'' said Michael Marlaire, the director of external relations of Ames Research Center. ``We don't have a goal, and we want to see how many want to go.'' About 30 workers recently left under buyout agreements, a union official representing Ames workers said. Ames' federal jobs aren't the only ones in jeopardy. Many of the center's estimated 1,400 contractors also are being forced out, according to Chris Knight, one of the lead negotiators for Ames Federal Employees Union, although he couldn't specify how many jobs. The anticipated buyout offer comes after President Bush's proposed federal budget puts nearly one-third of Ames' $700 million in annual funding at risk. Marlaire said Ames could lose as many as a quarter of its civil servant and contracting jobs by the end of 2006 if it fails to successfully compete with private companies and other National Aeronautics and Space Administration research centers for money it has been accustomed to receiving automatically. Ames is trying to retain certain workers, such as those who research heat shield technology that protects space shuttles, and air traffic managers that help the Federal Aviation Administration improve technology at airports. NASA/Ames leaders said they also plan to preserve many of the staffers operating the Columbia supercomputer, a joint project with Silicon Graphics and one of the fastest supercomputers in the world. Ames union leaders are negotiating details of the buyout, including which positions should be exempt, and say cuts imperil the center's scientific mission. Employees who accept the deal would leave next month, Knight said. Knight said some veteran scientists nearing retirement might leap at the chance to earn some money -- even at a federally mandated cap of $25,000 -- before they start earning their pensions. But he said many younger workers are devastated at the thought of giving up the dream of working on aeronautics or complex databases. ``People are really worried about what might happen to them next,'' said Knight, referring to possible layoffs down the road. ``There is even a little bit of paranoia. People are hunkering down and trying to lay low.'' Stuart Rogers, a 43-year-old aerospace engineer who worked on the supercomputer, said he would not take the buyout because the money isn't much of an incentive to leave. ``My plan is to try to complete my career at NASA,'' said Rogers, who has worked there for 16 years. ``Reorganization takes scary turns, but it doesn't mean things are going to be bad,'' he said. ``It has definitely affected morale. But I'm so busy, I don't have time to worry about it.'' http://www.mercurynews.com/mld/mercurynews/news/11088394.htm

Subject: Five Years After Nasdaq Hit Its Peak
From: Emma
To: All
Date Posted: Thurs, Mar 10, 2005 at 10:37:38 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/10/business/10scene.html Five Years After Nasdaq Hit Its Peak, Some Lessons Learned By HAL R. VARIAN ON March 10, 2000, five years ago today, the Nasdaq composite index hit its high, 5,132.52, at the peak of the dot-com bubble. It is fitting to commemorate this anniversary with a column about what financial economists have learned from this episode. Perhaps the most fundamental question one can ask about the bubble is how it could have happened in the first place. How could stock prices be pushed up to such irrational and unsustainable levels? Few economists would deny that fools and gamblers participate in the stock market. But the participation of such irrational traders does not necessarily imply that stock prices themselves should be irrational. In principle, irrational exuberance should be self-correcting. If overly optimistic investors bid up the price of a stock, rational investors should step in and sell shares, moving the price back down to a realistic level. This adjustment process does not even require that sellers own shares of the overpriced stock. Someone who thinks that the price of a stock will fall but does not own any shares can borrow shares to sell, a practice known as selling short. If an investor sells short and the stock price does indeed fall, he can buy shares to pay back the loan and pocket the difference as profit. As with other sorts of borrowing, the borrower typically has to pay interest on the loan. But, in the case of the Internet boom, short selling was apparently not strong enough to damp the stock price increases during the Internet bubble. The question is, Why not? Owen A. Lamont, a professor of finance at the Yale School of Management, reviews some recent work in the economics of short selling in the latest issue of the NBER Reporter (available at www.nber.org). As he points out, there were striking examples of apparent overpricing of stocks in 2000. For example, in March of that year, 3Com sold a fraction of its holding of Palm; it announced that by the end of the year it would disburse the rest of its holdings by giving 3Com shareholders 1.5 shares of Palm for each share of 3Com they owned. One would expect that 3Com shares would be worth at least 1.5 times the value of Palm shares. But on the first day of trading after the announcement, Palm shares were worth $95.06 a share while 3Com shares fell to $81.81. The market was valuing the non-Palm part of 3Com's business at minus $63. This pricing anomaly was widely reported in the financial press. The most likely explanation was that day traders and other overly optimistic investors bid up the price of Palm stock to excessive levels. These traders were presumably unaware that they could acquire Palm indirectly by buying 3Com stock. The apparent mispricing created a low-risk arbitrage opportunity. A savvy investor could buy some 3Com shares outright, borrow some Palm shares, sell them, and repay the borrowed Palm stock in a few months when 3Com issued the Palm shares. Indeed, many investors did exactly that. At one point, the number of Palm shares borrowed to sell short was 147 percent of the shares outstanding. (The number could exceed 100 percent since shares could be borrowed only to be lent out again.) Even this additional supply of shares was not enough to quell the Palm enthusiasts. According to Professor Lamont and his co-author on one paper, Richard H. Thaler, a big part of the problem is that the market for borrowing shares is not a centralized market with quoted prices, but rather a highly disaggregated market. In many cases, it was quite difficult to find shares of Palm that could be sold - and when they could be found, the interest rate charged to borrow them was quite high. Short selling was not the only way to bet against Palm. One could also buy put options, which allowed the stock to be sold for a fixed price. But the options were also mispriced during this period, making such investments unattractive. So the anomaly persisted for many months. Eventually, of course, it disappeared: a few weeks before 3Com issued its remaining Palm shares, the prices reflected the appropriate ratio. But the short selling constraints seemingly allowed the mispricing to persist for an awfully long time. Many intelligent investors believe that short selling is a strong signal of subsequent price declines. Professor Lamont's work and that of several other academics find that this is so: stocks that are subject to large short selling tend to have lower subsequent returns. One might ask why short selling is not immediately reflected in the price of a stock. The reason appears to be related to the basic problem with short selling: there is no centralized market for borrowing stock, so it can take time to find shares to sell short. Typically, there is no problem in finding shares of large companies that are traded frequently. But shares of small companies, whose stock is lightly traded, may be hard to find. This finding suggests that the total amount of short selling might be a good predictor of stock market movements in general. Somewhat surprisingly, this turns out not to be true. In fact, during the bubble years, the aggregate amount of short selling declined as stock prices were bid up. As Professor Lamont and his co-author on another paper, Jeremy C. Stein, remark, 'Short selling does not play a particularly helpful role in stabilizing the overall stock market.' But again one must ask why not. One suggested answer is that short selling arbitrage has more risk than appears at first glance. For example, the owner of the shares can force the borrower to return them under certain conditions. Hence, the short seller might find his position unwound at an inconvenient time. This risk factor means that short sellers may want to take smaller positions than they would otherwise prefer. It appears that at least on some occasions, short selling constraints can disrupt the normal operation of supply and demand: when supply is constrained, stock prices end up being determined by those who are overly optimistic. Hal R. Varian is a professor of business, economics and information management at the University of California, Berkeley.

Subject: Re: Five Years After Nasdaq Hit Its Peak
From: johnny5
To: Emma
Date Posted: Thurs, Mar 10, 2005 at 12:27:13 (EST)
Email Address: johnny5@yahoo.com

Message:
I bet the naked shorts talk about effificent market hypothesis a lot.

Subject: I did not have sex with that hedge fund
From: johnny5
To: All
Date Posted: Thurs, Mar 10, 2005 at 10:36:20 (EST)
Email Address: johnny5@yahoo.com

Message:
Clinton is on CNBC talking about the 'supferfund' hedgefund and how he is going to help us little guys with only 5,000 get into them - johnny5's friends in hedge funds were right - big news today - this is the future for the poor people. Watch out richie, the barbarians are coming!

Subject: Re: I did not have sex with that hedge fund
From: johnny5
To: johnny5
Date Posted: Thurs, Mar 10, 2005 at 10:50:40 (EST)
Email Address: johnny5@yahoo.com

Message:
Clinton should talk to II, we can short I-shares for this!? http://news.ft.com/cms/s/016121f0-910b-11d9-8bff-00000e2511c8.html Clinton backing for first US retail hedge fund By David Wighton in New York Published: March 10 2005 02:00 | Last updated: March 10 2005 02:00 Bill Clinton is lending his name to efforts by an Austriancompany to bring 'hedge funds' to the US retail investor. One of the former president's first public appearances following his planned chest operation this week will be at the launch of a retail investment centre on New York's Fifth Avenue by Superfund Asset Management. The opening of the office, believed to be the first of its kind in the US, is an attempt to tap the growing retail demand for products previously the preserve of wealthy investors. The minimum investment in the company's funds is just $5,000 (£2,600), while many hedge funds require $1m or more. Mr Clinton is due to give a speech on the global economy at the launch on March 30. Christian Baha, 36, founder of the company, formerly known as Quadriga Asset Management, said: 'As governor of Arkansas, President Clinton paved the way for more liberalisation and social justice. It is our goal as well to give people with a lower income the opportunity to benefit from successful investment models with double-digit returns.' The company, which claims to be the world's biggest provider of managed futures funds to private investors, has been at the forefront of attempts to bring hedge fund-type products to a wider audience in spite of regulatory concerns. The Securities and Exchange Commission forced it to drop the term 'hedge funds' when it launched its managed futures funds in the US. Managed futures funds, which invest in a wide range of commodity and financial markets, are commonly viewed as a style of hedge fund and the company uses the term hedge fund in Europe. According to its website, Superfund's two US funds have returned 52 per cent and 82 per cent after fees since their start in November 2002.

Subject: Re: I did not have sex with that hedge fund
From: Pancho Villa
To: johnny5
Date Posted: Thurs, Mar 10, 2005 at 11:00:18 (EST)
Email Address: nm

Message:
Bulls(R) vs Bears(D)?

Subject: China Textiles Flood the U.S.
From: Emma
To: All
Date Posted: Thurs, Mar 10, 2005 at 10:31:47 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/10/business/worldbusiness/10textile.html?pagewanted=all&position= Free of Quota, China Textiles Flood the U.S. By DAVID BARBOZA and ELIZABETH BECKER SHANGHAI - In the first month after the end of all quotas on textiles and apparel around the world, imports to the United States from China jumped about 75 percent, according to trade figures released by the Chinese government. The statistics bear some of the first evidence that China's booming textile and apparel trade, unhampered by quotas, could be prepared to dominate the global textile trade and add to trade tensions around the world. The quotas came to an end on Dec. 31 as a result of an international agreement reached in 1993. In January, the United States imported more than $1.2 billion in textiles and apparel from China, up from about $701 million a year ago. Imports of major apparel products from China jumped 546 percent. Last January, for example, China shipped 941,000 cotton knit shirts, which were limited by quotas; this January, it shipped 18.2 million, a 1,836 percent increase. Imports of cotton knit trousers were up 1,332 percent from a year ago. These figures may be understated because China ships a large part of its goods through Hong Kong, and those shipments are not included. Fears that China is going to flood the world market with cheap textile exports have already inflamed tensions between Washington and Beijing because of worries about American manufacturing plants being closed and thousands of jobs being lost. Already, in January, the first month after global quotas were lifted, 12,200 jobs were lost in the United States apparel and textile industries, according to the Bureau of Labor Statistics. Some analysts have predicted that China could capture as much as 70 percent of the American market in the next two years. Before the end of quotas, about 16 percent of apparel sold in the United States came from China. Last year, the United States trade deficit with China set a record of $162 billion, making it the largest trade imbalance ever recorded by the United States with a single country. To be sure, some textile importers say this phenomenon may be a one-time surge. Companies, for instance, may have put off shipping goods at the end of last year to avoid the quotas. 'Nobody knows if it's going to last,' said Andrew Grossman, who runs GAV, a company that designs and manufactures clothes for Calvin Klein and Emanuel Ungaro. 'So you're not seeing it passed on to the consumer.' Because of uncertainty over currency fluctuations and the process of lifting quotas, apparel producers like GAV have not reduced their prices to retailers. Moreover, poor countries like Bangladesh, Cambodia and Sri Lanka are pressing Washington to pass legislation giving them lower tariffs to help support a crucial source of their livelihood. Some trade experts say that China has achieved its status over the years by providing questionable bank loans and subsidies to its industry. Still, it is clear that efforts to move toward more open trade have freed China and other countries of many textile and apparel quotas and restrictions. And they have set the stage for China to become a global textile and apparel behemoth, lowering clothing prices for consumers around the world but upsetting and rewriting current trade balances. The January evidence showed blockbuster gains for Chinese textile and apparel makers - a surge that some textile experts had been predicting long before the quotas came to an end. The 25 countries that are part of the European Union also registered big increases, importing about $1.4 billion worth of textile and apparel goods from China, up from about $975 million a year ago, a jump of 46 percent. 'This is not a surprise; it is not a revelation,' said Donald Brasher, president of Global Trade Information Services in Columbia, S.C., which tracks and releases trade figures from around the world and was the first to publish China's official trade statistics. 'We're going from a quota regime to a quota-free regime. And China's one of the most competitive producers. What do you expect?' But representatives of some of the nation's biggest textile and apparel manufacturers say the figures seem to bear out their worst fears: what they see as China's unfair dominance of the world textile trade because of possible currency undervaluation and government subsidies of big textile operations in China. 'The wolf is at the door and only the U.S. government can slam it shut, and it needs to do it right now,' said Cass Johnson, president of the National Council of Textile Organizations, a trade group that is pressing the administration to impose immediate limits on Chinese imports. 'The action the government takes or doesn't take will affect 30 million workers around the world and perhaps half a million in this country.' 'This isn't like the Y-2K crisis where everyone was afraid of a computer meltdown that never happened,' Mr. Johnson added. 'This is happening and the consequences are frightening.' In January alone, China shipped more apparel in some categories, like cotton trousers, than it had in the previous year and a half, representing approximately a fourteenfold increase, according to Mr. Johnson's trade group. For instance, China sent nearly 27 million pairs of cotton trousers to the United States; the quota had held the number to 1.9 million a year ago. There were also big increases in everything from underwear to gowns. China's customs figures, which were released March 1 to Global Trade Information Services, are often the earliest indication of China's exports to the United States. This Friday, the Commerce Department is expected to release its own trade data with China. However, the figures could include Chinese apparel that was shipped in December, before quotas ended, but that landed in the United States in January. Those figures might show less spectacular jumps in trade with the United States, according to textile industry officials. Many Democrats in Congress say that imports from China are the biggest trade problem for the United States. Representative Benjamin L. Cardin of Maryland, the ranking Democrat on the trade subcommittee of the House Ways and Means Committee, said in an interview that he would push the administration to pay more attention to China's trading practices. Some American manufacturers say that China is increasing exports by undervaluing its currency, which makes its products cheaper in dollars for American companies. The Bush administration says it has put pressure on Chinese officials to revalue their currency and take steps on other trade issues. Moreover, the administration did agree last year to put limits on some Chinese textile and apparel imports in advance of any market disruption. But importers and retailers, particularly the National Retail Federation, persuaded the Court of International Trade to issue an injunction against the administration's limits. Still, a continued surge in Chinese imports could lead to another push by the administration to provide relief for American apparel and textile manufacturers. If the surge is temporary, the administration is less likely to apply limits. Brenda Jacobs, the Washington trade counsel to the U.S. Association of Importers of Textiles and Apparel, said she was wary of the new Chinese figures and would wait to see the United States trade figures, which will be released on Friday. 'I just don't know what to expect; there will be shifting of production,' said Ms. Jacobs, whose group supported the end of quotas. 'But put this in context - there were a lot of companies that held off shipping goods in December in order to be sure they would not be caught in the quota system.'

Subject: 5 years later
From: Pete Weis
To: All
Date Posted: Thurs, Mar 10, 2005 at 10:20:11 (EST)
Email Address: Not Provided

Message:
From the NYT's: March 10, 2005 OP-ED CONTRIBUTOR Five Years Later and Still Floating By JAMES GRANT TODAY marks the fifth anniversary of the peak of the great millennial stock market. What were you doing when the lights began to dim? Were you a bull or a bear? Rich or otherwise? What about today? Are you inoculated against the new alleged sure things? Or perhaps you believe in the permanent hegemony of the dollar in the world's currency markets? In the inevitability of rising house prices? Or of falling interest rates? Answer true or false: the chairman of the Federal Reserve Board is clairvoyant. From the March 2000 top to the October 2002 trough, the United States stock market gave up more than half of its quoted value, some $9.2 trillion. Five years ago today, Cisco Systems was the world's biggest company by market capitalization. Its line of business, the computer networking business, was universally heralded as the industry of the future. Owners of Cisco still devoutly hope it is. They have lost 75 percent of their investment. Americans hate to lose, especially when it comes to money, and they've demanded an accounting of the misdeeds of the bubble era. A certain number of former chief executives, like Bernard Ebbers of WorldCom, have had to answer the charges against them in court. And Congress, in 2002, overhauled and stiffened the nation's securities laws. But the chairman, governors and staff of the Federal Reserve have yet to be called to account. Booms and busts are recurrent in history and in nations. In not every episode was there a culpable central bank. But in virtually every case, there was a clever neighbor. The unbearable sight of a neighbor getting rich in the stock market in the late 1990's made millions of Americans bipolar. Shopping at Wal-Mart, they would pay any price except full retail. Investing in the stock market, however, they would pay nothing but. By the late 1990's, stocks had lost any connection to the value of the businesses in which they represented partial ownership. Picture an artful consumer settling into a discounted hotel room for the night. Now try to imagine this savvy individual formulating a calculated financial decision to make a meal of the $10 cashews and the $6 candy bars on sale in the hotel minibar. That was Wall Street a half decade ago. And, to a lesser but still striking degree, it is still Wall Street today - and Main Street, too. The Federal Reserve did not stand idly by after the bubble burst. It radically reduced the interest rate it controls (the so-called federal funds rate), pushing it from 6.5 percent in May 2000 to 1 percent by June 2003. Alan Greenspan, the chairman of the Fed, had worried about a stock market bubble as early as 1995, had warned against 'irrational exuberance' in 1996, and batted around the possibility that there might, indeed, be a stock-market bubble in discussions with his Federal Reserve colleagues as late as 1999. But he was not the man to stick a pin in the bubble. Indeed, he himself became a vociferous booster of the 'New Economy.' In a speech he gave only four days before the Nasdaq touched its high, he sounded as if he were working for Merrill Lynch, cheering that 'the capital spending boom is still going strong.' Should the boom turn to bust, the chairman had testified before Congress less than a year before, the Fed would 'mitigate the fallout when it occurs and, hopefully, ease the transition to the next expansion.' In so many words, Mr. Greenspan promised that the Fed would make money cheaper and more plentiful than it would otherwise be. He would override the market's judgment with his own. Nobody in earshot quoted the words of the German central banker Hjalmar Schacht, who protested in 1927: 'Don't give me a low rate. Give me a true rate, and then I shall know how to put my house in order.' Someone should have. Interest rates are the traffic lights of a market economy. To investors, they signal when to go and when to stop. Under the Fed's bubble recovery program, every interest-rate light turned green. With no lights flashing red or even amber, investors sped through the financial intersections. They paid more for houses, office buildings and junk bonds than they would have if interest rates were not hugging 40-year lows. The proliferation of dollars helped to lift the stock market out of its doldrums - though the doldrums of 2002 were singularly shallow ones. In comparison to earlier bear market lows, bargains were scarce on the ground (by March 2000, stocks were uniquely overvalued; never before had a dollar of corporate earnings been so costly to buy). At the checkout counter, inflation was well-nigh invisible. On Wall Street, however, it was - and still is - on the rise. To hear Mr. Greenspan tell it in 1999, post-bubble damage control was as simple as cutting interest rates. He passed lightly over the possible consequences of the rates he cut. The list so far includes a bubble-like housing market (geographically localized but ferocious), an overheated debt market (this one spans the globe) and a steady depreciation in the foreign exchange value of the dollar. Consuming much more than it produces, the United States emits hundreds of billions of greenbacks into the world's payment stream every year - about $600 billion in 2004. The recipients of these dollars willingly invest them in American assets if the price is right. On the evidence of the dollar's decline, the price - the available rate of return - is too low. Ultra-low interest rates not only serve to inflate the value of bonds, stocks and real estate. They also entice investors in those assets to employ the elixir called 'leverage.' Leverage means debt. Borrowing at 2.5 percent, a speculator can invest at 3 percent and still make a handsome living - if he or she can be sure when 2.5 percent might be raised to 2.75 percent or 3 percent. The Fed is happy to oblige. Forswearing the element of surprise in its policy actions, it has told the market exactly what it proposes to do. Paying close attention, professional investors, including thousands of hedge funds, have borrowed fearlessly. A little fear would help to improve the quality of financial stewardship. 'A stock well bought is half sold,' said the Wall Street ancients. What they meant is that success in investing depends on one's entry price. As Congress debates an overhaul of Social Security to permit tax-advantaged saving by millions of new investors, a passage from the new Berkshire Hathaway annual report warrants attention. 'We don't enjoy sitting on $43 billion of cash equivalents that are earning paltry returns,' writes Warren Buffett, Berkshire's chairman. 'Instead, we yearn to buy more fractional interests similar to those we now own or - better still - more large businesses outright. We will do either, however, only when purchases can be made at prices that offer us the prospect of a reasonable return on our investment.' Five years later, the bubble is still unpopped.

Subject: Re: 5 years later
From: Terri
To: Pete Weis
Date Posted: Thurs, Mar 10, 2005 at 19:10:09 (EST)
Email Address: Not Provided

Message:
Terrific argument, to be well remembered. I hope there are some letters in response.

Subject: Re: 5 years later
From: Emma
To: Pete Weis
Date Posted: Thurs, Mar 10, 2005 at 10:36:00 (EST)
Email Address: Not Provided

Message:
Please add your thoughts to this essay. James Grant, by the way, has been bearish on stocks and bonds for more than 20 years.

Subject: Re: 5 years later
From: Pete Weis
To: Emma
Date Posted: Thurs, Mar 10, 2005 at 20:47:07 (EST)
Email Address: Not Provided

Message:
'Shopping at Wal-Mart, they would pay any price except full retail. Investing in the stock market, however, they would pay nothing but.' This line brought to light an ironic observation. Many small investors are caught up in investing in assets (be they real estate, stocks, etc) which have become anything but bargains and they shop heavily at discount stores like Wal-mart. While wealthy investors (especially insiders) have been selling assets like stocks heavily and buying at Nordstroms, Saks, NiemanMarcus, etc.

Subject: What is a Hedge Fund?
From: Terri
To: All
Date Posted: Thurs, Mar 10, 2005 at 05:52:24 (EST)
Email Address: Not Provided

Message:
A hedge fund is an investment vehicle offered to a select group of investors; a manner of private mutual fund. Because of the private nature of the funds, there are few regulations. The investment patterns of hedge funds vary widely, for the guidelines on investment are not restricted as they are for classes of mutual funds. Some hedge funds hedge to lessen risk, some accentuate risk by using leverage. Hedge fund is just a name, not a hedging requirement. Hedge funds are expensive, 2% or more fees on assets and 20% or more of profits. Investment minimums are usually above 500,000 dollars. There are usually restrictions on redemptions. There are wonderfully successful hedge funds, there are poor funds. Reporting requirements on returns are lax.

Subject: Re: What is a Hedge Fund?
From: Pancho Villa
To: Terri
Date Posted: Thurs, Mar 10, 2005 at 11:12:21 (EST)
Email Address: nma@hotmail.com

Message:
In a different article, this one carried by Slate magazine (http://slate.msn.com/id/1908/), Krugman discusses LTCM and the possibility that hedge fund compensation arrangements create the incentives to take inordinate risks since managers share in the upside but not the downside. He points out that if someone lends you a trillion, they have effectively given you a put option on whatever you buy: since you can always declare bankruptcy and walk away, it is as if you owned the right to sell those assets at a fixed price whatever happens to the market. He argues that the rational way to maximize the value of the options is to invest in the riskiest, most volatile assets since if you win, you win massively, and if you lose, you merely get some bad press and lose the money you yourself put in.

Subject: Re: What is a Hedge Fund?
From: Pete Weis
To: Terri
Date Posted: Thurs, Mar 10, 2005 at 09:51:11 (EST)
Email Address: Not Provided

Message:
Associated Press AP: Big Banks Look to Hedge Funds for Growth October 8, 2004 What's a major investment company to do when its ultra-high-worth clients - the high rollers whose portfolios can rival the size of small mutual funds - want to take their money away and put it in a hedge fund? If you're J.P. Morgan Chase & Co., you buy your own hedge fund. And not just any fund, but Highbridge Capital Management, considered one of the best around, with an average 20 percent annual return for investors for the last 10 years, before fees, and $7 billion under management. If you're any one of the other big Wall Street firms, you sit up and take notice. Once derided as shadowy investment vehicles only for people with massive amounts of money, hedge funds are lowering their net worth requirements - which typically range from $100,000 to over $1 million - so that the mere well-to-do can participate. Like mutual funds, hedge funds pool investors' money to try to earn the highest return possible. But, under law, hedge funds can use techniques that are off-limits to mutual fund managers, such as betting that stocks will decline in price and using derivatives and other complex financial instruments to hedge against risk. That allowed many of them to post profits through even the worst market declines. Because of the higher risks involved, government regulators require that hedge funds be limited to high net-worth individuals with ample investment experience. They also limited the number of investors a fund could attract to usually 100 or less, though current regulations are vague and this number has been relaxed over the past few years. In turn, hedge funds operate with far less government scrutiny - which can be attractive for wealthy investors hoping to make their money quietly. J.P. Morgan Chase's Sept. 27 acquisition of a majority stake in Highbridge was valued at around $1 billion. Highbridge, founded by Glen Dubin and Henry Swieca, has not stated publicly who will get the payout from J.P. Morgan's investment. While still a fraction of the size of the $7.5 trillion mutual fund industry, the amount of money invested in hedge funds has risen from $76 billion in 1995 to $795 billion at the beginning of this year. 'If you're a big investment bank and you don't have a hedge fund, then you're not playing with a full deck,' said David Beim, professor of finance and economics at the Columbia University Graduate School of Business. 'Every major bank will be driven in this direction.' The number of hedge funds surged from 2,080 in 1995 to 7,000 at the start of 2004, in part because anybody who can attract investors can set up a hedge fund. That, of course, has led to concerns about how these funds are regulated. 'The barrier to entry in the hedge fund business is zero, but the barrier to success is high,' said Bob Sloan, founder of S3 Asset Management. Sloan's firm helps small hedge funds with administration and trade execution by pooling their resources - much like a group of small businesses might pool their resources to bring health insurance costs down. 'If you add the potential costs of regulation, then that barrier to entry rises,' he said. According to the Securities Industry Association, 42 percent of hedge funds operating in the United States are not registered with any regulatory agency. Thirty-nine percent of fund companies are registered as investment advisers, 9 percent are registered as commodity pool operators and just 1 percent are registered broker-dealers. Nine percent are registered as two or more of the above. In July, the Securities and Exchange Commission approved a proposed new rule ordering most hedge fund managers to register with the agency. If formally adopted after a public comment period that ended Sept. 15, the rule would open the funds' books to SEC examiners and make them subject to an array of regulations including accounting and disclosure requirements. Those requirements could end up cutting into many funds' profits, forcing them to either absorb the higher costs of regulatory compliance to remain attractive to investors or increase their base fees to make up for it. Those base fees, while low, are in addition to performance fees that customarily total 15 percent to 20 percent of investors' returns after the funds meet predetermined minimum target returns. There is a great deal of debate on regulating hedge funds. SEC chairman William Donaldson is an advocate of increased scrutiny, citing the 46 cases brought by the SEC against hedge funds in the last five years that the commission claims defrauded investors of more than $1 billion. The SEC filed a civil suit in August against hedge fund operator Sterling Watters Group and one of its executives, alleging that the executive and the fund raised $27 million by lying to investors about the fund's performance when the fund was allegedly worthless. The fund has vowed to fight the charges. However, experts note that as a whole, the number of funds involved is on par with the larger mutual fund industry, and that most funds operate legally and ethically. 'These funds are not some kind of scam city,' said Michael Udoff, vice president and associate general counsel for the Washington-based SIA. 'Yes, there have been some problems, but these funds have significant benefits as well.' Hedge fund supporters, most notably Federal Reserve chairman Alan Greenspan, have said hedge funds are beneficial because their active trading strategies provide liquidity in the markets when volume would otherwise be low. And they argue that the SEC already has the regulatory oversight needed to pursue fraud claims under current regulations. In the end, observers believe the SEC will succeed in increasing its hedge fund oversight. And that may lead to consolidation within the hedge fund industry, more efforts like Sloan's to help funds overcome their higher costs, or more partnerships like the one between J.P. Morgan Chase and Highbridge. 'Hedge funds have to come into the mainstream at some point,' Beim said. 'And Wall Street will see an opportunity there.'

Subject: Re: What is a Hedge Fund?
From: Setanta
To: Terri
Date Posted: Thurs, Mar 10, 2005 at 07:42:23 (EST)
Email Address: Not Provided

Message:
so anyone can set up a fund and call it a hedge fund. there are no requirements/parameters that must be reached before it can be called a hedge fund? thanks but no thanks, i'll stick to other forms of investments!!! i want to control the risk, composition and duration to suit my investment appetite! if what you said is true then with selective reporting etc then one cannot make a truly informed investment decision. information may be incomplete or distorted, thats definately not my cup of tea!!! terri, i have to confess i'm not too familiar with the details of hedge/mutual funds fees etc. i've only just purchased a house and do not have enough disposable income for the next year or so to invest! i'm still painting and putting in bathrooms in the place and its amazing how expensive paint and tiles can be!!! my form of investment at the moment is detailed below. it carries no risk, and pays a guaranteed return of 29.5% p.a. it sounds like an albanian pyramid scheme but actually is a government backed savings initiative. 'The Minister for Finance introduced a new savings scheme in the Finance Act 2001. Its principal objective is to encourage regular savings by individuals. The main features of the scheme are as follows: For every amount saved in the scheme, the Exchequer will contribute to the individual saver’s account an additional 25% of that amount. This is equivalent to giving tax relief on savings at the standard rate of income tax. Income or gains from the savings investment are taxed at 23% and this will be deducted by the participating financial institutions at the end of the five years. The scheme commenced on 1 May 2001 and accounts must be opened before 30 April 2002 to benefit. The Exchequer contribution will apply for a five year period only. Every individual, who is resident in the State and 18 years of age or over, can save in one of these accounts. This is so whether an individual is married/unmarried, employed/unemployed, or working outside the home/working in the home. Each individual will be allowed only one account and on opening the account will be required to supply his or her PPSN (personal public service number) to the financial institution concerned. The maximum amount that an individual can lodge to an account in any one month will be €254(£200), and the Exchequer’s contribution to the account will be €63.50 for each €254 lodged. The minimum amount which must be saved by an individual in any one month, in the first year of an account, will be €12.70(£10), though an individual may save up to €254(£200) maximum in any month. After the first year an individual may save any amount in a month up to €254(£200) over the remaining 4 year period. Special saving incentive accounts will be managed, on behalf of an individual saver, by a range of bodies such as banks, building societies, credit unions, life assurance companies and fund managers. Exchequer contributions to each account will be sent directly to the account manager and added to the savings in the account. The Government will not be operating or guaranteeing the account or the return under them - this will be a matter between an individual and an account manager. It will be a matter for each individual to assess any level of risk they wish to undertake. It will be possible for an individual to transfer a special saving incentive account from one investment manager to another during the five years. An account can comprise investments in deposits, quoted shares, government securities, collective funds or life assurance products, as determined by the account manager. To obtain the maximum benefit from the savings in the scheme, the savings must be left for the full term which is five years. Where that is the case, tax at 23% will apply only to the difference between the total value of the assets at that point in the account less the amounts invested together with the Exchequer contribution. That means that only the income or gains generated by the investment of all moneys lodged in the account will be liable to tax. This will be deducted at the end of the five year period whether the funds are withdrawn from savings or not at that point. However, if there is an earlier withdrawal from an account (other than on death), the full amount withdrawn (both the savings and investment return) will suffer tax at 23%. An account cannot be used as security for a loan. The following sets out some examples of possible benefits. It should be noted that returns are just an assumption for the example; it will be a matter between the financial institution what return or gain is involved. Example 1: Joe opens an account with his preferred account manager and decides to save €50 a month for the five year period. Joe will save €3000 over the five year period and the Exchequer will contribute a further €750. If the return on investment is assumed to be 4% per annum the return on this €3,750 saved over a period would be of the order of €390 which would be taxed at 23% leaving a net gain of €300. Thus Joe would have €4,050 at the end of the five year period for €3,000 saved, a gain of €1,050 after tax. Example 2: Anne decides to open an account and save the maximum of €200 per month. She will save €12,000 over the five year period and the Exchequer will contribute €3000. Again assuming a 4% return the gain on this €15,000 would be €1,564 which would be taxed at 23% leaving a net gain of €1,204. Thus Anne would have €16,204 at the end of the five year period, a gain of €4,204 after tax.'

Subject: Ireland's Saving-Investment Plan
From: Terri
To: Setanta
Date Posted: Thurs, Mar 10, 2005 at 08:37:58 (EST)
Email Address: Not Provided

Message:
The Irish saving-investment plan is unique and possibly the finest public saving plan there has been. The Irish should take maximum advantage of the plan, for the is little possibility of a repeat opportunity. Wonderful. But, I still wish to know more of European mutual funds.

Subject: European Mutual Funds
From: Terri
To: Terri
Date Posted: Thurs, Mar 10, 2005 at 07:19:50 (EST)
Email Address: Not Provided

Message:
What is mutual fund investing like in Europe? What are the choices and costs? I suspect costs are quite high, but I do not know this.

Subject: NEW international vanguard vipers
From: johnny5
To: All
Date Posted: Thurs, Mar 10, 2005 at 04:48:15 (EST)
Email Address: johnny5@yahoo.com

Message:
Ok how should we re - allocate our assets with these new products Terri? They say FIDO has better permananet rates now than vanguard - does this saving in costs dictate we move the money? http://socialize.morningstar.com/NewSocialize/Asp/FullConv.asp?forumId=F100000015&convId=139512

Subject: Cost and Service
From: Terri
To: johnny5
Date Posted: Thurs, Mar 10, 2005 at 05:39:10 (EST)
Email Address: Not Provided

Message:
Building accounts at Vanguard allows for additional cost and service advantages over already fine cost and service. I trust Vanguard completely and find the choices as broad as I could wish. I am not interested in moving accounts. I wish to know Vanguard thoroughly, and use the products thoughtly.

Subject: Service indeed!
From: johnny5
To: Terri
Date Posted: Fri, Mar 11, 2005 at 00:41:44 (EST)
Email Address: johnny5@yahoo.com

Message:
You have gone a long way terri to convincing johhny5 he should get his uncle into vanguard. Johnny5 and his uncle went to see a local fee only financial planner today who charges 1% for asset management - similar to the rate vanguard wants to charge for an asset management account - he said johnnys uncle messed up big time getting the annuity from raymond james and is going to try and help him get out of it and that he should have got a fido or schwab account - he also said vanguard was a good place to put the money but that vanguard accounts only let you buy vanguard assets - where the fido account he could buy DVY and other things and that he would recommend fido over vanguard only for that reason. Now johnny5's uncle is getting very tired of all this 'money' business and wants to take it easy and turn it over very soon - looking here: http://www.siliconinvestor.com/readmsg.aspx?msgid=21123488 Equity funds report net cash inflows totaling $2.959 billion in the week ended 3/9/05 with Non-domestic funds reporting 80% of the Inflows ($2.367 Bil); International funds report net cash inflows ($2.016 Bil) to all Developed and Emerging regions with more funds reporting inflows (753) than any week since 2/18/04; Emerging Markets Equity funds report net inflows totaling $689 million, the largest inflow to the sector since 1/5/94, with fewer funds reporting net redemptions (46) than any week since 7/2/96; Exchange Traded Funds accounted for 54% of the net Equity fund inflows ($1.607 Bil) with largest inflows: $466 Mil to iShares Russell 2000 Index fund; $396 Mil to iShares MSCI EAFE Index fund; $252 Mil to iShares MSCI Emerging Markets Index fund; $121 Mil to Select Sector SPDRs Financial fund; and largest outflows: -$234 Mil from iShares NASDAQ Biotech Index fund; -$215 Mil from Select Sector SPDRs Energy fund; Taxable Bond funds report net cash inflows totaling $642 million led by: $185 Mil to Franklin Income funds; $131 Mil to iShares Lehman Aggregate Bond fund; $88 Mil to iShares Lehman 20 Yr Treasury Bond fund; $73 Mil to iShares Lehman TIPS Bond fund and large outflows led by: -$100 Mil from iShares Lehman 7-10 Year Treasury Bond fund; -$57 Mil from iShares Lehman 1-3 Year Treasury Bond fund Taxable Bond fund sectors reporting the largest net cash inflows are Investment Grade Corporate Bond funds ($437 Mil) and International & Global Debt funds ($261 Mil); High Yield Corporate Bond funds report net cash outflows totaling -$141 million; Money Market funds report net inflows totaling $123 million; Municipal Bond funds report net cash inflows of $48 million. Is this fee based guy right about vanguard and they are limited in what you can buy through thier brokerage account or is he just another salesman with some backroom comission deal with Fido?

Subject: Simplicity
From: Terri
To: johnny5
Date Posted: Fri, Mar 11, 2005 at 11:31:25 (EST)
Email Address: Not Provided

Message:
Vanguard has all that is needed from mutual funds, to a variable annuity that has no sales charge or penalty for withdrawal, to a brokerage, to banking. There are times however when simplicity is called for.

Subject: Re: Simplicity
From: Terri
To: Terri
Date Posted: Fri, Mar 11, 2005 at 12:07:23 (EST)
Email Address: Not Provided

Message:
Adding to assets at Vanguard, lowers costs even further.

Subject: Re: Service indeed!
From: Jennifer
To: johnny5
Date Posted: Fri, Mar 11, 2005 at 10:18:29 (EST)
Email Address: Not Provided

Message:
Vanguard allows you to easily buy stocks, bonds, or mututal funds of other companies.

Subject: Re: Service indeed!
From: johnny5
To: Jennifer
Date Posted: Fri, Mar 11, 2005 at 11:26:46 (EST)
Email Address: johnny5@yahoo.com

Message:
Thanks Jennifer, I will ask the planner why he is giving inaccurate info on vanguard.

Subject: Re: Service indeed!
From: Jennifer
To: Jennifer
Date Posted: Fri, Mar 11, 2005 at 10:22:52 (EST)
Email Address: Not Provided

Message:
Vanguard has superb choices of investments. Also, you must know exactly what sort of annuity has been purchased.

Subject: Politics killing America
From: johnny5
To: All
Date Posted: Thurs, Mar 10, 2005 at 04:18:48 (EST)
Email Address: johnny5@yahoo.com

Message:
Well johnny5 watched the following programs on cspan3 tonight - and after these and the Economic Hit Man viewings - if there are any of you that believe you do not live in a very manipulated world - why do you think that with the evident truths being reported to you? More importanly, rubin, peterson and others continually speak about congress and government so divided that they can't get anything done to fix the problems - partisan politics killing our ability to adapt - if this institution is so bogged down they cannot serve the people they are there to work for - what can we fundamentally do to fix this? I think we have a problem, we have indentified it, now we need to make progress on fixing it and we can't because of politics - how sad. Perfectly Legal: The Covert Campaign to Rig our Tax System Washington, District of Columbia (United States) ID: 181339 - 03/30/2004 - 0:58 - $19.95 Johnston, David Cay, Correspondent, [New York Times], Business Mr. Johnston talked about his book Perfectly Legal: The Covert Campaign to Rig our Tax System to Benefit the Super Rich - and Cheat Everyone Else, published by Portfolio. The book is about the reality of how the tax system actually operates after the politicians pass the laws. The book discusses the tax loopholes that the rich can afford to exploit, corporate schemes that benefit the executives at the expense of the workers and stockholders, the taxes that are encroaching upon the middle class, and the weakness of the enforcement system. Running on Empty Institute for International Economics Washington, District of Columbia (United States) ID: 183041 - 08/09/2004 - 1:41 - $29.95 Bergsten, C. Fred, Director, Institute for International Economics Rubin, Robert E., Secretary (1995-99), Department of the Treasury Peterson, Peter G., Chairman, Blackstone Group Mr. Peterson talked about his book Running On Empty: How The Democratic and Republican Parties Are Bankrupting Our Future and What Americans Can Do About It, published by Farrar, Straus and Giroux. Mr. Peterson argued that America is headed towards an economic meltdown because of the large deficit the country runs every year. He asserted that big tax cuts and heavy spending have contributed to the massive debt the country currently has and warned that if measures are not taken soon the economy will suffer dramatically. Following Mr. Peterson's remarks he joined Robert Rubin and C. Fred Bergsten in a panel discussion. Audience questions were also answered. The Cheating of America Borders Books & Music Washington, District of Columbia (United States) ID: 163845 - 04/03/2001 - 0:52 - $29.95 Lewis, Charles, Executive Director, Center for Public Integrity Allison, Bill, Author Mr. Lewis and Mr. Allison talked about their book The Cheating of America: How Tax Avoidance and Evasion by the Super Rich Are Costing the Country Billions, and What You Can Do About It, published by William Morrow & Co. The book asserts that the federal treasury loses billions of dollars each year as a result of unpaid taxes. The authors developed statistics about the extent of the problem of tax evasion and what they feel is an inadequate response by the Internal Revenue Service. After the presentation the authors answered questions from members of the audience.

Subject: Rising Long Term Interest Rates
From: Terri
To: All
Date Posted: Wed, Mar 09, 2005 at 21:51:22 (EST)
Email Address: Not Provided

Message:
Rising long term interest rates will further limit home refinancing and equity loans, and this will force consumers to expensive credit card debt. This may well be happening already. A further reason to be wary of a slowing of consumer spending. Because of this I seriously doubt the Federal Reserve will change the pace of tightening.

Subject: Good point.....
From: Pete Weis
To: Terri
Date Posted: Thurs, Mar 10, 2005 at 10:00:54 (EST)
Email Address: Not Provided

Message:
regarding shift from home equity to credit card debt. Now we begin to see why credit card issuers pushed so heavily for changes to bankruptcy laws. As Emma observed - risk, in so many ways, is being shifted from US corporations to US households - 'barbarians at the gates'.

Subject: Going upside down
From: Pete Weis
To: All
Date Posted: Wed, Mar 09, 2005 at 21:49:06 (EST)
Email Address: Not Provided

Message:
One thing which Buttonwood was not considering here was the selling expenses of a house. While a 20% or more correction in the housing market would not be unexpected in a market which has risen 100% in the last 5 years in a number of highly populated regions of the US, only a 10-13% drop could be serious. The reason - it often takes anywhere from 7-10% of the overall selling price of the house to close the transaction - after commissions, excise taxes, lawyer fees and escrow costs. A 10-13% drop in the housing market reduces the seller to the break even point in many cases. Any more of a drop puts many sellers in negative territory. Mar 8th 2005 From The Economist Global Agenda House prices and America’s mortgage-finance giants have both grown too big for their boots. Will one trip up the other? BUTTONWOOD had to chuckle at the photos of Martha Stewart, the world’s most tasteful jailbird, just released from Cupcake Correctional Facility last weekend. Adorably dressed, she looked suspiciously botoxed and understandably cheerful—if only because shares in Martha Stewart Living Omnimedia had more than doubled in price during the previous seven months (though they are down this week). She would be a role model, were it not for the record. It is hard to know whether the shares have risen at the prospect of her manicured hand profitably on the tiller once more or because home-furnishing companies usually rise when the housing sector flourishes. And flourishing it is. The price of residential housing in America rose faster last year than at any time since 1979, says Freddie Mac, one of the two big government-sponsored entities (GSEs) that provide mortgage liquidity. The ratio of house prices to rents is now a third above its average level from 1975 to 2000, on calculations by The Economist. Though the pace is likely to slow a bit this year, people keep on buying, and borrowing to do so. There are all sorts of tempting mortgages on offer, including 110 LTVs (110% loan-to-value mortgages), which lend the full price of the house plus a bit extra for transaction costs. Turnover is frenetic: as one commentator puts it, “Day traders in shares have become day traders in real estate.” Does all this amount to a bubble? Without a doubt. Alan Greenspan’s attempt to save capitalism from the burst dotcom bubble in 2000 (and the effects of terrorist attack in 2001), by cutting short-term interest rates from 6.5% in 2000 to 1% in 2003, produced a new bubble in the credit markets. One sign of that is the compression in bond yields, with riskier assets paying investors only slightly more than governments and blue chips. Another is the debt-fuelled explosion in property prices. What is less clear is the link between America’s huge and hugely troubled mortgage-finance behemoths—Fannie Mae and Freddie Mac—and the house-price bubble. If these custodians of $3 trillion in securitised mortgages back out of the market—either because there is further bad news to emerge from within them or because their masters make them—could this prick the bubble by making mortgages scarcer and dearer? And would Fannie and Freddie go bust if the bubble popped? The GSEs, created by statute but both private-sector companies these days, are supposed to pump liquidity into the lower end of the housing market. They do this by buying mortgages from banks and other lenders, most of which they then pool as collateral for marketable securities, collecting a “G-fee” for guaranteeing repayment. Some mortgages and mortgage-backed bonds, however, they hold in their own portfolios. The difference between what they pay to borrow (just a little more than Treasuries, as they are assumed to be guaranteed by the federal government) and what they make on their holdings (less the cost of hedging against interest-rate risks, plus the G-fees they earn) has made both companies among the most consistently profitable of the S&P 500. But those profits have been called into question. The agencies’ regulators have stumbled more than once on accounting fiddles at both and are now making Fannie Mae restate four years of earnings, slow the breakneck pace of growth in its portfolio, and strengthen capital. Mr Greenspan seems keen to get mortgage lending back into the hands of banks whose behaviour he can influence. Congress, meanwhile, may enact stronger controls over Fannie and Freddie. Economists at the Federal Reserve reckon that the GSEs pass on to consumers only seven basis points of the 15-18 point spread between the mortgages they buy and ordinary mortgages. Richard Baker, a Republican congressman who sits on one of the committees considering the GSEs’ future, says he worries that Fannie and Freddie have forgotten their mission to help low-income people and instead have become “a very sophisticated hedge fund which uses its leverage in the marketplace given by the taxpayers to yield significant profits for shareholders”. If the agencies are cut back dramatically, how much will it affect the markets? Looking at it another way, how much is the house-price bubble due to the availability of this huge pool of cheap credit? Not much, some would say. After all, many other countries, including Britain, have managed to produce perfectly good house-price bubbles without Fannie and Freddie, so the condition may have more to do with general global liquidity and tax breaks. More specifically, house prices in America galloped merrily on in 2004 while Fannie and Freddie were less active than they had been in years. Rising house prices pushed the size of many mortgages up through the limit ($359,650 at present) that the GSEs are allowed to buy. Many borrowers chose more complicated mortgages, such as hybrids (partly fixed-rate, partly floating), which the GSEs find harder to buy up and securitise. The result of all this is that the GSEs’ furious pace of securitising mortgages slowed in 2004, and their portfolios were virtually flat. Since then, Fannie has slimmed its portfolio by another 17%. It is too soon to know whether the GSEs can really absent themselves from the market without its noticing. Despite everything, says Jim Vogel, senior vice-president of FTN Financial Capital Markets, “everyone out there still assumes that there’s a put [option to sell] at some price back to Fannie and Freddie.” And there is plenty of money around to lend at the moment. Though Fannie’s shares, unlike Martha Stewart’s, have fared unhappily over the past few months, yields on its long-term debt have been reasonably resilient. If house prices dropped and defaults rose sharply, could that seriously trip up Fannie and Freddie? That would depend on how sharp the changes were. The agencies are prohibited from buying mortgages that represent more than 80% of the value of the house. Prices would have to fall by more than 20%—by much more, in areas where prices have risen most—before Fannie and Freddie took a serious hit. All this is not to say that a sharp change in either the agencies’ status or house prices would not roil the markets. But it seems that Congress could dare to be bold, paring back the GSEs’ portfolios and giving a new, stronger regulator broader powers. The boldest move of all, of course, would be to give up altogether on subsidising the American dream of home ownership for all. Surely Congress would not go that far? Buttonwood thought not—until a colleague pointed out that Britain had had a similar dream, financed through tax breaks on mortgage interest. Where are those tax breaks today? History, pure history. Just like Martha Stewart’s time inside.

Subject: Re: Going upside down
From: Terri
To: Pete Weis
Date Posted: Wed, Mar 09, 2005 at 21:52:59 (EST)
Email Address: Not Provided

Message:
Important point on selling cost. Darn.

Subject: Papa Roach's 'Unprepared world'
From: Pancho Villa
To: All
Date Posted: Wed, Mar 09, 2005 at 20:52:13 (EST)
Email Address: nma@hotmail.com

Message:
Global: An Unprepared World Stephen Roach (New York) Globalization is a wonderful subject to debate. Basically, that’s all I’ve been doing for most of the past two weeks — first at our own MacroVision exercise and more recently at the World Economic Forum in Davos. In many respects, these were two of the most intellectually enriching weeks I have spent in a long time. Yet as I now decompress and ponder the experience, I am left with a nagging sense of concern. As I see it, investors are largely unprepared for some big changes coming in the global landscape in 2005. This potential disconnect is most evident in the debate over the US and China — currently the twin engines of global growth. America’s imbalances are widely recognized as both worrisome and unsustainable. There is a minority that believes in the new paradigm of the fungible global saving pool — that the allocation of capital, consumption and production now flows seamlessly to its destinations of highest return or comparative advantage. In its simplest sense that translates into a world where China produces, America consumes, and the rest of the world gladly pays the bill and goes along for the ride. But with global imbalances expanding at an accelerating rate, even advocates of this point of view are starting to have second thoughts. America’s deficits are now being framed as a problem that will come to a head sooner or later. The hope of the global consensus is that it will be later. As I have noted ad nauseum, macro is not particularly good on these issues of timing — in making the distinction between the proverbial sooner or later(Sooner or later we learn to throw the past away...). But my suspicion is that 2005 will be a critical year in being able to make that distinction. I rest my case mainly on the likely behavior of the Federal Reserve. At present, the US central bank is running an utterly absurd monetary policy of maintaining a “zero” real short-term interest rate — a nominal federal funds rate of 2.25% that is basically equal to the core CPI inflation rate. That will undoubtedly change this week, but not by much. When the dust settles after what is likely to be yet another “measured” tightening of 25 basis points, the real short-term interest rate will only be fractionally in positive territory. This is well below what most believe to be a “neutral” position for the Fed’s key policy lever — somewhere in the 2% zone in real terms. Which, of course, says there is a good deal more tightening to come if the Fed is serious about containing the inflationary and speculative risks it cited in the minutes of the December FOMC meeting. This could be a recipe for a flash point that has a lot to say about the “sooner or later” aspect of global rebalancing. Last year’s Fed tightening was inconsequential — all it did was lift short-term real interest rates from negative territory to zero. This year’s Fed tightening is likely to be a very different animal — taking the policy rate from zero toward a large enough positive number that deals with the very risks the Fed, itself, is now citing. For financial markets, the zero real federal funds rate is the candy of the carry trade — allowing investors and speculators to borrow short and pocket the spread anywhere else on the yield curve. In 2005, the Fed is going to take the candy away. This points to a likely unwinding of a multitude of carry trades that have driven spreads on risky assets to unbelievably low levels. Those include high-yield and emerging market debt, investment-grade debt, and the “refi trade” that has underpinned consumer equity extraction from increasingly overvalued homes. This underscores a potentially critical moment of reckoning for the US economy and for a US-centric global economy. Extraordinary monetary accommodation has been the glue that has held a post-bubble US economy together these past five years. But the easy money has given rise to an asset-driven saving and spending mindset. That development, in conjunction with an unprecedented shift in the federal government’s saving position — a budget that went from surplus to deficit — has pushed America’s income-based saving position to record lows: The net national saving rate has averaged just 1.5% since early 2002. Lacking in domestic saving, the rest is history — a US that has to import surplus saving from abroad to grow its economy, and run massive current-account and trade deficits to attract the foreign capital. And, of course, Japan and China have led the charge in financing this asset-dependent spending binge because they couldn’t stomach the alternative. Like in 1994, 2005 is likely to be the year when the Fed finally gets “real” on real short-term interest rates and the carry trades they have spawned. But unlike the case in 1994, more than a decade later, the US has been transformed into an asset-dependent economy that has given rise to massive global imbalances. To me, all this smacks of sooner rather than later on the rebalancing watch. Based on all my discussion and debates in the past few weeks, I would say that the world is largely unprepared for this possibility. The Fed is widely thought to be the world’s central bank and wouldn’t dare risk such an outcome, goes the logic. By inference, that means the world is perfectly content with the alternative — the folly of financing itself on an increasingly shaky foundation of ever-risky carry trades. A truly independent central bank has no choice other than to take the candy away. And a US-centric world will have to figure out how to cope with the aftershocks. The key question, in my view, is whether the Fed has the courage to act. Similarly, an increasingly integrated global economy has to find a much better way to cope with China. The China debate has now reached a feverish pitch — especially on the RMB currency issue. The Chinese were well represented in Davos and every utterance by a Chinese official or banker was scrutinized by the press and the markets for hints of any imminent action on this front. In one of the final sessions at the World Economic Forum, Li Ruogu, Deputy Governor of the People’s Bank of China, stated unequivocally that the decision has already been made to shift gradually to a more flexible currency regime. But he went on to underscore that there is no timetable for such an action. But, as I saw it, the message from China was sooner rather than later on this count as well. The operative word on this issue came from the senior member of the Chinese delegation at Davos — Vice Premier Huang Ju. China, he stated, was well advanced in its preparation for a more flexible currency regime. If that wasn’t a wake-up call, the next session at the World Economic Forum was. Literally, a few minutes later on the same stage, John Taylor, US Under Secretary of Treasury, used precisely the same language in stating that China is now taking steps to prepare for the shift a more flexible currency system. The emphasis on the word “prepare” stands in sharp contrast to earlier language, which always contained references to terms such as “stability” or “fixed.” Those words were not used in Davos. I don’t want to read too much into the nuances of language, but I think there is an important message here. I don’t think it was an accident that both Chinese and US officials selected the same new word to characterize an issue that has taken on increasing significance in world financial markets. Personally, I think the Chinese currency issue is totally misunderstood. For starters, I can’t conceive of a likely move in the RMB that would have any impact on Chinese competitiveness or on the US current-account deficit. Sure, if the peg goes, other Asian currencies could follow suit — allowing the dollar to continue the requisite decline that America’s current-account deficit requires. That would undoubtedly also trigger some diversification out of dollar-denominated assets by foreign investors and central banks — only underscoring the likely of a back-up in longer term US interest rates that would have happened in any case. The only RMB outcome that would shock the markets would be an Asian-crisis-style adjustment. With over $600 billion of official foreign exchange reserves at its disposal, the odds of that are close to zero, in my view. China has ample resources to manage any currency adjustment it wants. I do think this is a big deal for China. Over the past 26 years, China has made phenomenal progress largely by successfully executing an open, trade-oriented development model. It has relied on its enormous reservoir of national saving to improve the infrastructure that supports its manufacturing platform. And it has used this infrastructure, along with aggressive tax incentives and a vast low-cost labor force, to attract huge inflows of foreign direct investment. Currency stability is key for any outward-looking growth model. But now China is coming of age and must shift to a more balanced, market-oriented framework. To do that, it needs to focus more on stimulating domestic demand — its consumption share of GDP is only about 55%. At the same time, China also needs a more flexible policy apparatus to smooth out the inevitable cyclicality of market-driven adjustments. That points to flexibility in terms of fiscal, monetary, and yes, even currency policy. The Chinese know and understand this, and are definitely moving in that direction. Timing is their business — not ours. But when they shift currency regimes, I think it will be a very positive sign of the maturation of the Chinese growth miracle. I don’t think the rest of the world gets this point at all. All this speaks of world financial markets that are not well positioned to cope with two of the biggest issues on this year’s macro agenda — a significant move in real short term interest rates in the US and the deeper implications of an eventual shift in China’s currency regime. Timing is always tricky in this business, but I think the Chinese have put it best: The time to prepare is now.

Subject: Re: Papa Roach's 'Unprepared world'
From: Jennifer
To: Pancho Villa
Date Posted: Wed, Mar 09, 2005 at 21:09:37 (EST)
Email Address: Not Provided

Message:
http://www.morganstanley.com/GEFdata/digests/20050131-mon.html January 31, 2005 Link to article.

Subject: Re: Thank u
From: Pancho Villa
To: Jennifer
Date Posted: Wed, Mar 09, 2005 at 21:13:06 (EST)
Email Address: nma@hotmail.com

Message:
Thank you dear Jennifer

Subject: Dreaming of Hedge Funds
From: Terri
To: All
Date Posted: Wed, Mar 09, 2005 at 20:02:33 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2004/12/09/business/09scene.html?ei=1&en=d2de508be5f474c3&ex=1111414828&pagewanted=all&position= There are surely superior investors and superior programs of investment, but there is no reason to think that the trillion dollar hedge fund industry delivers superior returns to index funds. Rather, hedge fund as a class appear to trail indexes by the costs of the funds. A trillion dollars competing in markets tends to lose any particular advantage smaller fund sources might have had. We should be quite careful before we look to hedge funds as a source of returns that easily better market indexes.

Subject: Why hedge funds underperform from a hedge manager
From: johnny5
To: Terri
Date Posted: Thurs, Mar 10, 2005 at 04:12:07 (EST)
Email Address: johnny5@yahoo.com

Message:
http://www.safehaven.com/article-2717.htm March 09, 2005 Short Selling as Vice and Virtue by Clif Droke The broad market in recent weeks hasn't exactly been kind to the shorts. Depending on the stock sector in question, short squeezes have become quite common and have killed off more than a few bears. But have the bears been wrong altogether in their urge to sell short the stock market? Or have they just been a bit too early? To answer that question you need only to turn to the financial press for some valuable clues. One reason why the market has been immune from sustained decline of late was uncovered in a Feb. 28 Business Week magazine article entitled 'Why the shorts have long faces.' The article looks at how traders are taking advantage of a new SEC rule to bid up shares of shorted stocks. Business Week explains that a new SEC regulation is cracking down on the practice of 'naked shorting,' in which brokers executive a short sale without having a firm arrangement to borrow shares of the stock being shorted...and then discover they can't locate the necessary stock. 'The new regulation is prompting brokers who can't deliver stock within 13 trading days to close out customers' short positions,' says Business Week. The article goes point to point out that since early January major stock exchanges have had to publish daily lists of companies for which sellers have failed to deliver sizable amounts of stock to buyers in a timely fashion. 'The daily lists signal to other trades that they can pluck profits by mounting a short squeeze in stocks, such as Martha Stewart Living Omnimedia, that are already moving up on positive news. Evidently, some brokerage firms are passing on to their customers fees-per-month-per-share on some companies that have hard-to-borrow stocks. For instance, at Harrisdirect, investors who want to short the stock of Travelzoo Inc. Must pay an extra fee of $31.40 a month per 100 shares they want to short, according to Business Week. According to the article, Harrisdirect officials acknowledge that the fees are putting a damper on short-selling activity. 'It has had an impact,' says Harrisdirect's chief operating officer Michael Hogan. 'In some of these stocks the economics become uninteresting.' Aside from the clear implication that the shorts have been getting squeezed a lot in recent weeks (in part reflecting the upside tendency of the major indexes), what is the point of this magazine article? Could it not be to scare away potential short sellers for the next stock market top...which isn't too far away? I think it just may be! Another example of the art of short selling being portrayed as 'vice' in the financial press was found in a recent Financial Times guest article written by James Altucher, managing partner at a hedge fund and author of the best-selling book 'Trade Like a Hedge Fund.' Altucher's article was entitled 'The long and the short of short trading' and in it he asks, '...does shortselling turn out well in general?' His answer: 'I am not sure that...[it] works out profitably.' He goes on to offer a look at how well professional short-sellers and hedge funds in general fare in shorting stocks. 'On average,' he says, 'they are uninspiring. Take 2001. The S&P was down more than 10 per cent, the NASDAQ more than 20 per cent. The events of September 11,2002 caused the market to crash and many stocks hit multi-year lows. So how did the shortsellers do? The CSFB/Tremont Dedicated Short bias Index, which tracks the hedge funds that only sell short, was down 3 per cent -- better than the market but not great.' He concludes by asking, 'So does shorting ever work?' His answer: 'That is a tough call. For some hedging purposes, shorting is acceptable. I avoi dit. It leaves me with less cocktail-party fodder, but, I hope, more money.' Not exactly high praise from a professional in a sector who is presumed to be adept at short selling. My observation has been that whenever the mainstream financial press draws attention to the practice of short selling (which is rare) it is usually for the purpose of either encouraging short selling at precisely the wrong time, or else discouraging shorting when it might otherwise be a profitable course of action. For example, during the mini-bear market decline of August-October 1998, the Wall Street Journal ran an article in the Oct. 14, 1998 edition headlined, ''Bullet' strategy makes comeback as traders find a way to skirt rules on short selling.' It went on to describe the bullet strategy of 'married puts,' a complicated technique allowing traders to sidestep rules that prevent short sales when the stock's share price already is falling steadily. 'You can really crack a stock this way,' one trader was quoted as saying. Of course, by the time this article was published the market had already put in a bottom and from there rallied back up to a new high before the year was through. Flash forward to the October 2002 stock market bottom. CNBC was expounding on the 'virtues' of short selling and was obviously trying to encourage the public to start heavily shorting. From there of course the market took off and rallied virtually straight up into December. Suffice it to say the mainstream financial press has an unenviable record of telling people when to short (or when NOT to short) at the wrong times! The moral to this story is that you shouldn't always follow the lead of the mainstream press, especially on the subject of short selling! We'll have more to say on the subject of shorting in a later commentary... Clif Droke ClifDroke.com

Subject: C-span3 tonight - the Rich cheat taxes
From: johnny5
To: All
Date Posted: Wed, Mar 09, 2005 at 18:20:51 (EST)
Email Address: johnny5@yahoo.com

Message:
Time to get mad America - don't think about the poor somalies starving in africa - think about those rich crooks above you that live the good life. For you guys in China - you should be able to watch the live web feed off the c-span website with an anonymous proxy server. 02:05 am 1:33 (est.) Forum Running on Empty Institute for International Economics C. Fred Bergsten , Institute for International Economics Robert E. Rubin , Department of the Treasury 10:00 pm 1:33 (est.) Forum Running on Empty Institute for International Economics C. Fred Bergsten , Institute for International Economics Robert E. Rubin , Department of the Treasury http://inside.c-spanarchives.org:8080/cspan/cspan.csp?command=dprogram&record=164557288 Mr. Lewis and Mr. Allison talked about their book The Cheating of America: How Tax Avoidance and Evasion by the Super Rich Are Costing the Country Billions, and What You Can Do About It, published by William Morrow & Co. The book asserts that the federal treasury loses billions of dollars each year as a result of unpaid taxes. The authors developed statistics about the extent of the problem of tax evasion and what they feel is an inadequate response by the Internal Revenue Service. After the presentation the authors answered questions from members of the audience. http://inside.c-spanarchives.org:8080/cspan/cspan.csp?command=dprogram&record=138631350 Running on Empty Institute for International Economics Washington, District of Columbia (United States) ID: 183041 - 08/09/2004 - 1:41 - $29.95 Bergsten, C. Fred, Director, Institute for International Economics Rubin, Robert E., Secretary (1995-99), Department of the Treasury Peterson, Peter G., Chairman, Blackstone Group Mr. Peterson talked about his book Running On Empty: How The Democratic and Republican Parties Are Bankrupting Our Future and What Americans Can Do About It, published by Farrar, Straus and Giroux. Mr. Peterson argued that America is headed towards an economic meltdown because of the large deficit the country runs every year. He asserted that big tax cuts and heavy spending have contributed to the massive debt the country currently has and warned that if measures are not taken soon the economy will suffer dramatically. Following Mr. Peterson's remarks he joined Robert Rubin and C. Fred Bergsten in a panel discussion. Audience questions were also answered.

Subject: A book for you Terri
From: johnny5
To: All
Date Posted: Wed, Mar 09, 2005 at 17:36:54 (EST)
Email Address: johnny5@yahoo.com

Message:
One of the comments mentions the austrians. I agree carrying gold is not fashionable or trendy, that plastic credit card is so much more chique at the macy's. http://www.amazon.com/exec/obidos/tg/detail/-/0471389455/qid=1110407177/sr=8-1/ref=pd_csp_1/103-6179943-8706260?v=glance&s=books&n=507846 Fascinating and entertaining take on the history of boom/bust cycles in markets, that functions also as a reply to the monetarists of the Austrian school. The monetarists seem to see panics and crashes (such as those that heralded the beginning of the Great Depression) as the function solely of improper monetary policy by the central bank. Kindleberger, in my opinion correctly, realizes that while monetary policy may either enable speculation or exacerbate a panic, one must not ignore the behavioral psychology that grips the masses of investors once a mania has set in. He also sees a panic as the natural and inevitable consequence of an investment mania. It seems impossible to have a mania without a panic, as night follows day. Are you folks at the Fed listening? Pumping more air into the bubble through the current ultra easy money policy could well be simply setting us up for an even bigger set of problems down the road. Whether or not you agree with the author, he has written a very thoughtful and important book.

Subject: Charles Kindleberger
From: Terri
To: johnny5
Date Posted: Wed, Mar 09, 2005 at 17:52:36 (EST)
Email Address: Not Provided

Message:
Manias, Panics, and Crashes: A History of Financial Crises by Charles P. Kindleberger An excellent book, by a traditional economist. A keynesian.

Subject: Hedge Funds
From: Terri
To: All
Date Posted: Wed, Mar 09, 2005 at 17:20:15 (EST)
Email Address: Not Provided

Message:
Hedge funds are interesting in that the managers who run them have far more freedom than mutual fund managers. A hedge fund manager can use a range of investment strategies. The potential for gain and loss is accentuated because leverage is often used by the managers. The idea of a hedge fund is to try to exploit market anomolies, and the techniques range from using mathematical models to careful team observations. The only problems with hedge fund investing for many investors are minimum investment levels that are often in the million dollar range and a lack of oversight. Beyond this, an investor must know what choices are available and be accepted by managers with superior reputations. Again, hedge funds are simply not going to be available for the vast majority of investors and if they were so available returns would quickly appromimate market returns minus costs. Even now, there is evidence that hedge funds as a whole have returns that approximate market averages minus costs.

Subject: Hedge Fund Data Management
From: Terri
To: Terri
Date Posted: Wed, Mar 09, 2005 at 19:39:08 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2004/12/09/business/09scene.html?ei=1&en=d2de508be5f474c3&ex=1111414828&pagewanted=all&position= Hedge Funds Better at Managing Data Than Managing Money By ALAN B. KRUEGER HEDGE funds have grown at supersonic speed. In 1990, about $50 billion was invested in hedge funds; today, the amount is estimated at $1 trillion. Does superior performance explain the rapid growth? No, says Burton G. Malkiel, a professor of economics at Princeton University, and Atanu Saha, a managing principal at the Analysis Group, a consulting firm. The researchers recently completed a study that challenges the often-made claim that hedge funds, in general, produce lofty returns. Hedge funds are a diverse set of investment funds that typically cater to wealthy clients and institutions. The funds pursue various strategies, like holding both long and short positions, and often employ substantial leverage. Their fees are usually much higher than those charged by mutual funds or other financial assets. Data on the performance of hedge funds comes from indexes like the CSFB/Tremont Index or the Van Hedge Fund Index. Those indexes are generated by companies that advise investors and operate funds. 'Hedge funds in aggregate,' Van Hedge Fund Advisors boasts on its Web site, 'in most multiyear periods, have provided both superior returns and lower statistical risk than the S.& P. 500 or mutual funds.' The catch, according to Professor Malkiel, is that the information on performance is voluntarily provided to the organizations who track the funds. Because a good record helps attract investors, funds have a tendency to start reporting results only after they have achieved some success. Funds that are losers right out of the gate may never be represented in the database. Furthermore, when funds start reporting, they have the option of 'backfilling' their data, or providing information on returns for previous months. If a fund was successful in preceding months, it has an incentive to backfill its data to increase its attractiveness to investors. This process creates a 'backfill bias,' because better results are overrepresented in the database. It is as if the Boston Red Sox waited until 2004 to report their World Series success, while the Yankees started in 1923; both franchises would look like smashing successes. By analyzing statistics from TASS Research, which is owned by Tremont Capital and has perhaps the most comprehensive data on returns, Mr. Malkiel and Mr. Saha have shown that the backfill bias is substantial. The returns that were backfilled for a given year were 5.8 percentage points higher than the returns of other funds whose results were contemporaneously reported for that year. 'I think there are a lot of people in the financial community who have a vested interest in showing only those pieces of data that help them sell products,' said Professor Malkiel, who is also a director for the Vanguard Group. Another problem he noted, called survivor bias, is a tendency for funds to stop reporting their monthly returns when they suffer losses and are on the verge of closing. Long-Term Capital Management, for example, did not report its losses to any of the database services from October 1997 to October 1998, a period when it lost 92 percent of its capital. (Long-Term Capital never reported to the TASS database.) Looking only at the past returns of hedge funds that are in existence today - that is, the surviving funds - it does appear as if hedge funds do produce generous returns. But this is tantamount to judging the success of a war by ignoring all the casualties. Mr. Malkiel and Mr. Saha have found that the funds that cease reporting their data, so-called dead funds, tend to have weak returns in the months before they cease reporting. The average annual return for dead funds was 7.4 percentage points less than that of surviving funds for the same years. And hedge funds have a tendency to die - more than 10 percent stop reporting to the database each year. Although it is possible that some of these funds withdrew because they were so successful that they no longer desired further investors, the researchers found that smaller and underperforming funds were the most likely to cease reporting - not a profile of successful funds that were turning away business. Using data from 1996 to 2003, Mr. Malkiel and Mr. Saha found that correcting for backfill and survivor biases reduced the average annual return on hedge funds, after deducting fees, from 13.5 percent to, at most, 9.7 percent, which is almost three percentage points less than the return on the Standard & Poor's 500-stock index for that time period. The lower return could be justified if hedge funds helped to diversify portfolios by providing an investment that did not move in lock step with other investments, and the researchers did find that hedge funds do not move closely with the stock market over time. Yet they also found that choosing a particular hedge fund entailed considerable risk because the funds exhibited enormous variability in performance in any given year. The best funds perform extraordinarily well, but the worst ones perform extremely poorly, with the spread between the best and worst greatly exceeding the spread between the best and worst equity or bond funds in a typical year. 'Clearly, there is a risk in investing in hedge funds that is far greater than the risk of investing in the other asset classes,' the researchers said. Even the so-called fund of funds hedge funds, which try to diversify risks by investing in other hedge funds, display nearly as much variability in performance across funds in a given year as is exhibited across the entire universe of mutual funds. Moreover, from 1995 to 2003, the average fund of funds yielded only a 7 percent annual rate of return after deducting fees, well below that of the average mutual fund. Picking a good fund is also dicey because there is little persistence in performance from one year to the next. The chance that a hedge fund that performed in the top half of the universe of funds in one year would do so again the following year is no better than 50-50, which raises the question of how the funds can command such high fees. Most hedge funds will be required to register and provide data to the Securities and Exchange Commission beginning in February 2006. While some people have argued that the S.E.C. already has too much to do, it would seem that collecting and disclosing information on performance is a small burden for the commission, and a great potential benefit to investors. 'As a free market person, I think markets work better when there is fuller and more accurate information,' Mr. Malkiel said. Alan B. Krueger is the Bendheim professor of economics and public affairs at Princeton University.

Subject: Vanguard Europe on Bear markets
From: johnny5
To: Terri
Date Posted: Wed, Mar 09, 2005 at 17:59:52 (EST)
Email Address: johnny5@yahoo.com

Message:
I want a fund that shorts the way hedge funds do with low fees - richie can get into this, poor johnny5 and terri are on the wrong side of the tracks - this is a disservice to our citizens and is just reaffirming the social gap of richie and poor. Vanguard has no bear funds, not by market, our country, or sector that I can find and this puts a severe limit on my diversification and increases my risk - mauldin makes this point clear in his paper. Buffet and Gates and Soros can run these sophisticated foreign asset positions and make a ton (100%) on a declining dollar but terri and johnny5 are supposed to be happy with 7% a year if that!! What crap - the rich get richer and grandma millie and grandpa war vet fight over the crumbs.

Subject: Re: Vanguard Europe on Bear markets
From: Institutional Investor
To: johnny5
Date Posted: Wed, Mar 09, 2005 at 21:59:40 (EST)
Email Address: Not Provided

Message:
No offense, but you have absolutely no idea what you are talking about Johnny. Almost anyone can enter apply the same strategies hedge funds use. If you don't believe me, read Gross's commentary below... There really isn't a reason to complain that there aren't any low cost bear funds, its called shorting ETFs. Johnny, instead of complaining about investing, you probably be well served to take at least an intro to investments class at your local university. It would probably clear up many of the misconceptions you seem to have. http://www.pimco.com/LeftNav/Late Breaking Commentary/IO/2004/IO_August_2004.htm Also, it might be worthwhile for you to investigate hedge funds a little more. Its not just 'richies' invested in them, look at any college endownment, public/taft-hartley pension plans, public foundations, you'll see a significant percentage in hedge funds and private equity. You can easily download financial statements from university websites if you really want to see how much they are invested. Allocations of 25-50% are quite common.

Subject: Re: Vanguard Europe on Bear markets
From: Setanta
To: Institutional Investor
Date Posted: Thurs, Mar 10, 2005 at 04:31:52 (EST)
Email Address: Not Provided

Message:
forgive my ignorance institutional investor. what is the definition of a hedge fund and how does it differ from an indexed fund or mutual fund. my experiance of hedges are that they are specific to a componant of risk. e.g. interest rate risk - interest rate swap from floating to fixed. currency risk - currency forward exchange contract. credit risk - credit default swaps etc. what does a hedge fund hedge against, surely not all componants of risk? or is it a fund on the hedge market i.e. a fund on a secondary market on currency, interest rate and credit swaps? in which case it is a fund on all the risk that institutional investors are not willing to accept. am i way off track here?

Subject: Re: Vanguard Europe on Bear markets
From: Institutional Investor
To: Setanta
Date Posted: Thurs, Mar 10, 2005 at 21:09:27 (EST)
Email Address: Not Provided

Message:
the term hedge fund is actually extremely generic. There is no one particular style for them. Typical strategies are covered in the links below, the most common being relative value (the typical long-short portfolio), convertible arbitrage, and event driven. http://www.magnum.com/hedgefunds/abouthedgefunds.asp#strategies http://www.hedgefund.com/abouthfs/strategysector/strategysector.htm

Subject: Re: Vanguard Europe on Bear markets
From: johnny5
To: Institutional Investor
Date Posted: Wed, Mar 09, 2005 at 22:59:27 (EST)
Email Address: johnny5@yahoo.com

Message:
No offense taken, I appreciate your comments II. I am trying to learn why I can't invest in a hedge fund but a man with 1 million can or these larger insitutions. I am not complaining about investing per se - but there are options that certain people have that me and terri do not because we are poor - the hedge fund investor does not have to short i-shares and do his own DD but can pay a professional to do so in a hedge fund - why do you think it is fair I cannot given mauldins comments to congress? He does not think it is fair. Perhaps I am tired of reading the markets 12 hours a day and want to pay a professional to do all the long and short sales for me - I could pay a guy in a hedge fund if I had 1 million right? But I don't have 1 million so I can't - I don't have time to talk to you or play golf with you - I have to do it all myself. Making money and investing is fine and doing all your own research and allocation and longs and short pleasure some people, but my uncle wants to pay someone else to do all the DD and market buys and sells, I think he would be best served if he could have someone go long and short - but if he gives the money to vanguard they only can invest for him in a very limited way - so why wouldn't he be better served with a hedge fund as many other people are who have more money? You find no ethical problem with this as Mauldin does II? It is OK for the rich man to give his money to a hedge fund manager and then live it up with all his free time but my poor old uncle should take time to learn about i-shares and how to use a computer so he can do all his own trades? Come on II - that is not fair - we are giving 2 people 2 different choices for no other reason than 1 has 1 million and 1 only has 250K - that has to sit wrong with you.

Subject: Re: Vanguard Europe on Bear markets
From: Institutional Investor
To: johnny5
Date Posted: Thurs, Mar 10, 2005 at 21:06:54 (EST)
Email Address: Not Provided

Message:
johnny, its called a market economy. I'd love to have a private jet, ten-million dollar house, etc, but I don't have the resources. I'm not going to be upset/bitter because someone else can afford these things. The reason you can't get into a hedge fund with a small amount of assets is a result of it not profitable for the firm, simple as that. Its not a matter of being exclusive, its a matter of being profitable. In regards to going long and short, a typical broker can do this using the futures market. I wouldn't recommend it, because I'm not a big fan of your typical broker, but it is available to the 'average' investor.

Subject: Re: Vanguard Europe on Bear markets
From: johnny5
To: Institutional Investor
Date Posted: Thurs, Mar 10, 2005 at 21:55:46 (EST)
Email Address: johnny5@yahoo.com

Message:
Thanks for the incite II, much appreciated. I would have less reservations if the fund told me no johhnny, you don't have the money, go away and tell your rich uncle to come here - but congress is telling the funds to tell me no currently, the funds are 100% free in their choice of who they can offer services too - its not a free market - the government is in the middle mucking it all up again. I hope congress will bring more regulation and transparancy but stop telling the hedge fund they can only talk to people with 1mil or more.

Subject: Bear Funds
From: Terri
To: All
Date Posted: Wed, Mar 09, 2005 at 17:07:17 (EST)
Email Address: Not Provided

Message:
Bear funds simply invest on the basis that a particular market will decline in price. That may be stocks or bonds. Since the funds are diversified you are really betting on an entire market declining. There is a problem with bear stock funds, for the stock market generally rises. So, a bear fund will lose money most of the time and an investor really has to time the use of such a fund. Timing an entire market is far more difficult than choosing reasonably valued assets to buy and holding those assets. Bond prices can not rise forever, so bear bond funds would seem to be better buys. I do not agree. Bond prices can trade in a narrow range in a well run economy for years and an investor will waste assets in a bond bear fund because of the cost while hoping for a price decline. I find no reason for a bear fund unless you really feel you can time an entire market, both in an out.

Subject: Bear Funds - my experience
From: David E..
To: Terri
Date Posted: Wed, Mar 09, 2005 at 18:52:06 (EST)
Email Address: Not Provided

Message:
Very insightful Terri, buying bear funds is 'market timing'. I thought it was risk managment, but that was wrong thinking. Buying a bear fund is a bet that the market goes down(market timing). I got two lessons from that mistake in my college of hard knocks. Number 1 - market timing is very, very, stupid. Number 2 - Betting on a manager to continue his outstanding performance is very, very stupid. Prior to my purchase this manager had managed to keep his losses to 50% of the amount that the S&P went up. And his gains were 200% of the amount that the S&P went down. Right after I bought, that relationship disappeared, substituted by a 1:1 relationship.

Subject: Buffet says put your money on afterburner flight
From: johnny5
To: David E..
Date Posted: Wed, Mar 09, 2005 at 21:42:09 (EST)
Email Address: johnny5@yahoo.com

Message:
The markets can remain irrational longer than you can remain solvent - but there is a physical limit to everything - do you really believe we can have the growth we had in the past? America is losing its competitive edge - demographically our women aren't squirting out babies like they used too, technologically we aren't leading in reasearch like we used too, certainly most here at pkarchive believe that wars and deficits and huge debt will crush even mighty america given enough time - I am not timing the market - I am just looking at the smart money - gates and buffet say GET OUT OF THE DOLLAR - were they saying that back when you bought your bear fund? Is it different this time?

Subject: Re: Bear Funds
From: johnny5
To: Terri
Date Posted: Wed, Mar 09, 2005 at 17:48:10 (EST)
Email Address: johnny5@yahoo.com

Message:
Terri I have read many studies going back 200 years that point out flaws with thinking of the market as forever increasing - how many of the original dow are still in the DJIA? If you don't take out all the failures and bankrupt companies - things are not quite so positive. Remember a lot of the research does not show this. Mr. Mauldin went before congress and showed in the following link that hedge funds that could long and short were much less volatile than the median mutual fund - do you disagree with the info he presents in this paper? It looks right to me - but only richie can get in to the good low risk stuff - poor boys like me get the sand kicked in thier face. http://www.accreditedinvestor.ws/downloads/congressional_testimony.pdf Comparing hedge funds to one of the largest and most popular mutual funds: Investors were well served by this fund during the bull market of 82-2000. This fund seriously out-performed not only this index, but most hedge fund indexes in the rcent bull market, rising 598% from march of 1990 until march of 2000. Since that time, they have seen their assets lose over 42%. The annual volatility of this fund was over five times that of the average market neutral fund. The management of this fund is some of the best available anywhere. However, they are limited to a long only strategy. You live by the bull and die by the bear.

Subject: XOM up - stocks & bonds down
From: Pete Weis
To: All
Date Posted: Wed, Mar 09, 2005 at 15:08:18 (EST)
Email Address: Not Provided

Message:
There seems to be a definite inverse relationship here! How much longer before the housing market starts to get hammered. U.S. Stocks Fall as Oil Rises; Financials Drop on Bond Yields March 9 (Bloomberg) -- U.S. stocks fell as a rally in oil prices fanned concern inflation will pick up. Financial shares such as Washington Mutual Inc. led the slide as the yield on 10- year Treasury notes reached a seven-month high, giving investors a reason to favor bonds rather than equities. ``We may be in for a period of rising interest rates,'' said Todd Clark, head of listed trading at Wells Fargo Securities in San Francisco. ``That is going to provide some yield competition for equities, which is not good.'' The Standard & Poor's 500 Index lost 4.60, or 0.4 percent, to 1214.83 as of 12:39 p.m. in New York. Financials accounted for more than three-quarters of the decline. The Dow Jones Industrial Average slipped 46.63, or 0.4 percent, to 10,865.99. Gains in semiconductor stocks such as Intel Corp., which will provide investors with a mid-quarter update tomorrow, helped limit the Nasdaq Composite Index's retreat. The index lost 2.56, or 0.1 percent, to 2070.99. Two stocks fell for every one that rose on the New York Stock Exchange. Some 783.7 million shares changed hands on the Big Board, in line with the same time a week ago. Crude oil for April delivery climbed 1.4 percent to $55.35 a barrel in New York after a report showing a U.S. inventory increase failed to damp concern about supply shortfalls this summer. Futures touched $55.46 a barrel, the highest intraday price since Oct. 27. Prices are up 53 percent from a year ago. Bond Yields U.S. 10-year Treasury notes fell, sending yields as high as 4.48 percent. Yields on the benchmark 4 percent note due in February 2015 increased almost 9 basis points, or 0.09 percentage point, and 17 basis points yesterday and today, the biggest two- day increase in six months. Rising interest rates may curb demand for loans and reduce the value of bonds owned by banks, brokers and insurers. They also make dividend-paying stocks less attractive to investors seeking income. Washington Mutual, the biggest U.S. savings and loan, lost 71 cents to $41.47. Citigroup Inc., the No. 1 financial services company, dropped 49 cents to $47.98. Countrywide Financial Corp. slid $1.28 to $33.77 after Jefferies & Co. analyst Charlotte Chamberlain cut her rating on the biggest U.S. mortgage lender to ``hold'' from ``buy,'' citing the prospect for higher borrowing costs. Utilities, REITs, Homebuilders Other interest rate-sensitive shares such as utilities and real estate investment trusts retreated. Consolidated Edison Inc., owner of New York City's electric utility, dropped 61 cents to $41.87. Equity Residential, the largest U.S. apartment company, fell $1.03 to $33.13. Both pay a dividend equal to more than 5 percent of their stock price, compared with the S&P 500's 2 percent yield. Higher rates may also crimp demand for mortgages and loans. D.R. Horton Inc., the largest homebuilder by market value, slid $1.45 to $42.10. Smaller rival Pulte Homes Inc. fell $1.77 to $76.22, bringing its decline this week to 4.1 percent. Semiconductor stocks helped buoy the Nasdaq, the only one of the three stock benchmarks that is still down for the year. The index has retreated 4.8 percent in 2005. Intel rose 26 cents to $25.06. The company will likely say revenue this quarter will be in the high end of its forecast range of $8.8 billion to $9.4 billion, JPMorgan Chase & Co. analyst Christopher Danely wrote in a note today. Xilinx's Forecast Xilinx Inc. added 13 cents to $31.59. The company said fiscal fourth-quarter sales may rise as much as 8 percent to $383.8 million, exceeding its January forecast for sales of as much as $373.2 million. Analysts expected $367.3 million, the average estimate in a Thomson Financial survey. An S&P 500 measure of semiconductor shares added 1 percent, the largest gain among the benchmark's 24 industry groups. The gauge has advanced 4.1 percent this year. ``Business is going a little better than we thought at the beginning of the quarter,'' said Greg Tuorto, who helps manage $3.5 billion including Intel shares at Guardian Life Insurance Co. of America in New York. ``Semiconductor stocks are a good psychological indicator for the market.'' Exxon Mobil Corp., the world's largest publicly traded oil company, added 29 cents to $63.39. The company said it plans to increase spending on refinery expansions and chemicals plants in the next five years to boost profit from sources other than oil and natural-gas wells. Other energy stocks advanced. Valero Energy Corp., the No. 3 U.S. oil refiner, climbed $3 to $76.40. The stock has gained 68 percent this year for the biggest rally in the S&P 500 this year. Smaller rival Ashland Inc. increased $1.69 to $67.73.

Subject: Re: XOM up - stocks & bonds down
From: johnny5
To: Pete Weis
Date Posted: Wed, Mar 09, 2005 at 16:09:18 (EST)
Email Address: johnny5@yahoo.com

Message:
Johnny5 down in his XOM - but he bought for long term hold to get all those good qualified dividend payments. Here is Mr. SOROS reply to jim willie about investing in hedge fund carry trades borrowing short money at zero percent from japan and making the big bucks - with walmart about to take over the banking business and kill all those financial companies raking in the big profits - I think he has a very good point - Mr. SOROS probably not very will liked on pkarchive board - his mind seem to be in the gutter. http://www.siliconinvestor.com/readmsgs.aspx?subjectid=54034&msgnum=28213&batchsize=10&batchtype=Next Pretty soon, this will be the ONLY thing ANY company in America can actually turn a profit on, but at some point, supply will overrun demand. 'I'm sorry sir, but you don't have enough money in your account to buy the fish sticks and the Girls Gone Wild video. Please step in the bank line with your first born to increase your credit line and have them fitted for their 6 months of Wal Mart service. Or, if you have a better-looking relative, you can try them out for the Wal Mart Checkers Gone Wild tryouts for extra credit, or, I hear assistant manager Bob is sweet on fat guys like you. He's on duty from 10-3. He calls it 'Blowing for Dollars.' I remain, SOROS http://moneycentral.msn.com/content/Banking/Betterbanking/P109171.asp?GT1=6235

Subject: The case for hedge funds?
From: johnny5
To: All
Date Posted: Wed, Mar 09, 2005 at 14:54:04 (EST)
Email Address: johnny5@yahoo.com

Message:
http://www.accreditedinvestor.ws/downloads/congressional_testimony.pdf He argues to congress why should all ther richies have all the fun? I still wish vanguard had a bear fund, it bothers me I can only go one way with my money with thier low expenses. Who can resonably argue with the data he provides here?

Subject: Watching the nukular prez
From: johnny5
To: All
Date Posted: Wed, Mar 09, 2005 at 14:43:01 (EST)
Email Address: johnny5@yahoo.com

Message:
I can't get over he keeps saying nukular in his energy talk today - isn't it nuclear? So we make 'clear skies initiatives' here - does that stop china from burning dirty coal and making us all get pollution?

Subject: Re: Watching the nukular prez
From: Setanta
To: johnny5
Date Posted: Thurs, Mar 10, 2005 at 04:16:42 (EST)
Email Address: Not Provided

Message:
with regards to the 'clear skies initiative' i suspect it involves the neocon tactic of bait and switch. the clear skies initiative will not provide clear skies, but with a name like that everyone thinks it will. its a lot weaker than the kyoto protocols. the president's estimate that the kyoto protocols will cost america 5m jobs has to rank up there, in terms of accuracy and truthfulness, with his estimate of saddam's arsenal of WMD. the real reason to his opposition is more to do with his links to the captains of the oil industry than any concern about jobs. america cannot shirk its responsiblity in this global matter. as producer of 25% of the world's greenhouse gasses, any global initiative without the US is doomed to failure. china and india are a problem but with EU and US pressure i'm sure a start in the right direction will be made. compliance with the protocols are tough. but the alternative is tougher. imagine florida being hit by 10 hurricanes a year instead of 4 (as in this year), the place would be a wasteground in 5 years. northern europe may be only 10 years or so from a little ice age (potentially caused by the diversion of the gulf stream by melting ice in the polar region). low lying countries like holland would disappear, as would manhatten, new orleans and much of the low lying regions of the US eastern seaboard. we need to start acting now. we need to end our obsession with SUVs (yes, they're popular over here too). why does one require an off-road vehicle, with a 4 to 6 litre engine, to ferry kids around the suburbs? we need to end our insatiable appetite for oil. we will still require oil, but imagine a world where oil is on its last legs. imagine trying to run a police, fire service, shop, hospital etc without oil. there is a fixed amount of oil in the world, and we need to choose whether its better consumed on heating, public services and transport (of food, products and people) or on a gas guzzling gargantuan when a family sized car would suffice. what would be the effect of, say, the world running out of oil tomorrow? is it better to wean ourselves off gently while using whats left for public services and industry, or continuing happily as we are and finding none left in about 50 years time? sorry for going off in a tangent to the point raised by johnny but i feel this is hugely important. this has to be built into long term expectations and its implications on our investments and pensions. how will pharmaceutical and other industries operate without oil?

Subject: Re: Watching the nukular prez
From: johnny5
To: Setanta
Date Posted: Thurs, Mar 10, 2005 at 04:28:22 (EST)
Email Address: johnny5@yahoo.com

Message:
Many economists are saying this is the fundamental flaw of our leaders, our markets, and our society in the USA and even more so in japan and europe - short term performance and vision - we have totally lost any long term vision.

Subject: Computing and Health Care Costs
From: Emma
To: All
Date Posted: Wed, Mar 09, 2005 at 12:22:58 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/09/technology/09compute.html Doctors' Journal Says Computing Is No Panacea By STEVE LOHR The Bush administration and many health experts have declared that the nation's health care system needs to move quickly from paper records and prescriptions into the computer age. Modern information technology, they insist, can deliver a huge payoff: fewer medical errors, lower costs and better care. But research papers and an editorial published today in The Journal of the American Medical Association cast doubt on the wisdom of betting heavily that information technology can transform health care anytime soon. One paper, based on a lengthy study at a large teaching hospital, found 22 ways that a computer system for physicians could increase the risk of medication errors. Most of these problems, the authors said, were created by poorly designed software that too often ignored how doctors and nurses actually work in a hospital setting. The likelihood of errors was increased, the paper stated, because information on patients' medications was scattered in different places in the computer system. To find a single patient's medications, the researchers found, a doctor might have to browse through up to 20 screens of information. Among the potential causes of errors they listed were patient names' being grouped together confusingly in tiny print, drug dosages that seem arbitrary and computer crashes. 'These systems force people to wrap themselves around the technology like a pretzel instead of making sure the technology is responsive to the people doing the work,' said Ross J. Koppel, the principal author of the medical journal's article on the weaknesses of computerized systems for ordering drugs and tests. Dr. Koppel is a sociologist and researcher at the Center for Clinical Epidemiology and Biostatistics at the University of Pennsylvania School of Medicine. The research focused on ways that computer systems can unintentionally increase the risk of medical errors. The study did not try to assess whether the risks of computer systems outweigh the benefits, like the elimination of errors that had been caused by paper records and prescriptions. Yet Dr. Koppel said he was skeptical of the belief that broad adoption of information technology could deliver big improvements in health care. 'These computer systems hold great promise, but they also introduce a stunning number of faults,' he said. 'The emperor isn't naked, but pretty darn threadbare.' Another article in the journal looked at 100 trials of computer systems intended to assist physicians in diagnosing and treating patients. It found that most of the glowing assessments of those clinical decision support systems came from technologists who often had a hand in designing the systems. 'In fact, 'grading oneself' was the only factor that was consistently associated with good evaluations,' observed the journal's editorial on computer technology in clinical settings, titled 'Still Waiting for Godot.' The principal author of the editorial, Dr. Robert L. Wears, a professor in the department of emergency medicine at the University of Florida College of Medicine in Jacksonville, said the message from the research studies was that computer systems for patient records, the ordering of treatments and clinical decision support have not yet shown themselves to be mature enough to be useful in most hospitals and doctors' offices. 'These systems are as much experiments as they are solutions,' said Dr. Wears, who also holds a master's degree in computer science. The medical journal's articles, according to some physicians and technology experts, tend to be too broad in their criticisms because the technology is still developing rapidly and some of the computer systems reviewed were old. Still, even those experts conceded that the articles raised some good points. 'They are absolutely right that the people who design these systems need to be in tune with the work,' said Dr. Andrew M. Wiesenthal, a physician who oversees information technology projects at Kaiser Permanente, the nation's largest nonprofit managed care company. 'But the newer systems are designed more that way.' Dr. David J. Brailer, the administration's national coordinator for health information technology, termed the articles a 'useful wake-up call,' though he said the findings were not surprising. In health care, as in other industries, he said, technology alone is never a lasting solution. 'The way health information technology is developed, the way it is implemented and the way it is used are what matter,' Dr. Brailer said. But Dr. Brailer did take issue with the suggestion that the Bush administration is encouraging a headlong rush to invest in health information technology. For the next year, he said, his policy efforts will be to try to encourage the health industry to agree on common computer standards, product certification and other measures that could become the foundation for digital patient records and health computer systems. 'We're not ready yet to really accelerate investment and adoption,' Dr. Brailer said. 'We have about a year's worth of work.' Dr. David W. Bates, medical director for clinical and quality analysis in information systems at Partners HealthCare, a nonprofit medical group that includes Massachusetts General Hospital and Brigham and Women's Hospital, said careful planning and realistic expectations were essential for technology in health care. 'But the danger is if people take the view that computerized physician order entry and other systems are a bad idea,' said Dr. Bates, who is a professor at the Harvard Medical School. 'That would be throwing out the baby with the bath water.'

Subject: Health Industry Under Pressure to Computerize
From: Emma
To: Emma
Date Posted: Wed, Mar 09, 2005 at 12:26:34 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/02/19/business/19health.html?ei=5070&en=f791442a4da6a563&ex=1111035600&pagewanted=all&position= Health Industry Under Pressure to Computerize By STEVE LOHR DALLAS - Dr. David J. Brailer, the federal official who is trying to prod the nation's health care system into the computer age, has delivered a warning to the health care industry: take steps soon to make it happen or the government will probably impose a solution. Across the ideological spectrum, health care experts and politicians agree that the nation's hodgepodge of paper medical files needs to move into the digital era, so that eventually each person has an electronic health record that can travel across networks and be read by doctors, hospitals, insurers and the patients themselves. Doing so, the thinking goes, would reduce medical errors, improve health care and save money. Congress has been doing its own prodding on the matter, with another bill introduced this week. Trying to pick up the pace, Dr. Brailer, in meetings with health care and technology executives here at their industry's big annual convention, has told them to come up with a single set of technical standards for electronic health records. The approach, he said, must include a method to certify that the records can be opened and read by doctors and specialists, as authorized by the patient, even when different clinics and hospitals have different computer systems. If the industry cannot agree upon such standards by this summer, 'then government will probably do what government does best - put out a mandate,' Dr. Brailer said in a talk to information technology companies here Wednesday. 'Some people think that would be a train wreck, and some people think that would be a great idea.' Dr. Brailer's comments amount to goading with intent. A 45-year-old physician and economist, he explained over a late-night dinner here with a reporter that he regarded his job primarily as taking steps to repair a market failure in health care information technology. He is part policy maker, technologist, cheerleader and arm-twister, traveling much of his first 10 months on the job to meet with doctors, hospital administrators, technology executives and others. At the Dallas convention, sponsored by the Healthcare Information and Management Systems Society and attended by more than 23,000 people, Dr. Brailer spent a typically adrenalin-charged day and a half. He arrived Tuesday night for a business dinner that ended at 11 p.m. His first appointment the next morning was shortly after 6 a.m., beginning a stream of meetings and talks that ended after 10 p.m., with groups that ranged in size from a few hundred people to a handful. Thursday morning began with an early meeting, then off to an 8:30 a.m. speech to an audience of more than a thousand in the convention center's main arena. Next came a quick tour of the convention floor, before heading to the airport. In the smaller gatherings, Dr. Brailer took notes and asked questions as much as he spoke. He is still wrestling with just how large and how direct a role the government should take in trying to accelerate the adoption of computerized health records. But it is clear that a common technical standard for those digital documents is a vital step. In most markets, technical standards - from uniform railroad track sizes in the 19th century to software protocols for the Web in the 1990's - have enabled the growth of markets and industries that are built on those public standards. Once a basic standard for electronic health records is in place, Dr. Brailer says, it will be less risky to invest in digital records for doctors or hospitals that may now worry that the software they purchase today, and struggle to learn to use, may become obsolete sometime later. 'We've got to take the risk out of purchasing electronic health records,' he told the group working on the standard. The industry is poised for growth, judging from the turnout at the convention. It set an attendance record for the show, and more than 700 exhibitors displayed their wares on the trade floor. The booths were a corporate who's who of household names like I.B.M., Microsoft, Cisco Systems and General Electric, as well as health technology specialists like Cerner, McKesson, Epic and Allscripts. Dr. Brailer, appointed last year by President Bush as the national health information technology coordinator, said that he would greatly prefer to see an industry consortium agree upon a technical standard, because it might be more flexible and open to future technical improvements than one determined by government edict, however well intentioned. The industry group that is supposed to develop the electronic health record standard, the Certification Commission for Healthcare Information Technology, was formed last year, with members drawn from large medical centers, technology companies, insurers, physicians, nonprofit groups and consultants. Speaking to a meeting organized by the commission, Dr. Brailer said their early efforts showed 'great promise.' Then, he added, 'We're banking on this, until it is clear that you can't do it.' In small group meetings, Dr. Brailer urged the technology executives to set aside their narrow corporate interests, giving up some of their proprietary lock on customers, to open up a larger market opportunity for everyone. Each company cannot get all it wants, he said. Yet technical standards groups often bog down amid conflicting interests. At one point, Dr. Brailer asked a group of technologists what they wanted from government. Wes Rishel, a veteran of health technology standards groups and a member of the certification commission for electronic health records, replied, 'We need a tie-breaker - someone who is somewhere between a czar and a diplomat.' By now, the need to computerize a health care system that is choking on paper is beyond dispute. Health experts say that moving to electronic records, which would reduce paper handling and eliminate unnecessary or duplicative tests, could cut 10 percent or more from the nation's $1.7 trillion a year in health care spending. And a digital system should sharply reduce medical errors, which are estimated to be responsible for 45,000 to 98,000 deaths a year - more than breast cancer, AIDS or motor vehicle accidents, according to the Institute of Medicine of the National Academy of Sciences. The electronic patient records could also open the door to a national health information network in which patient information, stripped of personal identification, could be used for national health research projects, impartial assessments of drugs' effectiveness and other data-mining possibilities. Health care is already rich in high technology when it comes to diagnosis, surgery and treatment - from advanced body scanners to all manner of medical devices and drugs - in large part because those investments clearly generate revenue. But in information technology, health care lags well behind most other industries. In health care, the average investment in information technology computer hardware, software and services is only about $3,000 annually for each worker, compared with $7,000 a worker on average for private industry and nearly $15,000 a worker in banking. Falling prices for personal computers and software, and the blossoming of the Internet in recent years, have brought down the cost of adopting electronic health records and made it easier to connect to specialists, hospitals and insurers. But health care remains a fragmented industry, with much of the care still provided by physicians in small practices. An estimated 60 percent practice in offices with 10 physicians or fewer and 35 percent in offices with three physicians or fewer. And for these physicians, who essentially are small- business people, information technology still represents a daunting cost: $30,000 a physician to adopt electronic health record technology, according to a recent study, which factored in the cost of hardware, software and time lost in terms of patients not seen while learning the system. 'The elephant in the living room in what we're trying to do is the small physician practices,' Dr. Brailer said. 'That's the hardest problem, and it will bring this effort to its knees if we fail.' Dr. Brailer is still studying what might be the right mix of incentives to encourage physicians to embrace digital health records. The incentives, he noted, could include federally backed loans, grants and extra reimbursement by Medicare and other insurers for using electronic health records. Many large hospitals and medical centers already have electronic health records, accounting for most of the 10 to 15 percent of all physicians who have adopted computerized patient records. It will be essential for them, Dr. Brailer said, to make sure they conform to the new open standard, when it is developed by industry or mandated by government, so they can share information with other groups. Once adoption reaches 45 percent or 50 percent, Dr. Brailer predicted, the benefits from digital records will be so apparent in terms of savings and quality of care that a tipping point will be reached. 'That's when the network economics will take over,' he said. 'It will become a condition of being in business, like e-mail is in most businesses.' Dr. Brailer's challenge is to fashion the right policies to get there. 'This is not about technology,' he said. 'It's really about transforming health care, fixing this market.'

Subject: Re: Health Industry Under Pressure to Computerize
From: johnny5
To: Emma
Date Posted: Wed, Mar 09, 2005 at 14:00:34 (EST)
Email Address: johnny5@yahoo.com

Message:
When we have the toilets analyzing our outputs and our refrigerators analyzing our inputs and the machines all in unison sharing the data back and forth with medical records we are going to be able to better service our people. I am very excited about the future that expert systems will bring.

Subject: PK article on the anti-globalisation
From: Setanta
To: All
Date Posted: Wed, Mar 09, 2005 at 12:08:54 (EST)
Email Address: Not Provided

Message:
If a picture is worth a thousand words, a two-page spread in the New York Times, featuring more than a dozen pictures, can speak volumes. And sure enough, the lavish Nov. 15 advertisement by the Turning Point Project, a coalition of activists opposed to globalization in general and the World Trade Organization in particular, said more than any merely verbal exposition about what really motivates those activists could. Indeed, it revealed quite a bit more than its sponsors intended. The occasion for the ad was the upcoming WTO 'ministerial' taking place in Seattle in a few days. The WTO has become to leftist mythology what the United Nations is to the militia movement: the centre of a global conspiracy against all that is good and decent. According to the myth, the 'ultra-secretive' WTO has become a sort of super-governmental body that forces nations to bow to the wishes of multinational corporations. It destroys local cultures, the headline on the ad read 'Global Monoculture'; it despoils the environment; and it rides roughshod over democracy, forcing governments to remove laws that conflict with its sinister purposes. Like most successful urban legends, this one is based on a sliver of truth. The gradual global progress toward free trade that began in the 1930s, when Franklin Roosevelt introduced the Trade Agreements Program, has always depended on international negotiations: I'll reduce my tariffs if you reduce yours. But there has always been the problem of governments that give with one hand and take away with the other, that dutifully remove tariffs and then use other excuses to keep imports out. (Certainement, there is free trade within the European Union, but those British cows, they are not safe.) To make agreements work there has to be some kind of quasi-judicial process that determines when ostensibly domestic measures are de facto a re-imposition of trade barriers and hence a violation of treaty. Under the pre-WTO system, the General Agreement on Tariffs and Trade, this process was slow and cumbersome. It has now become swifter and more decisive. Inevitably, some of its decisions can be challenged: Was the U.S. ban on dolphin-unsafe tuna really a trade barrier in disguise? But the much-feared power of the WTO to overrule local laws is strictly limited to enforcement of the spirit of existing agreements. It cannot in any important way force countries that are sceptical about the benefits of globalization to open themselves further to foreign trade and investment. If most countries nonetheless are eager or at least willing to participate in globalization, it is because they are convinced that it is in their own interests. And by and large they are right. The raw fact is that every successful example of economic development this past century--every case of a poor nation that worked its way up to a more or less decent, or at least dramatically better, standard of living--has taken place via globalization; that is, by producing for the world market rather than trying for self-sufficiency. Many of the workers who do that production for the global market are very badly paid by First World standards. But to claim that they have been impoverished by globalization, you have to carefully ignore comparisons across time and space--namely, you have to forget that those workers were even poorer before the new exporting jobs became available and ignore the fact that those who do not have access to the global market are far worse off than those who do. (See my old Slate piece 'In Praise of Cheap Labour.') The financial crisis of 1997-99 temporarily gave those who claim that globalization is bad for workers everywhere a bit of ammunition, but the crisis did not go on forever, and anyway the solution to future crises surely involves some policing of short-term capital movements rather than a retreat from globalization as a whole. Even the Malaysians continue to welcome long-term foreign investors and place their faith on manufactured exports. What about the environment? Certainly some forests have been cut down to feed global markets. But nations that are heedless of the environment are quite capable of doing immense damage without the help of multinational corporations--just ask the Eastern Europeans. For what it is worth, the most conspicuous examples of environmental pillage in the Third World today have nothing to do with the WTO. The forest fires that envelop Southeast Asia in an annual smoke cloud are set by land-hungry locals; the subsidized destruction of Amazonian rain forests began as part of a Brazilian strategy of inward-looking development. On the whole, integration of the world economy, which puts national actions under international scrutiny, is probably on balance a force toward better, not worse, environmental policies. But anyway, these are side issues, because what that advertisement makes clear--clearer, I suspect, than its sponsors intended--is that the opposition to globalization actually has very little to do with wages or the environment. After all, leaving aside a photo of tree stumps and another of an outfall pipe, here are the horrors of globalization the Turning Point Project chose to illustrate: A highway interchange, a parking lot filled with cars, a traffic jam, suburban tract housing, an apartment building with numerous satellite dishes, an office with many computer screens, office workers on a busy street, high-rise office buildings, a 'factory farm' with many chickens, a supermarket aisle, a McDonald's arch. Each picture was accompanied by a caption asking, 'Is this Los Angeles or Cairo?' 'Is this India or London?' etc. What is so horrible about these scenes? Here's what the ad says, 'A few decades ago, it was still possible to leave home and go somewhere else: The architecture was different, the landscape was different, the language, dress, and values were different. That was a time when we could speak of cultural diversity. But with economic globalization, diversity is fast disappearing.' You can't argue with that; lives there the tourist with soul so dead that he does not wish that he could visit rural France, or Mexico City, or for that matter Kansas City the way they were, rather than the way they are? But the world is not run for the edification of tourists. It is or should be run for the benefit of ordinary people in their daily lives. And that is where the indignation of the Turning Point people starts to seem rather strange. For surely the most striking thing about the horrors of globalization illustrated in those photos is that for most of the world's people they represent aspirations, things they wish they had, rather than ominous threats. Traffic jams and ugly interchanges are annoying, but most people would gladly accept that annoyance in exchange for the freedom that comes with owning a car (and more to the point, being wealthy enough to afford one). Tract housing and apartment buildings may be ugly, but they are paradise compared with village huts or urban shanties. Wearing a suit and working at a computer in an office tower are, believe it or not, preferable to backbreaking work in a rice paddy. And nobody forces you to eat at McDonald's. Now, of course what is good for the individual is not always good if everyone else does it too. Having a big house with a garden is nice, but seeing the countryside covered by suburban sprawl is not, and we might all be better off if we could all agree (or be convinced by tax incentives) to take up a bit less space. The same goes for cultural choices: Boston residents who indulge their taste for Canadian divas do undermine the prospects of local singer-songwriters and might be collectively better off if local radio stations had some kind of cultural content rule. But there is a very fine line between such arguments for collective action and supercilious paternalism, especially when cultural matters are concerned; are we warning societies about unintended consequences or are we simply disagreeing with individual tastes? And it is very clear from the advertisement in the Times that the Turning Point Project--and the whole movement it represents--are on the supercilious side of that line. Although they talk of freedom and democracy, their key demand is that individuals be prevented from getting what they want--that governments be free, nay encouraged, to deny individuals the right to drive cars, work in offices, eat cheeseburgers, and watch satellite TV. Why? Presumably because people will really be happier if they retain their traditional 'language, dress, and values.' Thus, Spaniards would be happier if they still dressed in black and let narrow-minded priests run their lives, and residents of the American South would be happier if planters still sipped mint juleps, wore white suits, and accepted traditional deference from sharecroppers ... instead of living in this 'dreary' modern world in which Madrid is just like Paris and Atlanta is just like New York. Well, somehow I suspect that the residents of Madrid and Atlanta, while they may regret some loss of tradition, prefer modernity. And you know what? I think the rest of the world has the right to make the same choice.

Subject: Re: PK article on the anti-globalisation
From: johnny5
To: Setanta
Date Posted: Wed, Mar 09, 2005 at 13:53:02 (EST)
Email Address: johnny5@yahoo.com

Message:
Good article. There is only so much oil to go around, america cannot continue to outperform in this new global market. The growth in the poor comes at a cost to the currently rich - more competition for limited resources - how can america do anything but go down? My grandpa had a 40 acre farm, there was a physical limit to how much cotton or corn he could grow on it. Globalization is going to be great for everyone below the mean standard of living, but not so good for those richie americans who are way above it from what I can see.

Subject: EU scores barmy own goal with Intel
From: Setanta
To: All
Date Posted: Wed, Mar 09, 2005 at 11:27:23 (EST)
Email Address: Not Provided

Message:
Brussels scores barmy own goal with Intel 06 March 2005 By Cliff Taylor Ever since Maggie Thatcher's days in Downing Street, the British tabloid press has taken great pleasure in baiting the “barmy Brussels bureaucrats'. The most infamous episode was the Sun newspaper's 1990 campaign against the EU, which was prompted by the first suggestions of a single currency. That campaign kicked off with the headline “Up Yours Delors'‘ (Jacques Delors was the European Commission president) and involved various DJs and Page 3 girls “invading'‘ Paris and Brussels. Then there were the (largely invented) “threats'‘ from Brussels to “ban'‘ items as diverse as mushy peas, smoky bacon crisps, corgis, rocking horses, pints of shandy, lorry drivers' breakfasts,11-inch pizzas and, of course, excessively curved bananas. We in this country have generally taken amore benign view of Brussels - and little wonder, considering the huge economic advantages brought to us by membership of the European Union. However, the negative view taken by Brussels of the proposed grant package for Intel's expansion in Leixlip raises serious questions about the Brussels bureaucracy and how it reaches its decisions. If it is a sign of things to come, then it is not a good one. Intel has been one of the leading companies in Ireland since it first located at a former stud farm in Co Kildare in 1989.When it first landed in Leixlip, the unwritten deal was that it would continually update its technology. The company has adhered to this rule, investing a total of €5 billion in Ireland and locating its cutting-edge manufacturing operations here. There are no more modern manufacturing facilities anywhere in the world than Intel's facilities in Ireland. The company's latest €1.6 billion expansion was carried out to facilitate the manufacture of the latest wave of semiconductors, a highly advanced and expensive manufacturing process. IDA Ireland negotiated a grant deal with the company, probably involving support of some €100 million - less than 10 per cent of the total cost. The deal was sent for ratification to Brussels, as must now be done for any project involving state investment of more than €50 million. We do not know the precise reasoning behind the EC's view - if we had to wait for this, it would have taken another 18 months. By that time, Intel would have built the Fab 24.2 plant in Leixlip, and would be actively considering where to put its next plant. However, the indications are that the EC was disturbed by Intel's high share of the semiconductor market in Europe, and did not believe that the company should be grant-aided to try to increase its market share. The EC would also have looked at the prosperity of the greater Dublin region, where companies are entitled to lesser grant aid. Commission spokesmen have said that they were not convinced the Intel investment would bring additional employment, and that the Irish government had not been sufficiently clear on this point. The danger of the debate is that it gets tied up in the knots of how European rules are made and whether the investment could be justified as legitimate regional aid (it couldn't, of course). Dublin is now at the richer end of the EU, and Intel is a highly profitable company and a market leader. But this misses the point. The key factor about the Intel project is that it is bringing a new cutting-edge manufacturing process to Ireland - and to the EU. The Brussels bureaucrats may not be able to tick the box when they ask if the Intel investment falls under “research and development'‘ - an activity which they are happy to support. But surely this should not be an issue. Intel, a model corporate citizen, has continually upgraded its technology, moving out of lower-value activities and into higher-end manufacturing processes. It is precisely the kind of operation that the much-vaunted Lisbon agenda - the, ahem, blueprint to make the EU economy more innovative and cutting-edge - is designed to encourage. And if giving Intel €100 million is the price required to copper-fasten the location of the project in Leixlip, then why can the Irish government not give it? It is important to keep in mind that there was no other EU location in the running for the project. There might be some sense in the Commission intervening if, say, Ireland, Scotland, Portugal and France were bidding against each other for a big investment. In this case, however, the competition was Israel, where Intel also has a substantial investment. While Fab 24.2 looks likely to go ahead in Leixlip, the real import of last week's events will be felt two to three years from now, when Intel begins mulling over where to make its next generation technology. Ireland may still win the project, particularly with the strong record of its Irish management team led by Jim O'Hara. However, without the grant-aid carrot, the risk has increased that the next investment will go to Israel, where attractive grants will be offered and where the political situation may soon improve. Other Intel bases around the world will also be in the running. Due to the very nature of the semiconductor business, the next investment being considered by Intel will be even bigger than the current one, probably running to more than €2 billion. Why jeopardise this, and the cutting-edge technology and productivity boost it brings to Europe, for the sake of sticking to some obscure rulebook on state aid? What possible economic advantage does the EU get from the Commission's negative view of the package? And, to get down to the nitty-gritty, why turn down Intel but approve a state bailout of the Italian airline, Alitalia, as the EC did last July? Or the big French engineering firm, Alstom? Or, to cite a more sector-specific case, why turn down Intel but approve the massive €500 million paid to AMD, another US company, for the establishment of its new semiconductor plant in Dresden in Germany? That case was apparently influenced by the fact that AMD's share of the EU semi-conductor market is below 25 per cent, while Intel is above the 25 per cent threshold. And in Brussels, apparently, rules are rules: when your share is over 25 per cent, you have to prove the project is innovative. But surely the EU should be trying to win such cutting-edge projects wherever possible? If the EU economy is to succeed, then it must meet the goals set out by commission president José Manuel Barroso when he relaunched the Lisbon Agenda last month. The three goals set then were job creation, technological innovation and creating a good environment for business investment. The Intel project clearly meets the first criterion. Even if some of the jobs replace existing ones, the new ones will be more productive, and the old ones would gradually disappear anyway. It is beyond question that Intel's high-level manufacturing will boost technological innovation, even if it does not fit the definition of R&D. And as for the third criterion, the presence of the plant here has acted as a magnet to a whole range of other outside investors, as well as boosting many indigenous firms, suppliers, construction firms and service industries. More than the specifics of the case, or the €100 million, the Intel case is essentially about the commission's state of mind. How could it take a negative view of support for such a leading-edge project? Why could it not try to meet the spirit of the Lisbon Agenda - to be flexible in trying to encourage innovation? And who could agree that, after nine months of weighing everything up, it was reasonable for companies to wait for another 18 months for the learned analysts in Brussels to conduct a full investigation? It is, to use a red-top word, barmy.

Subject: Intel in Japan
From: Emma
To: Setanta
Date Posted: Wed, Mar 09, 2005 at 12:13:04 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/09/technology/09intel.html Japan Says Intel Violated Antimonopoly Law By TODD ZAUN TOKYO -The Fair Trade Commission in Japan ruled on Tuesday that the Intel Corporation violated the country's antimonopoly law in the way it sold semiconductors and ordered the company to stop some of its sales practices. Intel took issue with the finding and said it was considering how to respond. The commission said Intel used unfair business practices to persuade five Japanese personal computer makers, including Sony and Toshiba, to stop or limit their purchases of microprocessors from two Intel rivals, Advanced Micro Devices and the Transmeta Corporation. The action against Intel came 11 months after the commission began its investigation with a raid on the company's Japanese offices. Fair trade authorities said that since May 2002, Intel offered discounts and incentives to computer makers that were contingent on promises that those companies either cease, or strictly limit, purchases from other chip makers. Intel said in a statement that it regarded its practices as fair and lawful. The company has 10 days to decide whether to appeal. If it does, the case would go through the commission's judicial review process. 'There is a broad consensus that competition regulators should only intervene where there is evidence of harm to consumers,' D. Bruce Sewell, Intel's vice president and general counsel, said in the statement. 'It is apparent the J.F.T.C.'s recommendation did not sufficiently weigh these important principles.' The ruling, which does not carry a fine, was the second action by Japanese competition regulators against a major American high-technology company in the last year. In July, the commission ordered Microsoft to remove a clause in its licensing contracts that was intended to protect it from patent suits. Intel has about 90 percent of the Japanese market for microprocessors, with the remainder split between Advanced Micro and Transmeta. That compares with an 80 percent market share for Intel worldwide. In the ruling, regulators did not ask Intel to stop offering volume discounts or other incentives to computer makers, but it did order the company to stop tying those discounts to promises to stop buying rival brands. In one case, Intel forced a computer maker to buy all of its semiconductors from Intel or lose rebates that had been offered, the commission said without identifying the manufacturer. Regulators argued that Intel's sales methods were unfair because the stipulations virtually assured that computer companies would severely limit purchases from rivals. Intel's brand power with consumers and its overwhelming market share in Japan mean computer makers have little choice but to buy a large number of their chips from Intel, and losing the discounts on those purchases would be costly, they said. The commission determined that Intel's practice limited competition and thus was likely to drive up the cost of computers for consumers, said Hiroshi Yamada, a commission official who briefed reporters on the decision. 'The company urged the five computer makers not to buy products from rivals in order to raise its own market share,' Mr. Yamada said. The combined Japanese market share of A.M.D. and Transmeta dropped by more than half from 24 percent in 2002 to 11 percent in 2003, the commission said. Intel accounted for the remainder of the market, so its share rose to 89 percent from 76 percent in the period. A.M.D. has cited Intel's sales practices for its dwindling market share in Japan and applauded the ruling. 'It's a clear determination by the F.T.C. that Intel has been abusing a dominant position to limit competition,' Thomas M. McCoy, executive vice president for legal affairs at A.M.D., said in an interview here....

Subject: Nuke em again!
From: johnny5
To: Emma
Date Posted: Wed, Mar 09, 2005 at 13:34:50 (EST)
Email Address: johnny5@yahoo.com

Message:
We better send in some economic hit men, who are these silly guys that think fair competition is good for the people? fools!! What about the INTC shareholders - the USA grannies and vets that have thier retirement in INTC, they will lose thier behind if our american companies aren't allowed to compete unfairly - who thinks about them? So millions of young game players overpay in a non competitive market - it helps the old shareowners no?

Subject: Transfer of Risk
From: Emma
To: All
Date Posted: Wed, Mar 09, 2005 at 11:06:39 (EST)
Email Address: Not Provided

Message:
National Association of Realtors figures show a rise from 28% mortgages with no down payment in 2003, to 42% in 2004. Another 27% of mortgages in 2004 involved down payments below 10%. I do not well understand the implications of such data, though there seems reason for concern. The last time there were mortgage deals like this was after the GI Bill was passed following World War II. But, those mortgages were 30 years fixed at 3% with all the promise of the New Deal behind and in front.

Subject: Re: Transfer of Risk
From: johnny5
To: Emma
Date Posted: Wed, Mar 09, 2005 at 13:25:04 (EST)
Email Address: johnny5@yahoo.com

Message:
http://calculatedrisk.blogspot.com/2005/03/housing-excessive-leverage.html Here are pretty graphs showing the data. the third program has several payment options, including a 'minimum payment' that allows the buyer to pay less than the interest owed, resulting in an increasing loan balance. All of these programs are increasing in popularity and increasing the amount of leverage for the buyer. The third program, combined with no money down, creates significant systemic risk. Who bears the risk? Not the first time buyer. Since the loan is collateralized with the house, the buyer can just walk away and only suffer the minor indignity of a foreclosure on their credit record. The real risk is borne by the lender. Now isn't he wrong on that? don't the new bankruptcy laws stop this?

Subject: Free Trade Proposal Splits Bolivian City
From: Emma
To: All
Date Posted: Wed, Mar 09, 2005 at 10:24:20 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/09/business/worldbusiness/09trade.html?pagewanted=all&position= Free Trade Proposal Splits Bolivian City By JUAN FORERO EL ALTO, Bolivia - This city, a poverty-stricken expanse of adobe houses considered the capital of Bolivia's indigenous people, was the flashpoint of relentless protests against globalization that toppled a government more than a year ago and had threatened another president, Carlos Mesa, who offered his resignation on Monday in the face of mounting demonstrations. On Tuesday evening, though, Mr. Mesa said that he would stay on as president, despite his offer to quit and despite street protests that have paralyzed parts of the nation. No one, though, predicts that El Alto will remain calm. As Bolivia inches toward free trade talks with the United States, which is vilified by a powerful leftist movement in this country, the protesters have said they are not finished. But even as this clash of views is being played out, El Alto is quietly benefiting from trade preferences provided by Washington, spawning hundreds of small businesses and thousands of jobs. That has created a little-noticed fissure between those who maintain that Bolivia needs to enter what the Bush administration envisions as a hemisphere-wide free trade zone, and others who say that such an agreement will leave the country, South America's poorest, even more destitute. That fierce division of opinion, most apparent in Bolivia, the most protectionist nation in the region, is echoed across Latin America - and it is driven by persistent poverty. The market-oriented changes that Washington long ago prescribed for Latin America have brought little or no prosperity to the average person, with some lands poorer than before. Growth has been no better than halting in a region that needs galloping momentum to pull many of its people out of poverty, despite improved economic indicators seen in 2004. The United Nations estimated the number of people living in poverty in Latin America at 221 million in 2002, up from 200 million in 1990. 'When you see that there's only been two years of growth in the last 10 years, and other years it was so-so or there was no growth at all, then the political impact is very big,' said César Gaviria, a former secretary general of the Organization of American States. 'So some of these countries have many problems and there is no support for these reforms, or confidence in them, because the expectations for what would happen with growth were not met,' said Mr. Gaviria, now chairman of Hemispheric Partners, a New York firm providing political and economic risk analysis to investors. 'Some of those people who say that nothing has changed are, in fact, right.' But those promoting free trade point to the Andean Trade Promotion and Drug Eradication Act, a preferential trade deal that lowers United States tariffs on a range of goods, essentially rewarding governments in the region's drug-producing countries for their cooperation. Bolivian exporters to the United States - a diverse group including furniture manufacturers, jewelry makers and textile producers - have benefited, growing notably in this city of 750,000 outside La Paz, the capital, 13,000 feet above sea level. El Alto, with its small, humming manufacturing base juxtaposed against the most virulent anti-globalization movement in Latin America, embodies those tensions. 'El Alto is the principal beneficiary of this law,' said Marcos Iberkleid, president of América Textil, a 40-year-old garment maker that ships to well-known retailers like Ralph Lauren and Abercrombie & Fitch. 'The workers know that and see a tangible difference.' Others, like Pablo Solón, who heads a policy group, the Fundación Solón, that opposes the American-led talks, says that free trade aims to chip away at Bolivia's control of its natural gas and minerals, dropping Bolivian tariffs on United States imports and opening vast sectors of the economy to investors. The American plan, he argues, would badly hurt a country ill prepared to compete. 'We do not want to turn Bolivia into an island,' Mr. Solón said, 'but what we want are negotiations that take note of the realities of our country. Much of what is being offered will simply lead to more instability in our country.' The growing debate in this hermetic land of nine million comes as the Bush administration, which aspires to an Alaska-to-Argentina trade bloc, has moved aggressively to sign two-party agreements and to press reluctant partners, like Brazil, into accepting its view. So far, deals have been signed with Central American countries, the Dominican Republic and Chile. Now, Washington is seeking an accord with three of Bolivia's Andean neighbors, Colombia, Ecuador and Peru. Bolivia is currently an observer - a concession to the country's left-leaning leaders - but increasingly, government officials and business leaders have declared the need for this country to jump in. Under the Andean pact, negotiated for Bolivia by former President Jorge Quiroga in 2002, dozens of Bolivian products enter the United States duty-free. That pact expires at the end of 2006. The problem for Bolivia's government, ever wary of the next round of unrest by globalization opponents, is that the United States now wants it to agree to a quite different kind of deal, one that would open exporters like furniture and leather-goods makers to American investment. It would also fly in the face of efforts by the Bolivian left to enact a stringent law that would expand state control over the oil and gas industry. As Eduardo Gamarra, the Bolivian-born director of the Latin America and Caribbean Center at Florida International University, sees it: 'The Americans are saying, 'Look, this was a temporary arrangement, and now you have to pay. You have to do certain things and you have to open your economies to us.' ' But the voices advocating Bolivia's entry into a trade accord have been gathering force, the most prominent of them in El Alto being that of Mayor José Luis Paredes, who was re-elected in December on a free trade plank. With a small staff, working in a church because city hall was burned to the ground by protesters in 2003, he is trying to present a different image of El Alto. 'We cannot just close ourselves off,' Mr. Paredes said of his city. 'If society thought free trade was of no use, I would not be mayor.' Though figures on job creation are sketchy, Mr. Paredes said that the Andean pact had already helped double the number of workers employed in factories and by small contractors to more than 20,000. A few big factories have arrived, he said, and the number of microbusinesses - shops with just a few workers, often under contract to manufacturers - has risen to 5,300 from 2,500. That is still a relatively small share of the local economy - 162,000 people work in the informal sector in El Alto, barely making ends meet selling trinkets or food on the street. But exports to the United States under the Andean pact were up 20 percent in the first 10 months of 2004 from the period a year earlier, and Mr. Paredes said that had given Bolivia a tantalizing look at what the future might hold if an accord on a larger scale was signed. Among the big beneficiaries is Eduardo Bracamonte, general manager of Exportadores Bolivianos. A maker of jewelry for Macy's, Bloomingdale's and Wal-Mart, its exports of necklaces, rings, pendants and similar items rose to $39 million last year, up 34 percent from 2003. The company employs 750 workers in two plants in La Paz and depends on 1,600 more contract laborers in 17 small factories in El Alto, a work force poised to grow under a new pact. 'This is mass production,' he said during a tour, as rows of employees in gray work clothes soldered or strung gold chains in his main plant. 'What the United States wants fits in perfectly with what we can offer.' Textile exports have also shot up, mostly benefiting companies like Mr. Iberkleid's América Textil, which had $32 million worth of exports in 2004, up 20 percent from 2003. On vast and well-lighted floors in Mr. Iberkleid's factories, workers stitch clothes, examine garments and pack boxes. Others at computer terminals receive orders from the United States, making last-minute alterations before firing off instructions to people on the assembly line. Here, the pay and benefits can be more than triple the minimum wage of $55 a month, workers are unionized and some receive company-paid university training - treatment that is unusual in a country like Bolivia. With orders for clothes pouring in, Mr. Iberkleid has 3,000 workers, up from 1,300 before the trade preferences took effect. 'When I talk to the workers to discuss free trade,' he said, 'the support is massive.' But the rosy outlook hides an undercurrent of dissatisfaction among workers here, the kind of pent-up anger that prompted the nationwide protests last week that are endangering Mr. Mesa. Many of them are contract employees for small outfits that barely pay minimum wages. At one, a jewelry maker, rows of workers repeated the tedious task of stringing together chains from specks of gold. It is difficult work and the pay - just above the minimum wage - is a pittance, workers said. One of them, Moisés Pintado, 33, said that sometimes employees are not paid on time. Life remains hard and he pines for the days when state-owned companies, like the tin and silver mines that once dotted Bolivia, provided many of the jobs. 'Since these new companies are private, they pay us less,' he said. 'We protest for that reason.'

Subject: Re: Free Trade Proposal Splits Bolivian City
From: johnny5
To: Emma
Date Posted: Wed, Mar 09, 2005 at 13:21:50 (EST)
Email Address: johnny5@yahoo.com

Message:
They will wake up and see that even though short term they might starve to death, in the long term it will be best for thier countrymen that live through this. I saw a special on children working in those silver mines down there - certainly any fate is better than that.

Subject: Just another nail in......
From: Pete Weis
To: All
Date Posted: Wed, Mar 09, 2005 at 10:12:00 (EST)
Email Address: Not Provided

Message:
the coffin of Alice & Ralph Cramden's future. Where are the penalties for irresponsible lenders? Is this a one-way street? March 9, 2005 Bankruptcy Bill Set for Passage; Victory for Bush By STEPHEN LABATON WASHINGTON, March 8 - The Senate assured final passage of the first major overhaul of the nation's bankruptcy laws in 27 years on Tuesday, when it took two votes that cleared the remaining political obstacles to a measure that the nation's credit and retail industries have sought for years. The bill would disqualify many families from taking advantage of the more generous provisions of the current bankruptcy code that permit them to extinguish their debts for a 'fresh start.' It would also impose significant new costs on those seeking bankruptcy protection and give lenders and businesses new legal tools for recovering debts. The Senate on Tuesday first defeated an amendment that would have prevented violent protesters at abortion clinics from using the bankruptcy laws to shield themselves from judgments awarded in civil lawsuits. That amendment, which lost by a vote of 53 to 46, had threatened to derail the legislation. The senators then voted 69 to 31 to limit debate and cut off any effort to kill the legislation by filibuster. Final passage of the measure is now an inevitable formality. House leaders have said they will quickly approve the legislation once the Senate completes work on it as early as this week. President Bush has said he intends to sign it. His predecessor, President Bill Clinton, killed the measure in his final days in office in 2000 after it had been passed by Congress by declining to sign it at the end of the legislative session, issuing a so-called pocket veto. The sponsors of the legislation say that it will have the effect of lowering the costs of goods and services for all consumers by making it easier for companies and issuers of credit to collect unpaid debts rather than passing those costs on to everyone else. In the last 30 years, bankruptcy filings have steadily increased, rising eightfold since Congress last rewrote the bankruptcy laws. But critics said the measure was a thinly disguised gift to banks and credit card companies, which, they contend, are largely responsible for the high rate of bankruptcies because they heavily promote credit cards and loans that often come with large and largely unseen fees for late payments. They said that the measure would impose new obstacles on many middle-income families seeking desperately needed protection from creditors, and that it would take far longer for those families to start over after suffering serious illnesses, unemployment and other calamities. The votes on Tuesday were the second legislative victory in recent weeks both for Mr. Bush and the Senate majority leader, Bill Frist, himself a possible presidential contender in 2008. Mr. Frist nimbly moved both the bankruptcy bill and another bill last month making it more difficult to bring class-action lawsuits through the Senate. In both cases, he unified the Republicans to beat back every effort by the Democrats to water down or delay the measures. In both cases, he also reached a deal with House leaders in which the Senate blocked any significant changes to the measure in exchange for a commitment from the House that it would adopt unaltered what the Senate approved. The White House applauded the votes on Tuesday. 'The administration supports the passage of bankruptcy reform because ultimately this will lead to more accessibility to credit for more Americans, particularly lower-income workers,' said Trent D. Duffy, a deputy White House spokesman. 'The fact that the Senate was able to set aside those issues and move toward passage shows it's another bipartisan accomplishment. Coupled with class actions, it shows we're off to a good start.' The sponsors of the bankruptcy legislation say it is a badly needed measure to curb a growing number of abusive bankruptcy filings by individuals who ought to be able to meet their obligations. Those cases, supporters of the measure say, have added hundreds of dollars in annual costs to other consumers who wind up having to pick up the unpaid debt. 'We are a compassionate nation but we should not be fools,' said Senator Orrin G. Hatch, a Utah Republican who has fought for the measure for eight years. 'We want to give our neighbors who get in over their heads a chance to get out of their financial troubles. But for some it is a way to avoid personal responsibility. There is something inherently unfair about denying full restitution to creditors.' Supporters of the new law point to the rise of bankruptcy filings, from 200,000 in 1978 to 1.6 million last year, as evidence of abuses. But critics of the measure say that the rise in such filings is not evidence of unfair filings. Rather, they say, it is symptomatic of broader economic problems - the growing distress in families plagued by high health care and education costs. A recent study by bankruptcy and medical experts at Harvard University found that more than half of the 1,771 personal bankruptcy filers in five federal courts cited medical bills as a primary reason they filed. The critics - including consumer groups, Democrats and more than 100 bankruptcy law professors - say that the legislation's supporters have significantly exaggerated the problem with the current bankruptcy laws. They say the legislation will do far more damage than good by hitting middle-income families, women and the elderly who have used bankruptcy protection in growing numbers to protect themselves. 'This bankruptcy bill is mean-spirited and unfair,' said Senator Edward M. Kennedy, Democrat of Massachusetts. 'In anything like its present form, it should and will be an embarrassment to anyone who votes for it. It's a bonanza for the credit card companies, which made $30 billion in profits last year, and a nightmare for the poorest of the poor and the weakest of the weak.' In a letter to Congress two weeks ago, 104 bankruptcy law professors predicted that 'the deepest hardship' would 'be felt in the heartland,' where the filing rates are highest - Utah, Tennessee, Georgia, Nevada, Indiana, Alabama, Arkansas, Ohio, Mississippi and Idaho. Critics also said the measure fails to do anything to curb abusive bankruptcy practices by wealthy families, who can create special trusts to shelter their assets, and by corrupt companies like Enron and WorldCom, which were able to find favorable bankruptcy courts and deprive many of their employees and retired employees of benefits. The Senate defeated a series of amendments proposed by Democrats that sought to address those issues. 'The bill has a real bias,' said Senator Charles E. Schumer, Democrat of New York, whose proposal to close a loophole that permits wealthy people to shelter assets through a special trust was defeated last week. 'It deals with abuses in bankruptcy by one group but not with another group.' The lobbying money for the legislation, which has come close to passage several times in the eight years since it was introduced, has been lopsided. The main lobbying forces for the bill - a coalition that included Visa, MasterCard, the American Bankers Association, MBNA America, Capital One, Citicorp, the Ford Motor Credit Company and the General Motors Acceptance Corporation - spent more than $40 million in political fund-raising efforts and many millions more on lobbying efforts since 1989, according to the Center for Responsive Politics, a nonpartisan organization that studies the role of money in the political process. By definition, the critics of the legislation had limited lobbying resources. The foundation of the legislation is a provision that would limit access by individuals to Chapter 7 of the bankruptcy code. It enables individuals to sharply limit payments on their obligations and get a 'fresh start.' The bill would instead impose a means test that would prompt many people to file for bankruptcy protection under Chapter 13, which requires a repayment plan. The means test would not be applied to debtors who earn less than the median income in their state. Those who earn more than that and can pay at least $6,000 over five years would have to seek protection under Chapter 13. The median income for a family of four in 2003 was $65,093, ranging from $45,867 in New Mexico to $82,561 in Massachusetts, according to the United States Census Bureau. The bill would also increase the costs of bankruptcy by increasing the amount of paperwork filed and force people in bankruptcy to pay for counseling about the way they use credit. It would also make it more difficult for some people to try to shelter their assets through the purchase of expensive homes in states like Florida and Texas, which have homestead exemptions. To shelter more than $125,000 in assets, homes must have been purchased at least three and a third years before a bankruptcy filing.

Subject: Transfer of Risk
From: Emma
To: Pete Weis
Date Posted: Wed, Mar 09, 2005 at 10:35:07 (EST)
Email Address: Not Provided

Message:
What is happening is the increasing transfer of risk from business to household. We see this from job security to medical benefits and coverage to pension benefits and coverage. When more than 40% of mortgages for new homes in 2003 involve no down payment, we have a sense of how vulnerable households are.

Subject: Good observation Emma
From: Pete Weis
To: Emma
Date Posted: Wed, Mar 09, 2005 at 15:04:02 (EST)
Email Address: Not Provided

Message:

Subject: Their is hope!
From: johnny5
To: Emma
Date Posted: Wed, Mar 09, 2005 at 13:14:08 (EST)
Email Address: johnny5@yahoo.com

Message:
Wow at least they allowed some kind of relief! Just move to massachussets and buy a house in florida and you are set. Or get one of those fancy trusts like the richies have. There is always a silver lining in every cloud if you look.

Subject: Simplicity
From: Terri
To: All
Date Posted: Wed, Mar 09, 2005 at 07:26:03 (EST)
Email Address: Not Provided

Message:
Before looking for complexity on complexity, why not look for simplicity in grasping investment opportunities. That seems to be the Buffett and Munger way, and that way makes perfect sense. If we are mathematicians, we can look for subtle market anomolies, if not we must think simply and effectively.

Subject: Mach 5
From: johnny5
To: Terri
Date Posted: Wed, Mar 09, 2005 at 13:02:26 (EST)
Email Address: johnny5@yahoo.com

Message:
Agreed, buffet and munger and gates said get out of the US dollar - why make it any harder than that - do what the smart money has done - but your US dollar on afterburner takeoff from the USA and fly it into another land.

Subject: Liquidity
From: Terri
To: All
Date Posted: Wed, Mar 09, 2005 at 06:15:44 (EST)
Email Address: Not Provided

Message:
There is a curious group of analysts who have never accepted JM Keynes and who account for all changes in economies as a result of money supply changes. The money supply must be tightly and artificially controlled. 'Austrians.' I have never found it possible to understand Austrian economics, and have no understanding of why we might wish to go back to a gold standard or other such artificially controlled money supply system. Interest rates are a reflection of expectations on inflation and how much liquidity there is, and for year after year there has been expectation that inflation will be constrained and no evidence that liquidity is a problem.

Subject: Dollar 'miracles'
From: johnny5
To: All
Date Posted: Wed, Mar 09, 2005 at 03:26:48 (EST)
Email Address: johnny5@yahoo.com

Message:
After this last pump of money - are there going to be any other 'miracles' for the dollar? Any more legilslation that will temporarily save the dollar? If not johnny5 is going to get one of those everbank cd's that are in a foreign currency to be like his buds gates and buffett or should he go into ishares that are in a foreign country? http://www.businessweek.com/bwdaily/dnflash/mar2005/nf2005039_2866_db035.htm NEWS ANALYSIS By Michael Englund Welcome Home, Big Money Companies may repatriate some $350 billion held abroad at a low tax rate in 2005 -- a huge inflow that could boost the U.S. economy Some $350 billion in U.S. corporate profits held overseas by U.S. multinational companies could wing its way home in 2005, thanks to legislation passed in October. The effects of the fund repatriation could relieve pressure on foreign central banks to intervene in currency markets to prop up the U.S. dollar, boost American debt and equity markets at the expense of their foreign counterparts, and directly contribute to U.S. economic growth. Advertisement The spur for all this: The American Job Creation Act, which allows multinational corporations to repatriate -- during the first taxable year after Oct. 22, 2004, which for most companies is 2005 -- foreign accumulated profits that would normally have faced double taxation. Under this law, U.S. companies may elect an 85% dividends-received deduction from a foreign subsidiary, with the remaining portion taxed at the 35% corporate rate, to leave a total 5.25% tax rate on the transaction. DRUG BONANZA. What will happen when profits held overseas find their way home? For global capital flows, the expected magnitude is huge. Investment bank forecasts seem to be settling in at the $350 billion mark. A Feb. 11 report by JP Morgan already identified $112 billion in slated repatriation deals, including $38 billion by Pfizer (PFE ), $14.5 billion by Hewlett-Packard (HPQ ), and $10.7 billion by Procter & Gamble (PG ), alongside Johnson & Johnson's (JNJ ) widely publicized $11 billion plan. David Kotok of Cumberland Advisors estimates more than $100 billion in announced repatriations by Big Pharma outfits alone and deems these deals central to the strength of the U.S. dollar since mid-January. The IRS issued a Jan. 13 press release with guidelines to help firms determine how they can qualify for the preferred tax treatment. The press release indicates that companies must commit to an investment plan with specific anticipated investments in the U.S. in reasonable detail and with dollar amounts, within a reasonable time period that need not correspond to the one-year period for the repatriation. INVESTMENT IMPACT. Investments that qualify include hiring, capital investments, R&D, debt repayment or funding of benefit plans, M&A, advertising, purchase of patent rights, and payment of tort liabilities. Funds need not be traced or segregated, so transferred funds will augment existing corporate cash accounts. The markets are still awaiting some additional rulings, which may push back actual cash transfers despite progress on individual deals. Of course, CFOs are paid to push the limits on IRS rules, and we at Action Economics estimate that less than half of the $350 billion in repatriation will finance domestic investment plans that wouldn't have happened otherwise (the IRS claims that their review of each plan will guard against this). But if companies channel even half the $350 billion into the list of acceptable investment strategies for newly initiated projects, you're talking real money. Consider some of the biggest potential consequences: Foreign exchange: Investment banks estimate that the majority of foreign subsidiary holdings are in dollars. Yet, we might assume that the flow to dollars in the foreign exchange market will reach $100 billion to $150 billion this year, making it about half the magnitude of 2004 foreign central bank intervention to prop up the dollar. The forex impact may be front-loaded in 2005, as companies hedge or build dollar-cash positions abroad in preparation for transactions that themselves are likely to be front-loaded. Notably, the dollar bounced significantly just after the Jan. 13 IRS clarifications came out and official deals started to materialize. Fixed income: Repatriation will directly boost dollar cash positions by $300 billion this year (though each individual company's holdings will be temporary and at different points in time), aside from corrections for transfers that were likely anyway. This will both increase demand for short-dated securities through the transaction phase and limit corporate bond supply in the U.S. as companies face lower borrowing needs or choose to use the repatriated funds to pay down debt. This shift in cash from foreign to U.S. books will increase debt supply abroad, though a portion of this supply rise would likely be in non-U.S. denominations. The upshot: The program will depress U.S. market yields but raise yields abroad. Equities: Repatriation appears to be giving a clear lift to U.S. equities, as M&A activity may well dominate the investment plans of large outfits, and the inflow of cash to the stock market will both boost demand and limit the need for new issuance. Here, there may be some offsetting negative effect abroad, as subsidiaries face depleted cash positions that might otherwise have been put to work in European or Asian markets. U.S. GDP: The impact of the program on aggregate sales and output measures -- such as GDP and its final sales components -- will depend on the extent to which companies choose investment plans that target plants and equipment, R&D, and advertising expenditures that weren't going to occur otherwise. Repatriation could boost equipment and software spending by several percentage points this year. And other corporate expenditures could raise all the major spending and employment aggregates to a degree that could boost GDP by as much as 0.5 percentage points for 2005 and a smaller amount in 2006. The U.S. current account deficit: The Bureau of Economic Analysis is still determining how it will treat these jumbo dividend payments in the U.S. current account and GDP reports for 2005. It appears likely that the bureau will publish a statement alongside, or within, the 2004 fourth-quarter current account release on Mar. 16 that dictates the procedures it will apply for incorporating the repatriation payments. In the end, the financial ramifications of repatriation in 2005 will be momentous and create economic ripple effects through 2006 and potentially beyond. The flows will boost the value of the dollar, particularly through the first half of the year, and alleviate pressure on central banks to perform this role. The program will also lift dollar-denominated equity and debt valuations at the expense of markets in other currencies and lift many of the major economic reports through the year. After their overseas stay, these funds should find a warm welcome on their return home.

Subject: Re: Dollar 'miracles'
From: j9
To: johnny5
Date Posted: Wed, Mar 09, 2005 at 08:10:55 (EST)
Email Address: Not Provided

Message:
Johnny, you ask: 'After this last pump of money - are there going to be any other 'miracles' for the dollar? Any more legilslation that will temporarily save the dollar? If not johnny5 is going to get one of those everbank cd's that are in a foreign currency to be like his buds gates and buffett or should he go into ishares that are in a foreign country? ' IMHO, you should do both with part of your portfolio. May make money or not, but this is a good hedge against dollar woes. I have done so, as well as a little global binds and natural resources ETF. The rest is cash and value funds or diversified funds. The underlying fundamentals for the US economy look shaky to me. A favorite site: www.safehaven.com.

Subject: Re: Dollar 'miracles'
From: johnny5
To: j9
Date Posted: Wed, Mar 09, 2005 at 12:59:04 (EST)
Email Address: johnny5@yahoo.com

Message:
Haha, I love the quote they have at the top of their website. No warning can save a people determined to grow suddenly rich.' - Lord Overstone I will have to see what the fees are versus investing in a canadian or new zealand cd versus buying an i-share. I am leary to hold any US cash if the us dollar is determined to give up another 30-40% purchasing power. My mother already can't buy gluewhine from germany because the exchange rate killed the supply chain.

Subject: Re: Dollar 'miracles'
From: jimsum
To: johnny5
Date Posted: Wed, Mar 09, 2005 at 21:45:11 (EST)
Email Address: jim.summers@rogers.com

Message:
I had a look at the I-shares site and it looked interesting. The same outfit has set up shop in Canada using the name iUnits. There probably isn't any real difference between the two operations, but the index ETF that sells on the Toronto stock exchange (XIU) has a MER of 0.17%, which is better than the I-shares equivalent. They have some cheap bond funds too. I'm getting 2.4% for cash right now. Although, if you happen to keep any American dollars, these guys pay 2.6% for cash: http://home.ingdirect.com/

Subject: Debt and investing
From: johnny5
To: All
Date Posted: Wed, Mar 09, 2005 at 00:31:28 (EST)
Email Address: johnny5@yahoo.com

Message:
http://www.newswithviews.com/NWVexclusive/exclusive88.htm Bob Chapman, known for his uncanny accuracy in predicting the markets and the financial pulse of America's economy, had this to say in his International Forecaster newsletter: 'Over the past decade, productivity growth on average has been about 2-1/2%, which is historically normal. It has not been 4-5% as described by government statistics and Sir Alan Greenspan. This is simply another lie in the process of psychological warfare, which is used to brainwash the American public. There has been no productivity miracle, but there has been a budget and current account balance disaster. Real rates of return on investment have not come from productivity but from the use of third world slave labor. It is similar to profits of the opium trade between India and China, which British and American families engaged in during the 19th century. This is how the great American fortunes were begun and how the British Royal Family became enormously rich. 'This exodus of manufacturing capabilities over these ten years has caused US exports to drop from 24% of GDP to 13% of GDP. As this transpired, deficits continued to grow and naturally the dollar began its decent. That decent was not allowed to occur until five years ago, because prior to that the Clinton administration via Treasury Secretary Robert Rubin artificially increased or stabilized the dollar. That was accomplished via the working Group on Financial Markets and the Federal Reserve’s monetary policy, the use of the repo pool and the suppression of gold prices. This false dollar value caused imports to exceed exports by some 50%. 'Cheap foreign goods become even cheaper and that excited the Fed because it suppressed inflation. There was an assist as well as exporters began to accumulate large dollar balances, which they in turn used to buy US Treasuries and agencies, which continued to allow the profligate spending of the American consumer. The result was a relentlessly rising trade and current account deficit. This easy money and credit underwritten by foreigners and the Federal Reserve exacerbated the situation by allowing spending to exceed income as real wages fell under the pressure of outsourcing and illegal immigration. In order to maintain their lifestyle, consumers have fallen deeper and deeper into debt. The Bureau of Labor Statistics tells us that hedonically our inflation is 3.3%, when in fact it is considerably higher. That phantom inflation has bitten deeply into consumer purchasing power. 'Under free trade and globalization, the more we import the less we produce. We can never compete with third world wages. That is why we always had tariffs, duties and imports. Had we not had them, America would have never prospered over the last 225 years. America’s economy would have always been inundated with cheap foreign goods and our standard of living would be that of a third world country. 'When we import goods our purchasing power falls and no real wealth is built within our country, and as you well know our jobs are shipped to the third world. Furthermore, we do not need cheap goods. We did just fine before those cheap goods were allowed to arrive in such numbers. If we do not stop free trade and the machinations of WTO and NATA or CAFTA and FTAA, were they to become law, we would be doomed. Generally, both political parties back these treaties and amnesty. Our elected representatives know in most cases over 60% of their constituents are opposed to these issues, yet they continually vote for them.' Not everyone is enamored of the privately owned Federal Reserve Banking system. Several years ago, the Von Mises Institute at Auburn Univeristy commented, 'Today the Fed attempts to coordinate world-wide inflation as the major banks once attempted to coordinate nationwide inflation. The major banks once agreed among themselves to bail out bankrupt banks to prop up the domestic financial system; now the Fed bails out central banks of other countries to prop up the entire international financial system. The logical end of this monetary interventionism is a single world-wide central bank with unlimited, coordinated inflation: in short, the dream of John Maynard Keynes. 'But why would anyone desire this, especially after a century of Fed-caused inflation, business cycles, world wars, welfarism, statism, financial insecurity, and cultural collapse? Government and its connected interests do, but for everyone else, it would be a disaster, no matter what Alan Greenspan says.' It would appear that the same conditions exist today and that not much 'recovery' has been made, but in fact, the debt load continues to stagger even long time market investors and econonomists. Pros say their position is right on the mark and the worst is yet to come. Before the crash in 1929, the premier economists of the time who supported the monetary policies of the day, reassured the American people that all was well at Wall & Broad. History shows they were dead wrong. While most Americans believe the 1929 stock market crash caused the Great Depression of the '30s, others point to the actual cause being the Federal Reserve's manipulating the money supply during the 1920s and 1930s. Despite the ability for the central bank to print up paper that has no value (fiat currency), many are worried that even with all this flooding of 'prop up' money by the FED, will it be enough to meet the extreme challenges in a few years when the baby boomer retire with an immediate debt load of $71 trillion dollars? Since there is no money in the U.S. Treasury and all income tax dollars go to pay the central bank for borrowing by Congress so they can continue to spend, only time will tell if America is indeed headed for a severe depression.

Subject: Re: Debt and investing
From: Setanta
To: johnny5
Date Posted: Wed, Mar 09, 2005 at 11:54:33 (EST)
Email Address: Not Provided

Message:
''Under free trade and globalization, the more we import the less we produce. We can never compete with third world wages. That is why we always had tariffs, duties and imports. Had we not had them, America would have never prospered over the last 225 years. America’s economy would have always been inundated with cheap foreign goods and our standard of living would be that of a third world country. ' i fundamentally disagree with this paragraph. the advantages of free trade over tarriffs have been proved over and over again in the real world and on academic papers (google comparative advantage). however, tarriffs will endure due to the political'capital' to be made from them. i'll attach an article of PK's (in favour of globalisation) that was so illuminating that i've been an avid reader ever since. as an aside, ireland did not develop until the 1970's before which there were restrictions in trade and the movement of capital, the country back then was a dismal and dreary place, since the opening of trade we have become among the richest countries (per capita) in the EU and western world. quotas, tarriffs and duties were the relic of the economic theory of mercantilism and the 'zero sum game' theory of trade. back then any foreign trade was considered bad for the economy as it involved an outflow of gold from your nation's treasury trove (read Munn's English Treasure by Foreign Trade - it was written in 1700's so the english is a little quaint!). the theory was replaced by Ricardo's theory of comparative advantage which explains that (in a 2 country 2 product model) both countries gain from trade. america would have developed regardless of tarriffs and import duties/quotas. cheaper labour costs wouldn't have been much influence in the nascient years of the US as labour would have been cheaper in the US than in Europe, as would land and other natural resources.

Subject: Re: Debt and investing
From: johnny5
To: Setanta
Date Posted: Wed, Mar 09, 2005 at 12:49:32 (EST)
Email Address: johnny5@yahoo.com

Message:
I hear you setanta, I just see all these unions in the USA begging the US gubbment to force china to float thier currency so that we don't keep bleeding good jobs. They may feel tariffs and restrictions are gonna help - as krugman said earlier - once they copied our economic models we have more competition now and probably won't outperform anymore. I agree the fundamentals of why the US grew was not because of certain trade policies, we just had a lot of land and hard working baby making people and the rest of the world was blown up. But now americans want to chat on bbs's rather than go out and till the fields with the beasts of burden. No matter what we try to do, the run is over - nixon has visited china.

Subject: Federal Financing Bank?
From: johnny5
To: johnny5
Date Posted: Wed, Mar 09, 2005 at 04:15:29 (EST)
Email Address: johnny5@yahoo.com

Message:
More on Rubin and the magic money! Sshhh ! The $14,000,000,000 Secret .. .. .. .. .. .. .. .. .... by Charles Mackay, Tuesday March 08 2005 The Treasury Department with the help of the secretive Federal Financing Bank created $14 billion out of thin air last November 15 to make a critical bond interest payment. As you may remember last fall, the nation smacked up against its federal debt limit on October 14. Congress then refused to enact an expanded debt limit bill in the run up to the November elections. Lacking legal authority to borrow additional funds, the Treasury faced a significant problem on November 15 when it needed to make a substantial interest payment. Having no alternatives left, the Treasury turned to the secretive Federal Financing Bank (FFB). Established in 1973, the FFB basically is direct agency of the US government whose purpose is to arrange financing for other government agencies not funded by the Treasury. (Not to be confused with another type of agency - Fannie Mae and Freddie Mac - which are technically called agencies but are not part of the US government and not funded by the FFB). The FFB is so secretive it issues its financial reports only with a two year delay, and press releases months after the fact. The FFB first got attention in the 1994 to 1996 period, but in recent years has settled back into virtual obscurity. In 1994, when the 'peso crisis' erupted south of the border in Mexico, then Treasury Secretary Rubin engineered a novel approach to bailing Mexico out of a debt payment problem. The somewhat mysterious Exchange Stabilization Fund (a joint Fed-Treasury operation) was called on by Rubin to provide $20 billion to Mexico. Although the Federal Reserve gave itself the authority to lend Mexico its share, the Treasury could legally only contribute its half through Congressional authorization. Congress balked. Rubin turned to the off-budget FFB for those funds. The FFB had been authorized since its inception to borrow up to $15 billion for general purposes. The ESF money was lent to Mexico and this defused the peso crisis, but Congress continued to question whether Rubin and the FFB had the authority to lend money for a non-agency purpose. Because of those problems, by 1996 Treasury Department lawyers formulated more specific opinions about what the FFB is authorized to do. One important decision was that the FFB could lend money to the federal Civil Service retirement plan and the huge Thrift Savings Plan (a 401k type plan for federal employees). Conversely, those retirement plans were allowed to hold FFB bonds and treat them essentially like Treasury bills and notes. Fast forwarding to the present, the FFB can and still does use its unlimited off-budget borrowing authority when it deems necessary. Other than supporting routine financing of the US Post Office and regional power authorities, the FFB has borrowed money in recent years to help get the Treasury through repeated debt limit problems. When the debt limit bills were eventually passed, the FFB was paid back by the Treasury in short order - until in the latest fiscal year. Last November, in a spinning wheel of transactions, the FFB issued its debt to the federal retirement funds. The funds transferred $14 billion of non-public Treasury debt they held back to the FFB in exchange for the FFB debt. The FFB then deposited the Treasury debt with the Treasury itself in exchange for an IOU. Lastly the Treasury used its own debt as collateral to make $14 billion in interest payments to finish the circle game. The net effect here is that the Treasury has issued $14 billion in new money - which is off-budget and not counted as part of debt subject to the debt limit. (Please note the $14 billion was counted in budgetary spending, just that the debt was not included with 'public debt' totals). So the Fed isn't the only one issuing US dollars. Electronic dollars issued by the Treasury are virtually the same as those coming from the Fed. The process which the Treasury/FFB created money is ostensibly legal but seems to be making an end run around all budget financing rules. The federal government plans to fund and retire the FFB debt in the fiscal year starting October 1, 2005. The Treasury will have to raise $14 billion in real money to pay off the funny money debt of the FFB. When that happens that spinning wheel goes into reverse and that funny fiat money disappears. The $14 billion of fiat money created last November 15 affects the markets in the much same way that the Fed's repo operations affect them. Not surprisingly, the $14 billion in new money had a positive effect on markets around that time. Maybe in about two or three years the FFB will release more information about the $14 billion transaction. Until then, let's keep this a secret. posted Tuesday March 08, 12 59 AM ET http://wallstreetexaminer.com/?itemid=462

Subject: 100% returns
From: johnny5
To: johnny5
Date Posted: Wed, Mar 09, 2005 at 00:44:10 (EST)
Email Address: johnny5@yahoo.com

Message:
Ok so the ww2 era where we had all the manufacturing and the rest of the world was a big crater of dropped bombs is over - now manufacturing is going to asia - and now they are gettin out of our dollars. http://news.ft.com/cms/s/f47dee6a-8f38-11d9-a70f-00000e2511c8.html Asian banks cut exposure to ailing dollar By Steve Johnson Published: March 7 2005 18:47 | Last updated: March 7 2005 18:47 The extent to which Indian and Chinese banks are cutting their exposure to the ailing US dollar was revealed on Monday in data from the Bank for International Settlements. The Asian central and commercial banks covered in the BIS data held only 67 per cent of their deposits in dollars as of September 2004, down from 81 per cent in the third quarter of 2001, said the Basel-based bank. http://www.reuters.com/newsArticle.jhtml;jsessionid=TMIHH0NYYPJGKCRBAEKSFEY?type=reutersEdge&storyID=7830485 NEW YORK (Reuters) - The ongoing decline U.S. net investment income suggests further weakness for the dollar lies ahead, analysts said. 'I expect that will become a drag on the current account,' and the dollar, said Binky Chadha, global head of currency research at Deutsche Bank in New York. Net investment income is the difference between income earned by U.S. investors on assets abroad, and income on U.S. assets owned by foreigners, and is a component of the U.S. balance of payments' current account which measures income from trade, workers remittances, investment income and other items. Even though the United States owns about $2.43 trillion fewer assets abroad than foreign investors own in the U.S., higher rates of return abroad than in the U.S. have meant net U.S. investment income has been positive in recent years. Foreigners owned about $9.63 trillion of U.S. assets at the end of 2003, while U.S investors' holdings of foreign assets was worth $7.2 trillion. The U.S. current account deficit has been running at about 5.7 pct of gross domestic product recently, and is one of the main reasons for the decline in the dollar in the past three years, analysts believe. The correlation between net investment income and the overall U.S. current account balance has been quite close, analysts said. In the fourth quarter of 2003, the current account gap was $127 billion, deteriorating to $147.2 billion, $164.4 billion and $164.7 billion in the subsequent three quarters, according to the U.S. Commerce Department. Over the same three month periods, net investment income flows into the United States shrunk from $17.5 billion to $13.6 billion, $6.6 billion and $6.7 billion. 'Unless there are significant changes to the patterns of global external imbalances, it's perfectly reasonable to assume the U.S. income balance is headed toward deficit from here,' said Jason Bonanca, vice president of foreign exchange research at CSFB in New York. Ok so our income balance is going negative. http://www.bloomberg.com/apps/news?pid=10000103&sid=aqn29mYf1LeY&refer=us GM Decline to Junk Yields Shows Waning Confidence in Automaker March 8 (Bloomberg) -- General Motors Corp., struggling with declining market share and ballooning health costs, faces a growing menace that's making all its challenges more dangerous: rising interest expense on its debt. Besides spending $5,349 per vehicle on consumer incentives last month, or 49 percent more than Toyota Motor Corp., GM Chief Executive Rick Wagoner, 52, must pay more to lure investors to GM's bonds. So america is just falling and falling - now benson had something to say about this awhile back: http://www.sfgroup.org/ under articles borrow and run from the dollar: If U.S. stocks are, indeed, back in a bubble along with real estate and bonds, and cash yields remain at around the 1% level - which is well below the rate of inflation - it does leave the investor in a quandary about what to do. The Fed is actually offering investors a simple solution that has worked well for many other countries over the ages - borrow money for next to nothing and get it out of the country! The average American, however, just isn’t used to this strategy. Typically, the strategy used by Latin Americans and developing countries was to borrow dollars from banks and the IMF and then use the money to purchase condominiums in Miami. With the dollar going down, they should be borrowing dollars but buying villas in Spain, rather than condos in Florida. The rest of the world knows about profiting from capital flight – didn’t George Soros make a few billion dollars betting against the pound? At least it seems the smart hedge funds are beginning to catch on and gear up here in America. This is how the “flight of capital” opportunity works: Just a few years ago when the dollar was rising, one could go to Japan and borrow Yen for almost 0% interest. The Yen could be used to finance U.S. securities, such as Fannie Mae mortgage backed securities. The investor could then lever his equity 20 to 1. In addition, not only would the investor earn the “carry” of the interest rate on the securities, less “the cost of carry” (which was almost zero), but gain from the appreciation of the dollar! The returns were huge and for some funds they were over 100% on invested capital! Now, the U.S. investment world is “upside down” and the game works in reverse. The Fed allows speculators to borrow dollars at 1%. With the dollar going down, just about any financial or real asset in any decent foreign country will go up in value in dollar terms. With the Fed holding interest rates below the rate of inflation (and most foreign interest rates are above rates in the U.S.), borrowing cheap and getting dollars out of the U.S. and turned into something of value, clearly offers a better return than investing in U.S. factories, stocks or bonds. When you notice that America is committed to running the largest trade deficit in history, and raising its budget to 5% of GDP, the economics get much better! The dollar should depreciate at least 20% against major currencies, and much more against select currencies. Fortunes will be made, or at least saved, by investors who can get their money out of the U.S. before foreign central banks slow their dollar buying. If you have a few million dollars to protect, you should be in a position to find a hedge fund that can borrow a few billion from your local money center bank, and run a major sophisticated foreign asset position. If you are a small investor, there are still some things you can do. It is possible to open foreign currency accounts offshore. (If you do open a foreign account, however, you must inform the IRS when you file taxes because Big brother needs to know!) For instance, HSBC does offer a Euro account to American citizens out of the Channel Islands. Moreover, Everbank (www.everbank.com) offers U.S. bank deposits in foreign currencies that are FDIC insured. so johnny5 sees these foreingers stop buying the US, the BIS shows the central bankers have stop buying the US, even though the benson article was a better deal 1.5 years ago when he wrote it - is it still not prudent to run from the dollar and maybe get into reits or markets where the US is not so connected to thier growth?

Subject: Cheer Up Pete!
From: johnny5
To: All
Date Posted: Tues, Mar 08, 2005 at 20:31:06 (EST)
Email Address: johnny5@yahoo.com

Message:
An old Indian chief sat in his hut on the reservation, smoking a ceremonial pipe and eyeing two U.S. government officials sent to interview him. 'Chief Two Eagles,' asked one official, 'You have observed the white man for 90 years. You've seen his wars and his technological advances. You've seen his progress, and the damage he's done.' The chief nodded in agreement. The official continued, 'Considering all these events, in your opinion, where did the white man go wrong?' The chief stared at the government officials for over a minute and then calmly replied, ' When white man found the land, Indians were running it. No taxes, no debt, plenty buffalo, plenty beaver, women did all the work, medicine man free, Indian man spent all day hunting and fishing, all night making love.' Then the chief leaned back and smiled, 'Only white man dumb enough to think he could improve system like that.'

Subject: I'm cheered Johnny
From: Pete Weis
To: johnny5
Date Posted: Tues, Mar 08, 2005 at 21:02:32 (EST)
Email Address: Not Provided

Message:
You're a good person and your posts are excellent. I printed the full version of the Munger piece and found 'random gleanings' very interesting - I actually thought it made a lot of sense.

Subject: Re: I'm cheered Johnny
From: Emma
To: Pete Weis
Date Posted: Tues, Mar 08, 2005 at 21:18:47 (EST)
Email Address: Not Provided

Message:
Absolutely. We had better laugh a lot to keep from madness :)

Subject: Re: I'm cheered Johnny
From: Terri
To: Emma
Date Posted: Tues, Mar 08, 2005 at 21:49:44 (EST)
Email Address: Not Provided

Message:
Thank you for all, Johnny. You are terrific.

Subject: You guys the best!
From: johnny5
To: Terri
Date Posted: Tues, Mar 08, 2005 at 23:31:43 (EST)
Email Address: johnny5@yahoo.com

Message:
Johnny5 learn so much from all of you, especially about good long term investing with vanguard - johnny5 never hear of them until you guys. He gonna name all his kids after you, pete, terri, emma, jennifer, david, setanta, pancho etc etc, I gotta have lotta kids!! johhny5 gonna try and fix the demographic problem of too few tax payers singlehandedly - pity the poor girl johnny5 marry - hehe.

Subject: Come to fl, take a shower if you can?
From: johnny5
To: All
Date Posted: Tues, Mar 08, 2005 at 20:18:10 (EST)
Email Address: johnny5@yahoo.com

Message:
Johnny5 moved to florida and for the first time in his life found out turning on the water spiggot gave sand - not water - johnny5 making home depot rich on new whole house water filters he must buy almost monthly to keep the sand out of his plumbing. Apparently this problem is on both coasts of florida - will this be the wall that coastal housing development cannot overcome? http://www.palmbeachpost.com/search/content/local_news/epaper/2005/02/27/m1a_slwater_0227.html Flaws, fate cited in St. Lucie West water woes By Teresa Lane Palm Beach Post Staff Writer Sunday, February 27, 2005 PORT ST. LUCIE — Each winter for the past two years, St. Lucie West Utilities Director George Morgan has watched the falling water levels in storage tanks and held his breath. Record-breaking construction in St. Lucie West, where routine building levels tripled last year, had strained the plant's ability to keep water flowing to sinks and toilets and, in the dry season, outdoor spigots where homeowners attached hoses for sprinkling brown lawns. Water wells drilled 16 years ago were overtaxed or pumping sand, and one was producing little more than a trickle by December, when crews punched the earth in search of more water. Filters at the treatment plant were clogged with sand and debris, but crews were unable to clean regularly because back-flushing reduced tank levels even further. In the wee hours of Feb. 19, when a worker realized the plant no longer could supply enough treated water to meet demand, he decided to make a last-ditch effort to clean the filters. Instead of a quick fix, that action catapulted the award-winning utility into an extended water failure and city-imposed building moratorium that has many residents demanding answers to a seemingly simple question: How can a well-managed utility run out of water? 'It's like when you're on a cross-country trip, and your gas gauge is getting lower, but you keep passing gas station after gas station,' Mayor Bob Minsky said. 'All of a sudden, there are no more gas stations, and you're out of gas. You've got nobody to blame except yourself.' Although utility managers have planned to expand the plant for two years, J.W. French of the Florida Department of Environmental Protection said unreliable water supplies in the shallow aquifer exacerbated the plant's woes. Five board members of the St. Lucie West Services District, a quasi-governmental agency that owns and operates the utility plant, agreed last year to spend $12 million on a new plant and three deep wells that reach the Floridan Aquifer, but they say historic growth and the winter drought rendered their plans too little, too late. 'It does not take a literary giant to figure out there were a lot of mistakes made in the short term,' said Jerry Barlowe, a nine-year board member and one of St. Lucie West's first residents in 1989. 'We got kicked between the eyes, and I assure you it does not feel good. We don't intend for it to happen again.' When the plant shut down in the early hours of Feb. 19, the spigots at 7,000 homes and businesses immediately went dry. Although the city and utility managed to deliver a trickle of water that day, the flow disappeared a second time Feb. 20, prompting city crews to build a second interconnecting pipe between the two systems and begin supplying all the community's water. Fearful of another failure, city council members imposed a building moratorium that will be lifted only after DEP is satisfied St. Lucie West can fulfill its own demand through July. That's when a new plant with nearly double the treatment capacity and well supply will go online to serve the 4,600-acre community through build out, which is likely to occur within a few years. French said he hopes a well that was tapped Thursday and is undergoing tests will serve as a stopgap until July. It could be certified for use as early as Tuesday. 'They'll have to demonstrate they can meet their maximum daily demand with their largest well out of service,' French said. 'We'll see what kind of production they get out of their new well. If they can meet their permitted requirements, they're entitled to go back to operating on their own.' Although DEP monitors utilities monthly to ensure what occurred in St. Lucie West doesn't happen, French said well production is not included on the monitoring sheets. On paper, it appeared the wells were producing and the plant was treating enough water to handle the average daily demand of 1.4 million gallons of potable water. In reality, lack of rain had left shallow wells parched. The water that was being pumped was sandy, further exacerbating dirty filters at the treatment plant, he said. Morgan said he has warned supervisors for two years that the plant was approaching maximum capacity, prompting them to consider two avenues: Build a new plant and convert the existing wells to irrigation use or buy water from Port St. Lucie. City Manager Don Cooper attended a board meeting in April 2004 and offered to sell capacity for 3,200 homes for roughly $2.5 million, plus monthly water use. Although board members said they liked the idea of spending only $2.5 million rather than $12 million, two utility consultants they hired advised them to choose the latter, resulting in a multimillion-dollar expansion program that landed the consultants more work and thousands more in fees. One of those consultants, engineer Jon Whitmer, said he is not sure he would recommend the same action a second time in light of last week's water problems. 'There's some advantage to being able to control your own destiny, and utilities have become a good way to control growth,' Whitmer said. 'If we had gone to the city, we wouldn't be able to convert our existing wells for irrigation in July. That's one of the biggest concerns we hear out here, is that people want more water for irrigation.' St. Lucie West uses a combination of treated sewage and lake water to irrigate homes and businesses on a timer system. During dry times such as last weekend, residents use about 250,000 gallons of potable water a day to supplement the paltry output from their sprinklers, a high enough figure to prompt last week's crisis, Whitmer said. 'We were down to 1.34 million gallons (a day) of treatment capacity, and the demand was 1.4,' Morgan said. 'While we're off-line and the city is supplying the water, we're going to chemically clean our filters twice, and the new well should get us to 1.9 million gallons a day. I'm optimistic we'll get through until July.' Even if St. Lucie West shows it can operate without another shutdown, French said, the two utilities should agree on an emergency water pact as soon as possible to serve as a backup. After supervisors rejected the city's $2.5 million offer in April, newly hired District Director Charles Sweat wrote Cooper in November, saying he would like to buy 200,000 gallons of water each day 'immediately.' City Utility Director Jesus Merejo responded in December that Sweat must apply for DEP approval to mix the two water supplies and spend nearly $200,000 to upgrade an interconnecting pipe and install an ammoniation system. Sweat never responded, saying there was no money in the budget for the upgrades. City crews say they have incurred at least $150,000 in emergency costs so far and will bill the services district. St. Lucie West residents, including Police Chief John Skinner, have embarked on mass e-mail campaigns or placed angry calls to the district office and city hall demanding answers to the outage, which paralyzed businesses for days and threatens to taint the luster of Port St. Lucie's first master-planned community. 'We are not only talking about a healthy water supply, but if St. Lucie West gets the reputation for having an unreliable water and sewer system, our property values will take a beating,' Skinner wrote in an e-mail to neighbors. 'The recent failure of St. Lucie West Utilities is something we all need to be concerned with.' Resident Janice Zynko estimates the interruption will cost her hundreds of dollars to replace water filters that must be discarded after a boil-water notice is issued. The notice remained in effect five days last week. 'This failure is due to the poor planning of our officials, however the cost of replacement falls to the homeowner,' Zynko told district supervisors. 'How could plans for more and more town homes, single family homes, and businesses be approved knowing that the system was ready to fail?' Barlowe acknowledges that board members should have monitored the situation more closely and warned residents to avoid unnecessary use of potable water during the crisis. After 16 years of living in the upscale community that boasts a major-league baseball stadium, two colleges and a 14-screen movie theater, Barlowe is hopeful the water failure will one day be a distant memory, long forgotten as residents return to their suburban lives in what is often seen as the catalyst to making Port St. Lucie the second-fastest-growing city in the country. 'If we can get through this crisis, and I'm sure we will, there is a light at the end of the tunnel,' Barlowe said. 'I'm so tired of hearing about irrigation and water, I'd almost be refreshed to hear people fussing about something else.'

Subject: A Fighting Strategy for Veterans
From: Emma
To: All
Date Posted: Tues, Mar 08, 2005 at 19:28:59 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/05/opinion/05sat1.html?8bl A Fighting Strategy for Veterans Military veterans are crying foul over President Bush's budget proposals to cut spending on their health care. The budget must not be balanced 'on the backs of veterans,' wrote Stephen P. Condon, the chairman of the Air Force Association, in a recent letter to The Times, a point that was echoed by other veterans at Congressional hearings last month. We agree with the veterans - but for somewhat different reasons than they have put forth. The veterans' goal is to block the president's attempt to impose new hospital fees, higher prescription co-payments and other spending constraints - all of which would add up to an estimated 16 percent reduction in veterans' benefits in 2010. (The estimate is from the nonprofit Center on Budget and Policy Priorities because the administration, breaking with 16 years of budget tradition, did not provide five-year projections for specific programs.) But if veterans succeed in preserving only their own benefits, they will have been outfoxed by the administration. Mr. Bush knows that wartime is no time to go after veterans' benefits. But by proposing changes that are politically implausible while challenging Congress to cut spending, the administration gains a bargaining chip: if lawmakers aren't willing to make the veterans' cuts the president has proposed, they will be pressured to make even deeper cuts in programs for people who don't have the veterans' ability to fight back. In effect, Mr. Bush's budget pits veterans against the 660,000 women, infants and children whose food assistance is on the chopping block; against the 120,000 preschoolers who would be cut from Head Start; against the 370,000 families and disabled and elderly individuals who would lose rental assistance; against the whole communities that would lose support for clean air and drinking water; and so on. The only way for veterans to avoid those unacceptable trade-offs is to refuse to fight on the president's terms. The size and scope of Mr. Bush's proposed spending cuts are a direct result of his refusal to ask for tax-cut rollbacks - that is, to ask wealthy investors, who have had lavish, deficit-bloating tax cuts over the past four years, to contribute toward deficit reduction. On the contrary, Mr. Bush's budget proposes even more tax breaks, specifically for people with six-figure incomes or more and overflowing investment portfolios. Most galling, the new tax cuts would be, in themselves, so large that the net spending cuts Mr. Bush has requested would not be enough to pay for them, let alone reduce the existing deficit. Veterans have the moral and institutional clout to argue that no one group should be singled out to make sacrifices until all groups are asked to sacrifice....

Subject: Poor veteran or poor welfare mom
From: johnny5
To: Emma
Date Posted: Tues, Mar 08, 2005 at 20:09:09 (EST)
Email Address: johnny5@yahoo.com

Message:
Look this is great strategy and for all the idiots you think rove and bush the pubs are look at what they are doing - gonna make grandma millie fight grandpa war vet over the dog crumbs while bush and kerry and all the other richies laugh it up in thier new mcmansions at the beach. Does anyone remember when MacArthur rolled the tanks over the veterans in washington? Patton and Eisenhower were there too: Patton criticized one of the very men that saved his life 14 years earlier - is this social justice? http://www.thehistorynet.com/ahi/bl_bonus_march/index2.html To his dismay, the routed marchers included Joseph Angelo, who 14 years earlier had saved the wounded Patton's life by pulling him to safety from a foxhole. The episode would dog President Hoover in his attempt to win a second term of office in the fall of 1932. Presidents had called out federal troops before to suppress civil unrest, but this was the first time they had moved against veterans. It left a bad taste in the mouths of voters. A letter to the Washington Daily News expressed the sentiments of many. 'I voted for Herbert Hoover in 1928,' one disgusted woman wrote. 'God forgive me and keep me alive at least till the polls open next November!' and FDR and the NEW SOCIETY were born! http://pqasb.pqarchiver.com/sptimes/804303191.html?MAC=4df46e4c98d9f0f5b78de2a45db236af&did=804303191&FMT=FT&FMTS=FT&date=Mar 7, 2005&author=&printformat=&desc=Fee for using beach only hurts residents of the working class Series: LETTERS; TIMES RECOMMENDS Full Text (1097 words) Copyright Times Publishing Co. Mar 7, 2005 Re: Revolt at Courtney Campbell: $10 fee clears parkway beach, story, March 2. The 'Revolt at the Courtney Campbell' is just one more disrespectful act by the upper middle class city councillors and county commissioners against the working class families of Pinellas. Let's charge those people $10 to get to a lousy beach and maybe they'll go away. Let's charge them $10 to go to a lousy beach while we go to Caladesi Island on our $50,000 boats, burning precious fuel and spilling motor oil in the gulf. By the way, since we have to drive by their modest homes and trailer parks while returning home to our McMansions, let's use eminent domain and knock them all down. Then our buddies who contribute so much to our re-elections can build new housing there just like ours. Always remember, it's their problem, not ours. Why should we care about the quality of their lives while our soccer moms drive our kids around in land yachts? Oh, by the way, now we want to restrict their boats and trailers from their yards in unincorporated Pinellas, too. We can keep our boats in a marina or at our backyard dock so why can't they do the same? Why don't the politicians really care about those people? Maybe because they don't contribute enough to their campaigns. In this county it is very obvious only the well connected get taken care of while the working poor get little or nothing. Clearwater collects how many tax dollars? They can't afford $23,000 to clean the Courtney Campbell beach? I do not want my tax dollars to pay for baseball stadiums or for developing properties for private corporations. I do not want my tax dollars paying for school busing. I want better paid teachers, better school buildings and smaller classrooms. I want the parents who work hard all day putting the roof on your big fancy house and paving your roads so you can drive that Escalade to be able to drive a few blocks to participate in the PTA. Councillors and commissioners, you are to blame for the continued demise of the quality of life for the working class in Pinellas. You are to blame for the overcrowding. You are to blame for the lousy traffic situation. You are to blame for the high taxes. As long as you keep on doing everything you can to develop the county for tax dollars and votes, you are not doing anything for the working class citizens. And please don't think those minimum wage jobs are a blessing either. By the way, about that $10 fee to get to the beach: Some nice working mom who just spent all day on her feet at a 7-Eleven just had to decide whether to take her daughter to the beach so she can have a little fun or buy her the new pair of shoes she needs from Kmart. How about a beach boycott to protest? Re: Revolt at Courtney Campbell. When I moved here from California last summer, the Courtney Campbell Parkway beach was one area I first noticed because of all the people having fun, swimming and boating. You could actually just pull in with your boat or Skidoo and take off into the water. 'Wow, Floridians have so much more freedom here,' I thought. 'You could never do this in California' (where almost all beaches are taxed and strictly regulated). Sadly, Florida seems to be headed in the same direction that California has gone - taking over all nonprivate land for themselves, as if they bought and paid for it, then charge us citizens to use it. Because some local government department cannot confront finding and punishing the actual individuals who have caused trouble at the beach, they now punish everyone by levying another fee or tax to use it. And they're using the ploy of starting the fee at a ridiculously high rate, so when they do bring it down (because of protests like this), it won't seem so bad and you'll forget that it was 'free' before. I do have a solution to go with my rant. Let's protest this decision by not using the beach until it is free again. And send a letter or e-mail of protest to the Clearwater City Council. Mark Ferguson, Clearwater Fee may counteract a growing eyesore Re: Revolt at Courtney Campbell. I have lived in Clearwater for 15 years. Every time I drive across the Courtney Campbell causeway to and from Tampa, I wonder why this scenic parkway beach is open for public use and free at that. It is not a good introduction to the Clearwater side of the causeway. The beach is crowded with people and cars. It is loud and obnoxious. There should be a fee to use this beach. After all, there is maintenance to be done along the beach each year. It is only fair that visitors help pay for this maintenance. If people stop using it because of the fee, so be it. The best things in life are not free. Personally, I think the entire causeway beach on both sides from Pinellas to Hillsborough should be beautifully maintained and there should be more beautification along its shores. It is the first introduction to the cities of Clearwater and Tampa as we drive across the causeway to the east and west. This introduction to visitors and the people who live in the area should be pleasing to the eye. Sandra Becker, Clearwater sadly johnny5 thinks while richie bush taxes poor beach goer - poor beach goer only looks up at who has more than him - a sad flaw in most americans - not looking down at how much more he has compared to starving somalie that would be glad to live in country where 10 dollar beach fees were is biggest complaint - god people make me sad sometimes.

Subject: Re: Poor veteran or poor welfare mom
From: Emma
To: johnny5
Date Posted: Tues, Mar 08, 2005 at 20:58:38 (EST)
Email Address: Not Provided

Message:
Thank you for reminding me of this episode in history, for I had forgotten. Whether Veternas will react so strongly now is not likely, but there are veterans who fully understand.

Subject: A Just-Right Economy
From: Emma
To: All
Date Posted: Tues, Mar 08, 2005 at 10:00:05 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/08/business/08econ.html?pagewanted=all&position= As Businesses Step Up Spending, Some See a Just-Right Economy By EDMUND L. ANDREWS and EDUARDO PORTER WASHINGTON - Nearly five years after the last economic boom sputtered out, executives and investors are again talking about a rebirth of the Goldilocks economy. The Goldilocks economy - not too hot, not too cold - was never a perfect metaphor even at the height of the 1990's. For all the strong growth and low inflation of the 1990's, the economy and the stock market were both overheated by the time the stock bubble collapsed in March 2000. But a wide variety of indicators now suggest that the economy is in a sweet spot: business investment is soaring; inflation appears more moderate than a few months ago; employment is climbing, even if real wages are not. Many economists have raised their growth forecasts for the year, from about 3.5 percent to 4 percent or higher. In some ways, the pattern resembles the handoff from consumer-led growth to business-led growth that many Federal Reserve officials hoped would occur. The most encouraging trend is business investment: spending on equipment and software rose 13.5 percent last year and at an annual pace of 18 percent in the fourth quarter of 2004. Analysts say much of the investment last year was to replace and repair equipment. This year, much of the spending is likely to be for expanding production capacity. Dell is spending nearly $1 billion to add a factory in North Carolina. Makers of telecommunications equipment, which have been battered since the dot-com bubble burst, are again adding capacity to meet demand for networking equipment, cellphones and cellular infrastructure equipment. But for all the good news, many economic forecasters remain worried about the broader global imbalances. The United States' large trade deficit, which exceeded $600 billion last year, is expected to widen in 2005 and increase the country's enormous foreign indebtedness. Exports are unlikely to redress that balance this year, most analysts predict, because Europe and Japan are growing at anemic rates in comparison with the United States. That means American demand for imports is likely to expand much more rapidly than European and Japanese demand for American exports. And with American imports almost twice as great as exports, America's exports must grow far more rapidly to even begin a reduction in the trade deficit. 'The world is still too dependent on U.S. spending,' said Nigel Gault, an economist at Global Insight, a forecasting firm, in Lexington, Mass. 'We're still increasing imbalances in the global economy, so the U.S. is still increasingly dependent on the inflow of foreign capital.' Like many other forecasters, Global Insight raised its estimates for growth this year mostly because new data showed business spending on new equipment was stronger than expected in January. Analysts had expected orders for capital goods to decline in January, after the expiration of special tax incentives at the end of last year. Instead, orders for nonmilitary capital goods jumped 2.9 percent in January. 'It's clear that businesses have begun to believe that it's time to add to spending and time to hire,' said Peter Kretzmer, an economist at Bank of America. 'At some point, it becomes riskier not to spend money.' Daniel Meckstroth, chief economist at Manufacturers Alliance/ MAPI, an industry research group, said production had picked up across an array of industries. 'The amazing thing is that it is almost across the board in every type of equipment,' he said. The fastest-growing areas, he said, are oil and mining equipment, telecommunications and computer equipment, and construction equipment. 'The growth last year,' Mr. Meckstroth said, 'was in replacement and repair of old equipment, but this year we're going to get into the actual growth cycle.' Hints of a handoff from consumer-led growth to business-led growth are apparent at Siemens Energy and Automation of Alpharetta, Ga. At the company, a unit of Siemens of Germany, electrical equipment sales to industrial customers plunged by a third after 2001. Sales of equipment to the residential housing market picked up part of the slack, as the Federal Reserve's low interest rates prompted a home-building boom that continued through last year. But Harry Volande, chief financial officer at Siemens Energy and Automation, said industrial sales of electrical equipment and automation systems would expand by double digits, even as sales to the residential housing market flatten with the cooling of the housing market and a tapering off of construction activity. Siemens is still cautious about expansion. But Mr. Volande says that his company, like most others, was operating with plenty of spare capacity. Even as investment picks up, little money will be spent to increase capacity. 'I don't think we will see much capacity extension, except in the raw material area,' Mr. Volande said. Employment growth in February reinforced the impression of a Goldilocks expansion. Job creation was unusually strong, with the nation adding 262,000 jobs last month, according to initial estimates by the Department of Labor. But neither hourly wages nor weekly earnings climbed at all, and the unemployment rate actually climbed slightly, to 5.4 percent from 5.2 percent, as more people entered the labor force. That news suggested that growth would remain strong, but that wages were not yet adding to inflationary pressures. Numerous uncertainties do remain. One is oil prices, which recently jumped to more than $55 a barrel and are likely to cause at least a modest jump in gasoline prices. A bigger uncertainty is the ability of consumers to keep spending. Consumer spending climbed faster than personal income last year, but the personal savings rate is down to 1 percent. 'If consumer demand falters, then business caution will intensify,' predicted Stephen S. Roach, chief economist at Morgan Stanley. Mr. Roach, who is far gloomier than most analysts, contends that competitive pressures from China and other low-wage countries are limiting wage gains among white-collar as well as blue-collar workers in the United States. To be sure, the story is not yet finished. Alan Greenspan, chairman of the Federal Reserve Board, has repeatedly argued that companies will be forced to raise wages in order to meet rising demand and that companies will pay for those wages by letting profit margins - which were unusually large last year - shrink.

Subject: Computer hedonics counted 2 times?
From: johnny5
To: Emma
Date Posted: Tues, Mar 08, 2005 at 19:48:39 (EST)
Email Address: johnny5@yahoo.com

Message:
On the computer front: there are now 512 meg video cards, 400 gig hard drives, software packages that overlap many many times - so sure they can spend all that money on a new pentium 6 with 400 gigs of hard drive and more video memory than most hard drives had 10 years ago, and replace thier CRT monitor with a trendy fashionalbe LCD monitor and instead of having just one text editor now have ms office installed with word, wordpad, notepad, instead of one browser, have netscape, firefox, ie exlporer, opera, etc etc, three copies of a music player - windows media player, apple i tunes and dell audio player - but I am certain this is not going to increase productivity - let me elaborate - the 400 gig hard drives will be used by people wanting to store lots or porn maybe (maybe we need to invest in KY - a canadian company I think - america loses again), the 512 meg video cards will be used by people wanting to play the latest most realistic driving simulation game (ati is in canada too - another american loss), but this is not going to translate into any boost for business or even the majoriy of individual computer purchasers from what I can see. I can only check my email so fast and with one program. I have a friend in the business selling old retirees these HUGE computer systems with lots of hardware and many expensive software packages and it just doesn't let grandma check her email any faster or let johnny5 read pkarchive bbs any better - I tell him he is wrong to sell them this excess capacity beyond thier needs and should give them a minimal system at much lower cost to do what they really want it to do and tell them to put the saved money in tax free municipal bonds to help out our country and cities - but then he wouldn't have that new house he just bought or that 2004 monte carlo ss either :( PS - the house was bought with an ARM and he doesn't drive the car near as much as he used too because of gas prices. SO retiree wealth through him and his computer sales is going into assets that he doesn't really even need or use. How sad.

Subject: Annuities?
From: Jennifer
To: All
Date Posted: Tues, Mar 08, 2005 at 08:18:38 (EST)
Email Address: Not Provided

Message:
There are different types of annuities. Vanguard has a fine annuity department. There are no sales charges and no fees for withdrawal. John Bogel stressed that an annuity planned for less than 10 years is not useful since it takes 10 years for the saving in taxes to equal the extra cost for insurance. What the annuities at Vanguard do is insure the principle of an investment. As usual the cost and quality of the investment choices are excellent. Vanguard only offers these variable return annuities and never pushes them on clients. Conservative investing should be as secure as this type of annuity, so the only advantage might be long term tax saving. There is also an insurance annuity that takes your principle and pays a certain sum regularly. These are different than any Vanguard product. As has been pointed out these products can be expensive, can have severe penalties and take many years to be fruitful. I find these types of insurance annuities of highly doubtful value.

Subject: Re: Annuities?
From: johnny5
To: Jennifer
Date Posted: Tues, Mar 08, 2005 at 18:17:05 (EST)
Email Address: johnny5@yahoo.com

Message:
A good read on the CFP's take of indexing crushing their business model. Just as Bogle predicted years ago. This follows some conversations on Morningstars BBS. A selected paragraph: http://www.tamasset.com/desperation.html The Price of Ignorance An advisor I met at a conference called me recently and told me he had lost a $4.7 million account. He lost these clients, a husband and wife, to an advisor who used low-cost index funds. During the several years he managed their accounts using a diversified portfolio of mutual funds and bond funds, his clients lost more than $2 million. During the time he worked with them, he had taken them out to dinner, played golf with the husband, and engaged in other activities to make them like him. “I can’t believe they left me to go with an advisor who uses index funds,” he said. “What could that advisor offer that I cannot offer?” At the conference, I had suggested that advisors read several of the above books. I asked him if he had read any of them. “Nope,” he replied. “I don’t have the patience or time to read books.” I was taken aback. Here was a man who was entrusted to manage tens of millions of dollars of client assets, and he “didn’t have the patience or time to read books.” I had not told him to read medical books. I had not told him to read romance novels. I had suggested he read books in one of his supposed fields of expertise, investment management. He hadn’t found the time or couldn’t motivate himself to do so. I shouldn’t have been surprised. I have heard this before, even from CFPs and others who are supposed to be dedicated to continuing education. This advisor was perplexed as to why he lost two of his best clients, from whom he made nearly $50,000 a year, to an advisor who uses index funds. Had he read at least one or two of the above books, he would have known the indexers’ arguments in detail. And he would have had better ideas on what he could have said or done to keep those valuable clients. Ignorance of the “index fund argument” is one of the most expensive forms of ignorance for a financial advisor. Now containing more than $3 trillion, index funds are no longer “fringe” investments. Previously, the advisor down the street was your competitor. Today, index funds may be a much more serious threat to your investment management practice. If you wish to compete effectively against index funds, the most important advice I can give you is to learn the arguments used by the indexers. Read a least one or two of the above books. A superficial knowledge of indexing will no longer do. If you do not have knowledge of the indexers’ arguments and the research backing it up, all hope is lost. You cannot operate from a position of strength if you do not have an in-depth understanding of what your competitor is saying and doing.

Subject: Adding to: Annuities?
From: Jennifer
To: Jennifer
Date Posted: Tues, Mar 08, 2005 at 11:16:43 (EST)
Email Address: Not Provided

Message:
Vanguard indeed now has an insurance annuity, which can be used to gain a steady income stream. However, as with the variable annuity there is no sales charge or surrender fee. There is another addition, a fixed income annuity again with no sales charge but with a surrender fee that declines from 6% to 0% in 6 years. The average fee for Vanguard variable annuity is 0.63% The fee for the insurance steady income annuity is about 1.1%. The fee for the fixed income annuity is included in the interest rate guaranteed.

Subject: Re: Annuities?
From: Pete Weis
To: Jennifer
Date Posted: Tues, Mar 08, 2005 at 10:56:00 (EST)
Email Address: Not Provided

Message:
It is true that some annuities can be a good thing for the right person. Unfortunately there are too many brokers and brokerage houses which prey on older investors who suffer from the insecurity that comes with getting older. I don't believe Johnny5's uncle's experience and my mother-in-law's experience are unusual cases. I bet this kind of predatory investment management is quite common. There seems to be little oversite or regulation to protect investors - either by state insurance commissions or any federal agency. I'm sure this kind of thing has been with us for a long time, but it seems to have reached Himalayan levels.

Subject: What do We Need?
From: Jennifer
To: Pete Weis
Date Posted: Tues, Mar 08, 2005 at 11:23:07 (EST)
Email Address: Not Provided

Message:
Personally I believe there is little need for an annuity, and less need for an annuity with a surrender charge. The sense I have is that annuities are repeatedly sold simply for the sake of the sales charges.

Subject: Re: What do We Need?
From: johnny5
To: Jennifer
Date Posted: Tues, Mar 08, 2005 at 17:58:53 (EST)
Email Address: johnny5@yahoo.com

Message:
Here is a discussion board of CFP's ChFC's, CLU's: Give you somewhat of an inside track of what these people talk about behind the closed doors - some of it I like - most of it I don't. http://www.financial-planning.com/phorum/read.php?f=4005&i=4380&t=4357 I am an IAR of my broker-dealer's RIA, and there is no agreement in place for us to be able to use the Vanguard VA. I am very disgusted with 95% of the 'load' VAs out there (even the ones that disguise themselves as no-load), and wish there were a good alternative. Vanguard's M&E charges seem to be about half of the lowest-cost 'load' provider offers. This would fit into my practice well, since most of my investment business is done in Vanguard's index funds. Anyway, since I haven't used the product, I can't comment on whether the Vanguard customer service is helpful to advisors. However, I can say that their fund-side employees are always extremely helpful when I call with questions.

Subject: Munger moans MPT, Diversifiication, Beta
From: johnny5
To: All
Date Posted: Tues, Mar 08, 2005 at 02:38:14 (EST)
Email Address: johnny5@yahoo.com

Message:
Charlie Munger - warren buffets buddy needs to get in the room with terri and let her set him straight!! Wow terri - this guys comes down hard on the academic papers and the EMH. I wonder what Brinson's portfolio has made over the past 20 years. http://www.bankstocks.com/article.asp?type=1&id=9880561 Munger defends the idea of having as much as 90 percent of one’s asset in a single company—as long as it’s the right company. Three great companies could be plenty for a lot of people. The ability to make a good qualitative analysis is critical. He warns against cluttering one’s mind with a lot of folly or striving for sophistication, which can cost you far more than any possible rewards. Too many people try things without thinking of the consequences, logical or unintended. References are often made to common sense, but what people really mean is “uncommon sense.” Munger, like Buffett, is generally contemptuous of financial experts, analysts, and strategists, whom he believes add little value. Like Buffett, he warns that hedge funds are essentially fads; most won’t end well for most people. The latest investment fad, funds of funds, doesn’t make sense for people because of their added costs. Academia If Munger holds much of Wall Street in contempt, his disdain for investment academics is at least as strong. He has little regard for modern portfolio theory, which has become academic gospel at most business schools. Nor does he put much stock in academia’s emphasis on diversification and beta. He says emphasis on volatility is nonsense, and that beta should be ignored. Most superior investment records have been achieved by eschewing diversification. One need only make a small number of good decisions and then largely stay with them. Berkshire did well with a combination of non-diversification, patience, and intense opportunism. Munger nudged Buffett into a willingness to pay up for quality businesses, on the principle that good businesses make one good decision after another. Wide diversification, which necessarily includes investment in mediocre businesses, only guarantees ordinary results. If academia confined itself only to the few necessary investment principles, it really wouldn’t have much to teach because there isn’t that much to say. Instead, most professors waste their time, and that of their students, with the useless concept of efficiency of markets when, in fact, markets are far from being totally efficient. He does single out Jack McDonald at Stanford as being a notable exception, who’s well out of step with modern academia. McDonald happens teach the most popular class at Stanford, and is probably is an anathema to the rest of the faculty there.

Subject: Excellent Post
From: Terri
To: johnny5
Date Posted: Tues, Mar 08, 2005 at 16:16:02 (EST)
Email Address: Not Provided

Message:
These posts and thoughtful and helpful, and arguing with Charles Munger would be more than foolish. 'Tease' away, and post all you will. The question for Munger then is always, where is a reliable company at a reasonable price?

Subject: Re: Excellent Post
From: johnny5
To: Terri
Date Posted: Tues, Mar 08, 2005 at 17:41:25 (EST)
Email Address: johnny5@yahoo.com

Message:
This I feel is charlies downfall, playing devils advocate once again. Him and buffet lived through one of the greatest bull runs in one of the richest countries EVER. Lets stick him and buffet in the time machine right before tulip mania or the south seas bubble and see what companies they would buy - what investments did the mungers of spain or london make back when thier empires had peaked. Was there ANY company or stock worth buying at those points?

Subject: Re: Munger moans MPT, Diversifiication, Beta
From: Jennifer
To: johnny5
Date Posted: Tues, Mar 08, 2005 at 06:30:33 (EST)
Email Address: Not Provided

Message:
Please stop continually picking on Terri. She is always polite and exceedingly helpful. The ideas she gives are sound and in line with what Buffett and Munger teach about investing.

Subject: Oh brother
From: johnny5
To: Jennifer
Date Posted: Tues, Mar 08, 2005 at 10:40:22 (EST)
Email Address: johnny5@yahoo.com

Message:
How many times do I have to say I am not picking on Terri - Jennifer you don't read all the posts presented on this BBS do you? This has been covered with david e, pete weis and several others - I do not understand why you all keep taking this negative view. Terri has indeed been very helpful, she champions EMH and academic research of the MPT, munger is challenging her and I simply wish to evoke dialogue that helps us all - I am not picking on anyone - why do you feel that? Even after many messages explaining this either A) you haven't read those messages or B) you think I am lying - which is it?

Subject: You are Right
From: Jennifer
To: johnny5
Date Posted: Tues, Mar 08, 2005 at 11:27:03 (EST)
Email Address: Not Provided

Message:
You are right, so tease away. I really should have known you were playing. Sorry, I was defensive.

Subject: Re: Munger moans MPT, Diversifiication, Beta
From: Jennifer
To: Jennifer
Date Posted: Tues, Mar 08, 2005 at 08:31:45 (EST)
Email Address: Not Provided

Message:
I always appreciate your posts and thoughts, and you were teasing but I so appreciate all who contribute. Please do not be in any way hurt, for a sense of humor is essential for us. I appreciate you.

Subject: Re: Munger moans MPT, Diversifiication, Beta
From: johnny5
To: Jennifer
Date Posted: Tues, Mar 08, 2005 at 10:49:24 (EST)
Email Address: johnny5@yahoo.com

Message:
I am crushed, I LOVE terri, very much, I am just trying to learn and all this EMH and MPT seems counter intuitive to me, the more academic papers I read the more I can see the point of the researchers, but the more real world investors I read keep slamming the guys in the ivory towers - so it comes down to do you think the guys writing the research papers are gonna make us all money and secure our retirements or the mungers of the world. This is a very very important topic, my uncle just invested 250K in an annuity based on this brinson paper and the MPT of asset allocation, but I am not convinced that was wise - and if it wasn't - he is not adding to an efficient market but padding the pockets of the salesmen out there which hurts productivity of our world and nation in the long run. I specifically put the questions to terri because she seems to be the most educated and steadfastly optimistic about these concepts so I defer to her tremendously when trying to learn and understand, not to pick on her, but as a fool that wishes to gleen insite and learn from her wisdom - like a student learns from a wise teacher. None of my teachers in the past thought I was being mean with them with the type of attitude I have, but here online for some reason people think I am out to get someone - I don't understand why.

Subject: I Agree
From: Jennifer
To: johnny5
Date Posted: Tues, Mar 08, 2005 at 11:30:54 (EST)
Email Address: Not Provided

Message:
Foolish me, there is no reason to fear teasing. You are right, and even though I like index funds I agree with you.

Subject: Respect
From: Pete Weis
To: johnny5
Date Posted: Tues, Mar 08, 2005 at 11:29:35 (EST)
Email Address: Not Provided

Message:
'Charlie Munger - warren buffets buddy needs to get in the room with terri and let her set him straight!!' Johnny. This line comes across as very sarcastic and shows a lack of respect. It's obvious to Terri and everyone on this board (as well as yourself) that Monger and Buffet are investment geniuses. So your line here (whether or not you meant it that way) comes across as ridiculing Terri. If you had started your post - 'Terri and some other folks on this board believe in investing in diversified value stocks in a traditional 'balanced' portfolio, but Munger does not agree with this strategy....' then there might have been a usefull discussion of your post. But if you ridicule (it may not be your intention but it's the way it comes across to many of the rest of us) you will get far fewer responses to your posts - and I, for one, think they are very good posts.

Subject: Preface
From: johnny5
To: Pete Weis
Date Posted: Tues, Mar 08, 2005 at 17:49:53 (EST)
Email Address: johnny5@yahoo.com

Message:
I can only preface all of this with that I only wish for the world to get better and all of us to be happy. I agree with the long term academics that terri has enlightened me too and feel perhaps munger and buffet have just been the products of a time when corporations and thier leaders were more honest than now and the class divisions of rich and poor were more in line - this afforded them to be able to trust a few good companies. I don't feel america is as unified as most of thier time. I can't believe there were good domestic companies if you were in the runups of the big bubbles in the past - south seas, tulip mania - etc. I am going to quit trying to be 'cute' and funny and become more in line with the board respondents - too many people are telling me my attitude is disrespectful and if a bunch of people start saying something it is probably true.

Subject: I Disagree
From: Terri
To: johnny5
Date Posted: Tues, Mar 08, 2005 at 18:21:04 (EST)
Email Address: Not Provided

Message:
I disagree. Play on, for the board needs play, but know comedy is tricky and can easily be taken wrongly. Then set it as right as you can and go on playing. The comedy will become more familiar in any event after a time, and in being more familiar will improve for us. As for Buffett and Munger, they always need listening to.

Subject: Re: I Disagree
From: Jennifer
To: Terri
Date Posted: Tues, Mar 08, 2005 at 18:36:43 (EST)
Email Address: Not Provided

Message:
Me too. Making this fun is worth quite a lot :))

Subject: Re: Respect
From: Terri
To: Pete Weis
Date Posted: Tues, Mar 08, 2005 at 16:17:06 (EST)
Email Address: Not Provided

Message:
Thanks all, as always.

Subject: Warren Buffett and Charles Munger
From: Jennifer
To: Jennifer
Date Posted: Tues, Mar 08, 2005 at 08:27:34 (EST)
Email Address: Not Provided

Message:
Charles Munger and Warren Buffett are brilliant honest investors and I always pay attention to their advice. Berkshire Hathaway has been a truly wonderful investment. They constantly teach us to be simple in investing decisions, and that is what I try for. That is why I am never tempted to use bear funds. Munger says that if we can choose a few companies to invest in and stay with them forever, we will be content. I prefer more diversity however because I am not as confident in my ability to select as Munger would be. So, I also use a few Vanguard index and managed funds.

Subject: OF lazy Susan-deals & barter revenue
From: Pete Weis
To: All
Date Posted: Mon, Mar 07, 2005 at 22:11:09 (EST)
Email Address: Not Provided

Message:
The Seattle Times has run a very good 2-part article (both lengthy) entitled 'Dot-con job: How InfoSpace took its investors for a ride'. I'm not posting it here because of its length. But an internet search should find it easily. I think it's a important article because its a fairly detailed account of how a dotcom company fudges its earnings reports both legally and illegally. The lazy Susan deals reminded me of George W at Harkin. Also of interest is the way the SEC went to bat for the main villian in the InfoSpace investor rip-off were hundreds of millions in life savings were lost. Contrast that with the SEC's aggressive investigation and prosecution of Martha Stewart's insider activity where she gets the info from her broker who tells her the Waxill (sp?) family is selling. Don't get me wrong -Martha should pay for her mistake and she has but something is greatly out of whack here. Anyway, if you want to continue to invest in dotcom companies and do not wish to be deterred don't read this article. If you want to get a very good look at what companies can and are doing to beat 'the number', and why, then definitely read both parts of this very good article. The Seattle Times had to file a suit to get this information released to the public.

Subject: Re: OF lazy Susan-deals & barter revenue
From: johnny5
To: Pete Weis
Date Posted: Mon, Mar 07, 2005 at 22:45:52 (EST)
Email Address: johnny5@yahoo.com

Message:
Even the legislators and thier personal accountants can't do simple math - how are these people that read cliff notes to get risk certified supposed to be expected to keep up with all the quantitative stuff? Rep. Greg Evers, R-Milton, listed a net worth of $589,495 when he filed his 2004 report. But his list of assets totals $1,524,977, with liabilities he puts at zero. When asked about the discrepancy, Evers could not explain. His accountant, Pam Faulkner, called the Times to say some of the figures given for assets were 'net.' But she could not explain the discrepancy, either. http://www.sptimes.com/2005/02/21/State/Financial_disclosures.shtml Financial disclosures don't always add up Legislators have to file a report detailing net worth. But some fail to fill out forms to a point that a true number can be determined. By LUCY MORGAN, Times Tallahassee Bureau Chief Published February 21, 2005 Second of two parts Click here for part one TALLAHASSEE - The instructions seem simple enough: Florida legislators must file a financial disclosure report each year detailing their net worth, assets, liabilities and sources of income. Yet some 40 lawmakers do it incorrectly. Take Sen. Jim Sebesta, R-St. Petersburg. On his most recent report, he lists assets of $242,000 and liabilities of $136,596. His net worth, he reports, is $590,182 - a figure that includes stocks, bonds and savings accounts he does not report. Rep. Frank Farkas, R-St. Petersburg, ticks off his assets one by one: office building, home, stocks, bonds, IRA. But he does not give details on any of them, as required. Rep. Matt Meadows, D-Lauderhill, is one of 10 lawmakers who omits his legislative salary, just as he omits the value of his home and other assets that gave him a net worth of $590,182 in 2004. On his disclosure forms since 1992, he has left the space for assets blank, yet put his mortgage in his list of liabilities. Property records in Broward County indicate he bought his house in 1986. Meadows, Farkas, Sebesta and the other legislators who file incomplete or erroneous reports don't have much to worry about, however. The Florida Ethics Commission, which maintains the disclosure reports submitted each year by the 160 lawmakers, can fine officials who don't file on time. But the commission has no power to investigate the accuracy of a report unless somebody files a complaint. Only a handful of complaints against legislators have been filed in the past decade. And only four of those resulted in a decision to fine or censure the lawmaker. Why is the Ethics Commission essentially powerless to act against offenders? Because the Legislature has never given it that power. No surprise there. Nearly 30 years ago, then-Gov. Reubin Askew had to go over the heads of balky legislators to get financial disclosure rules put into the state Constitution in the first place. A different path The early 1970s were a time of political corruption from the county courthouse to the White House. Watergate was making headlines around the country, and scandal drove two Florida Supreme Court justices and three members of the state Cabinet from office. In April 1973, Gov. Askew called on state lawmakers to demonstrate a commitment to good government by passing laws to restrict conflicts of interest among public officials. 'I urge you to require all elected officials, all candidates for public office and all major appointed officials in Florida to disclose all of their financial interests,' Askew said. 'This would include copies of income tax returns.' Legislators refused. Askew tried again in 1974 and 1975, urging the Legislature to help restore confidence in government and approve new ethics laws that would include disclosure of potential conflicts of interest and prohibit lawmakers from leaving office one day and going to work as lobbyists the next. Again, the Legislature refused. Detailed disclosure of personal financial information, opponents said, would violate their right to privacy and stop good people from seeking public office. So Askew took a different path. He proposed what he called the 'Sunshine Amendment' to the state Constitution. He and his supporters collected more than 230,000 signatures from Floridians to get the issue on the November 1976 ballot - the first time the initiative process had been used to get a proposed amendment approved by state voters. Nearly 80 percent of the voters approved Askew's amendment. 'We really had a lot of problems in state government,' Askew, 76, recalled recently. 'I recognized this was in a sense an invasion of privacy, but I thought we had extraordinary circumstances and should assure Floridians that public officials are working for them. I think it has accomplished most of what I wanted it to do. 'I just gave up on the Legislature,' said Askew, who now teaches government at Florida State University. 'And I put everything I thought we would need in the amendment.' That turned out to be a good move. Lawmakers have never passed a comprehensive bill implementing his amendment. In addition to requiring financial disclosure for elected officials and candidates for office, the Sunshine Amendment: Shortly after the 1976 election, a group of legislators including outgoing Senate President Dempsey Barron and Sens. Phil Lewis and Ken Plante filed suit in federal court alleging that the amendment was an unconstitutional invasion of privacy. The court ruled against the lawmakers, however, and the amendment took effect on Aug. 1, 1977. Plante did not seek re-election and later became a lobbyist. The others remained in the Legislature and began filing disclosure forms. Five years later, the Legislature waited until the very end of the session and approved a proposed constitutional amendment that would have abolished the two-year ban on lobbying by former legislators. The proposal was never heard in committee, and its wording implied that it would strengthen, not weaken, ethics laws. Askew, Common Cause and the League of Women Voters filed a lawsuit alleging that the amendment contained deceptive language. The state Supreme Court agreed, striking the proposal from the ballot. The Sunshine Amendment has remained in the Constitution as Askew proposed it. Today more than 35,000 lawmakers and other public officials and candidates file disclosure reports every year. Widespread errors, omissions File the right disclosure form by the deadline and the odds are pretty high that no questions will be asked unless a reporter or political opponent takes a look. The Ethics Commission maintains financial disclosure records for all state officials and elected constitutional officers, such as sheriffs, county commissioners and school board members. Candidates for those offices file their reports with the Division of Elections. The forms are due on July 1 each year, but officials have until Sept.1 to file without facing a fine. The Ethics Commission imposes a fine of $25 a day up to a maximum of $1,500 for reports filed after that. But if somebody files a complaint about a tardy report, the commission has the authority to impose a fine of up to $10,000 and recommend removal from office. That has never happened to a legislator. Since the commission has no authority to investigate the accuracy of reports unless a formal complaint is filed, it rarely takes disciplinary action. A St. Petersburg Times review of disclosure forms filed by lawmakers, the governor and Cabinet since 1978 found widespread errors and omissions. Some failed to disclose debts that are recorded in their hometown courthouses. Others listed erroneous figures for their net worth, sometimes overstating their wealth and sometimes understating it. Officeholders and candidates are supposed to describe all property they own, including its location, and identify the stocks and bonds they own and each source of income that exceeds $1,000 a year. Despite the seemingly straightforward instructions distributed with the forms, however, dozens of legislators reported owning a 'home,' without the required details. Some failed to list other holdings at all. A few did not even list their principal residence or their legislative salary of $29,916 a year. Sebesta, the senator from St. Petersburg, has been a legislator for seven years and, earlier, was the supervisor of elections in Hillsborough County for four years. Yet the political veteran is among the legislators who failed to list most of their assets each year. Sebesta reports a 'home' (without the details), $30,000 in household goods and liabilities of $13,596. He also filed a partial copy of his federal income tax form. But he does not list sources of income or offer an explanation for a net worth that he says totaled $590,182 in 2004. 'This is the first time I've ever noticed there is no place to write down stocks and bonds,' Sebesta said when asked why he did not itemize assets, as required. 'No one has ever questioned it before. I will do something about it.' Some chose the option of filing a copy of their federal income tax return instead of disclosing sources of income. But at least a dozen of them, including Sebesta, failed to attach copies of wage and earnings statements or any other document that identifies the sources of the income. Rep. Carl Domino, R-Jupiter, was among a handful of legislators who failed to list the $29,916 salary he makes as a legislator in the otherwise painstakingly detailed reports he filed in 2003 and 2004. Domino, an investment banker with a net worth of more than $35-million, reports other income totaling more than $1.5-million for 2004. His accountant, Mike Dixon, took the blame for omitting his legislative salary. 'I'm shocked it's not in there,' Domino said. 'I pay someone a lot of money to do it.' Lawmakers frequently do a better job of complying with the law when first elected. Farkas, the St. Petersburg House member, is an example. When he was elected to the House in 1998, he dutifully reported the location of his real estate holdings and attached a list of stock he owns. In 2004, however, he listed his real estate as 'office building, home' without any detail and identified his other assets as 'Stocks, bonds, IRA' without detail. Rep. Marco Rubio, R-Miami, reports $220,000 in assets, $292,000 in liabilities and a net worth of zero. But since his liabilities exceed his assets by $72,000, his net worth is really minus-$72,000. Sen. Larcenia Bullard, D-Miami, has been in the Legislature since 1992. Her husband, Rep. Ed Bullard, D-Miami, was elected to replace her in the House in 2000 when she was elected to the Senate. When they filed reports last year, neither of them disclosed ownership of the house they bought in 1983. Some lawmakers hire accountants to do their reports and are unable to explain the contents even though they signed an oath swearing to the contents. Rep. Greg Evers, R-Milton, listed a net worth of $589,495 when he filed his 2004 report. But his list of assets totals $1,524,977, with liabilities he puts at zero. When asked about the discrepancy, Evers could not explain. His accountant, Pam Faulkner, called the Times to say some of the figures given for assets were 'net.' But she could not explain the discrepancy, either. Only a handful of complaints have been filed against legislators in the past decade, and only four of those resulted in a decision to fine or censure the lawmaker. Complaints generally surface in the midst of a re-election campaign. Rep. Gus Barreiro, R-Miami Beach, was the target of a complaint filed by an opponent in 1998 after a newspaper reported he had failed to pay or disclose a debt for $22,000 in child support. Barreiro, who won the election, later admitted violating the ethics law. His punishment was left to legislators because the commission must refer cases involving lawmakers to the House or Senate for final action. A special House committee recommended a letter of admonishment, one of the mildest forms of punishment available. Then-Speaker John Thrasher wrote the letter, which was published in the House Journal . Barreiro said the omission was not intentional. He wrote a letter of apology to the House.

Subject: Are bear funds wise Pete?
From: johnny5
To: All
Date Posted: Mon, Mar 07, 2005 at 12:00:35 (EST)
Email Address: johnny5@yahoo.com

Message:
I agree, Google seems way overvalued - but should we avoid BEARX funds giving this? http://www.palmbeachpost.com/business/content/business/epaper/2005/03/07/m1bz_hedge_0307.html By David Sedore Palm Beach Post Staff Writer Monday, March 07, 2005 WEST PALM BEACH — Won Sok Lee and John Kim were gamblers at heart, poker players who risked it all at the casino tables in Las Vegas. Win big, lose big. The two men, managers of a West Palm Beach hedge fund investment firm called KL Financial Group, ran their business with the same swashbuckling style. And in that game, they lost — perhaps as much as $300 million — stinging a list of investors who believed the two would beat Wall Street's odds and deliver huge returns. The list is believed to include some of Palm Beach County's richest and best-known residents. 'John Kim was not just their trader but a friend,' said Gary Klein, a former Securities and Exchange Commission attorney now in private practice and representing 20 former KL Financial investors who together lost $20 million. 'They'd watch him trade and make millions of dollars for them. Or at least seem to.' Kim's charisma was enough to lure many an investor who plunked down more than a cool million. Now many investors are stunned, suspecting Kim was merely gaming them. On Wednesday, the SEC sued KL Financial, Lee, Kim and Kim's brother, Yung, in federal court to put a temporary hold on any remaining assets. U.S. District Judge Kenneth Ryskamp in Miami granted the request Thursday. Now it's up to the investigators with the SEC, the FBI and Guy Lewis, a former U.S. attorney for South Florida, to unravel what happened to the firm and to investors' money. The judge appointed Lewis to oversee the effort to determine how the hedge fund firm managed to lose all but $11 million it solicited from at least 250 well-heeled investors since 1999. Sources familiar with the firm, including former employees, investors and attorneys, put together a picture of a firm that ran on the edge — heavily in debt and trying to make money on an extremely risky and ultimately wrong-headed investment strategy. In its lawsuit, the SEC bluntly claimed KL Financial engaged in a 'massive hedge fund fraud.'' The money management firm stubbornly kept at its strategy — short-selling technology stocks — piling up loss after loss, digging itself deeper and deeper into a hole until it ultimately collapsed last week and abruptly closed. John Kim, a Jupiter resident, won't comment. Lee, who owns a $1.8 million condominium in Riviera Beach, has left the area, perhaps the country. Yung Kim has fled as well, according to the SEC. All three are Korean. While a few investors are willing to discuss KL Financial, none are willing to have their names published. Many still are in shock. High-risk, high-reward By nature, hedge funds are high-risk, high-reward propositions. The funds operate unregulated by securities officials, cater to the wealthy and can invest in anything they want. 'Anybody can start a hedge fund,' said Boca Raton attorney Jim Sallah, Klein's partner. What makes the KL Financial saga so mysterious is its history and the fact that its victims were relatively sophisticated investors. This is a firm founded by Lee and John Kim eight years ago in California, not an overnight wonder that pops up and disappears with clients' cash. It found its investor clients by word of mouth. A friend, a brother, someone who knew someone would pass the word of the fund with the fantastic investment returns. West Palm Beach trust and estates lawyer Ronald Kochman played a key role in soliciting area investors among his friends and legal clients, raising unanswered questions about his role in the now-defunct hedge fund operation. Kochman says he too lost everything he had invested in the fund. Within KL Financial, John Kim claimed the title of portfolio manager. His biography in a fund prospectus says he spent 'several years on Wall Street specializing in mergers and acquisitions,' but it doesn't cite specific employers. The literature says Kim has 'extensive trading experience' but again doesn't say what securities he traded or whether it was for his own account or for established brokerages. Lee held the title of managing member. Investors were told that he had a degree in economics from the University of California, Berkeley, and received his law degree, magna cum laude, from Tulane University in New Orleans. They had it all — the sharp designer suits, the sports cars, the luxury homes — everything successful hedge fund managers are supposed to have. And they shared it with their traders in the office. Every year, the KL Financial Christmas party was in Las Vegas, and those who attended said there was heavy gambling. 'I've seen John (Kim) place as much as $25,000 on a single bet,' said one former KL trader, who asked not to be identified. 'I've seen Won (Lee) lose as much as $180,000 and then make it back.' Said Boca lawyer Klein: 'They talked the talk and walked the walk.' Lavish reassurances In 2002, the high-stakes trio brought their investment firm to North Palm Beach hoping to tap into Palm Beach County's scores of wealthy residents looking for a place to park some of their millions. The firm also kept an office in San Francisco and one in Irvine, Calif., where it managed money for its international clients. In October, KL Financial signed a 10-year lease for the entire 17th floor of Esperante, one of West Palm Beach's signature downtown office buildings and one of its most expensive. Every display of wealth, they thought, reassured investors. John Kim and Lee would brag to prospective investors they had devised a trademarked securities trading system, called the KL Trading Methodology, based on daily trends and stock movements — day trading essentially. They would invest in 11 types of stocks — such as drug companies and technology firms — with a money manager overseeing each sector. They would buy some securities short — betting the price would drop — and buy others long, expecting the share price to soar. Hands down, KL Financial's trading forte was short-selling stocks, particularly tech stocks. Short-selling is investing parlance for betting that a stock will fall in value, as opposed to buying a stock thinking its value will increase. That investment strategy is extremely risky because the losses can keep mounting. According to the former trader, the hedge firm found its short-selling prowess particularly profitable when the so-called tech stock bubble burst in 2000 and the stock market as a whole declined from 2001 through early 2003. In an investment circular, the hedge fund firm claimed annual returns of 260 percent in 1998, 480 percent in 1999 and 198 percent through the first three quarters of 2000. As the bear market morphed into a raging bull nearly two years ago, KL Financial continued the brazen strategy but lost money instead. 'They fibbed a little to investors in '03,' the former trader said. 'They out-and-out lied in '04.' The firm continued its fondness with short-selling securities as losses mounted and even as its own investment research showed it was unwise. For example, KL Financial even bought short the stock of Google, the Internet search-engine company and one of the high-flying stocks of 2004. According to the former trader, Kim, convinced that Sir Isaac Newton had it right, shorted 88,000 shares of Google at $130 a share, meaning it had to fall below that price for the hedge fund to start making money. It didn't. In fact, Google went far the other way. Yet, Kim increased the firm's short position in Google and reworked it so that the target price was $160 a share. The strategy eventually put KL Financial in position to make a profit. But instead of pulling out and taking some profit, the firm hung on, desperately trying to cover earlier losses. Google ultimately rose beyond $200 a share and closed Friday at $185.90 a share. Of course, the hedge fund's clients didn't know any of this. All they knew was that KL Financial supposedly was making money. Big money. An investment statement for the fourth quarter of 2004 given to one of Klein's and Sallah's clients showed $636,000 in profit on an opening balance of $5.4 million. That's better than a 10 percent return in three months. 'For two or three years, investors would get monthly or quarterly statements that would look like they were making money,' Klein said. 'They believed in these guys.' In fact, according to the SEC, those statements were phony, created by an outside accounting firm based on forged trading reports supposedly from KL Financial's brokerage clearinghouse. When SEC examiners showed up Feb. 22 to inspect the firm's books, all bets were off. And the hedge fund investors were left empty-handed. Klein said at a meeting two weeks ago with KL Financial clients, John Kim put the blame for the firm's collapse on Lee. Kim told investors that the firm's traders were nothing more than props in a bizarre scheme and that Lee was making all the trades. 'It was like the Wizard of Oz, and Lee was the wizard. Pull back the curtain, and there's this little guy,' Sallah said. At the same meeting, Kim begged already-sandbagged investors for more of their money, promising that he'd make up the losses — if only given a chance. Despite what's happened, there are those out there willing to give him that second chance, Klein said. 'People just think he's this unbelievable trader,' the Boca attorney said.

Subject: Re: Are bear funds wise Pete?
From: Pete Weis
To: johnny5
Date Posted: Mon, Mar 07, 2005 at 15:07:22 (EST)
Email Address: Not Provided

Message:
I've decided that funds which short the markets are too risky for me. Besides I haven't the patience to wait out an overvalued market for the point where investor emotions finally head south. Well managed shorting funds have minimal downturns during market rally periods and big gains during broad market downturns. 2002 was obviously a very good year for funds like bearx. Some savy investors hedge their market positions with some ownership of funds like bearx -probably not a bad idea since even profitable natural resource companies will suffer stock loses during broad market downturns with investors exiting enmasse.

Subject: The Great Inflation
From: johnny5
To: Pete Weis
Date Posted: Mon, Mar 07, 2005 at 17:38:56 (EST)
Email Address: johnny5@yahoo.com

Message:
I hear you Pete, but I feel so strongly that google is in fantasy territory - back when google was at 120 I was very tempted to short - I easily could have fell into the trap these much more sophisticated investors fell prey too. Before you write off bear funds listen at this first part of the 2 hour audio from Mr. Puplava - he goes specifically into your history of the west palm beach housing of the 20's, asset inflation and why bear funds may be prudent at this time - it was extremely interesting listening. A Special 2-Hour Discussion Frank Barbera & Jim Puplava The Great Inflation http://www.netcastdaily.com/broadcast/fsn2005-0305-2.asx This is the first hour - I will listen to the second hour tonight - I think one point I haven't heard talked about much is that you have a lot of rational people that understand the market is overvalued and will short it - but the people with the real money anticipate this, suck in all the rational bears with a bear trap - make all that money - then when the bear fund managers have all quit or are fired and all the hedge fund bears have been bleeded dry and there is no more to milk from the market on squeezing the shorts and everyone and thier brother is long - you stomp that sucker flat. As has been posted earlier most bears are tapped out at this point - perhaps this is the time to embrace the bear. My uncle got screwed on a 250K raymond james annuity I feel, but he did hold 250K in cash at my pleading, I was going to recommend some of that to vanguard, bearx or another lower fee bear fund, the vice fund, and some to tax free florida municipal bonds and some countrywide cd's. Well now the vicefund people in dallas are in trouble according to fundalarm.com so luckily he still has not invested and I can take that one off the list - but the choices are getting smaller and smaller.

Subject: Certain types of annuities..
From: Pete Weis
To: johnny5
Date Posted: Mon, Mar 07, 2005 at 21:28:10 (EST)
Email Address: Not Provided

Message:
are used, effectively at times, to seize large chunks of personal life savings. They are often provided to people who don't need them and who have little chance of living long enough to benefit much from them. Upon their death the outfit which provided the annuity often greatly reduces the lump sum payout (if there is one) by factoring in future estimated inflation if the annuitant had lived to receive the full term of the annuity. They simply walk away with a lot of money. Very large commissions are provided to brokers who sell the annuities. That's, obviously because the annuities are so lucrative to the institutions providing the annuity. Not all annuities provided through brokerages are bad. But no one should sign a contract for an annuity until they first talk to an attorney who has expertise in this area. My mother-in-law was taken advantage of by Fidelity who persuaded her to sign a contract on a sizeable annuity. The contract language was, IMO, purposely vague. She was in her 80's at the time and was already receiving a sizable survivor's pension and had considerable other income from investments. For her to get any kind of return on the annuity, she would've had to live well into her 100's. The contract mentioned a lump sum payment for the remaider of the annuity (minus the monthly payments which subtracted from principal) in the event of her death. She passed away after only a few payments and Fidelity is attempting to keep a third of the money which was originally invested in the annuity. The annuity was through one of Fidelity's own insurance companies. Fidelity was receiving a 1% commission to manage my mother-in-law's investments and she trusted them to manage her investments in her best interest. It would seem they invested her money in their own best interest. Attorneys are involved now. No wonder Republican's want to limit class action law suits - it makes it so much harder for the little guy to take on these giant outfits which donate so much to Republican coffers. I'm betting there are many others out there who have similar stories to ours. Thanks for the tip on the internet radio broadcast.

Subject: Re: Certain types of annuities..
From: johnny5
To: Pete Weis
Date Posted: Mon, Mar 07, 2005 at 22:28:47 (EST)
Email Address: johnny5@yahoo.com

Message:
Even this financial writer of the wall street journal had problems with annuities and his grandmother - who is safe? http://online.wsj.com/public/article/0,,SB111006649527271447,00.html?mod=sunday_journal_primary_hs LOVE & MONEY By JEFF OPDYKE An Annuity For Grandma? Say It Isn't So. March 6, 2005 My grandmother called me to her house recently to dig through her insurance and financial documents. She has named me executor of her modest estate, and she wants me to 1) know exactly what she has; and, 2) know what she wants to happen when the time comes. Going through her records, however, I noticed something that set off alarm bells: What was once a $20,000 certificate of deposit at a local bank is now a $20,000 deferred annuity that the local banker sold her. I immediately recognized it for what it was: a disaster. As a personal-finance writer, I've seen too many older people enticed into buying these investments, typically without understanding what they're getting talked into. I probably can't do anything to help my grandmother; she bought her annuity a year ago and the grace period to cancel the contract ended 10 days later. She signed all the appropriate documents stating she understood the transaction, though as she told me recently, 'I don't know a damn thing about this stuff; the guy at the bank just told me to sign these papers.' So I write this in hopes that when an annuity salesman approaches you, your parents or your grandparents with a compelling pitch -- and their pitches are always compelling, if not entirely honest -- you will remember my grandmother's story. * * * I am not against annuities. In fact, in the right situation, an annuity can accomplish a host of beneficial things: It can be a great vehicle for accumulating wealth before you retire. After you retire, some annuities can be the perfect tool for creating a stream of income you can never outlive. And in some circumstances it can help with estate-planning needs. But too many annuities are sold for the wrong reasons. And those reasons typically have to do with the commission the salesman is pocketing rather than the financial needs of the investor. Just to be clear, I'm complaining largely about variable annuities and deferred annuities, both of which allow money to grow tax-deferred. Basically, you invest your money, say, $20,000, with an insurance company that guarantees some level of income in the future, either through a lump-sum or a monthly payout that lasts for years or until you die. But to me, buying such an annuity in retirement generally makes little sense, especially for those who are much older, like my grandmother. That's because these are simply not short-term savings vehicles. Not to be morbid, but older savers generally don't have the number of years remaining that might make an annuity practical. Often, they'll never even benefit from it. Annuities have two phases: accumulation, which can last for years, and then the distribution. At her age, my grandmother has no need to accumulate; her only worry is living off of what she has. Thus, it's absurd for an older retiree to invest the bulk of her liquid assets in an instrument that locks away money for years, which most annuities do because of the so-called surrender period. That essentially blocks you from touching your money for seven to 15 years or more -- and if you do, you lose a hefty chunk in the form of a surrender penalty. Here's where this diverges away from the purely financial and into the personal: Buying investments late in retirement often creates tensions in a family. Retirees either panic immediately after signing up for an investment they're unsure of, or they find out too late that they've been duped. Often, they're too embarrassed to admit they didn't know what they were doing, or too proud to approach their kids for advice. But when they finally do announce the problem, family members get livid that Mom or Dad or a grandparent invested foolishly without seeking anyone's counsel. When I asked my grandmother why she just didn't call me for advice, she replied: 'Well, you were still living in New Jersey.' I reminded her that they do have phones there, and she just looked at me sheepishly. Of course, I can't blame my grandmother for not understanding what she bought. These are complex insurance contracts larded with bells and whistles that make them enticing and expensive, and often misunderstood by the very people selling them. This is where families come in. * * * My grandmother is 84 years old and, as she says herself, doesn't know an annuity from a Portobello mushroom. She's very trusting of people like bankers. Yet her $20,000 CD represented two-thirds of her liquid assets, reason enough for any conscientious investment peddler to steer her away from a contract that imposes an eight-year surrender penalty that will suck away as much as 8% of her account if she needs her money early. What's worse is that the salesman was, at best, clueless about what he sold. My grandmother invested for one reason only: to keep her spendthrift daughter from accessing all the $20,000 upon my grandmother's death. 'The banker assured me she wouldn't get all the money at once,' my grandmother told me when I questioned her. Imagine her surprise when I read this line, from the very first paragraph of the contract summary: 'Upon the annuitant's death, the cash balance will be paid out in full to the beneficiary.' To put that even more plainly, the beneficiary, my mom, gets a lump-sum payout when my grandmother passes away. Thus, the annuity does nothing to accomplish my grandmother's wants. Moreover, the fat interest rate my grandmother thought was so impressive -- 5.25% -- lasts for just one year. Then, as the contract notes, it falls to the minimum 2% for the duration. To put that into perspective, I just stashed the $900 my son has in his savings in a one-year CD that pays 3.15%. Unfortunately, I may have discovered my grandmother's purchase much too late to fight for her -- though I'm currently trying. But others out there can still fight for their parents and grandparents. Talk to them now; implore them to speak to you before investing in an annuity. If they tell you they recently bought one, rush over to examine the contract, and if it looks onerous have it annulled. You generally have 10 days to cancel. If you don't understand how the annuity works, talk to a trusted lawyer about the contract's provisions before signing anything. Annuities can be good. But too often they're tools of greed that fatten the seller's wallet at the expense of trusting people like my grandmother, who never needed the investment in the first place. This is the problem in moving away from usufruct societies into modern day industrial ones - we don't take care of each other anymore - we screw over the weak and ignorant in ways that just weren't possible before all these complicated quantitative papers.

Subject: Be Conservative
From: Jennifer
To: johnny5
Date Posted: Mon, Mar 07, 2005 at 21:21:15 (EST)
Email Address: Not Provided

Message:
Please be careful with advice for your uncle. A single conservative fund at Vanguard like Wellesley would be all that is needed. This bear stuff makes no sense for a conservative investor, and likely not for any investor.

Subject: Canadian I-shares bad buy?
From: johnny5
To: All
Date Posted: Mon, Mar 07, 2005 at 11:39:17 (EST)
Email Address: johnny5@yahoo.com

Message:
http://www.macleans.ca/topstories/world/article.jsp?content=20050307_101541_101541 ...That is a reality Canadians don't seem to fully grasp. A recent Maclean's/Rogers Media poll found only 41 per cent agree that the domestic economy is closely tied to that of the U.S.; 11 per cent choose to believe the two economies are not at all interrelated. In reality, virtually every region of the country and every major industry -- forestry, energy, mining, auto manufacturing, agriculture, technology -- depends on U.S. demand for its prosperity. If American consumers are suffering under surging unemployment, spiking interest rates, collapsing housing prices and rising inflation, those same forces will inevitably spill over into Canada. Rosenberg, for one, believes the U.S. will restructure its fiscal policy to avoid a major crash -- but even such a process of reform is sure to have negative effects on trading partners like Canada. To close its fiscal gap and reduce its need to borrow abroad, the U.S. must find ways to boost its exports while slowing imports. In other words, it must make it more difficult for other countries to sell into its market. This is what economists refer to as a 'beggar thy neighbour' policy. 'For the world economy, this means the free ride is over,' Rosenberg says. 'The days of partying on the U.S.'s fiscal Ferris wheel are over. It's done.' HOW CAN AMERICA FIX THE PROBLEM? On Nov. 1, 2000, as George W. Bush was campaigning for the White House, he warned an audience in Minneapolis that the Democrats would lead the nation into a future of higher taxes and slower economic growth that 'could mean an end to this nation's prosperity.' Bush won the election in part by portraying himself as an antidote to tax-and-spend liberals. Yet despite this bold austerity rhetoric, discretionary spending rose 23 per cent in Bush's first term. Just over four years after harping on the dangers of fiscal irresponsibility, the President is on his way to making his own warnings a reality. Virtually every reputable independent observer who has looked at the United States budget shortfall concludes that some combination of significant tax increases and major spending cuts is unavoidable. But making those reforms happen, and closing that budget gap, will require the kind of deft touch used to dismantle a bomb. The American currency must be slowly, carefully managed lower to boost U.S. exports, but without triggering a sudden plunge in the greenback that could spark a devastating jump in inflation. Interest rates must gradually rise to ward off inflation and encourage consumers to save more of their earnings. Spending must be reined in, but not so severely that it compromises U.S. security and other public priorities. And taxes must be raised, but not so drastically that they stunt economic growth. In many ways, the U.S. must now emulate the program that Canada instituted in the 1990s to bring its deficit spending and surging national debt under control. That was done with higher taxes, billions in spending cuts and a sharp drop in the dollar's value, combined with healthy economic growth. But south of the border the size of the challenge is much larger, the stakes are higher, and it seems clear the standard of living that millions of Americans have come to take for granted will have to change. Walker stresses the need to make 'tough decisions,' and none will be tougher than tackling the runaway costs of providing health-care coverage for the elderly and the poor. Health spending in the U.S. is projected to jump 63 per cent by 2010, and to continue rising even faster after that. Most analysts agree that, at some point, the government must find a way to clamp down on those costs, yet any cuts in coverage are sure to raise an outcry from the swelling ranks of senior citizens -- a highly influential voting bloc. Academics have proposed such reforms as a national retail sales tax, a luxury tax and a rollback of all tax cuts enacted since 2001. Others are calling for increased funding for the Internal Revenue Service to catch tax cheaters. Many insist there must be increases to Medicare premiums, as well as massive cutbacks in a wide range of social programs. But telling voters that they will have to pay more in taxes for fewer services is not an easy sell, and so far no politician has been willing to try it. In February, Bush tabled a proposed budget that would eliminate or trim back 150 government programs, but even with that, the U.S. would be racking up deficits well in excess of US$200 billion for years to come. 'They're not being serious about austerity at all,' Bivens says. 'They're talking about very big cuts to very small programs. They mean a lot to the people getting them, but it's pennies in the overall fiscal problem.' James Horney spent more than seven years as a staffer at the Congressional Budget Office and now does analysis for the Center on Budget and Policy Priorities, a non-partisan think tank in Washington. He says the solution to the debt problem can only emerge when both parties in Congress and the President sit down to work out a 'grand bargain' that includes concessions on both taxes and program spending, and a strategy for reassuring international lenders. 'It requires a deal in which everything is on the table and everyone is at the table,' Horney says. 'One just hopes it will happen before some major cataclysm.' Walker shares that hope, and clings to his own sense of optimism. He says he has detected a noticeable shift in attitude just in the past few months, as legislators slowly come to grips with the inevitable financial reckoning. But he acknowledges that, so far, there is little concrete progress to show for his efforts. 'The thing that is frustrating is that you can talk to people and point to things, but that's all you can do,' he says. 'You can lead them to water, but they have to drink. And they better start drinking fast -- and soon.'

Subject: Re: Canadian I-shares bad buy?
From: jimsum
To: johnny5
Date Posted: Mon, Mar 07, 2005 at 23:43:50 (EST)
Email Address: jim.summers@rogers.com

Message:
The Canadian economy is closely tied to the U.S. Trade amounts to 35% of GDP and the U.S. gets 85% of it. Our stock markets are therefore closely correlated. There is one significant difference; resources. Canada is a net exporter of oil and most other commodities; but that doesn't amount to a huge difference. I think there are some positive differences that could make Canadian investments attractive to Americans. Canada is America's largest trading partner so it is logical to invest a good chunk for that reason. The Canadian government is running a small surplus, and most of the provinces are running small deficits, so there is not much chance of a government fiscal crisis. Canadian housing and stock prices have gone up, but not as quickly as in the U.S. In general, I'd say Canada is about 2 years behind the U.S. in a similar bubble. I think Canada will crash less than the U.S., and the Canadian currency will probably appreciate. If you are not looking to diversify your equity risk, but instead want to hedge the U.S. dollar, the Canadian market is a good bet.

Subject: China's Economic Policy
From: Emma
To: All
Date Posted: Mon, Mar 07, 2005 at 11:08:32 (EST)
Email Address: Not Provided

Message:
China's leadership should be taken seriously on matters of economic development and fiscal and monetary policy. This is a well advised and competent leadership as can be seen in the 'smoothness' of the development surge. As Bill Gates pointed out there is a fresh capitalist development model being fashioned. This means expect China not to sell dollars, and to maintain the currency peg within a reasonably close range. There will be little interest rate pressure on America from China.

Subject: China Says It Won't Sell Dollars
From: Emma
To: All
Date Posted: Mon, Mar 07, 2005 at 10:34:59 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/07/business/worldbusiness/07yuan.html China Says It Won't Sell Dollars By KEITH BRADSHER HONG KONG - The Chinese official in charge of his country's huge foreign currency reserves said over the weekend that China had no plans to sell dollars, and also ruled out any 'large scale' appreciation of China's currency against the dollar. The series of unusually blunt comments by Guo Shuqing, director of the State Administration of Foreign Exchange and a vice chairman of the central bank, may reassure currency traders that China will not push down the value of the dollar by dumping its holdings in favor of currencies that have been stronger in the last year or two, like the euro. With $609.9 billion in foreign exchange holdings at the end of last year, China has the world's second-largest reserves, after Japan. But Mr. Guo's opposition to any significant appreciation of the Chinese currency, the yuan, is also a setback to efforts by the United States, the European Union and Japan to blunt China's growing share of global trade by urging that Chinese officials let the yuan's value rise. Mr. Guo appeared to be trying to address an undercurrent of popular dismay in China over the rapid accumulation of dollar-denominated assets even as the dollar has weakened. Chinese media have published numerous articles in recent months asking if the country has lost money by investing so heavily in dollars. The official New China News Agency on Sunday carried a rare defense of Chinese currency policies by Mr. Guo. 'We will not adjust the structure of our foreign exchange reserves according to short-term fluctuations,' he was quoted as saying Saturday on the sidelines of a meeting of the Chinese People's Political Consultative Conference, an advisory group. 'If we sell U.S. dollars now when it is tumbling, it means we lose money. If we do sell them, we have to buy other currencies such as the euro. But what if the euro drops?' Liang Hong, a Goldman Sachs economist here, said Mr. Guo might have felt compelled to speak publicly because the National People's Congress, the Communist Party-controlled Parliament, has convened for its annual session. 'Each time at this time of year,' she said, 'they have to respond to these questions, probably raised by N.P.C. members, so they have to defend that.' China's foreign reserves have tripled since 2001, but oil prices have more than doubled since then, so the buying power of the reserves has not risen as fast, Ms. Liang noted. In separate comments to domestic and foreign news media on Saturday at the conference, Mr. Guo ruled out allowing the yuan to float freely and said that no large-scale appreciation would be permitted. But like other Chinese officials over the last four years, he hinted at the possibility that Beijing would at some point tolerate greater flexibility in the exchange rate, now effectively fixed at 8.28 to the dollar. 'As for how to determine the range, it depends on actual circumstances,' he said, according to Reuters. 'We are making various preparations.'

Subject: What Makes a Team a Success?
From: Emma
To: All
Date Posted: Mon, Mar 07, 2005 at 10:23:11 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/07/sports/baseball/07psych.html?pagewanted=all&position= Close Doesn't Always Count in Winning Games By BENEDICT CAREY TAMPA, Fla. - The most extravagant collection of celebrities this side of Oscar night meets in a windowless bunker every workday before 9 a.m. Here in their stocking feet are Jason Giambi, who has emerged at the center of a nationwide steroids controversy; Alex Rodriguez, who has been fending off insults in the news media from opposing players; Kevin Brown, the pitcher who last year broke a hand by punching a wall; and, a few lockers away, the newcomer Randy Johnson, the 6-foot-10 pitcher whose first visit to New York as part of the Yankees resulted in a public scuffle with a cameraman. Looming nearby, always, is the principal owner, George Steinbrenner, who on Feb. 26 vented his anger at Giambi's agent, using a profanity when referring to him and producing more tabloid headlines. Yet at the eye of this hurricane, the clubhouse feels as sleepy as a back porch on an empty afternoon. This is not a team on the verge of a nervous breakdown. Nor is it one that - like its archrival, the world champion Boston Red Sox - exhibits the kind of passionate team cohesiveness that analysts and many sports psychologists consider critical to success. But social scientists who have studied group performance under pressure say that often it is decentralized groups (like the Yankees) that prove more resilient than strongly connected ones (like the Red Sox); they are better able to weather outside criticism and internal quarrels. Evidence from personality profiles and from studies of military, corporate and space flight crews suggests that looser ties between group members can be a strength, if the team includes individuals who can generate collective emotion when needed. And the Yankees have several of them. 'So much of psychology and sociology emphasizes the importance of communicating and creating strong bonds to improve group performance, but in a lot of situations that is just not how it works,' said Dr. Calvin Morrill, a professor of sociology at the University of California, Irvine, who has studied group behavior in competitive corporate situations and in high schools. 'Baseball is an odd mix of an individual and team sport, and an ideal example of where a diffuse team with weak ties to one another may help the overall functionality of the group.' In interviews during the first week of spring training, Yankees players said there was no single dominant personality in the clubhouse, no boisterous leader. The diffuse nature of the group seemed evident. The team's stars have corner lockers, or lockers next to open spaces, and a few of them are centers of gravity. In one corner, pitcher Mike Mussina anchors a group of pitchers and other players. In the opposite corner, outfielder Gary Sheffield centers another small group. And in a third corner, catchers Jorge Posada and John Flaherty sit. A clutch of Spanish-speaking players occupy a bank of lockers in the center of the room. Shortstop Derek Jeter, the team's captain, made the rounds of the clubhouse on his first day, then settled at his locker like any other teammate: hardly a portrait of the take-charge leader many imagine. 'You could be a fly on the wall in the clubhouse all season long, and if you didn't know already, you couldn't even tell who the leaders of this team are,' Flaherty said. Insulate the Team But the culture in the Yankees' clubhouse seems to put the team first, in one often overlooked sense: It presumes that front-line players can handle their own problems, and that they will protect the team from controversy, rather than the other way around. 'I certainly like it' when players take individual responsibility, Manager Joe Torre said in an interview in his office in Tampa. Torre said he made it clear to players that they would not be insulated from criticism, from the news media, from Steinbrenner or from anyone else. He said that he expected players to address controversy or criticism immediately and that his role was not to shield them but to reduce the stress it causes 'by letting them know that they're not the only ones getting criticized, and that it does go away.' When reporters early last month invited Yankees players to defend Rodriguez from barbed comments in the newspapers that were attributed to Red Sox players, they declined, saying the issue was between him and his accusers. A few days later, Rodriguez shrugged off the comments in interviews and even suggested a mock headline for his response: 'A-Rod Doesn't Back Up A-Rod.' When Giambi, the first baseman who reportedly admitted using steroids, arrived for his first spring training workout, he entered the clubhouse just after the coaches and the other players left for the field. With his career in the balance, and his integrity under question, he faced a swarm of reporters with queries about his personal and professional life for more than 20 minutes. He was the only Yankee in the room. Johnson, who pushed aside a cameraman on his first visit to New York as a Yankee in January, said, 'My understanding of the way it works is that everything you do or say gets noticed, and if you make a mistake you are personally accountable for it.' Johnson made a public apology within days of the incident. Winning is more likely to create team unity than vice versa, Torre has said repeatedly, and the evidence backs him up, said Dr. Richard Moreland, a professor of psychology and management at the University of Pittsburgh. Team cohesion is a hard thing to measure in the first place, Dr. Moreland said, and dozens of studies of sports teams find that, although having players who feel team unity helps performance, 'it is not a strong effect, compared to the effect of performance on cohesion.' Torre puts it this way: 'Look, I was on teams in St. Louis, we would go out 10 or 12 of us at a time, but we finished third or fourth. We got along, we liked each other, all that stuff, but all that meant is you weren't alone a lot.' When a common purpose is shared, loosely tied groups can function better than strongly bonded ones when it comes to containing dissent or bickering, research suggests. In studies of neighborhood organizations and corporate teams, social scientists have observed that members with weak ties can withdraw from disagreements without disrupting the group or their own work. On a tightly knit team, by contrast, a falling out between key members can divide a squad, forcing people to take sides, psychologists say. 'The idea is that any sort of problem is likely to ripple more strongly and quickly through a close group than one with weak ties,' said Dr. Mark Granovetter, a professor of sociology at Stanford. Psychologists who have studied the personality profiles of people who face far greater pressures than winning in October - including special-operations forces and astronauts - agree that those who do well share distinct qualities: they tend to be independent, confident, able to tolerate uncertainty and socialize easily with others. 'But they are not too outgoing, not socially needy, not the sort of people who need others for support,' said Dr. Lawrence Palinkas, an anthropologist at the University of California, San Diego, and the chief adviser to the National Space Biomedical Research Institute, which studies spaceflight. Whether such independent, loosely tied people ultimately succeed as a unit depends not only on strong management, researchers say, but on the presence of individual group members who can circulate through disparate parts of the team, reduce conflict and help generate collective spirit when it is needed. In one continuing investigation of a highly diverse high school of 1,600 students, Dr. Morrill found that a single 16-year-old white skateboarder had been critical to the reduction of conflict. 'He moves between black, Asian, Hispanic and white groups, and he's one of these kids who's always bringing good news,' he said. 'He's a very important person in this school.' The Go-To Guys While high schools are hardly baseball teams - there aren't many A-Rods on skateboards - ballplayers acknowledge the same kinds of people can keep a clubhouse united despite multiple strong cliques. 'I can attest that on the 2001 Arizona Diamondbacks,' Johnson said of the team that beat the Yankees in the World Series that year, 'we had a couple players like that, Craig Counsell and Danny Bautista, that helped keep us playing as a unit.' Torre says he pays close attention to who socializes with whom, and is pre-emptive if he perceives a problem between players or groups. 'If I'm uncomfortable with a situation, I'll ask a player to check it out for me, because as a player you can get in where I, as the principal, can't,' he said. In the 1990's, he said, he often asked catcher Joe Girardi, now a coach on the team, to help head off potential problems between players. Now, he said, he may ask Jeter, Posada or outfielder Ruben Sierra, whom Torre sees as a kind of prodigal son. The Yankees traded Sierra away in 1996, despite his power, because of what Torre called his 'self-involved attitude.' Sierra later asked for his job back and returned as a backup player in 2003, a source of good cheer in the clubhouse and one of Torre's most important conduits to Spanish-speaking players. Several players also note that Posada, who is bilingual, moves easily throughout the group and may support as well as challenge individual players, as needed. In an interview, Posada acknowledged that he would immediately approach other players if he saw them having trouble, whether mechanical, baseball-related or personal. 'If I see a problem, I say something right away,' he said. 'I don't wait two or three days.' He may not be able to wait two or three pitches, come October. If the Yankees do go down to the wire again with the Red Sox, a single signal or word from Posada, Jeter, or Torre may be enough to change a game or turn the tide in a series. And no researcher can predict at that point which system will prevail, the centralized passion of the Red Sox or the diffuse professionalism of the Yankees. One thing is certain for the Yankees, though: if they fail, they will face another off-season of hearing how soulless they are compared with Boston's band of brothers.

Subject: Timing and Housing
From: Terri
To: All
Date Posted: Mon, Mar 07, 2005 at 07:26:11 (EST)
Email Address: Not Provided

Message:
If timing the stock or bond markets seems exceedingly difficult, as opposed to making reasonably priced investments, then timing the housing market is that much harder. Housing prices seem to have risen far too fast to be sustained, but that does not mean selling the house in which you are secure and which you can afford in hope the market will allow you a bargain in a short while.

Subject: Agree
From: Pete Weis
To: Terri
Date Posted: Mon, Mar 07, 2005 at 09:55:28 (EST)
Email Address: Not Provided

Message:
Why sell your house if you enjoy where you live. IMO, it comes down to selling if you where thinking about selling anyway, and you live in a region where housing has really soared. Also it would probably be prudent to hold off buying a house in areas that have seen big mark-ups. 40 year mortgages are now being introduced and it's very difficult to predict when and if long term interest rates might begin to rise. So both the government and the mortgage industry are and will attempt extraordinary measures to keep the housing boom from going bust and our economy with it.

Subject: Mortgages in Europe
From: Emma
To: Pete Weis
Date Posted: Mon, Mar 07, 2005 at 10:30:23 (EST)
Email Address: Not Provided

Message:
What fundamental differences are there in European and American mortgages? Also, is the American mortgage market as a whole becoming more risky? The indication seems to be so for new owners, but what of older owners? Have older too owners increased mortgage debt to take advantage of the low rates?

Subject: Re: Mortgages in Europe
From: Setanta
To: Emma
Date Posted: Tues, Mar 08, 2005 at 12:31:45 (EST)
Email Address: Not Provided

Message:
5 words... fannie mae and freddie mac. in europe there are no federal mortgage agencies. we do however have huge banks with massive mortgage books...Depfa Bank for example (depfa being the short for Deutsche Pfandebrief - German Mortage in English). there's a huge secondary market in the securitisation of these assets. on an individual level, i'm not too sure whether the structure of a european mortgage is different from a US one. my suspicion is that there isn't, bar the different legal restrictions/conditions. if you wish to ask more specific questions i'll try to answer to the best of my ability.

Subject: Adjustable or Fixed Rate Mortgages?
From: Terri
To: Setanta
Date Posted: Tues, Mar 08, 2005 at 15:07:50 (EST)
Email Address: Not Provided

Message:
Setanta, I got the impression from you that mortgages in Europe were largely, possibly entirely ajdustable. Is this correct? If so, why should this be?

Subject: Re: Adjustable or Fixed Rate Mortgages?
From: johnny5
To: Terri
Date Posted: Tues, Mar 08, 2005 at 17:36:55 (EST)
Email Address: johnny5@yahoo.com

Message:
http://www.henrythornton.com/article.asp?article_id=2809 Morgan Stanley economists say that about 25 per cent of the developed countries have housing bubbles, defined as home prices relative to their rental yield, while another 40 per cent are in the bubble watch category, with some of the characteristics of a bubble, or at risk of moving into bubble territory (July 15 2004). In the bubble class, Morgan Stanley puts Australia with home prices relative to rental yield at a multiple of 58 compared to a long term average of 31 times. Also in the bubble class are UK, China, Korea, Spain, Netherlands and South Africa. In the bubble watch class are USA, Argentina, Canada, France, Hong Kong, Italy, Russia, Thailand, Sweden. In the no bubble group are Japan, Germany and Euroland as a whole, Asean except for Thailand, India and Latin America. Europe and Japan is a better place to put the housing money no?

Subject: Minimal Market Timing
From: Terri
To: All
Date Posted: Mon, Mar 07, 2005 at 06:27:29 (EST)
Email Address: Not Provided

Message:
Though I would guess that long term interest rates will gradually rise, this is a gross guess and we have expected such a rise for 3 years. Rather than trying to time the bond market, I find it more useful to stay with a conservative bond fund position and to continue to look for attractive stock market investments. Simplicity and a minimum of market timing has long worked nicely.

Subject: Cautious Simple Investing
From: Terri
To: All
Date Posted: Mon, Mar 07, 2005 at 06:10:36 (EST)
Email Address: Not Provided

Message:
This is a time for caution in investing. Stocks seem reasonably priced, though not inexpensive by historical standards since 1970. Bonds are expensive by historical standards since 1970. Real estate is expensive by any standards. The Fed is well into a tightening sequence, while dollar can be expected to be under pressure indefinitely. A lot to worry about, though we are in an international bull stock market and a bull bond market, not to mention real estate. The approach I take then is stay precisely with what I understand, and stay with a company I can completely rely on. Simplicity has long worked, why not still?

Subject: Rust not Bust in Tampa, West Palm
From: johnny5
To: All
Date Posted: Mon, Mar 07, 2005 at 05:47:33 (EST)
Email Address: johnny5@yahoo.com

Message:
Was johnny5's mom right? Is holding on to her West Palm Beach house a good investment that will always go up? http://www.sptimes.com/2005/03/07/Columns/Soaring_home_prices_b.shtml Soaring home prices boost gains, worries By ROBERT TRIGAUX, Times Business Columnist Published March 7, 2005 Location. Location. Location. With this state a people magnet, the still-good news is Florida ranked fifth nationally in housing appreciation in 2004. That's behind just three far-western states and the government-bolstered housing market in the District of Columbia. Florida housing prices rose 18.79 percent last year, and 3.77 percent in the fourth quarter of 2004. Those numbers may pale next to modestly populated No. 1 Nevada, where housing price zoomed 32.38 percent last year. But contrast Florida to its southeastern neighbors. Georgia housing prices bumped up a mere 5.22 percent in 2004. Alabama, South Carolina and even North Carolina housing all appreciated at less than a third that of Florida homes. Before Florida homeowners start calculating their increases in paper wealth, just remember that runaway housing prices can cause as much pain as gain to the state economy. While Florida still tries to sell itself as a low-cost place to do business, that message is getting muddy as housing prices soar. Rising house values do enrich homeowners and grease the home-equity lending business. But higher prices stress many younger home buyers - gee, the same young workers we're so eager to attract and keep - who must stretch further to afford even a basic place to live. And as Florida house prices rise at a double-digit clip, Florida wages are not even remotely keeping pace. The average weekly wage in Pinellas County is about $650 a week, about $700 a week in Hillsborough and about $565 in Pasco. These days, wages are increasing barely enough to cover inflation. That makes it tough for many already here to go shopping for single-family homes that routinely top $200,000. Florida housing prices are up for good reasons. As folks sell their homes in northern markets - many of which have appreciated dramatically over the past decade or more - they are pouring into the state loaded with cash from their home equity. A home that sold for $400,000 or more up north may cost only $300,000 here, so many newcomers are not sensitive to paying a few extra bucks in such a bargain market. Area home builders will hasten to add that available land is difficult to find and increasingly expensive to buy. Those costs, too, get passed along in higher housing prices. And do not forget the increasingly weak U.S. dollar. It is turning overseas tourists in Florida into real estate investors armed, in effect, with up to a 20 percent shopping discount. After all, what's a little housing arbitrage among friends? Still, Florida's affordability issue is starting to be noticed. In the annual St. Petersburg Times survey of 180 area business managers, conducted in January, 6 percent of those polled said 'housing prices' was their 'most pressing' concern. That's not a big percentage. The fact, however, that it was a top worry of anyone here suggests a tremble in a Florida economy historically built on cheap and seemingly endless housing. Within Florida, the Tampa Bay housing market continues to appreciate at a strong clip. Area housing prices rose 16.83 percent in 2004 - which, you might notice, is lower than the statewide average, according to data from the government's Office of Federal Housing Enterprise Oversight. Compared with Tampa Bay, 11 other mid-to-large-size Florida metro markets reported higher housing appreciation rates last year. Eight of those 11 were smaller metro areas. Among the big metro areas in the state, West Palm Beach, Fort Lauderdale and the Miami area recorded higher housing appreciation rates than this area in 2004. Orlando and Jacksonville recorded slightly lower rates. All major Florida markets were still well above the national average of housing appreciation last year of 11.17 percent. Wow. Sixteen paragraphs on real estate and not one mention of bubble. Are we in a real estate bubble? Not here. Market experts look for at least another year of double-digit appreciation. Most of the credit must go to mortgage rates that remain stubbornly below 6 percent - lower than the 6.5 to 7 percent range Federal Reserve chairman Alan Greenspan and his merry team of interest-rate hikers would like. There are some red flags to watch: * More people are speculating in real estate as an alternative to the stock market. A new National Association of Realtors study shows that nearly one in four of all homes purchased in 2004 was for investment. Another 13 percent were vacation homes. In addition, a record 2.82-million second homes were sold in 2004, up 16.3 percent from 2003. The investment home component rose 14.4 percent to 1.8-million sales in 2004 from 1.57-million in 2003. Vacation home sales rose 19.8 percent in 2004. The typical vacation home buyer is 55 years old and earned $71,000 in 2003. Investment property buyers had a median age of 47 and earned $85,700, the study found. 'We've seen a shift over the last few years with a growing number of second-home buyers purchasing primarily for investment,' NAR chief economist David Lereah says. * Increasingly, an investment practice known as 'flipping' is used to buy and sell distressed or undervalued property, often without any renovations. The boom in condominiums has accelerated this trend to the point where condos are sometimes bought and sold for profits, multiple times, even before they are built. That's happening more often in the Tampa Bay area, a trend that has been honed to perfection in the condo-canyon-crazy scene of South Florida. According to the San Francisco mortgage data company LoanPerformance Inc., about 8.5 percent of mortgages nationwide in the first 11 months of 2004 were taken out by people who did not plan to live in the houses themselves. That's up from 5.8 percent in 2000. * Waterfront property remains a high-price obsession. A recent Wall Street Journal real estate analysis of home price changes in 1,200 zip codes found that 'waterfront access was the feature many of our fastest-appreciating towns shared.' One such town mentioned in that analysis is St. Pete Beach, where housing prices (median price: $410,000) soared 22.7 percent last year and doubled in the past five years. The town, described by the Wall Street Journal as 'once a sleepy retirement mecca and vacation retreat for the likes of Clarence Darrow and Al Capone,' now is awash in new condo projects with starting prices of $700,000. * Rising interest rates are coming. Yes, mortgage rates have stubbornly refused to break the 6 percent barrier. But that day is coming. The curve ball is that houses bought by investors often are paid for with adjustable rate mortgages because ARM rates start low and investors assume they will sell their properties before rates adjust upward too much. That makes for an interesting bet. It assumes interest rates will not rise rapidly, but that housing appreciation will. If that does not happen? According to the Mortgage Bankers Association, one third of all home mortgages are now adjustable, meaning the carrying costs of investment homes that are not selling could get expensive in a hurry. The latest numbers from the Office of Federal Housing Enterprise Oversight show a steep slowdown in quarterly house price increases in the fourth quarter of last year, slipping to 1.69 percent from 4.79 percent in the third quarter. The bottom line is: Don't hold your breath waiting for a local bubble to burst. Too many darn people keep wanting to move to Florida. The giddy appreciation days, though, are slowly nearing an end. I like the way Morgan Stanley's chief U.S. economist Richard Berner puts it. Home prices are likely 'to rust, not bust.' Johnny5 can't help but to remember that even the father of mathematics - Sir Isaac Newton was suckered into the investment bubble of his day - if the father of mathematical science can be sucked in by greed - what chance do the rest of us stand? Johnny5 has watched property values soar all around him while his scottrade account has not done very much and it makes johnny5 very sad :( Johnny5 has been very tempted to jump get a 250K house and ride the double digit return wave - but he has held steadfast so far. Several years ago kurt reibacher and volcker were talking about 250K houses dropping maybe to 25K - but Johnny5 does not believe that is reality anymore.

Subject: Don't Worry, Be Happy
From: johnny5
To: All
Date Posted: Mon, Mar 07, 2005 at 04:20:46 (EST)
Email Address: johnny5@yahoo.com

Message:
Johnny5 wish all his friends great happiness and hope they get good politicians elected that realize we need to maintain social equality to have great prosperity. http://www.sptimes.com/2005/03/06/Columns/Losing_the_keys_to_ha.shtml Losing the keys to happiness By ROBYN E. BLUMNER, Times Perspective Columnist Published March 6, 2005 What do people need to feel happy? In his new book on happiness, British economist Richard Layard posits some intriguing theories about what makes us feel content and live a more enjoyable life. Standards of living in the United States have more than doubled in the past 50 years. We are healthier, own larger homes and enjoy many modern comforts like air conditioning that were out-of-reach luxuries or not invented decades ago, but Layard's book, Happiness: Lessons From a New Science, says we are not, as a whole, happier. It turns out, according to the author, that people tend to measure success by looking at those around them. Keeping up with the Joneses is killing our inner peace. Even as we acquire luxury items, the other guy has more. Layard calls it a 'hedonic treadmill.' But there are other forces at work beyond our own affluenza, including the government's approach to the people it serves. When a nation embraces a culture of community well-being over a 'you're on your own' attitude, happiness gets spread around. 'Our fundamental problem today is a lack of common feeling between people - the notion that life is essentially a competitive struggle,' Layard says. He points to the Scandinavian countries as among the happiest because they 'have the clearest concept of the common good.' Layard endorses the high tax rates of these nations as a way to reduce overwork, making it less valuable. It also has the added benefit of giving government the resources to provide a broad array of social services that tend to make people's lives more secure, such as universal health care. And, high taxes reduce income disparities, leading to a general sense of relative well-being. Layard says studies find that the more equally a nation's income is distributed, the higher the level of average happiness. He is not talking about communism but a shrinking of wealth disparities, the way estate taxes used to operate in this country before President Bush whacked them. Layard's research and analysis confirm some of the worries I have about the direction of this nation. Two strong forces are tamping down our national happiness along the lines that Layard describes: The income divide is widening into a gaping chasm, and our working lives are feeling less dignified and secure. Both are a recipe for simmering resentment. In 2003, the average worker took home $517 a week, while the average CEO enjoyed a weekly paycheck of $155,769. Is the executive really 300 times (that's 300 times!) better and more vital to the company than Joe Lunchbox? We talk about the humiliation of cultures in the Middle East as breeding a backlash of violence. But few people talk about the loss of dignity for workers in this country. A new study by the Conference Board declares that 'Americans are growing increasingly unhappy with their jobs.' Only one-third of workers said their pay was satisfactory. The Arab street is always in the news, but here's the American street: People feel they are struggling too much and are increasingly uneasy about their financial security. One bad accident or one big medical bill can destroy a family's economic standing. To this abiding worry, the response of Republican leaders in Congress is to consider bankruptcy reform that would shackle people to their debts without holding the credit card industry the least bit responsible for raining down limitless credit. A large, thriving and optimistic middle class is the best ticket to social stability, but it feels as if no one is looking out for this group anymore. Government and employers used to have a larger role to play in making American workers feel protected from the world's vicissitudes. Employment was for life. If you devoted your professional life to a place, employers rewarded you for it. Now, you're lucky if your company gives you a month's notice before outsourcing your job to China or India. Before, if something went awry, government unemployment benefits were there as a cushion. In the 1970s, workers could count on 15 months of help; today it's down to six. And the one program that has served Americans' peace of mind since the New Deal, Social Security, is being eyed as a place to shift financial risk from government to workers. Taking a page from Maslow's Hierarchy of Needs, humans must satisfy certain basics for themselves before feeling generous and charitable to others. As the media bombard us with images of our wealthy neighbors living it up while programs to protect the footing of those in the middle are being unraveled, our sense of relative need and insecurity grows. We become less charitable and generous in spirit, more protective of our own. We then elect politicians who share that sensibility, who in turn enact legislation that frays the social safety net even further. It seems to me to be a vicious cycle and certainly no recipe for happiness. Self-interest, or rather self-love, or egoism, has been more plausibly substituted as the basis of morality. But I consider our relations with others as constituting the boundaries of morality. With ourselves, we stand on the ground of identity, not of relation, which last, requiring two subjects, excludes self-love confined to a single one. To ourselves, in strict language, we can owe no duties, obligation requiring also two parties. Self-love, therefore, is no part of morality. Indeed, it is exactly its counterpart. Letter to Thomas Law (1814) -Thomas Jefferson

Subject: Like Terri's sunshine state - Negro Removal
From: johnny5
To: johnny5
Date Posted: Mon, Mar 07, 2005 at 04:26:40 (EST)
Email Address: johnny5@yahoo.com

Message:
The movie coming to a reality near you! Where are the escalator clauses? http://www.sptimes.com/2005/02/20/Columns/Putting__home__back_i.shtml Putting 'home' back in homeland By ROBYN E. BLUMNER, Times Perspective Columnist Published February 20, 2005 What could possibly unite such disparate elements as the NAACP, the Southern Christian Leadership Conference and the AARP, together with the conservative Pacific Legal Foundation and Cato Institute? The home. To liberals and conservatives alike, the home is a potent symbol of American freedom and well-being. Having a home is the consummate American dream, representing security and accomplishment. It is an ideal that crosses the ideological spectrum. And the specter of the government's confiscating a home to give it to private developers to generate a more lucrative tax base is more than anathema, it's a violation of the essential promise of this nation to its people. On Tuesday, the U.S. Supreme Court will hear arguments in a case that will determine whether private ownership has any meaning left or whether we really live in a command economy, like the old Soviet Union, where government can expropriate property whenever it is profitable to do so. In Kelo vs. City of New London, the court will decide the fate of Susette Kelo's home and those of her neighbors in the Fort Trumbull area of New London, Conn. Kelo's Victorian-era home with a water view has been lovingly restored, according to her lawyers. But she is about to lose it to the New London Development Corp., a private entity that has been delegated the power of condemnation by the city. The NLDC wants Kelo's home, along with 14 others, in order to put together a 90-acre parcel for new development, including office space, a waterfront hotel and conference center and other uses. The city claims it can do this because economic redevelopment will benefit the public by bringing more tax revenue and jobs to the city. The homeowners say that they have invested their lives and treasure in their homes and are not interested in moving and shouldn't be forced to. It has been more than 50 years since the high court considered and approved of the use of eminent domain involving private development. Eminent domain is the government's power to confiscate property in exchange for compensation. The Fifth Amendment allows the government to do this for a 'public use,' and eminent domain has traditionally been used to acquire land for roads, schools and other public buildings. But since the 1950s, its use has been expanded to include slum removal and other redevelopment aims. Maybe it is constitutionally acceptable for governments to take over abandoned and unsafe buildings in a dying neighborhood for revitalization. But with more communities reaching density capacities and new land for building more and more scarce, the abusive use of condemnation is becoming a national scandal. According to a study by the Washington-based Institute for Justice - a leader in battling this scourge and the attorneys in the Kelo case - there were more than 10,000 filed or threatened condemnations in 41 states between 1998 and 2002, where the property to be taken was slated to go to another private entity. Big developers are bypassing the marketplace, using the power of government to gain control over large parcels of undervalued land. This may enrich the local government tax base by clearing away low- and moderate-income residents to make room for the more affluent or deep-pocket commercial ventures, but it shatters the core understanding of what constitutes private property. That's why 25 friend-of-the-court briefs are filed on behalf of Kelo and her neighbors, from liberal civil rights organizations to fiercely conservative groups and everything in between. The brief by the Becket Fund for Religious Liberty worries about the prospect that tax-exempt religious institutions can be moved aside by local governments any time there is a tax-generating enterprise that wants to move in. The NAACP notes in its brief how redevelopment has historically been targeted at minority communities, so much so that urban renewal 'was often referred to as 'Negro removal.'' And the brief filed by author and legendary urban sociologist Jane Jacobs bemoans the consequent destruction of community that comes with 'economic redevelopment': '(P)eople who get marked with the planners' hex signs are pushed about, expropriated, and uprooted much as if they were the subjects of a conquering power,' she writes. 'Whole communities are torn apart and sown to the winds with a reaping of cynicism, resentment and despair that must be seen to be believed.' Little in life is as devastating as losing a home you love or a business you have built because the government thinks another private owner will do better things with the land. The court has an opportunity to end this spreading pox. The left and right wings of the court should come together and do so. Government big enough to supply everything you need is big enough to take everything you have ... The course of history shows that as a government grows, liberty decreases. I hope we shall take warning from the example [of England] and crush in it's [sic] birth the aristocracy of our monied corporations which dare already to challenge our government to a trial of strength and bid defiance to the laws our country. Letter to George Logan, (November 12, 1816) -Thomas Jefferson

Subject: Listing iShares
From: Terri
To: All
Date Posted: Sun, Mar 06, 2005 at 19:29:18 (EST)
Email Address: Not Provided

Message:
http://www.ishares.com/material_download.jhtml?source=newschool&relativePath=/repository/material/downloads/product_expense_ratio_report.pdf A listing of iShares....

Subject: Re: Listing iShares
From: johnny5
To: Terri
Date Posted: Sun, Mar 06, 2005 at 21:15:48 (EST)
Email Address: johnny5@yahoo.com

Message:
THe ishares s&p 500 index has a .09% expense ratio - vanguard s&p 500 has a .18% 100% higher! Why buy vanguard? costs matter!

Subject: Re: Listing iShares
From: DJ
To: johnny5
Date Posted: Sun, Mar 06, 2005 at 22:53:07 (EST)
Email Address: Not Provided

Message:
You need to evaluate transaction costs. If you buy directly through vanguard you don't pay a commission, you do for ishares (Fidelity offers a few index funds cheaper than vanguard too). I'm surprised there is no discussion of S&P's move from a full cap to a free float index. That is going to have a big effect on certain funds, depending on how they decide to transition their portfolios.

Subject: Transaction costs
From: johnny5
To: DJ
Date Posted: Sun, Mar 06, 2005 at 23:46:48 (EST)
Email Address: johnny5@yahoo.com

Message:
I use scottrade - they advertise 7 dollar trades. Is there a better way? I read here http://socialize.morningstar.com/newsocialize/asp/FullConv.asp?forumId=F100000034&convId=138408 That taxes will eat you up in Ishares versus Vanguard?

Subject: Re: Transaction costs
From: David E..
To: johnny5
Date Posted: Mon, Mar 07, 2005 at 21:45:27 (EST)
Email Address: Not Provided

Message:
I read the link - the jury is still out, iShares may still be the savings leader. This will take time to sort out, and the answer might not always be iShares. It looks to me that it will be a 'that depends' answer every time.

Subject: Warren Buffett on the Dollar
From: Terri
To: All
Date Posted: Sun, Mar 06, 2005 at 15:52:10 (EST)
Email Address: Not Provided

Message:
http://www.berkshirehathaway.com/2004ar/impnote04.html Warren Buffett: Berkshire owned about $21.4 billion of foreign exchange contracts at yearend, spread among 12 currencies. As I mentioned last year, holdings of this kind are a decided change for us. Before March 2002, neither Berkshire nor I had ever traded in currencies. But the evidence grows that our trade policies will put unremitting pressure on the dollar for many years to come – so since 2002 we've heeded that warning in setting our investment course.... But as I argued in a November 10, 2003 article in Fortune, (available at berkshirehathaway.com), our country's trade practices are weighing down the dollar. The decline in its value has already been substantial, but is nevertheless likely to continue. Without policy changes, currency markets could even become disorderly and generate spillover effects, both political and financial. No one knows whether these problems will materialize. But such a scenario is a far-from-remote possibility that policymakers should be considering now. Their bent, however, is to lean toward not-so-benign neglect: A 318-page Congressional study of the consequences of unremitting trade deficits was published in November 2000 and has been gathering dust ever since. The study was ordered after the deficit hit a then-alarming $263 billion in 1999; by last year it had risen to $618 billion.... Americans end up owning a reduced portion of our country while non-Americans own a greater part. This force-feeding of American wealth to the rest of the world is now proceeding at the rate of $1.8 billion daily, an increase of 20% since I wrote you last year. Consequently, other countries and their citizens now own a net of about $3 trillion of the U.S. A decade ago their net ownership was negligible.

Subject: Thomas Jefferson
From: johnny5
To: Terri
Date Posted: Sun, Mar 06, 2005 at 18:31:50 (EST)
Email Address: johnny5@yahoo.com

Message:
http://en.wikiquote.org/wiki/Thomas_Jefferson I believe that banking institutions are more dangerous to our liberties than standing armies . . . If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] . . . will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered . . . The issuing power should be taken from the banks and restored to the people, to whom it properly belongs. Letter to the Secretary of the Treasury Albert Gallatin (1802) ; later published in The Debate Over The Recharter Of The Bank Bill (1809) http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2005/03/06/cnbuff06.xml&menuId=242&sS... Warren Buffett, the world's greatest investor, yesterday launched a vitriolic attack on the US government for failing to take effective action to reduce the country's trade deficit. He warns of dangerous consequences if these trends continue. He says that within a decade, the US would be compelled to deliver '3 per cent of its annual output to the rest of the world simply as tribute for the overindulgences of the past'. He adds: 'This annual royalty paid the world... would undoubtedly produce significant political unrest in the US. 'A country that is now aspiring to an 'ownership society will not find happiness... in a 'sharecropper's society' ' But he says that just such a demeaning outcome is 'where our trade policies, supported by Republicans and Democrats alike, are taking us.'

Subject: Re: Thomas Jefferson
From: johnny5
To: johnny5
Date Posted: Sun, Mar 06, 2005 at 19:00:58 (EST)
Email Address: johnny5@yahoo.com

Message:
Why do we keep falling back into the same ruts? Jefferson on the ECONOMY: I, however, place economy among the first and most important republican virtues, and public debt as the greatest of the dangers to be feared. Letter to William Plumer (July 21, 1816) Government big enough to supply everything you need is big enough to take everything you have ... The course of history shows that as a government grows, liberty decreases. Our citizens may be deceived for a while & have been deceived; but as long as the presses can be protected, we may trust to them for light; still more perhaps to the taxgatherers; for it is not worth the while of our antirepublicans to risk themselves on any change of government, but a very expensive one. Reduce every department to economy, & there will be no temptation to them to betray their constituents. I hope we shall take warning from the example [of England] and crush in it's [sic] birth the aristocracy of our monied corporations which dare already to challenge our government to a trial of strength and bid defiance to the laws our country. Letter to George Logan, (November 12, 1816) Jefferson on MEDIA CONGLOMERATION: Nothing can now be believed which is seen in a newspaper. Truth itself becomes suspicious by being put into that polluted vehicle. Letter to John Norvell (June 11, 1807) Self-interest, or rather self-love, or egoism, has been more plausibly substituted as the basis of morality. But I consider our relations with others as constituting the boundaries of morality. With ourselves, we stand on the ground of identity, not of relation, which last, requiring two subjects, excludes self-love confined to a single one. To ourselves, in strict language, we can owe no duties, obligation requiring also two parties. Self-love, therefore, is no part of morality. Indeed, it is exactly its counterpart. Letter to Thomas Law (1814) History, I believe, furnishes no example of a priest-ridden people maintaining a free civil government. This marks the lowest grade of ignorance of which their civil as well as religious leaders will always avail themselves for their own purposes. Letter to Alexander von Humboldt (Dec. 6, 1813) Scanned letter at The Library of Congress (http://memory.loc.gov/cgi-bin/ampage?collId=mtj1&fileName=mtj1page047.db&recNum=74&itemLink=/ammem/mtjhtml/mtjser1.html&linkText=7) Transcript at The Library of Congress (http://memory.loc.gov/cgi-bin/query/r?ammem/mtj:@field(DOCID @lit(tj110127))) Jefferson on the WAR: War is an instrument entirely inefficient toward redressing wrong; and multiplies, instead of indemnifying losses.

Subject: On Commodities
From: Terri
To: All
Date Posted: Sun, Mar 06, 2005 at 15:35:20 (EST)
Email Address: Not Provided

Message:
http://www.economagic.com/crb.htm Economagic is a fine source of economic data. A look at the Commodity Research Bureau data for futures, spot, and total returns indexes from 1947 to the present does not show good long term gains. There are dramatic short term gains however, and the indexes have slowly advanced. The CRB indexes are evenly weighted among commodities, while the Goldman Sachs Commodities Index is weighted according to value of a commodity in the economy. Now, just because long term commodity returns do not seem impressive is no reason to avoid current investing. We have been fortunate for decades in having supplies of commodities develop faster than demand. Possibly with the development of China and India this condition has been changed for the future. Possibly commodity prices will climb at a faster than historical rate from here. Then the question is whether to use the commodity futures market, buy the Goldman Sachs Commodity Index, or buy the Vanguard Materials Stock Index or Energy Fund. A guess, only a guess, would be the stocks of commodity based companies will be preferrable to the other choices. More work needs to be done.

Subject: Keep them laughing...
From: johnny5
To: All
Date Posted: Sun, Mar 06, 2005 at 13:19:18 (EST)
Email Address: johnny5@yahoo.com

Message:
People spend more for entertainment than education - I guess that is why buffet bought comcast - nothing else is a good buy. http://www.forbes.com/work/feeds/ap/2005/03/05/ap1864696.html Update 3: Buffett Failed to Buy Companies in 2004 03.05.2005, 05:19 PM The mighty billionaire Warren Buffett says he has 'struck out.' The CEO of Berkshire Hathaway Inc. wrote in his annual report Saturday that he had hoped to make several multibillion-dollar acquisitions in 2004. He certainly had the money, so the problem? None to buy, he said. 'I found very few attractive securities to buy,' Buffett wrote in his company's 40th annual report. Berkshire ended the year with $43 billion of cash equivalents, something he called 'not a happy position.' The bulk of the letter was positive, and the 74-year-old investment icon said he and Vice Chairman Charlie Munger would not be deterred. 'Charlie and I will work to translate some of this hoard into more interesting assets during 2005, though we can't promise success,' he wrote. Buffett, known widely as the 'Oracle of Omaha' for his insight into all things financial, was mum on the subject of an investigation of alleged bid-rigging and price-fixing in the insurance industry by New York Attorney General Eliot Spitzer. Buffett received a subpoena in January and has said he would cooperate. It's no surprise he wasn't able to find any companies to acquire last year, because it's a seller's market and there's a lot of activity in mergers and acquisitions, said Steve Kaplan, a professor at the University of Chicago Graduate School of Business. 'He won't find anything this year either,' Kaplan said. 'Since he likes to buy things cheap, it's harder to find.' Shares of Berkshire Hathaway class-A stock fell $302, or less than 1 percent, to close at $89,300 Friday on the New York Stock Exchange. Berkshire's profit fell 10 percent from nearly $8.2 billion in 2003 to $7.3 billion last year. However, its fourth-quarter results were strong, with net earnings climbing to $3.34 billion, up some 40 percent from the same period in 2003. In his letter to shareholders, Buffet highlighted the company's gains in book value - which determines value by looking at a company's assets minus its liabilities - as opposed to its true market value of about $135 billion, or nearly $90,000 per share. He said Berkshire Hathaway posted a gain in book value net worth of $8.3 billion in 2004, a per-share increase of 10.5 percent and just short of the S&P 500's gain of 10.9 percent last year. In 2003, the company saw a 21 percent increase in book value while the S&P 500 grew by 28.7 percent. A call to Berkshire Hathaway offices seeking comment Saturday was not immediately returned. Berkshire owned about $21.4 billion in foreign currency spread among a dozen countries at the end of the year. Buffet said this hedge against the U.S. dollar does not mean he is unpatriotic, but he voiced a warning about the nation's growing trade and fiscal deficits. The holding company owns businesses and stock in a wide variety of industries, including insurance, furniture, restaurants, candy and newspapers.

Subject: Re: Keep them laughing...
From: johnny5
To: johnny5
Date Posted: Sun, Mar 06, 2005 at 13:57:26 (EST)
Email Address: johnny5@yahoo.com

Message:
Johhny5 has a theory about why jon stewart was more watched than crossfire and it goes along with why buffet buys comcast and why bush is prez and not kerry - people want to laugh and be entertained more than they want to make money - collectively here in this country anyways - entertainment is our true prime industry anymore. Look at the sitcoms on tv versus the PBS shows like frontline - much higher numbers of viewership for the funnies. The news is now broadcast by jon stewart, colin quinn, and dennis miller, who would have thought such things back in the newscasts of the 50's or 60's? Bill Maher with his political show versus maybe a walter kronkite of decades ago. Even rush and oreilly have brought much more entertainment than the dryness of a tom brokaw. Who wanted boring al gore or john kerry with thier sound democratic ideals when we could watch bush on a daily basis make us all laugh with his bumblings - say all you want - undercutting peoples need for entertainment now comapared to thier need for sound economics in the future may be a mistake. There are even academic studies on why bear fund heads lose jobs even if they are right compared to bulls who are wrong, people want it all positive and fun all the time - there is a movie called NETWORK I believe that illustrates this.

Subject: Who Wins in a New Social Security?
From: Emma
To: All
Date Posted: Sun, Mar 06, 2005 at 10:25:23 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/06/business/yourmoney/06view.html?pagewanted=all&position= Who Wins in a New Social Security? By EDUARDO PORTER SOCIAL SECURITY may have done more to help the poor than any other government program in American history. Established in 1935 with the explicit objective of protecting the elderly from poverty, it has relied on a heavily skewed benefit formula that pays lower-income workers a higher share of their wages than those at the top of the earnings ladder. The results? According to government figures, old-age poverty has dropped from about 50 percent in the 1930's to around 10 percent today. Most of the credit goes to Social Security. Yet as President Bush sets out to reconstruct Social Security, by allowing workers to divert some of their payroll taxes into personal accounts, crucial questions remain unanswered: Would a new system retain the traditional approach of redistributing income from the more affluent to those in need? Or should personal accounts - framed by Mr. Bush as a step toward an 'ownership society' - usher in a system in which workers keep what they actually save? The president argues that workers can get a better return on their payroll taxes if they invest them themselves. Regardless of the truth of that assertion, Social Security has not been a simple retirement savings plan but an instrument of social policy, using part of the taxes paid by some groups to shore up the benefits of others. Any changes made to the system will inevitably shift this distributional mix, and that troubles some members of Congress. 'Social Security is a central strand in our social safety net,' said Senator Gordon H. Smith, Republican of Oregon, the chairman of the Senate Special Committee on Aging. 'I believe its progressive nature has to be preserved,' he said, adding that he would hold his vote 'in abeyance' until 'we address these progressive issues.' Social Security uses taxes from the rich to bolster the retirement income of the poor through a benefit scale that now replaces about 60 percent of preretirement earnings for low-income workers but only 30 percent for the workers in the highest earning band. But the program has a multitude of other objectives, moving money every which way. An essential reason for the decline in old-age poverty, for example, is that older generations - which paid lower payroll taxes - have received transfers from younger generations, who have paid higher taxes to get the same or even lower levels of benefits. Social Security aims to protect women who stay out of the work force to raise children, offering spousal and survivor benefits that depend on the earnings of the working spouse. And the program's disability insurance favors workers in tougher jobs, mainly at the lower end of the income spectrum. Social Security's income redistribution includes some unintended quirks. Survivor benefits are regressive, favoring people whose spouses were high earners. And the nation's changing demographics have created a patchwork of winners and losers that, to some extent, has overridden the system's original purpose of favoring the poor. That's because Social Security is more generous to people who have more time to collect benefits, like women, who are expected to live three years longer than men, on average, after retirement, and whites, who, after reaching 65, are expected to live a year and a half longer than blacks. Calculations by C. Eugene Steuerle and Adam Carasso of the Urban Institute offer this contrast: A 65-year-old single man who retires this year after a career in which he earned an average of $36,500 a year, in 2005 dollars, will get $164,000 in retirement benefits over the rest of his life, on average, based on his expected life span of 81.1 years. That is about $8,000 less than he would receive if he invested his payroll taxes at a 2 percent rate of return, after inflation. But a single woman with a similar earnings profile can expect to receive $206,000 - or $28,000 more than she would get by investing the contributions at the same 2 percent rate, merely because she is likely to live longer. Because the poor and the less educated tend to have lower life expectancies, they sometimes end up getting a worse return on their payroll taxes. According to projections by Mr. Steuerle, Mr. Carasso and Lee Cohen of the Social Security Administration, a male high-school dropout who retired over the past decade will receive retirement benefits equivalent to his lifetime payroll taxes invested at a 2.7 percent annual rate of return, after accounting for inflation. But for a college graduate, the implicit rate of return on his payroll taxes is 3.2 percent, because he is expected to live seven years longer. What would Social Security reform do to all of this? Personal accounts, in which people invested their own money for their own retirement, would not redistribute wealth by themselves. If poor or uneducated workers were allowed to take their stash as a lump sum, though, dying younger would be less of a financial loss. And depending on how Social Security is brought back into long-term financial balance, the distribution of benefits could be reconfigured substantially. CUTTING benefits by raising the retirement age, the choice of Social Security's reformers in 1983, would penalize poorer workers with shorter life spans. But the system could be skewed to transfer more income to the poor. In a report last year, the Government Accountability Office analyzed a plan designed to restore the system's solvency. It included carving out savings accounts, as Mr. Bush suggests, combined with indexing of benefits to inflation instead of to wages and providing low-income retirees a minimum pension of 120 percent of the poverty line. The G.A.O. found that such a system would redistribute more income from high earners to low earners than Social Security does today. The G.A.O.'s exercise also underscored how changes in the system could undermine Social Security's original goal of protecting the elderly from poverty. Bringing Social Security to long-term solvency without raising contributions would require cutting benefits. Even if personal accounts earned a 4.6 percent annual rate of return over a worker's career - President Bush's central assumption - overall benefits for the bottom fifth of wage earners would be 4 percent lower than their benefits under the current system.

Subject: Re: Who Wins in a New Social Security?
From: johnny5
To: Emma
Date Posted: Sun, Mar 06, 2005 at 14:00:13 (EST)
Email Address: johnny5@yahoo.com

Message:
A good article, I have read in several places now though that Greenspan and the politicos at top are using this as a diversion to the REAL economic issue of the day - bond market speculation and the carry trade. Bush is going around talking about this issue to avoid talking about the others - do you feel that is correct Emma or are the people speculating about SS being talked up to hide other much more severe problems full of it? IS bush using this diversion to deflect people's attention and gonna break a functioning system to divert attention from what is really broken?

Subject: Re: Who Wins in a New Social Security?
From: jimsum
To: johnny5
Date Posted: Mon, Mar 07, 2005 at 19:00:49 (EST)
Email Address: jim.summers@rogers.com

Message:
I vote for diversion. It's interesting that Bush's highest proiority is fixing a possible deficit in the SS budget decades from now while ignoring a budget deficit that already exists.

Subject: Re: Who Wins in a New Social Security?
From: johnny5
To: jimsum
Date Posted: Tues, Mar 08, 2005 at 02:30:46 (EST)
Email Address: johnny5@yahoo.com

Message:
Carlyle once said that “the task of man is not to see what lies dimly in the distance, but to what lies clearly at hand.”

Subject: Companies Behaving Badly
From: Emma
To: All
Date Posted: Sun, Mar 06, 2005 at 10:17:29 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/06/business/yourmoney/06gret.html?pagewanted=all&position= Companies Behaving Badly By GRETCHEN MORGENSON CORPORATE governance problems, business-speak for companies that shirk their responsibilities to shareholders, have been front and center for more than three years. While many companies have toned down anti-shareholder practices, investors must remain vigilant for executives and boards that are still in the Stone Age. That is the conclusion drawn by researchers at GovernanceMetrics International, a two-year-old independent research firm in New York that scrutinizes corporate governance practices for institutional shareholders. 'For too long governance screening hasn't been part of the investment process,' said Gavin Anderson, chief executive of GovernanceMetrics. 'But investors are realizing that this is another area they need to monitor.' The firm has just finished examining practices at 3,220 companies around the world. Of those companies, only 34 received GovernanceMetrics's highest rating of 10. Happily for American investors, most of these - 27 - were United States companies. These companies, Mr. Anderson noted, have outperformed the Standard & Poor's 500-stock index by an average of 11.13 percent for the 12 months ended Feb. 28. The average American company earned a rating of 7 from GovernanceMetrics. Other good news: the number of independent directors at the companies has climbed to 55 percent from 52 percent in 2003. And fewer companies have chairmen who are also chief executives: 39 percent, versus 47 percent in 2003. But GovernanceMetrics found questionable practices at many companies. Executive pay was the No. 1 culprit, at least in the United States. Pay issues accounted for 31 percent of the red flags it issued on domestic companies, versus 6 percent of those issued on European companies. Only 5 percent of Asian companies exhibited pay problems. Of course, lapses in governance do not necessarily lead to poor performance at a company. But enough investors have lost big money in companies where conduct was questionable that governance should be a constant consideration. Just look at Krispy Kreme, the formerly faddish doughnut maker. A hot stock for many years, Krispy Kreme has lost 81 percent of its value in the past year as its accounting has come under scrutiny. In June 2003, GovernanceMetrics gave Krispy Kreme relatively low marks for its policies, ranking it 4 out of 10 over all. Then, in January 2004, the firm dropped its rating to 2.5. In July, Krispy Kreme disclosed that securities regulators were investigating its accounting. The firm's recent study has turned up red flags at a number of companies. For example, it assigned demerits to UnitedHealth Group, a manager of organized health systems, because of the employment agreement it has struck with its chief executive, Dr. William W. McGuire. The agreement requires the company's shareholders to make generous annual payments to Dr. McGuire if he is terminated, no matter the reason. And if he dies after his departure, his surviving spouse is entitled to half the benefit. Dr. McGuire would have received $5.1 million a year under this plan if he had retired at the end of 2003. Mark F. Lindsay, a spokesman for UnitedHealth, objected to GovernanceMetrics's criticism, saying that the payout represented Dr. McGuire's pension and was modest when compared with the lofty returns shareholders in the company have received as a result of his leadership. 'His compensation reflects our corporate performance and that has been, without equivocation, superlative,' Mr. Lindsay said. Indeed, UnitedHealth's stock is up almost 50 percent over the last 12 months. Large companies getting below-average overall ratings from GovernanceMetrics include Molex Inc., which makes electronic equipment, and K-Swiss, the athletic shoe manufacturer. Molex received a 2.5 rating from the research firm because of board independence issues and a questionable internal control and financial reporting structure. Indeed, last Nov. 15, Deloitte & Touche, Molex's outside auditor, resigned when it identified errors in accounting for inventory that had overstated the company's income. Molex recorded a charge of $5.8 million as a result but said that an investigation by its audit committee had found no wrongdoing. According to company filings, Deloitte had said it would conduct a review of the matter in time for Molex to file its quarterly statement with regulators, but only if J. Joseph King, then Molex's chief executive, and Diane Bullock, then its treasurer, no longer served as corporate officers. Molex declined to remove them. At the time, Fred Krehbiel, co-chairman of Molex, issued this statement: 'We are extremely disappointed with the timing of Deloitte's resignation and strongly disagree with their approach and the condition that we remove as officers valued members of our senior management team.' He added that he and his brother, John Krehbiel, also co-chairman of Molex, had 'complete confidence in the integrity and leadership of our senior management team, and believe that the same principles of character, loyalty and integrity that built Molex's hard-earned reputation over its 66-year history are reflected in the board's decision regarding this matter.' ABOUT three weeks later, however, Molex appointed Ernst & Young as its auditor. In connection with the change, Molex announced that Mr. King and Ms. Bullock were resigning their positions. Both would continue at the company in 'a staff function,' it said. But it added, 'neither Mr. King nor Ms. Bullock will be elected an officer of Molex, nor will their positions involve or significantly influence accounting, financial reporting or internal controls.' Molex shares are down 15 percent over the past 12 months. The company did not return a phone call seeking comment. K-Swiss, which received an overall rating of 1 from GovernanceMetrics, was questioned over its board accountability in part because Steven Nichols, the chief executive, controlled appointment of five of the company's seven directors through his ownership of a class of supervoting shares. The research firm also chided K-Swiss for failing to disclose governance guidelines; for example, the company did not specify whether nonexecutive members of the board ever met without management present. K-Swiss shares are up more than 22 percent over the last 12 months, so its stockholders are probably unconcerned about governance. But shareholder-friendly practices should be a corporate goal regardless of how a company's stock has performed. 'Our ratings highlight one area of risk, and it's an area of risk that has largely been ignored in the past,' Mr. Anderson said. 'Our job is to provide investment managers with the information.' Armed with the data, investment managers can choose to sell a given company's stock or buy more. But they can't claim ignorance if a trifling governance problem turns into something more.

Subject: Note to Myself: 'Duh'
From: Emma
To: Emma
Date Posted: Sun, Mar 06, 2005 at 15:05:48 (EST)
Email Address: Not Provided

Message:
This article might have been important but in the end teaches us nothing. We learn that there are better and poorer companies. Duh. Sorry for the post, for I try to choose carefully.

Subject: Meeting Middle Class Needs
From: Emma
To: All
Date Posted: Sun, Mar 06, 2005 at 07:38:41 (EST)
Email Address: Not Provided

Message:
Middle class households should not give up social benefit and security programs that they have supported for generations. Conservatives are bent on cutting Social Security benefits, with the promise of cutting Medicare benefits to come. Medicaid benefits are already being cut. Happily middle class households are showing there must be no reduction in Social Security and Medicare programs. Conservative complaints have been to no avail.

Subject: Thank You
From: Emma
To: Emma
Date Posted: Sun, Mar 06, 2005 at 08:36:56 (EST)
Email Address: Not Provided

Message:
Thank you all for the wonderful posts. We are so fortunate to have this Internet site as a source of learning.

Subject: Commodities: Speculation and Investment
From: Terri
To: All
Date Posted: Sun, Mar 06, 2005 at 07:19:37 (EST)
Email Address: Not Provided

Message:
We should try to distinguish between speculation and investment. Investment for me means a long term vehicle which I feel I have bought at a reasonable price that seems likely to gain in value. Speculation is trying to catch what may be a short term trend. Before I buy the Goldman Sachs commodities index for an investment, I would like to understand how it would have performed over 10 and 20 and 30 years. Also, how does it differ from the Dow commodities index? After all, we can buy the MSCI Vanguard Materials Index or the Vanguard Energy Fund. Should we chase any of these vehicles? Should they be short term speculations or long term investments? As for the commodities futures market? Where is a secure long term investment vehicle?

Subject: Re: Commodities: Speculation and Investment
From: j9
To: Terri
Date Posted: Sun, Mar 06, 2005 at 07:51:12 (EST)
Email Address: Not Provided

Message:
Security, if there is such a thing, is in diversification. Simply using ETFs and indexes for things like commodities (rather than buying the underlying stocks) gives diversification. Though individual investment vehicles should be researched of course, their performance is not the only consideration. For example, shorting the bond market through something like RYJUX makes sense as a hedge on inflation and adds diversification. Though its performance over the past 5 years has been atrocious, I think it may be almost time to buy some as an insurance policy. I learned hard lessons in 2000 and began to diversify. I sleep better now. j9

Subject: A Risky Risky Long Term Bond Market
From: Terri
To: All
Date Posted: Sun, Mar 06, 2005 at 07:00:27 (EST)
Email Address: Not Provided

Message:
March 4, 2005 Paul Krugman: 'And the consequence of the failure of the starve-the-beast theory is a looming fiscal crisis - Mr. Greenspan isn't wrong about that. The middle class won't give up programs that are essential to its financial security; the right won't give up tax cuts that it sold on false pretenses. The only question now is when foreign investors, who have financed our deficits so far, will decide to pull the plug.' Paul Krugman is telling us that government deficits that can not be resolved by slashing middle class social benefit programs or raising taxes, will in time cause interest rates to rise. How long will foreign central banks or private institutions and individuals buy American bonds? I surely do not know, but we need not buy long term bonds.

Subject: Re: A Risky Risky Long Term Bond Market
From: jimsum
To: Terri
Date Posted: Sun, Mar 06, 2005 at 22:51:05 (EST)
Email Address: jim.summers@rogers.com

Message:
Bush could introduce a completely new tax and sidestep the right. It is obvious there is no way current government spending can be cut much more; unless a miracle occurs, taxes will have to go up. So, why not introduce a national sales tax? It might be acceptable to the right. It taxes consumption rather than production, and might lead to increased savings. It doesn't exactly undo Bush's tax gift to the rich; and as an added bonus, a regressive sales tax will hurt the poor more than the rich :-)

Subject: Re: A Risky Risky Long Term Bond Market
From: johnny5
To: jimsum
Date Posted: Sun, Mar 06, 2005 at 23:00:37 (EST)
Email Address: johnny5@yahoo.com

Message:
So when the guy building all the houses in florida goes to home depot to buy wood and plumbing and roof shingles won't that make the cost of developing new homes go way up and kill the housing bubble even faster? They don't want to do that do they?

Subject: Re: A Risky Risky Long Term Bond Market
From: jimsum
To: johnny5
Date Posted: Mon, Mar 07, 2005 at 18:55:13 (EST)
Email Address: jim.summers@rogers.com

Message:
Well they don't want to raise taxes at all. I'm saying that if they are ever forced into raising taxes, they might want to consider a sales tax.

Subject: A Complex Bond Market
From: Terri
To: All
Date Posted: Sun, Mar 06, 2005 at 06:50:10 (EST)
Email Address: Not Provided

Message:
Though we should continue to discuss broad risks to markets, they are very hard to properly assess. The international bond market may be inflated by speculation, and I can not imagine buying long term bonds right now, but the French are having no trouble selling 50 years bonds. The bonds themselves are backed by the French government, so possibly investors do not care about speculative risk since they are not speculating. Possibly investors are sure the Euro central bank will control inflation indefinitely so protecting bond prices. Please forgive a mild comment, but be careful with language, as in the title below, for this can limit a flow of conversation. The comments on this message board are so useful.

Subject: Krugman takes a dump on American Growth
From: johnny5
To: All
Date Posted: Sat, Mar 05, 2005 at 23:15:00 (EST)
Email Address: johnny5@yahoo.com

Message:
http://www.humboldt.edu/~ee3/econ323/topics/krugman.pdf Paul Krugman The United States has long enjoyed a unique position of economic supremacy. Not only is it far and away the most populous of the advanced market economies; for most of the past century it has also had substantially higher per capita income than any other major nation. As a result, the only puzzle about the Pax Americana that took shape in the 1940s is that it took so long in coming: at the time the United States actually took on the mantle of world leadership, it had about as much purchasing power as all other market economies combined. By the early 1990s, however, almost everyone believed that the age of U.S. supremacy was nearing its end. U.S. GDP per capita was no longer exceptional when measured at current exchange rates, although when measured at purchasing power parity instead the United States still led its rivals in real output per head. Perhaps more significant, other advanced countries had clearly overtaken U.S. productivity in some industries, and surpassed the United States in some technologies. The rapid growth of Asian developing countries further suggested that the balance of world economic power might be shifting away from the original advanced nations; probably nobody now alive will see China come anywhere close to U.S. income per capita, but all it has to do is reach one-fifth of the U.S. level to become the world’s largest economy in absolute terms. While prophets of “declinism” like Kennedy (1989) and Thurow (1992) did not entirely dominate the discourse—Nye (1992), for example, argued that despite its gradual relative economic decline the United States retained the resources to remain the world’s political leader for decades to come—circa 1992 few people would have dared to suggest that a second “American century” might be in prospect. At the millennium, however, such suggestions are indeed being made (for example, Zuckerman, 1998). Several years of extremely favorable U.S. economic performance, all the more dramatic in contrast to some of the crises and setbacks elsewhere, have made it seem possible that American supremacy, far from being further eroded, will return to something like its early post-World War II levels. But can America really stay on top? To raise this question is not in any sense to accept the idea that the world economy is a zero-sum game; if America does well, this is not bad news for the rest of the world, nor is a renewed supremacy based on dismal performance elsewhere good for us. But it is still interesting to ask whether the special position of the United States in the world economy has gained a new lease on life. America’s New Economy Around 1994, some businessmen and business economists began propounding what came to be known as the New Paradigm. As usually stated, this doctrine rejected the old idea that the risk of inflation would limit the possibilities for economic expansion. The doctrine’s advocates claimed that a combination of rapid productivity growth—much more rapid than official measures indicated—and the increased competition due to globalization would meant that even a sustained expansion at very high growth rates would not cause any inflationary pressures. Academic economists, myself included, were quick to notice that at least as stated this doctrine made no sense. Since productivity and actual production are calculated using the same data, any understatement of true productivity growth did not offer any room for faster measured economic growth. Moreover, international prices can just as easily feed inflation as prevent it; or to put it differently, globalization or no globalization, measured GDP cannot grow faster than the sum of employment and measured productivity increase. But there is a twist in the story: however much their analytical arguments may have been logical nonsense, the new paradigmatics have reason to feel vindicated by events. Over the last few years the U.S. economy has indeed grown much faster than conventional estimates of its potential, with (at least by mid-1999) still little sign of serious inflation. What seems to have happened is this: the new paradigmatics were correct in sensing that something important had changed for the better. They were unable to express that sense in a way that hung together logically, and economists were right to point that out; but perhaps we should have asked more carefully whether there was some reason why a new optimism had emerged among people closer to actual business experience. In any case, what now seems clear is that two important things have gone right for the U.S. economy. Productivity growth—as measured, never mind the dispute over unmeasured components—has accelerated, perhaps from the 1 percent per annum norm of recent decades to 2 percent or more (although some of this acceleration is due to changes in the way the numbers are calculated—and in any case three years do not a sustained trend make). In addition, the labor market has become much less inflation-prone, with wage increases still modest despite 25-year lows in unemployment. It is less clear is why these good things have happened. Productivity growth has presumably accelerated because of information technology; but promises about the rewards of such technology have been repeatedly disappointed over the past decade. Why are they finally being fulfilled now? An amateur, non-technologist’s guess is that connectivity pays off in a way that mere information processing does not: that replacing carbon-copy memos with publication-quality, laser-printed reports did not add much value, but that using the Internet to route trucks to the right place does. (My own experience is that personal computing had only a modest effect on my ability to generate and disseminate misinformation, but that e-mail and the Internet have made a big difference.) As for the labor market, the quiescence of wages remains a considerable puzzle. A number of hypotheses, ranging from the aging of the workforce to increased competition among firms, have been proposed; but serious research, like that of Katz and Krueger (1999), suggests that these hypotheses are not adequate to explain why such low unemployment produces so little in the way of wage increase. The upshot of the favorable news about the U.S. economy is this: whereas in 1995 a conventional view would have put the rate of growth of U.S. potential output at slightly more than 2 percent, and estimated the natural rate of unemployment at not much less than 6 percent, it now seems plausible that the rate of potential growth is around 3 and the natural rate below 5. If this good news is sustained, then, by 2005 America’s potential output will be something like 12 percent higher than we would previously have guessed; by 2015 it will be 20–25 percent higher than we might have projected only a few years ago. These numbers are significant but not earth-shattering—not enough, in themselves, to change one’s view of America’s future role dramatically. But the good news about the U.S. economy has been accompanied by bad news about potential economic or political rivals. Asian Drama, European Anticlimax Bad news, when it comes, tends to be more dramatic than good news. If America’s current and prospective position in international league tables suddenly looks better than expected, this owes more to the disappointments of other countries than to the acceleration in our own growth. Only a decade ago, Asia seemed to pose a challenge to both aspects of U.S. economic leadership. Remember that the United States has traditionally been both the biggest economy in absolute terms and the richest large nation per capita. At the beginning of the 1990s it seemed quite likely that it would soon have neither distinction: that within two decades the richest and the biggest economies would both be Asian. On one side, Japan seemed likely to acquire the title of richest major economy. With only half of the U.S. population, even a highly productive Japan would have a hard time displacing the U.S. as the world’s largest economy in absolute terms; but by 1990, Japanese labor productivity was closing in on U.S. levels, and its rate of growth was considerably faster. Thus, it seemed quite possible that by the turn of the millennium Japan would overtake the United States in per capita income (even adjusted for price levels). On the other side, China looked like a serious challenger in terms of absolute weight. If you believed estimates that put Chinese real GDP at 40 percent of U.S. levels as early as 1990, and supposed that China’s economy could continue to grow at 7 percent or more while the U.S. economy grew at 2.5 percent or less, it became apparent that the United States could be put into second place as early as 2010 or so. Well, the millennium is upon us, and Japan’s economy has not overtaken that of the United States—indeed, Japan’s economy has hardly grown at all since 1991. While China has thus far been spared the worst of the financial crisis that overtook its east Asian neighbors in 1997, in the light of that crisis few people now have the same optimism about China’s prospects that was nearly universal a few years ago. But one has to be careful about the downward revision of conventional wisdom about Asia. Much of the bad news is essentially cyclical, even if the cycles have been slow to turn. When the cycles eventually do turn, the prospect for an Asian century may not look quite as distant. For example, while one can argue that some of Japan’s slowdown represents a loss of technological vigor, the biggest reason for the post-1991 slowdown is simple lack of demand. In a way, Japan in the 1990s is like the United States in the 1930s: a powerful, productive economy that has stumbled into a macroeconomic muddle. Analysts such as Posen (1998) and Krugman (1998) argue that Japan currently has an output gap of more than 10 percent—that is, that output could rise by more than 10 percent if only demand were adequate. True, conventional monetary and fiscal policies have not thus far managed to close that gap; but if and when Japan does resolve the demand shortfall (perhaps by taking the advice of some foreign commentators—namely, me—that radical monetization be used to create expectations of inflation?), the resulting surge in output would make the growth record look considerably less dismal. As for China, even though the giant nation did not share the severe downturn suffered by some of its neighbors, as long as the Asian crisis seemed to have no bottom, it was natural to suppose that China’s crony capitalism would similarly come to grief one day. That may still be true: China indeed shows signs of developing a Japanese-style problem of persistent deflation and inadequate demand. But with most of Asia now growing again, and with China still managing annual growth rates of 7 percent or more, earlier projections may not be that silly after all. If China does grow 7 percent per year, while even the American New Paradigm economy manages only 3 percent, circa 2025 China will have the bigger economy. What about the prospect that world economic leadership might shift from the United States to Europe? This question is not simply about economic trends; indeed, it is mainly a political question. The nations of the European Union already collectively constitute an economic power comparable to the United States, and much (though not all) of the continent roughly matches the United States in terms of labor productivity and general technological sophistication. However, no individual European nation is large enough to be an economic power in the same league as the United States, or even Japan. So the question about Europe is really whether the continent can develop the cohesion and self-confidence to become an equal partner with the United States. Economic performance can play a role in the story, but more for its indirect political effects than its direct effect on the numbers. The grand project of Europe over the past decade has, of course, been the drive for monetary union. At least some members of Europe’s elite seem to have believed that monetary union would in itself radically transform Europe’s economic prospects: that it would directly or indirectly help cure the continent’s high unemployment rates, that the emergence of the euro as a major international currency would itself be a major economic benefit, and—always implicit in the project—that a common currency would be a step toward political union. In reality, the euro does not seem likely to do any of these things. Unemployment remains stubbornly high in the main euro-zone nations; only Britain, which has not yet decided to join, can show dramatic progress in combating “Eurosclerosis.” While the euro surely will rival the dollar as an international currency, the benefits for Europe will be modest. Some seignorage will be captured when Russian gangsters replace $100 bills with 100-euro notes, but so what? At least so far, the prospect of a true United States of Europe seems as remote as ever. This is not to say that Europe is any kind of economic disaster area. Unemployment, though high, has more or less stabilized; economic growth has remained reasonably high; productivity in France, western Germany, and northern Italy is comparable to U.S. levels. But anyone who expected the North Atlantic balance of power to shift substantially toward Europe as a result of economic and monetary union has been disappointed. The upshot of all this may be summarized as follows: in terms of sheer economic weight in the world, the United States is a bit stronger than it was in 1990, thanks to faster growth here and economic crisis in Asia. The relative decline that everyone expected to continue has stopped, and even gone moderately into reverse. But while this is a significant surprise, it does not in itself explain the shift in mood from declinism to triumphalism. Triumph of the American Model? Those who believed, a decade ago, that the United States was in the process of losing some sort of struggle for the future did not base their views solely on the numbers. More important, they believed that the U.S. economic system had been tried and found wanting: that our laissez-faire economic policies and the short-termism induced by our too-demanding financial markets left us ill-suited to the demands of modern technology and international competition. Japan not only had a better recent track record: its industrial policies, together with the long-term relationships between banks and firms that allowed those firms to engage in long-term thinking rather than focus narrowly on the short-term bottom line, would ensure that it would take the lead. Now, of course, American triumphalists not only point to good numbers; they also stress the superiority of the American system, including its laissez-faire economic policies, and its alert financial markets that force firms to adjust rapidly to shifting markets rather allowing them to sustain unsuccessful strategies with loans from too-friendly banks. This system, they claim, ensures that America will continue to widen its advantage. It is at least possible that changes in the nature of technology have really reversed the rules; that assets have become liabilities, vices virtues. Perhaps Japanese institutions were perfectly tailored to the age of the fax machine, but the American way is the right one for the age of the Internet. (Moreover, this technological universe, of course, is the last word: the rules won’t shift again, in a way that favors, say, Canadian values, eh?) But a more cynical view would hold that such judgements about the merits of systems are mainly ex post facto: knowing that America has done well the last few years, we succumb to assuming that whatever is distinctive about the American system must be superior. In either case, all we are really doing is extrapolating from recent experience—with all the pitfalls that implies. Indeed, it would not take much to bring America’s current triumphalism to an end. Let a few other countries show that they, too, can take advantage of the new technological possibilities. The most wired country in the world is currently not the United States but Finland, and video game afficionados tell us that Japan’s innovative talent remains impressive. Let some countries that have experienced financial crisis stage a convincing recovery, as Korea already seems to be doing. Together with these factors, if the U.S. economy also hits a bump in the road at some point, then the case for a second American century would suddenly seem far less persuasive. It is tantalizing to speculate about the tone of public discourse in five or ten years if those who assert that America is now a “bubble economy” like that of Japan a decade ago turn out to be right. It is very easy to imagine how, in retrospect, many economic sins that are now widely regarded as trivial—negative personal savings, a large trade deficit, the role of highly leveraged investors in our financial markets—could be reinterpreted as the American equivalent of “crony capitalism,” fatal flaws that ensured the subsequent punishment. Here is a sober view of the current and future U.S. position in the world. The truth is that the advanced nations—even Japan, once it resolves its Keynesian difficulties—have broadly converged to similar levels of technology and productivity. The United States is likely neither to fall far behind nor pull dramatically ahead of that pack, although its sheer size guarantees its place as first among equals for many years to come. Meanwhile, the growth of developing countries will gradually erode the dominance of the advanced countries as a group, and therefore of the United States as well; but the operative word is “gradually.” The funny thing is that a sober assessment of the prospects for U.S. leadership a decade ago would probably have reached the same conclusion. Several good years of U.S. growth and two very bad years in Asia have shifted the quantitative picture, but not the qualitative one. The old line surely applies: we were never as bad as people said, and now we aren’t as good. Above all, it is very hard to imagine how the kind of supremacy the United States once had—when it outclassed every conceivable rival on every dimension you could think of—could ever reemerge. America will not dominate the world economy the way it used to, not because it is doing something wrong, but because many other countries are also doing something right. And that is good news for everyone. References Katz, Lawrence and Alan B. Krueger. 1999. “The High-Pressure U.S. Labor Market of the 1990s.” Brookings Papers on Economic Activity. 1, pp. 1– 87. Kennedy, Paul. 1989. The Rise and Fall of the Great Powers: Economic Competition and Military Conflict from 1500 to 2000. New York: Vintage. Krugman, Paul. 1998. “It’s Baaack! Japan’s Slump and the Return of the Liquidity Trap.” Brookings Papers on Economic Activity, 2. Nye, Joseph. 1992. “What New World Order?” Foreign Affairs. Spring. Posen, Adam. 1998. Restoring Japanese Economic Growth. Washington: Institute for International Economics. Thurow, Lester. 1992. Head to Head: The Coming Economic Battle among Japan, the United States, and Europe. New York: Warner. Zuckerman, Mortimer. 1998. “A second American century.” Foreign Affairs. May/June. Paul Krugman 175 176 Journal of Economic Perspectives

Subject: Re: Krugman takes a dump on American Growth
From: johnny5
To: johnny5
Date Posted: Sat, Mar 05, 2005 at 23:17:36 (EST)
Email Address: johnny5@yahoo.com

Message:
It is tantalizing to speculate about the tone of public discourse in five or ten years if those who assert that America is now a “bubble economy” like that of Japan a decade ago turn out to be right. It is very easy to imagine how, in retrospect, many economic sins that are now widely regarded as trivial—negative personal savings, a large trade deficit, the role of highly leveraged investors in our financial markets—could be reinterpreted as the American equivalent of “crony capitalism,” fatal flaws that ensured the subsequent punishment. When does the punishment come Terri - Krugman wrote this in 2000 - have we yet to pay for the speculators in the bond market?

Subject: Tone
From: David E...
To: johnny5
Date Posted: Sun, Mar 06, 2005 at 11:37:50 (EST)
Email Address: Not Provided

Message:
Johnny5 - two things. Please don't use offensive images. It implies that you are making unkind assumptions that about your board mates. Plus it seems that an article that ends with 'American will not dominate the world economy the way it used to, not because it is doing something wrong, but because many other countries are doing something right' should not be interpreted as a slam against the United States.

Subject: Where is my soap mouthwash?
From: johnny5
To: David E...
Date Posted: Sun, Mar 06, 2005 at 13:14:36 (EST)
Email Address: johnny5@yahoo.com

Message:
I am really hurt, you have sent johnny5 into tears - he does not spend many hours everyday trying to find good information to share because he thinks poorly of his mates. Johnny5 thinks a lot of you David E. Johnny5 loves his mates, johnny5 has noticed this 'TONE' of thinking by his mates regarding Terri in the past - Johhnny5 loves Terri - he chides her in friendly jest but never to offend her - just to try and make her smile - why do people see such a negative that johnny views as positive? Why are their such differing impressions? Why is our differing cultures such a clash in this huge melting pot? Why is the diversity asked to conform? If anything johhny5 thought a good article written by krugman would be heralded and johhny5 embraced with much love and affection and understanding and children named after him and the visual reference would give a chuckle, not make people take a puke on johhny5 - but perhaps this is a perfect example of maybe why the grunt third world is going to topple the ivory towers in new york. In his attempt to entertain johnny5 has hurt his mates and johhny5 does not understand - for just last night johnny5 watched saturday night live which comes from new york and the daily show with jon stewart and thought these yanks really know how to lighten up and take it easy - even after the ivory towers have fallen. In fact johnny5 is in shock that a couple words has brought so much offense from so many after all his labor to do his civic duty and become more informed to add to the EMH and give his personal view of it. If after my time here you think I wish to offend you David E - which I assure you I don't and deeply hurt you inferred that, and you are apparently offended by one title amongst hundreds of posts. Would you ask me to become more mainstream and lose myself in the crowd? Is this your true desire? If you have received that much offense from one message title I really want to get to the bottom of it, you took a lot of negative away from that one post, but I promise you David E from the bottom of my heart that post was meant to inform and leave an impression to give you expanded horizons on investment to help you and help us all and let you experience johnny5's way of remembering it - not hurt you, please please forgive me if you thought I was out to hurt you or offend you, you have been very helpful in the past - I would not do that intentionally. It is either the choice of changing who I am and conforming or being the brash redneck southerner I have alaways been and giving you some diversity - is that bad? if I have to take away my striking visuals - it is the way I think it would be hard to remember without them to me - and I would not ask that from the first of you - if you want to make striking visuals to introduce a krugman thought or paper - I fully encourage it - the mind is a visual organ and striking visuals help in memory retention. If you want to make fun of johhny5 or chide him I encourage that too - and if attacking johhny5 makes you smile - he will embrace your entertainment. For people spend more money on entertainment than education so there is sound economic reasons to value it more highly. Krugman is not attacking the US, just the US growth - I thought that was made clear in the title and the article - we can't keep the other countries down anymore - Economic Hit Men aren't gonna do the job anymore - but some people can keep all thier money invested in the future of 1 country whose Economic Hit Men are going public if they wish. I just hate to see fellow investors be uninformed and not add to the EMH. I want you David E and Terri and all others to be well diversified in assets and in risk and make lots of money so you don't wind up as one of the grumpy bitter hateful people in my trailer park who eat dog food cause it is all they can afford and have no sense of humor and always flattening johnny5's tires or throwing thier kitty litter in his driveway. (stinky) Oh darn another visual! Emma already posted why international diversification is a prudent strategy, Krugman was ahead of the game. I am sorry and apologize to everyone who is offended by thinking of paul krugman using the toilet - I had no idea people so involved in protecting their money and future security could be so easily offended by such a common everyday occurence - I guess it is simply a clash of cultures - I will be certain to try to limit my redneck visuals in the future not to offend - Really David E I am not understanding why you would assume that about me? If I wanted to offend you I would fix you up on a date with my aunt katie - the lulu bell southerner that she is. Her favorite movie is shallow hal. I will watch more jon stewart and saturday night live to understand your humor if you will promise to watch more blue collar tv and south park to understand my humor - deal? Then maybe when you think I have offended you will realize johnny5 loves you very much and just wants you to laugh and have fun in life, not be wound so tight that losing all your money would make you jump out of the building when the crash comes. http://www.brookings.edu/comm/policybriefs/pb131.htm Global Economic Governance at a Crossroads: Replacing the G-7 with the G-20 by Colin I. Bradford, Jr. and Johannes F. Linn April 2004 A good read for those of you who wish to continue to stay in Number 1 America and with that now it is time for johnny5 to wipe his tears and go clean the kitty litter out of the driveway again (hehe) Big hug David E.

Subject: Johnny5, Johnny5
From: David E..
To: johnny5
Date Posted: Sun, Mar 06, 2005 at 14:49:40 (EST)
Email Address: Not Provided

Message:
I don't watch SNL and The Daily show. What we may have here is an age gap. I served as a draftee in the late 50's with many southerners. At that point in time, manners were important. Because I don't watch SNL and the Daily Show I don't know if gutter humor is widespread there. David E.. is not mad at you and Big Hugs back. David E.. just wanted you to know how he felt. In fact, David E.. believes in global investment and his split between US and foreign investment is at 45/65 and widening. And in a prior post(recent, but trimmed) you asked about a UK index fund. I recommended iShares then(ETF ticker is EWU) as a good selection, but was lukewarm because I was not convinced the fund would always sell at market. I am now reasonably convinced - and am ready to buy their Canada index and looking into the Brazil index to represent the Americas. They keep costs low, by gathering compatible indexes into one company - so just one set of accountants, overhead, and lawyers to produce one annual report for many index funds.

Subject: I-shares
From: johnny5
To: David E..
Date Posted: Sun, Mar 06, 2005 at 18:55:19 (EST)
Email Address: johnny5@yahoo.com

Message:
Yes very much appreciated David E, I will have to read up on these international I-Shares some more. Have you any links to get me started?

Subject: Links
From: David E..
To: johnny5
Date Posted: Sun, Mar 06, 2005 at 22:02:40 (EST)
Email Address: Not Provided

Message:
A good place to start is www.etfconnect.com. You can put in the ticker and get a statistics and performance history. This is like a stock, but different. You buy a stock and you own shares in an index. Today there was a .3% premium on the Canada fund(EWC). That means if you bought at the closing price, you paid .3% more than the index sold for. You will also notice that a discount is possible. I was concerned that the discount would grow to 12-16% like it is on some closed end funds that I own. Because an arbitrage opportunity exists, the discount doesnt becomes significant. The arbitrage is that if a guy buys up at a discount 50,000 shares he can submit them to iShares and they will give him the index stock shares he bought, and he then can then sell at market, and put the discount in his pocket. Etfconnect.com has performance information about the ETF, it also has an explanation of how the different types of ETF's work. Here is a link that explains quickly how ETF's work - http://www.etfconnect.com/select/etf/etf.asp (reached from the main page or the education link) ETF's covered include SPDRs, Diamonds and HOLDRS. Then iShares.com is the corporate site. This is not as easy as checking out a Vanguard index fund. But included in the ''download' information on the main page is the Annual Report, which helps to understand how the businesss works. I am going to make one more look for a competing ETF, and if I don't find a better one I am ready to buy this one. I will keep an eye out for UK ETF funds on the way. This is hard work, there is nobody to sell this stuff. So we have to figure this out ourselves. The good part is the expense ratios are usually low. Terri wants a 'value' slice, but I am not sure about how to jump there. DFA thinks that the 'value' comes with increased risk, and they should know. DFA funds have sliced markets enough ways to keep everybody happy. Me, I am happy with a plain old index, and plan to hold long enough for both value and growth to cycle through more than once. The UK fund looks good it is paying 1.8% in dividends, more than my Canada Fund. Dividends are good. Cheers David

Subject: worldwide dividend etf's
From: johnny5
To: David E..
Date Posted: Sun, Mar 06, 2005 at 22:45:58 (EST)
Email Address: johnny5@yahoo.com

Message:
Thanks David, I just found this website tonight - he is talking about DVY and PEY for dividends - I see the DVY on the ishares link terri provided, but not PEY. http://www.fundalarm.com/wwwboard/messages/111342.html Greetings: Does anybody here know of the existence of an ETF that focuses upon companies which pay a rising dividend every year and which are located all over the world? What I am looking for is an ETF that fits the above description and which I can add to my ShareBuilder account. I already know about DVY and PEY. But to my knowledge, their holdings are limited to the United States. I happen to own PEY in my Sharebuilder account. Eaton Vance offers some closed-end worldwide dividend paying funds, such as ETG, EVT, and ETO. However, they are not available on ShareBuilder. If you know of any leads, I would be delighted to hear them. If not, then it is probably only a matter of time until an ETF of this type comes along and joins the ShareBuilder roster. Thanks in advance. Very Sincerely, MM

Subject: Having Fun
From: Ari
To: David E..
Date Posted: Sun, Mar 06, 2005 at 15:12:18 (EST)
Email Address: Not Provided

Message:
Having fun is important, but imagery can be tricky.

Subject: Problem with asset v. risk allocation
From: johnny5
To: All
Date Posted: Sat, Mar 05, 2005 at 22:43:38 (EST)
Email Address: johnny5@yahoo.com

Message:
Can someone more educated please explain to me why asset allocation and that brinson paper is so important compared to this data: This is from Dimension Fund Advisors - supposed to compete with vangaurd: http://library.dfaus.com/articles/new_indexing/ ...The same logic works within the US market. Suppose market volatility is only one of several factors that drives US portfolio returns. In such a world the market would no longer be the only legitimate indexing solution. Academic research over the last ten years by Eugene Fama and Ken French, among others, suggests that MARKET RISK IS ONLY ONE OF THREE DISTINCT RISK FACTORS IN STOCK INVESTING. Small company stocks expose investors to a completely different form of volatility. Distressed stocks with poor earnings prospects, usually mislabeled 'value' stocks, also have unique risk-return characteristics. Each of these three risk 'flavors' is unrelated to the others. Small stocks can do well when the overall market does poorly and value stocks can have dreadful returns when small stocks do well, and so on. Yet each of the three risk factors has as much potential for increasing investment returns (the extra return expected for taking each of these risks is about 5% per year on average). This is from Hoyt - one of the top real estate think tanks: http://www.hoyt.org/asi/winter01.html Post-Modern Portfolio Theory Post-modern portfolio theory is rooted in the old adage that the money is not made until the asset is sold and the cash received. It is further rooted in recognition that risks come from diverse societal forces and that the combinations that occurred in the past are not expected to be the combinations of the future. Thus, composite historical volatility of returns or patterns of returns provide no useful predictor of future returns. The best forecast of future returns or volatility are predicated on the decomposition of the risks. Thus, the historical performance of assets tied to specific risk factors may shed light on the future, but only to the extent that the underlying factors are the variables that are analyzed. While it makes sense to do the best available in the forecasting of the risks, it is wisest to realize the limitations of forecasting. Thus, strategy becomes appropriate. Strategy is basically defensive. It is policy based on dealing with the risks and uncertainty of how events will unfold. THUS, ONE STRATEGY IS TO EVALUATE THE TOLERABLE LEVELS RISK, BY TYPE OF RISK, AND BUILD DIVERSIFICATION BY RISK, NOT BY ASSET TYPE. By so doing, one may maximize returns within risk constraints, and may use the concepts of modern portfolio theory to so do, provided that the risks are decomposed and that then returns are realized, not imputed by sales that are not intended and that do not occur. That is the genesis of a post-modern portfolio theory.* http://www.ibbotson.com/download/research/Does_Asset_Allocation_Explain_Performance.pdf The mutual fund results shows that, because policy explains only 40 percent of the variation of returns across funds, the remaining 60 percent is explained by other factors, such as asset-class timing, style within asset classes, security selection and fees. So Terri this is what we have to do, get the lowest fees we can, and then choose asset classes diversified on RISK types - not asset types - right?

Subject: Investing in Commodities
From: Terri
To: All
Date Posted: Sat, Mar 05, 2005 at 21:13:04 (EST)
Email Address: Not Provided

Message:
There has been no simple vehicle for investing in an index of commodities, so we have no idea whether such a strategy might be effective. Since commodity prices have been muted however these 25 years, I wonder. Investing in commodities on our own takes quite a level of expertise. Again, I cautiously cautiously wonder. There does seem to be enough at Vanguard, but we can look to all sorts of alternatives cautiously.

Subject: Re: Investing in Commodities
From: j9
To: Terri
Date Posted: Sat, Mar 05, 2005 at 22:40:42 (EST)
Email Address: Not Provided

Message:
There are some mutual funds which do this. TR Price New Era, I believe. I bought the ETF IGE at the beginning of the year. So far it is up 16%.

Subject: Re: Investing in Commodities
From: Terri
To: j9
Date Posted: Sat, Mar 05, 2005 at 23:54:33 (EST)
Email Address: Not Provided

Message:
Investing in the Goldman Sachs Commodity Index is an interesting alternative. The question is whether the index is preferable to the underlying stocks over time. Interesting. Thank you.

Subject: National Index Returns
From: Terri
To: All
Date Posted: Sat, Mar 05, 2005 at 19:13:16 (EST)
Email Address: Not Provided

Message:
http://www.msci.com/equity/index2.html National Index Returns [Dollars] 12/31/04 - 3/4/05 Australia 7.4 Canada 5.1 Denmark 7.1 France 4.5 Germany 1.4 Hong Kong -3.3 Japan 0.6 Netherlands 8.1 Norway 9.4 Sweden 3.1 Switzerland 3.4 UK 5.6

Subject: futures less volatile than s&p index
From: johnny5
To: All
Date Posted: Sat, Mar 05, 2005 at 14:12:27 (EST)
Email Address: johnny5@yahoo.com

Message:
http://www.dailyreckoning.com/Featured/CommoditiesFutures.html Commodities and natural resources used to be the butt of jokes and misconceptions. Now they are finally getting the respect they deserve. Traditional investors and advisors are rushing into commodities, hoping to find the high growth that traditional equities no longer deliver. But even with the commodities turnaround, there is still one sector of the real asset market that is still taboo to many mainstream investors. I'm talking about the commodity futures markets. Resource stocks and stock options are fine for most investors. But they still think that trading in the futures markets is nothing more than gambling. And that's a real mistake. The fact is, traders need to diversify. And if the next several years are as bumpy for stocks and bonds as some analysts expect, commodity futures and options might provide the kind of returns investors need. But please don't get me wrong - I'm not saying that futures trading is risk-free. Risks - and even losses - are a part of every kind of trading. Stock... real estate... even the U.S. dollar are full of risk. Yes, commodities carry risk... but they are not intrinsically risky. What makes them risky is the same thing that makes them attractive - LEVERAGE. You can trade futures on very, very low margin. So the question becomes, exactly how risky are futures? The truth may surprise you. For example, Gary Gorton of the University of Pennsylvania and K. Geert Rouwenhorst of Yale researched commodity futures contracts between 1959 to March 2004. Their first major finding commodities are negatively correlated with stocks. That is, they often move one way when stocks are moving another, and vice versa. So diversifying a stock portfolio into commodities can significantly reduce your risk. Of course, that's something we've been saying all along. But there were some surprises in the professors' findings. Previous studies have shows that commodities are able to match equities' returns. But the index model they constructed showed commodities were about 19% less risky than the S&P 500. That's right - buying futures contracts was less risky than buying stocks. Thus, on a risk-adjusted basis, they outperform stocks by a significant margin. They also discovered something very interesting about the different markets' volatility. It turns out that a disproportionate amount of stocks' volatility came from months in which they lost significantly. Meanwhile, an outsized portion of commodities' volatility came from months in which they scored big gains. In other words, the professors found that stocks have greater risk on the downside than commodities do. Those are some pretty strong arguments for considering commodity futures and options for your portfolio. But can you get the same results just holding resource stocks? Not quite... According to Gorton and Rouwenhorst, over the last 40 years, the commodity futures index more than tripled the cumulative performance of average resource stocks involved in the production of those commodities. They conclude: 'An investment in commodity company stocks has not been a close substitute for an investment in commodity futures.'

Subject: The Case for Commodities
From: Terri
To: johnny5
Date Posted: Sat, Mar 05, 2005 at 15:33:05 (EST)
Email Address: Not Provided

Message:
http://news.morningstar.com/doc/article/0,1,127772,00.html February 23, 2005 The Case for Commodities: Commodity futures have outperformed stocks on a risk-adjusted basis. By Curt Morrison Commodities and commodity futures are not widely owned. A typical Wall Street portfolio strategy consists of 60% stocks, 30% bonds, 10% cash, and 0% commodities. It's impractical to take possession of physical commodities, and futures contracts are inappropriate for most investors because they are rather complex and are often purchased using leverage. However, these barriers can be overcome by purchasing one of the three conventional open-end mutual funds that invest in commodities ( PIMCO CommodityRealReturn Strategy PCRDX, Oppenheimer Real Asset QRAAX, and Merrill Lynch Real Investment MDCDX). Yet these funds recently held less than $8 billion in combined assets--less than 0.1% of the total assets invested in mutual funds. Commodities and commodity futures have some key characteristics that should earn them a place in diversified portfolios, though. Financial theory suggests that buyers of commodity futures ought to earn a real return, and empirical data confirm the theory: An unweighted index of commodity futures between 1959 and 2004 provided a return equal to the S&P 500 stock index, but with lower volatility. This means that the Sharpe ratio, a measure of risk-adjusted return, was actually a little better for futures than for stocks. Further, the returns to futures buyers were negatively correlated with stock and bond returns during that 45-year period; futures zigged when stocks and bonds zagged. This means that a portfolio including futures exhibited less volatility than a portfolio containing only stocks and bonds. Economists Gary Gorton and K. Geert Rouwenhorst reported these findings and more in the article 'Facts and Fantasies About Commodity Futures.' To assess returns, the researchers constructed an equally weighted index of commodity futures from data maintained by the Commodities Research Bureau. They assumed that all futures contracts were fully collateralized with T-bills (futures buyers frequently employ leverage), and then rebalanced the index at the end of each month. Gorton and Rouwenhorst emphasized the difference between an investment in a physical commodity and the purchase of a commodity futures contract. A direct investor in commodities like copper, wheat, or hogs will only profit if the price of the commodity rises, but that is not true of the futures buyer. He or she can experience a profit even if spot prices are falling. Consider a simplified example: The current price of oil is $50. An oil producer thinks the price is most likely to be $45 one year from now. However, the producer thinks a fall to $30 is a significant probability, and such a steep drop would cause harmful disruptions to the company's cash flow. Therefore, the producer would like a hedge, a form of insurance that would lock in a minimum price for its oil next year. A futures contract provides that hedge. But like any insurance policy, it won't be free if the market is efficient. The insurer, in this case the buyer of the futures contract, will want to be paid. If the buyer also expects oil to sell for $45 next year, he might be willing to enter a futures contract requiring payment of $40. If the going price of oil is $45 when the contract expires one year later, the futures buyer can purchase it for only $40 and make a $5 profit. On the other hand, an investor who purchased oil directly for $50 would suffer a loss of $5. This is a critical difference between futures contracts and direct investments in commodities. Theoretically, futures buyers ought to earn a profit because producers should be willing to pay for a hedge that guarantees adequate cash flow. But this will only occur if the buyers who set the futures prices can project commodity prices about as well as producers. Gorton and Rouwenhorst confirm that the theory worked during the last 45 years. Despite the encouraging data, there is reason for some skepticism. Although returns of futures contracts greatly exceeded returns of physical commodities between 1959 and 2004, the two were highly correlated, and physical commodities in Gorton's unweighted index delivered a positive real ('real' means that the effect of inflation and deflation are removed) return during the period. One might wonder if returns of futures would have been positive if spot prices fell. Further, Gorton's study provides a rationale for investing in futures contracts, but doesn't make a strong case for an investment in physical commodities. Savvier readers might be aware that real commodity prices appear to travel in one long-term direction--down. (Gold is a notable exception to this pattern, probably because of its perceived value as 'hard money.' In the book Stocks for the Long Run, Jeremy Siegel showed that gold held its real value between 1802 and 2001.) In fact, The Economist has tracked a weighted index of commodity prices since 1845, and the real price of that index (which excludes oil and precious metals) fell by 70% in a bumpy downward path covering 160 years. This pattern makes sense as long as the supply of a commodity is not limiting; technological progress makes commodities cheaper to produce. Still, The Economist's index frequently rose for prolonged periods. In an October 2003 report, Legg Mason's Barry Bannister makes the case that growth rates of commodity prices and consumer prices outpace one another in alternating cycles lasting more than a decade. The latter favors stock market returns, but the former is associated with outperformance by raw commodities. His report contains data from 1870 to 2003 showing that outperformance by stocks or commodities alternated seven times for periods averaging 18 years. This very long-term data buttresses Gorton's finding that stock and commodity returns are negatively correlated. Bannister projected a 7% annualized return to physical commodities between 2003 and 2013. That was roughly twice his projected return for the S&P 500 (ex-dividends). Regular readers might know that I believe the broad stock market is egregiously overvalued and offers very poor prospective returns (you can read why here and here), so an asset class that promises a negative correlation to stock returns sounds appealing. Although I'm not aware of a convincing economic theory that explains why the negative correlation must persist indefinitely, I'm in the camp that believes this is likely. Thus I've invested a portion of my own portfolio in PIMCO CommodityRealReturn Strategy. If you are interested in one of the three mutual fund vehicles that invest in commodities, consider the following limitations first: Even if the average commodity future provides a stellar return in the years ahead, the available mutual funds might fail to provide the same gains. These funds subtract management fees, they invest collateral in a variety of bonds (which introduces another source of risk and return), and they are benchmarked against the return of weighted indexes of spot commodity prices rather than the unweighted index of commodities futures used by Gorton and Rouwenhorst. Although these funds may purchase futures contracts, they also employ other derivatives to capture the appreciation or depreciation in spot prices. Thus they are most likely to provide a return close to that of spot prices, but theoretically that should fall short of the return of futures contracts (as explained above). Also, taxable distributions can be hefty with these funds, so you might want to hold them in a tax-sheltered account.

Subject: Re: The Case for Commodities
From: johnny5
To: Terri
Date Posted: Sun, Mar 06, 2005 at 00:16:40 (EST)
Email Address: johnny5@yahoo.com

Message:
Great post Terri - I want the science to protect me from myself - so to be true to the academics we need to be in futures - not commodity stock indexes - PIMCO commodities are not gonna serve the needs of the acadmeic study right? So how do we get into futures cheap and easy?

Subject: Re: The Case for Commodities
From: Terri
To: johnny5
Date Posted: Sun, Mar 06, 2005 at 10:54:40 (EST)
Email Address: Not Provided

Message:
Thank you :) Since I do not know a resonable way to buy the commodity futures market, I will ask and read and think. Could the academic study procedure for buying futures be duplicated readily? I can not tell.

Subject: Decoy of the falling dollar
From: johnny5
To: All
Date Posted: Sat, Mar 05, 2005 at 14:04:21 (EST)
Email Address: johnny5@yahoo.com

Message:
So how long do we stick with bonds? http://www.financialsense.com/editorials/fekete/2005/0227.html The Decoy of the Falling Dollar by Antal E. Fekete, Professor Emeritus, Memorial University of Newfoundland February 27, 2005 A consensus is building among market observers that bonds defy all logic. The falling dollar should make dollar bonds fall, too. After all, bondholders stand to lose a large part of the value of their original investment as a result of the depreciating dollar. Yet the bull market in bonds that started almost 25 years ago is still intact. The following comments may help put some of the logic back. As a preliminary I would like to remind readers that a bull market in bonds is the sine qua non of the deflationary spiral under the Kondratiev cycle. Pimco’s Bill Gross is premature in writing the obituary of the bond bull. Other observers’ opinion that a dramatic rise in interest rates, which appears to be imminent, is likely to serve as the trigger for the Kondratiev winter is probably wrong as well. On the contrary, I shall argue that a continuation of the bull market in dollar-bonds will do that particular trick. I consider any weakening in dollar-bond prices a bear-trap. Here are my premises. The perspective on the bond and foreign exchange markets is distorted by the smoke-screen surrounding a gigantic speculative scheme known as the yen carry-trade. This is how it works. The Japanese are printing yens, not to support productive enterprise but to finance speculation. Next, the ball is in the Fed’s court. The Fed obliges and prints dollars, again not to support productive enterprise but to serve as a drop-off point for speculators. Japanese interest rates being so low, speculators can borrow yens at around 1.5%, sell them for dollars to be invested in US Treasuries yielding 4 to 5%. The speculators pocket the difference without performing any useful service whatsoever. The yen carry-trade is firmly in place, allowing the US debt markets to defy gravity. The question is when this scandalous charade might end. To answer it observers look at another key market, that of the dollar, and conclude that the obvious bear market will spell the end of the yen carry-trade. As the dollar falls, the Japanese and the Chinese may threaten to start dumping it and to put an end to its reserve currency status. Only a dramatic rise in interest rates may save the dollar as the world’s reserve currency. This is where I take issue with the conventional wisdom of those observers who, like myself, think that the deflation threat is serious. What they miss is the fact that the bear market in the dollar actually helps rather than hurts the yen carry-trade. The terms of trade for those who sell yens to buy dollars is improved immensely by the fall of the dollar. The yen carry-trade can be described as arbitrage with short leg in the yen bond market and long leg in the dollar bond market. Profits on the long leg increase far more than losses on the short as a result of the dollar-devaluation. The faceless bond speculators are sitting on a huge pile of profits already that have been accruing for a quarter of a century. They can well-afford to prevent Humpty-Dumpty (read: the dollar) from having a great fall from its perch as a reserve currency. This particular cash cow can be milked yet for quite a bit longer with careful husbandry. It would be a folly to let it be slaughtered just at the time when milk (and honey) output is at peak. What I am suggesting is that bond speculators are calling the shots, and central bankers willy-nilly play balls with them. The alternative is sudden death. Without bond speculation the regime of irredeemable currencies would have come to a sad end thirty years ago. Speculators well-understand the dynamics of competitive currency devaluations. The present round started ten years ago when the yen was devalued 50%. In the intervening years the ruble collapsed along with other Asiatic currencies. Right now it is the turn of the dollar. It will be interesting to watch whether and when the euro will succumb to the temptation, as I predict it will, in spite of the brave talk we are hearing from Brussels. This is just a replay of the 1930's with the yen playing the role of the leading currency. To recapitulate, if the yen carry-trade was profitable during the last ten years of a weak yen, then it would be a hundred times more profitable during the next ten years of a strong yen. It is a mistake to look at the falling dollar as the result of the profligacy of the American consumers, and a direct outcome of the American trade deficit. This is just a decoy. Admittedly, it is a clever one as far as decoys go. It is designed to divert attention away from the real culprit, which is the yen carry-trade and its obscene profits. The falling dollar is part of the big picture of competitive currency devaluations, or of the even bigger picture of the Kondratiev cycle. But let us not forget that at the same time it is a powerful booster for the yen carry-trade. Let the public buy the nonsense of Milton Friedman that the falling dollar is just the manifestation of the adjustment mechanism balancing the American trade account. Or let it buy the equally fallacious Quantity Theory of Money predicting that the dollar will be printed into worthlessness. The truth is that there is an insatiable demand for dollars, especially for falling ones, by bond speculators. According to the 19th century French economist Frederic Bastiat, economics is a game of distilling what you don’t see from what you do. In the present case what you see is the American trade deficit, which can easily be blamed on the appetite of the gluttonous American consumer. What you don’t see is the accumulating profits of the faceless bond speculators, sucking the life-blood from the world economy. This is exactly the same point that was missed in the Great Depression of the 1930's by all economists. They are going to miss it again. The world is going to repeat all the mistakes it made then, because it has allowed the government and the economists’ profession to fabricate a theory of the Great Depression that puts the blame squarely on the gold standard. The price has to be paid for pushing gold out, not just from the monetary system, but also from the research agenda of universities and think-tanks! It is not hard to predict the further course of the ongoing depression if you can divine the strategy of the faceless bond speculators. They will definitely want to keep the irredeemable dollar as a reserve currency for as long as it serves their purposes, which may be for another decade or so. The dollar is not going to have a precipitous fall. It will decline further, but the decline will be controlled. The important decline determining the course of deflation, however, is not that of the dollar, but that of the American rate of interest as it follows in the footsteps of the Japanese with a ten-year delay. The twin deficits will continue to baffle commentators who are too dim-witted to understand that they have fallen victim to clever prestidigitation. It reflects woolly thinking to talk about a repetition at this stage of the Volcker-miracle, 1980 vintage, in saving the dollar from sudden death by applying the shock-therapy of high interest rates. In the present situation the real miracle will be to save the dollar by a falling rather than a rising interest-rate structure. Remember, 1980 marked the blow-off phase of the inflationary spiral, and the beginning of the deflationary. Right now the world is entering the depths of the deflationary spiral, and vintage therapy is out of place. I define inflationary spiral under the Kondratiev cycle as the decades-long rise of prices and interest rates, and deflationary spiral as their similarly long fall. Interest rates may lead and prices may lag, or the other way round. The important thing is the linkage. Prices and interest rates are inevitably linked. Linkage epitomizes a huge oscillating money-flow back-and-forth between the bond and the commodity market. When the money-tide begins to flow at the commodity market and ebb at the bond market, we have the inflationary spiral. When the tide is reversed and it flows at the bond and ebbs at the commodity market, we have the deflationary spiral. These tides must run their course. They are too powerful to be diverted by contra-cyclical monetary policy. Central bank intervention is counter-productive. It acts only to prolong the cycle and to make it even more devastating. During the inflationary spiral the main worry of the central bank is the high and rising rate of interest. To combat it, the central bank resorts to open market purchases of bonds in order to put money into circulation, hoping that it will flow to the bond market to bid up prices there. But speculators know better, and they divert the flow of money to the commodity market. Prices rise. Linkage will then make interest rates rise more, contrary to the wishes of the central bank. During the deflationary spiral the main worry is low and falling prices. To combat it the central bank once again resorts to open market purchases of bonds in order to put money into circulation, hoping that it will flow to the commodity market to bid up prices there. But speculators forestall the central bank in buying the bonds first. Interest rates fall. Linkage will then make prices fall more, contrary to the wishes of the central bank. To recapitulate, in the inflationary phase of Kondratiev’s cycle the central bank wants to bring down interest rates but, instead, causes prices to rise which leads to still higher interest rates. In the deflationary phase it wants to raise the price level but, instead, causes interest rates to fall which leads to still lower prices. The contra-cyclical policy of Keynes backfired in either case, because Keynes was ignorant of the linkage. Some years ago I put forward a new theory of Kondratiev’s long-wave cycle* revealing its cause as the fluctuation in the propensity to hoard. This fluctuation is in turn caused by the centuries-old wrong-headed policy of banks, aided and abetted by the government, in obstructing the flow of the gold coin to the saver whenever he finds the rate of interest unacceptably low. The flow of gold in and out of the banks is the mechanism whereby the saver regulates the rate of interest under a gold standard. You cannot take away the saver’s right to control bank reserves with impunity. Gold is the natural conduit for hoarding. If you obstructed gold hoarding, the saver would have recourse by hoarding other marketable goods. This would, however, have some serious side effects. It would generate the Kondratiev cycle with its devastating flow of money back-and-forth between the bond and the commodity market. The tide of money in the commodity market triggered a tsunami in 1980 when it dawned upon owners of commodities that their hoards could no longer be financed at high interest rates in view of high prices. When they panicked and ran to the exits, most were trapped. A painful process of decades-long inventory liquidation began. We are at the stage right now where businesses must reduce high inventories at falling prices, while speculators make a killing in bonds.

Subject: More on bonds and inflation
From: johnny5
To: johnny5
Date Posted: Sat, Mar 05, 2005 at 21:53:34 (EST)
Email Address: johnny5@yahoo.com

Message:
So how long do we stay in bonds? http://www.contraryinvestor.com/moprinter.htm ...We won't belabor the point, but this little simplistic CPI adjustment calculation discussion again simply reinforces in our minds that the current day bond market is not about anticipating or discounting real world inflation at all in terms of setting fixed income prices. Or anticipating deflation either, for that matter. The US bond market of the moment is all about playing interest rate spreads. It's all about levered speculation. Believe us, the Fed has much bigger problems than an understated CPI at the moment. Much bigger in terms of total financial market leverage of the moment. Until the leveraged speculating and interest rate spread driven carry trade game comes to an end, we sure as heck would not be looking to the bond market for clues as to the true nature of inflationary pressures, or lack thereof, in the real economy. Levered bond players playing the spread game could care less about inflation. Theirs is a world of basis point spreads, yield differentials, mathematical algorithms and interest rate protection derivatives overlays. In other words, this ain't your father's bond market anymore. Get it? Again, we suggest being aware of the dynamics at work and the reality of the macro economic numbers at present is our best investment offense in looking ahead. At some point, the markets will reflect economic reality. For now, unprecedented systemic liquidity creation and resulting leverage has skewed the connection between the fixed income markets and the underlying reality of inflationary pressures in the real economy. Hopefully, if we can already 'see' it, we can act accordingly when change ultimately descends upon the markets and the economy (as it always has in the past and will again down the road). But in the meantime, you know the game implicitly being played by the mainstream - don't ask, don't tell.

Subject: Phillipines gonna default
From: johnny5
To: All
Date Posted: Sat, Mar 05, 2005 at 13:43:50 (EST)
Email Address: johnny5@yahoo.com

Message:
Philippines follows Argentina's debt path By Jephraim P Gundzik Just as Argentina concludes the restructuring of its defaulted external debt, another sovereign default looms in the Philippines. Many analysts and investors are aware that the fiscal position of the Philippines is very similar to the fiscal position of pre-default Argentina. However, the social and political similarities between the Philippines and pre-default Argentina continue to be overlooked. The risk of default in the Philippines is much higher than is generally believed. Out with the old, in with the new Early this month, Argentina's government is expected to announce that about 70% of the country's bondholders agreed to swap defaulted debt for new bonds, taking a capital haircut of about 75% in the process. The successful conclusion of Argentina's debt swap is being heralded as marking the end of the era of emerging-market debt defaults. Investors appear to agree, as emerging-market bond spreads are near historical lows. Rather than taking Argentina's debt restructuring as a signal that emerging-market credits are improving, investors should be mulling the implications of their capital loss in Argentina for other emerging-market credits. Argentina's default, and those of Ecuador and Russia before it, very clearly demonstrate that the risk of default among emerging-market countries is not insignificant. Current emerging-market bond spreads offer no default premium. Damn the credit fundamentals The Philippines offers an excellent example of the disconnect between default risk and bond spreads. In the past year, investors and analysts have begun to understand that credit fundamentals in the Philippines are quite weak. International credit rating agencies, in their backward-looking analysis, have concurred, downgrading Philippine debt. Evaluation of Philippine credit fundamentals, however, has been almost exclusively confined to the recognition that the public-sector deficit and debt stock are large. This is nothing new. The country's fiscal deficit, as measured by the all-inclusive public-sector borrowing requirement has been above 5% of its gross domestic product (GDP) in each of the last five years. Public-sector debt stock has been above 125% of GDP over the same period. What apparently is new is the sudden surge in public-sector debt service payments. Interest and principal payments on the public-sector debt stock increased from 46% of total national government expenditure in 2002 to 68% of total national government expenditure in 2004. That debt service expenditure would leap higher was evident more than five years ago, when the public-sector debt stock topped 100% of GDP. With public-sector debt service costs equivalent to almost 70% of the Philippines' total national government expenditure, it is painfully obvious that Philippine debt service is unsustainable. Attempts to increase fiscal revenue by raising taxes will push economic growth lower - the net effect being further reduction of tax revenue. The Philippines is squarely in a debt trap. Efforts by President Gloria Macapagal-Arroyo's government to extricate the country from this trap are too little, far too late. Inexplicably, investors are disregarding the obvious, pushing down Philippine international bond spreads to ridiculously low levels. Perhaps the Arroyo government's promise of fiscal rectitude has consoled investors. Nonetheless, this very rectitude will prompt the country's inevitable default. Social revolt as the driver of default As in the Philippines, Argentina's public-sector debt stock became unsustainably large long before the country's default. Again, similar to the Philippines, Argentina's attempt to tighten fiscal policy came far too late to extricate the country from its debt trap. Rather than reducing the fiscal deficit, tighter fiscal policy in Argentina reduced economic growth, making default inevitable. One of the key reasons why economic growth slowed in Argentina was the gathering social revolt. Increasing social instability in Argentina, driven by increasing unemployment, rising taxes and non-payment of public-sector wages and pensions, created political instability, leading to the eventual collapse of the government and default. Notably, the International Monetary Fund dictated to Argentina the fiscal policies that resulted in social revolt. The same pattern is being replicated in the Philippines. The increase in public-debt service costs has sharply reduced national government expenditure on social services. Social-service expenditure decreased from 35% of total national government expenditure in 2000 to 23% of national government expenditure in 2004. The reduction in social expenditure has contributed to the intensification of the country's Muslim and communist insurgencies and growing social instability. In addition to reduced social expenditure, the Arroyo government also seems to have adopted some of pre-default Argentina's fiscal antics. National government expenditure, in ratio to GDP, declined in 2004, most probably due to the delay of earmarked expenditure into 2005. However, President Arroyo's most socially detrimental policy is her plan to increase fiscal revenue by raising taxes. As fuel and utility prices escalated sharply in 2004, the Arroyo government began to implement its fiscal tightening plan in the face of mounting social instability. Legislation aimed at increasing the value-added tax (VAT), if implemented, will most likely touch off uncontrollable social revolt in the Philippines as fuel and utility prices are forced higher by rising international oil prices. Gaining the support of the powerful Catholic Church, such a revolt will probably lead to the demise of the Arroyo government. Significantly, several opinion polls indicate that the majority of the Philippine electorate view the Arroyo government as illegitimate due to what many consider fraudulent elections in 2004. As in pre-default Argentina, very weak governance in the Philippines, undermined by weak government legitimacy and low popular support for the president, will further diminish the government's taxing authority. This will lead fiscal revenue lower despite the proposed tax increases. Just like Argentina, the Philippines' eventual public-sector debt default will be the result of social revolt and government collapse. Unless another large capital loss is appealing, investors should consider Argentina's default as an example of what can happen in other emerging-market countries, and not as an isolated and resolved event. http://www.atimes.com/atimes/Southeast_Asia/GC02Ae04.html

Subject: Henri 'Papillon/Ponzi' Charriere...
From: Pancho Villa
To: All
Date Posted: Sat, Mar 05, 2005 at 12:59:58 (EST)
Email Address: nma@hotmail.com

Message:
Central Banks face prisoner’s dilemma From Mr. Julian Jessop. Sir, Chris Giles (“Why GWB should heed Asia’s central bankers”, February 26) enjoyably compares Asian purchases of US assets to a “pyramid scheme”. Participants in such schemes hope to be repaid by new members who join further down the pyramid. But Asian central banks are such big players they cannot start to sell their dollars without undermining the US currency and creating even larger losses on their remaining holdings. An even better analogy is the “prisoner’s dilemma”, an idea taken from game theory in which each player gains when both co-operates, the other one, who defects, will gain more. This dilemma also applies to reserve management, where the decision is whether to keep buying dollars or to diversify into other currencies. If all central banks keep buying a weakening dollar, they will each make small but manageable losses. If one decides to sell and the others do not, that bank will avoid a loss, but its dollars sales will impose big costs on the others. If all central banks start to sell, they will all make much larger losses as the dollar collapses. Thus selling dollars makes sense for any one central bank, but if they all do so the outcome is worse than if they co-operate and keep buying the US currency. It is clearly in Asian central banks’ interests to work together to smooth the decline in the dollar and minimize the fall-out for regional currency markets. This was the focus of a low-key meeting last month to set up the “Asian Bellagio Group”, the latest in a series of initiatives to improve regional policy co-ordination since the Asian financial crisis of 1997-98. This suggests Asian central banks will continue to co-operate to prevent an outright collapse in the dollar. Julian Jessop, Chief International Economist, Capital Economics, London SW1W 9TR, UK

Subject: Central banks Face Dilemma
From: Jennifer
To: Pancho Villa
Date Posted: Sat, Mar 05, 2005 at 14:21:37 (EST)
Email Address: Not Provided

Message:
http://news.ft.com/cms/s/a9489882-8d1c-11d9-9d37-00000e2511c8.html March 5, 2005 Central banks face prisoner's dilemma By Julian Jessop Here is the reference to the interesting article....

Subject: Re: Central banks Face Dilemma
From: johnny5
To: Jennifer
Date Posted: Sat, Mar 05, 2005 at 14:43:03 (EST)
Email Address: johnny5@yahoo.com

Message:
Please help me to understand why so much emphasis is placed on foreign central bank holdings of dollars when I thought foreign private investors hold many more times the dollars - won't they have a much more dramatic effect on the future than what the central bankers do? Assume the central bankers cause profit loss for their bank shareholders to keep the world and economies stable but all the private individuals dump US assets - can the central bankers stop the onslaught of such a tidal wave? I have heard numbers like 15 trillion private versus 5 trillion central banks - so central bankers are only 25% of the power and the private people are much more no?

Subject: Central banks and Private ownership
From: Terri
To: johnny5
Date Posted: Sat, Mar 05, 2005 at 15:43:45 (EST)
Email Address: Not Provided

Message:
Public or private institutions could well sell liquid dollar assets at any time, but if there is private selling and public buying the effect will likely be nill since most liquid dollar assets in private ownership will not be sold. Also, selling dollars will reduce the price of American assets internationally so there is a limit at least in theory to how much selling might occur. Since American debt is held in dollars, sales of dollar debt would be far less serious than otherwise.

Subject: Some consensus
From: johnny5
To: Terri
Date Posted: Sat, Mar 05, 2005 at 17:23:19 (EST)
Email Address: johnny5@yahoo.com

Message:
Ok so no bear for awhile, no bull either, central banks will stabilize as best they can. Futures have 19% less risk than s&p index but fees and expense ratios may wipe out the gains - Terri have you analyzed wether the PIMCO commodity fund fees are high enough to still make the vanguard s&p index funds the better choice assuming a muddle through stock market for 5-10 more years? Pete has talked about that PIMCO fund as have others on the silicon investor board. http://www.pimco.com/LeftNav/Late Breaking Commentary/IO/2005/March_IO_2005.htm So the road, as most roads do, ultimately winds back to the central banker controlling the world’s reserve currency - Alan Greenspan. While he may have legitimate questions about why yields are so low in the face of rising Fed Funds, he indeed sits on a throne higher than his global counterparts. If he wants the 10-year Treasury at 4½%, he should just wave that Fed Funds scepter at a few more meetings, and there’ll be no bull bond market tsunami. Four percent is the floor for 10-year Treasury notes in my view. It’s time to get defensive as long as your portfolio 'carries' enough yield to outlast the wave of global savings and price-insensitive central bankers who have dominated the cycle to this point. Because of them, a bear market may not be in the offing for some time, but Greenspan’s Fed Funds scepter should be enough to stop the current bull market charge. If it doesn’t, you can write and say I should have known 'better than that,' but it won’t bother me as much as it used to.

Subject: Commodity Stocks or Commodities
From: Terri
To: johnny5
Date Posted: Sat, Mar 05, 2005 at 18:22:53 (EST)
Email Address: Not Provided

Message:
The PIMCO Commodities Fund has been around for little more than a year, and so far has trailed the MSCI Vanguard Materials Index or the Vanguard Energy Fund substantially. What this means, I do not know. The Energy Fund and Materials Stock Index make sense to me, while the Commodities Fund I really do not understand.

Subject: Hedge Funds
From: Terri
To: All
Date Posted: Sat, Mar 05, 2005 at 10:58:31 (EST)
Email Address: Not Provided

Message:
With apparently well more than a trillion dollars in hedge funds and high high expense ratios there have to be a growing number of funds that are poor and mediocre performers, and also more risks to funds in hope of justifying the costs. Regulation appears little or none. By the way, Alan Greenspan has suggested in past years that regulation is not desirable or necessary for fear of driving investment from the country. Of course, there are superior hedge funds as there are other superior investment vehicles.

Subject: European Investing
From: Terri
To: Terri
Date Posted: Sat, Mar 05, 2005 at 11:04:29 (EST)
Email Address: Not Provided

Message:
What puzzles me still is why investment companies in Europe and Japan offer such high cost and mediocre performance retail investment vehicles with no apparent competition. How does a French or German or British middle class household invest for safety and performance?

Subject: Citgo and Houston and Venezuela
From: Emma
To: All
Date Posted: Sat, Mar 05, 2005 at 09:42:08 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/05/business/05citgo.html?pagewanted=all&position= Citgo's Status Is Giving Houston the Jitters By SIMON ROMERO HOUSTON - Few places are as jittery as this city when it comes to the future of Citgo Petroleum, the oil refining giant owned by the government of Venezuela and based here. Popular sentiment in Venezuela is critical of Citgo's rich links to the United States, and the administration of Hugo Chávez has recently signaled its intent to exert greater control over Citgo and perhaps even dismember it. So, Rafael Ramírez, the president of Venezuela's national oil company, tried to dispel uncertainty in energy markets when asked about the recent turmoil at Citgo, which is the main conduit for Venezuelan oil exports to the United States. Citgo lends its brand to 14,000 independently owned gas stations in this country. It also accounts for almost 15 percent of oil refining output in the United States. 'Houston has nothing to fear,' Mr. Ramírez, who is also Venezuela's energy minister, said in an interview in Caracas. To be sure, at Citgo's headquarters in Houston, the view is somewhat different. Next week, a group of Venezuelan lawmakers will come to the headquarters to interview officials as part of a recently expanded investigation by Venezuela's National Assembly into reports of corruption at Citgo and PDVSA Services, the Houston-based purchasing arm of Petróleos de Venezuela. Citgo officials declined requests for interviews. About a month ago, the administration of President Chávez quietly but abruptly ousted Citgo's chief executive, Luis Marín, only the second Venezuelan to run the company since Petróleos de Venezuela bought control of Citgo in 1990. Petróleos de Venezuela replaced Mr. Marín, who had overseen the recent transfer of Citgo's headquarters to Houston from Tulsa, Okla., with Felix Rodríguez, a senior executive at Petróleos de Venezuela and a vocal supporter of Mr. Chávez. Then, last week, Petróleos de Venezuela took the unusual step of purging Citgo's entire board, replacing longtime directors with people who are explicitly loyal to Mr. Chávez and who support increasingly activist policies intended to diversify Venezuela's oil exports to markets other than the United States. 'It's not unusual for our C.E.O.'s to serve a relatively short term and then be replaced by another executive,' said David McCollum, a Citgo spokesman. Mr. McCollum declined to comment further on the recent management upheaval at Citgo. Venezuela's ambitions for Citgo have recently come under greater scrutiny, amid statements from Caracas about the politically charged energy relationship with the United States. Though Mr. Rodríguez, Citgo's new chief executive, has insisted that a sale of Citgo's refining assets is not imminent, Mr. Ramírez, the president of Petróleos de Venezuela, acknowledged that Venezuela was actively considering the sale of parts of Citgo. Lukoil, a major Russian oil company, has said publicly that it is in discussions with Citgo about possibly refining Russian oil for export to the United States. 'We are in conversations with several interested companies, and are reviewing which refineries are beneficial for the country and which aren't,' Mr. Ramírez said. 'People keep asking us about the sale of Citgo as if it were as simple as selling a pair of shoes.' Of course, the reliance of the United States on Venezuelan oil imports is not so simple. Oil from the Middle East, West Africa or Central Asia could potentially be redirected to American ports if Venezuela were to curtail oil exports to the United States through severing commercial ties with Citgo. But doing so could help drive up global crude prices. Energy officials in Venezuela are aware of the benefits of selling oil to the United States; the country's total oil export revenues soared 47 percent in 2004, to $29.1 billion. Yet during a time of elevated oil prices, clarity from Caracas in relation to Citgo seems in short supply in its new home city. Less than a year ago, city officials celebrated the arrival of Citgo, which is transferring 700 jobs to the Houston headquarters out of a total work force of 4,000. Now the mood has changed amid doubts over the company's future. In an editorial entitled 'Our Chávez Problem,' The Houston Chronicle recently criticized the handling of Mr. Marín's ouster as Citgo's chief executive and the Venezuelan government's positioning of Citgo as a bargaining tool in relations with the United States. Citgo, of course, remains an essential pillar of Venezuela's economy as the nation's principal outlet for foreign crude oil sales and one of the most important operators of oil refineries in the United States, with interests in eight installations in this country that process crude oil into gasoline and asphalt. Those refining assets, analysts say, are among the most coveted in the energy industry. The growing profitability of Citgo's refineries is the main reason many energy executives in Houston are puzzled as to why Venezuela might consider selling them. Citgo's revenue has more than doubled, to $29.9 billion in the year that ended last Sept. 30, compared with $13.3 billion for the period in 1999, the year Mr. Chávez was elected president of Venezuela, said Bryan Caviness, an analyst at Fitch Ratings who follows bonds issued by Citgo. Citgo's net income also soared during those five years, to $499.2 million in 2004 from $146.5 million in 1999, a trend illustrated by Citgo's payment of a record $400 million dividend to the government of Venezuela last December. Mr. Ramírez, the president of Petróleos de Venezuela, complained that while Citgo was originally acquired with the intent of refining Venezuelan crude it now has to buy about 50 percent of the petroleum for its refineries from other countries, mainly Canada and Mexico. That fact might indicate one option Petróleos de Venezuela is considering when weighing the sale of some of Citgo's assets. 'For a trader this would probably be a good business but it doesn't make any sense for us,' Mr. Ramírez said in reference to its refineries that do not use Venezuelan crude. 'Does that mean we're going to abandon our refineries and leave the American market? No.' Nor does that mean, of course, that Citgo will remain out of play in Venezuela's strategy of finding new markets for its oil as far afield as China. For several years it has been impossible to separate any discussion of Citgo from the whirlwind of Venezuelan politics. The Chávez administration is critical of the way previous administrations opened up the oil sector to private investment and acquired foreign refining assets under Citgo's control, insisting these were attempts to hide revenue from the state. Many Venezuelans, particularly supporters of Mr. Chávez, remain profoundly mistrustful of Citgo and skeptical of a company that employs few Venezuelans and until recently did not return large dividends to Petróleos de Venezuela. 'Citgo has never been a good business for Venezuela, and the general population knows it,' said Rafael Quiroz, a former board member of Petróleos de Venezuela and a vocal supporter of selling Citgo. He said there were 'serious and legitimate doubts' whether Citgo's revenue had helped ease poverty in Venezuela. This mistrust was evident in a hearing this week in Caracas on reports of financial irregularities at Citgo. A five-member commission questioned Mr. Marín, the former Citgo president, for more than two hours on Tuesday about issues like pension funds and crude oil contracts. When asked whether Citgo was in fact profitable for Venezuela, or whether it should be sold, Mr. Marín offered few clues about the ultimate fate of the company. 'That evaluation must be made by the shareholder,' he said, referring to the Venezuelan state.

Subject: Whose Patent Is It, Anyway?
From: Emma
To: All
Date Posted: Sat, Mar 05, 2005 at 09:40:05 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/05/business/worldbusiness/05copycat.html?pagewanted=all&position= Whose Patent Is It, Anyway? By HOWARD FRENCH GUIYANG, China - Each shift, 200 workers, most of them women in smocks and bibs, labor in a factory tucked away in hilly farmland outside this city assembling a single product, one-inch hard drives. As China's emerging industrial centers go, Guiyang is an obscure outpost, bearing little resemblance to the booming factory towns of the east coast. And yet, as much as any other place in China this hard drive assembly may be at the front line of an intense global struggle to dominate high-tech manufacturing. The tiny storage device this factory churns out is the heart of one of the world's hottest consumer electronics items, the mini version of Apple Computer's iPod. Sales to Apple represent a huge triumph for GS Magic Stor, an offshoot of a struggling state-owned carmaker that is so obscure that even in China few are familiar with the name. The problem with this ringing success story, according to a better-established rival, Hitachi Global Storage Technologies, which has factories in China and also supplies miniaturized drives to Apple, is that the Chinese company stole crucial elements of the design. GS Magic Stor denies this charge, which Hitachi has made in a suit filed in Federal District Court in Northern California. In a recent online forum the company's president ridiculed Hitachi's claim, likening it to someone's asking carmakers to pay design rights to the inventors of the horse and buggy. A Hitachi official, who refused to comment further, said that GS Magic Stor could characterize the Hitachi patents however it wished, 'but the plain and simple matter is they haven't expired.' Hitachi's highly technical complaint specifies several areas where it says its designs were infringed by Magic Stor. Apple, which was not named in Hitachi's suit, would not comment. Even if Hitachi wins the suit, that would do nothing to stop Magic Stor from continuing to produce its miniature hard drives in China, although some analysts say that Apple would be forced for image reasons, if nothing else, to drop Magic Stor as a supplier. For Western companies competing with China as well as those doing business here, the issue goes well beyond the fate of one obscure company or of a single technology, however valuable. In one sector after another, companies warn that China's swift industrial rise is being greased by brazen and increasingly sophisticated theft of intellectual property. The issue of intellectual property theft has been a fixture on the trade agenda between the United States and China for years, with visiting American officials routinely stopping at the famous Silk Market in Beijing to highlight the sale there, like all over China, of cheap knockoffs of toys, clothing, software and DVD's. The Chinese government has recently razed the market, but the counterfeit activity has been moving relentlessly upscale, with General Motors, Cisco, Sony and Pfizer, just to name the most high-profile companies, complaining that their designs or formulas for everything from cars and PlayStations to routers and Viagra, have been violated. 'Until recently, when China began putting intellectual property laws in place, for the past 40 years, all patents were owned by the government, and could be shared by any company that was willing to use them,' said Paul Gao, a Shanghai-based expert on consumer electronics and automotives at McKinsey & Company. 'The Chinese government actually encouraged this, and that has left a deep impression on companies that intellectual property is there for anyone to use it.' Experts say the practice of copycat production is also fueled by the fierce competition among Chinese companies and provinces to join the global economy. 'With the extreme fragmentation of industry, you see a lot of subscale players that are trying to survive in the market on their own,' Mr. Gao added. 'They don't have the budget for research and development or the scale to compete. If they pay a licensing fee, they consider they are essentially imposing a death penalty on themselves.' Like many people on the receiving end of accusations of intellectual property theft here, GS Magic Stor's president, Zhu Baolin, fiercely denies his company has done anything wrong, and goes so far as to say that the lawsuit is an act of desperation by a foreign enterprise unable to compete with his Chinese company. 'We don't blame Hitachi for what they are doing,' said Mr. Zhu, a 25-year electronics industry veteran. 'We just want Chinese people to know we created our own product, and that we face a lot of pressure. This will happen a lot in the future in the knowledge industry, but we will still work hard to grow.' Beyond the case of Hitachi versus Magic Stor, many Chinese legal experts simply deny there is any special problem with theft of intellectual property in China. 'It may look like it's a China problem, but it's a worldwide problem, just like piracy on the Internet, and it exists in America as well,' said Zhang Ping, a law professor at Beijing University, and one of China's leading experts on intellectual property rights. 'There are many problems with fake products, with low levels of technology. These can't be counted as intellectual property violations. They are just cheap fakes.' Like many people professionally involved with this issue here, Ms. Zhang denied that China was a leading violator of intellectual property rights, which she acknowledged was still a relatively new concept in China. She also said that the country's efforts at improving enforcement, though steady, would require more time to reach the standards of intellectual property rights in many advanced industrialized countries. Lawyers who represent Western companies embroiled in intellectual property disputes in China, however, point to major loopholes in Chinese law and in the country's trademark and patent system as parts of the problem. Many Chinese patents, for example, are granted without any examination of their originality, making it easy for local companies to claim others' innovations as their own. While foreign experts also point to progress in the country's courts and especially in the richer provinces along the country's east coast, they say that local and provincial governments, eager to bolster their economies, sometimes subsidize patent filings for local companies and provide pointers to them on how to beat foreign claims of infringement. Even the Shanghai government speaks of building a 'great wall of patents' to protect local companies. 'Once upon a time, the counterfeiters in China ran away when you came after them,' said Xiang Wang, a lawyer specializing in intellectual property rights at White & Case in Shanghai. 'Today, they don't run away. Indeed, they stay put and they sue us. More and more Chinese companies are taking a so-called legal approach, taking advantage of serious weakness in the Chinese legal system.' One of the most problematic areas, experts say, are joint ventures between foreign and Chinese companies, which are legion. When the joint venture dissolves, or sometimes even while it remains active, the Chinese party makes use of the technology or manufacturing processes illegally. A perennially told war story in business circles here involves the foreign factory owner who makes a wrong turn while driving to his plant only to discover an exact copy of his factory on the other side of the mountain. Although this story might be apocryphal, Mr. Wang said he saw cases all the time that are not so different in their details. 'We have a client in the power business who found that one of his key employees had quit and joined a competitor, revealing confidential information to him straight away, and filing patents of these materials which were literal copies of the original technology,' he said. 'When our client warned he would sue over patent infringement, the Chinese company said it was also planning to sue. 'And by the way,' they asked, 'what patent are you talking about? This is our patent now.' '

Subject: Investing and Quality Changes
From: Terri
To: All
Date Posted: Sat, Mar 05, 2005 at 07:34:28 (EST)
Email Address: Not Provided

Message:
The most important point to remember in a debate as to whether the measure of quality enhancements is making our economic growth data appear too robust, is that we must save and invest as much as possible. We must save and invest or there will be no secure retirements for us. There are enough sound investment opportunities that we need not worry overly about whether government data accumulation is entirely accurate. Worry mildly about data, and find fine investment opportunities nonetheless. We must save and invest, even more so if we are worried.

Subject: Brookings on Data Quality
From: johnny5
To: Terri
Date Posted: Sat, Mar 05, 2005 at 14:24:17 (EST)
Email Address: johnny5@yahoo.com

Message:
A good read from an older paper. http://www.brookings.edu/comm/policybriefs/pb63.htm ....The Statistical Agencies and the Problems They Face Economies are continually evolving, which requires that the statistical system also change and adapt to new circumstances. The United States has become a predominantly service-based economy, as goods-producing industries account for only about one-fifth of the nation's output and employment. Yet our statistical system remains heavily focused on goods production. Identifying the sources of productivity growth, for example, requires accurately measuring output at the level of major sectors and individual industries, and linking that information to corresponding data on the quantities of material and services inputs, capital, and workers that are used to produce it. The U.S. statistical database for manufacturing has the required data, for the most part, but the statistics for the services industries are far less adequate. The primary statistical database for computing productivity in manufacturing industries comes from the Quinquennial Censuses and Annual Surveys of Manufactures, which the Census Bureau has conducted for decades. These data collections contain a large amount of integrated and useful data on the outputs of manufacturing industries, their employment, investment in capital plant and equipment, and their purchases of goods and services from other industries. Price indexes for deflating the outputs of most manufacturing industries are compiled and published by the Producer Price Index (PPI) program of the Bureau of Labor Statistics. Thus, there is a relatively good database for productivity analysis. But even in manufacturing, the recent growth has been concentrated in the newer high-tech industries where the statistical coverage is least strong. For services, however, the databases are less satisfactory. The Census Bureau's Annual Services Surveys only began in the 1980s, and still often contain only a minimal amount of information on individual services industries. In contrast to its good coverage of manufacturing, the PPI price index program had covered only a small fraction of non-goods producing industries by 1990. The information databases for the services and 'high-tech' manufacturing industries, which have shown the greatest growth in the past several decades, are insufficient for economic analysis, and are generally inferior to those for the older 'smokestack' industries that once accounted for the bulk of U.S. economic activity. These statistical gaps in the services sector inhibit the analysis of the U.S. economy. For example, the large gains in the efficiency with which we produce computers seems evident in the rapid decline in their price. But have there been similar gains in the computer-using industries? Some analysts have argued that the benefits of the computer are underestimated precisely because computer use is concentrated in services industries, such as finance and insurance, where output is not well-defined or measured. The medical care industry employs high technology, especially in the form of pharmaceuticals and new technologies. This is an industry that has experienced substantial innovations in medical treatments, introduced many new medical procedures, and undertaken substantial investment in complex medical equipment. Although it is not normally thought of as a computer intensive industry, some kinds of medical equipment are computers in all but name. None of these facts is characteristic of industries with declining productivity, so the present statistical profile of medical care is puzzling. Recently, a number of studies suggest that price inflation in medical care may be overstated through a failure to capture changes in medical outcomes. The statistical problems arise from the difficulty of measuring the output from improved medical procedures and assigning them an economic value. For a significant number of services industries, such as education and business services, the current statistical system provides no meaningful measure of price changes or real output growth. Output is simply assumed to grow in parallel with employment, which is equivalent to assuming that there is no labor productivity growth.

Subject: Adapting to Change
From: Terri
To: Terri
Date Posted: Sat, Mar 05, 2005 at 09:31:33 (EST)
Email Address: Not Provided

Message:
For questions about whether we may not need so much speed and memory on our computer, though I do, think about a knee operation 20 years ago and now. The advance in technique is astonishing. We have advanced in technology in myriad ways, and need to account for this. Still, how are we to save and invest as the economy changes is all of our concerns.

Subject: Vanguard Fund Returns
From: Terri
To: All
Date Posted: Sat, Mar 05, 2005 at 07:12:17 (EST)
Email Address: Not Provided

Message:
http://flagship5.vanguard.com/VGApp/hnw/FundsByName Vanguard Returns 12/31/04 to 3/4/05 S&P Index is 1.2 Large Cap Growth Index is -0.5 Large Cap Value Index is 2.9 Mid Cap Index is 2.7 Small Cap Index is 0.2 Small Cap Value Index is 0.7 Europe Index is 4.3 Pacific Index is 2.0 Energy is 19.1 Health Care is 2.0 REIT Index is -3.0 High Yield Corporate Bond Fund is 0.9 Long Term Corporate Bond Fund is 2.5

Subject: Sector Indexes
From: Terri
To: Terri
Date Posted: Sat, Mar 05, 2005 at 07:13:28 (EST)
Email Address: Not Provided

Message:
http://flagship2.vanguard.com/VGApp/hnw/FundsVIPERByName Sector Indexes 12/31/04 - 3/4/05 Energy 23.4 Financials -1.6 Health Care 0.9 Info Tech -5.0 Materials 7.8 REITs -3.0 Telecoms -3.0 Utilities 5.9

Subject: Social Benefit Programs
From: Emma
To: All
Date Posted: Sat, Mar 05, 2005 at 07:06:38 (EST)
Email Address: Not Provided

Message:
We turned from a large government budget surplus to a large and growing deficit in a remarkably short time. The reason is not that government spending exploded, but that taxes were sharply cut especially for the most wealthy households. Government revenue as a proportion of GDP is at levels no seen since the Presidency of Harry Truman. Since the defence and security budgets will not be cut, spending cuts will be concentrated on programs which have relatively little lobbying support such as Medicaid. Such cuts will not significantly reduce the structural budget deficit. Social Security is in surplus and will be in surplus till at least 2020. There is every likelihood Social Security will be able to pay full benefits for generations, because economic growth promises to be higher than the Social Security actuaries have projected. There is no Social Security problem, unless we create a problem. This leaves Medicare and Medicaid. Here the question is whether we are willing to look to moderate tax increases and cost limiting measures that will not harm millions of vulnerable households. Medicare has powerful lobbying support. Medicaid is quite sadly vulnerable. The question is, what sort of social benefit programs do we wish to support and are we willing to look to mild tax increases for such support as well as innovative cost limiting measures that are commonly used in other countries? At present, tax increases in particular appear politically impossible.

Subject: Stocks and Bonds
From: Terri
To: All
Date Posted: Sat, Mar 05, 2005 at 06:37:09 (EST)
Email Address: Not Provided

Message:
This international bull market in stocks began 28 months ago in October 2002. Again, with the exception of Hong Kong every major stock market is positive fror the year in domestic currency and dollars. The American stock is now positive as well. Large cap stocks are a little stronger than small cap; mid cap are strongest. Value stocks are again stronger than growth in America and internationally. Energy stocks are especially strong, with materials strong as well. Health care is moderately positive, while REITs are moderately negative. Corporate earnings continue to be strong, so price earning ratios are holding above 18, which seems moderately high. After all the warnings about low interest rate on long term bonds, the long term bond market continues to gain.

Subject: Sunshine State
From: Terri
To: All
Date Posted: Fri, Mar 04, 2005 at 18:41:45 (EST)
Email Address: Not Provided

Message:
http://query.nytimes.com/search/article-printpage.html?res=9C04E3DB1339F932A15755C0A9649C8B63 June 21, 2002 Within a Florida Civics Lesson, Rich Stories By STEPHEN HOLDEN Gazing across an immaculate Florida golf course that used to be a swamp, Murray Silver (Alan King), a multimillionaire developer, conjures the Florida dream of sunshine, orange groves and balmy breezes wafting through palm trees. Wearing the sly, imperious grin of a successful snake-oil peddler and waving his arms like a maestro, he proudly announces to his golfing partners, ''We created this nature on a leash.'' This pungent little scene is a perfect prelude to John Sayles's ''Sunshine State,'' a spacious American epic that examines the world of Delrona Beach, a fictional Florida seacoast town in the throes of development. But as the movie widens its scope, it evokes the ugly flip side of nature on a leash: strip malls, fast-food outlets, environmental destruction, the uprooting of stable communities and the Disneyfication of history. The deeper the movie delves into the forces that threaten to tear apart this nondescript town somewhere south of Jacksonville, the more Delrona Beach looms as a microcosm of not only Florida but also the United States wherever greedy developers stake their claims in the name of progress. ''Sunshine State,'' which opens today in Manhattan and Los Angeles, may be the most far-reaching civics lesson ever crammed into a 2-hour-21-minute film. But more important, it creates a cinematic mosaic of American lives unprecedented in its range, balance, subtlety and even-handedness. More than a dozen indelible characters are woven into Mr. Sayles's multigenerational, multicultural tapestry. By the end of the film you feel you've not only touched the soul of each one but also tasted some salty essence of our national life. A crucial ingredient of that essence, the movie suggests, is a nagging, unappeasable restlessness that may be the emotional engine driving American capitalism. Several of the performances in this beautifully written and acted film are small revelations. The closest thing to a central character is Marly Temple (Edie Falco), a sardonic, quick-witted young woman who runs her family business, the Sea-Vue Motel, a slightly shabby but strategically located hostelry that rival developers are itching to purchase and tear down. From her tired Florida twang to her slumped posture to her slightly sour squint, Ms. Falco's Marly is so fully realized that not a drop of her signature role on ''The Sopranos'' is allowed to leak into her performance. A former mermaid in a local aqua show, Marly is divorced from Steve (Richard Edson), the oafish leader of a defunct rock band named Skeeter Meter (a kind of Lynyrd Skynrd manqu). Steve now ekes out a living impersonating a Union soldier at a local historical attraction and dreams of owning and operating a water slide. When Marly's younger boyfriend, Scotty (Marc Blucas), announces he's about to leave town to pursue his dream of becoming a golf pro, she falls into an aimless romance with Jack Meadows (Timothy Hutton), a lonely, peripatetic landscape architect who transforms swampland into upscale suburban environments. The movie is organized around the histories of two families: one white (the Temples), the other black (the Stokeses). Marly's grandly histrionic mother, Delia Temple (Jane Alexander), known as ''the Sarah Bernhardt of Delrona Beach,'' runs the community theater and is a devout environmentalist. Delia's husband, Furman (Ralph Waite), who founded the motel, is a genial, partially blind curmudgeon whose rants about how the world is going to hell attest to his still-vigorous fighting spirit. The Stokeses are headed by Eunice (Mary Alice), the proud, stiff-backed widow of a revered pillar of Lincoln Beach, a black-owned middle-class enclave that the developers are scheming to obliterate. When Eunice's daughter Desiree (Angela Bassett), exiled in disgrace 25 years earlier, shows up with her husband, Reggie Perry (James McDaniel), an anesthesiologist, the scars of old family wounds are ripped open. The film's most wrenching encounters are Eunice and Desiree's embittered, walking-on-eggshells dialogues that reveal how the mother's strait-laced morality and obsession with respectability drove her beautiful, rebellious daughter to become pregnant at 15. After being hastened out of town to stay with an aunt in Georgia, Desiree went north and built a career doing infomercials. The kind of mother-daughter strife that seems so cutely contrived in ''Divine Secrets of the Ya-Ya Sisterhood'' here feels achingly real. The flashes of resentment, sorrow and lingering affection exchanged by these two great actresses perfectly cast in their roles makes one of the most compelling emotional duels to be seen in a movie in quite a while. As the story begins, Eunice has taken Terrell Bernard (Alexander Lewis), a 13-year-old distant relative, under her wing. Traumatized by a family tragedy, this listless teenager has tendencies toward vandalism and pyromania, and he latches on to Reggie as a surrogate father. A third family, the Pickneys, is more sketchily drawn. Earl (Gordon Clapp), a suicidal county commissioner, is battling a gambling addiction that has left him susceptible to bribery. His fussy, high-strung wife, Francine (Mary Steenburgen), runs Buccaneer Days, a bogus local festival that involves a parade, make-believe pirates and a treasure hunt. Francine, who lends the film its brightest notes of comic relief, whines about how hard it is to ''invent a tradition'' and navely refers to her unstable husband as ''my rock.'' Without forcing the connections, ''Sunshine State'' has most of its characters cross paths at one time or another, and their remarks constitute an informal community dialogue. If the movie has a moral center, it is Dr. Lloyd (Bill Cobbs), an African-American resident of Eunice's generation who has been around since the civil rights era and who tries with little success to goad the apathetic residents of Lincoln Beach into organizing against the developers. Dr. Lloyd's idealism is balanced by the pragmatism of Flash Phillips (Tom Wright), a college football legend, also African-American, who has been hired as a front man by a group of developers to buy property under his name. It is Flash who, when confronted with his own duplicity, delivers some of the film's saddest and most resonant lines: ''There's a handful of people who run the whole deal, and the rest of us who do what they say and get paid for it.'' ''Sunshine State'' isn't the first film by Mr. Sayles to imply a larger social view by focusing on a microcosm. ''Lone Star'' examined Texas, and ''Limbo'' explored Alaska. But ''Sunshine State'' has an authority and a breadth of vision that those worthy earlier films lack. In telling overlapping stories, it is Mr. Sayles's first film to convey the sweep of a top-drawer Robert Altman movie. There are huge differences of course between the two directors. Mr. Altman is an entertainer with a satirist's wink and a fondness for high drama, while Mr. Sayles is a social realist whose films have an essayistic weight. His scrupulous insistence on seeing every side of a political issue will make ''Sunshine State'' seem a little dry for those who expect the roller-coaster dips that an Altman film promises. And when ''Sunshine State'' reaches a crucial turning point, the fate of Delrona Beach is determined not by the characters' passions but by an act of God in which the past almost literally rises up from below. The lack of a human tragedy produces a slight letdown. But make no mistake. ''Sunshine State'' is a great film on its own sober, unflashy terms. As its conflicts unfold, you can only marvel at Mr. Sayles's skill at fashioning dialogue that is charged with competing ideas yet still sounds utterly natural coming out of its characters' mouths. For all its measured cool, ''Sunshine State'' isn't entirely detached. Here, as in all his films, Mr. Sayles shows himself a humanist who believes in the ability of ordinary people to change their lives for the better, if they will only rouse themselves. Except for the story's most rapacious developers, all his characters exhibit a strain of decency. At the same time ''Sunshine State'' is shot through with a profound sense of disappointment at the suffocating banality and shortsightedness of American popular culture. Is a tacky pageant like Buccaneer Days, in which clich pirates walk the plank into a plastic pool, really the best we can come up with when struggling to tell our history? Given the facts of that history, the movie suggests, it may be the only reality we are able to face. As two characters chat about the portrayal of Florida's discovery and settlement, the choice comes down to a Disney-style pageant of ''Indians, pirates and Spanish gold'' or ''mass murder, rape and slavery.'' As shallow and phony as the Disney version might be, how many people would willingly embrace the more truthful alternative?

Subject: Adjusting for Quality
From: Terri
To: All
Date Posted: Fri, Mar 04, 2005 at 15:06:15 (EST)
Email Address: Not Provided

Message:
Suppose that adjustments to economic data for quality improvements are routinely showing growth levels that are too high and price levels that are too low. What would be the significance of such data distortion? Well, the most important market distortion would be in the price of bonds. Bonds prices would be considerably higher than warranted. But, what about the data? Quality improvements are now routinely counted in the data, but data series have been calculated in past years to smooth the series in how growth and prices are calculated. So, when we find an increase in productivity since 1995, an increase that accelerates in 2002, we can be sure that productivity has increased even if the data give levels that are too high for each year. Productivity may be lower than we record, but it has obviously risen since 1995.

Subject: Re: Adjusting for Quality
From: johnny5
To: Terri
Date Posted: Fri, Mar 04, 2005 at 21:26:29 (EST)
Email Address: johnny5@yahoo.com

Message:
On the computer front, some of my friends sell high end computers with lots of ram and big video cards and huge monitors and hard drives and all kinds of software and other junk installed. The retirees here in florida never use all that software or hardware - it is just a glorified machine to check email and chat on the pkarchive. SO all that computer/tech productivity they have bought and paid for has no use and will never be used - but next year when the pentium 6 and the 512 meg video cards come out the retirees will want to buy the latest again to be current but will not USE all that extra power - it simply will not help them check their email faster - but in the hedonics this very computer productivity is counted twice right? I have far more hard drive space and computer than I can make use of - I assume this to be true for many people.

Subject: International Stock Indexes
From: Terri
To: All
Date Posted: Fri, Mar 04, 2005 at 15:03:38 (EST)
Email Address: Not Provided

Message:
There is a stock index and stock index fund for most countries. These index funds ranging from Sweden or Norway to Australia and Singapore can be bought as exchange traded funds on the American Stocks Exchange. So, an investor could buy the index for Canada or Japan or the United Kingdom. Of course, country indexes can be especially volatile in ways that surprise foreign investors. But, the purchase is simple.

Subject: European Investing Puzzle
From: Terri
To: All
Date Posted: Fri, Mar 04, 2005 at 12:19:53 (EST)
Email Address: Not Provided

Message:
European based investment houses strike me as even less responsive to middle class needs than American based houses. Vanguard is a minor presence in Ireland, but there is no equivalent in Europe to Vanguard America. Why does stock and bond investing in Europe seem to lack any real competition?

Subject: Investing in Europe?
From: Terri
To: Terri
Date Posted: Fri, Mar 04, 2005 at 12:24:49 (EST)
Email Address: Not Provided

Message:
http://uk.virginmoney.com/unit/faq.html Virgin UK Index Tracking Trust Your money is invested in shares in every one of the top 700 or so UK companies quoted on the London Stock Exchange. Your savings lock into the returns of the main UK stock market – the FT-SE All-Share Index. When the stock market rises, your savings automatically keep track. There's just a single annual management fee of 1% – that's it. Other fund managers may take a more 'active' investment approach, trying to pick which shares will do best, rather than investing in the whole market. They typically charge you an extra 5% for this. However, this doesn't guarantee you an extra return. Far from it. In fact, all the evidence we've ever seen shows that more actively managed funds do worse than the stock market, than beat it. It's the same whether the market's going up (bull) or down (bear). The longer the timespan you look at, the more compelling the case for index tracking becomes.

Subject: Re: Investing in Europe?
From: johnny5
To: Terri
Date Posted: Fri, Mar 04, 2005 at 14:32:17 (EST)
Email Address: johnny5@yahoo.com

Message:
Terri have you found any index funds that are in countries not holding HIGH levels of US currency? IE korea, japan, china, UK - would that be worth checking into as a dollar hedge?

Subject: Re: Investing in Europe?
From: David E..
To: johnny5
Date Posted: Fri, Mar 04, 2005 at 22:30:15 (EST)
Email Address: Not Provided

Message:
If you want to invest by country, not region, there is a family of funds called Ishares. I did a search for Ishares Korea, Japan, and China and found an Ishares fund. Right now I am looking at EWC a Canadian Ishares index fund with an ER of .6%. It is a lot like an ETF, but trades at a very small premium that floats with demand. It is possible, that when you sell, you might possibly have to give a discount, I think. I am not sure of that yet. All of these ISHARE funds that I have seen are based on MSCI indexes.

Subject: Investing in Asia?
From: Terri
To: David E..
Date Posted: Sat, Mar 05, 2005 at 10:46:55 (EST)
Email Address: Not Provided

Message:
What is unfortunate is that country index funds are not divided as growth and value. Remember how risky the Japan market has been since 1989; the most dangerous developed market. Hong Kong is also quite volatile, but China is still more so.

Subject: Trading for a Venture in China
From: Emma
To: All
Date Posted: Fri, Mar 04, 2005 at 10:58:21 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/04/business/worldbusiness/04goldman.html?pagewanted=all&position= Horse Trading for a Venture in China By DAVID BARBOZA BEIJING - Shortly after a SARS crisis scared many people off the streets of this city, Henry M. Paulson Jr., the chief executive of Goldman Sachs, flew here for a quiet dinner on June 4, 2003, with two of China's most influential power brokers. They worked out a remarkable deal, approved last year by President Hu Jintao, that marks a triumph for Goldman - the creation of a joint venture that gives the firm greater access than any other foreign investment bank to China's increasingly lucrative financial services market. But to gain that access, Goldman engaged in an unusual horse trade. In exchange for making a $67 million 'donation' to cover investor losses at a failed Chinese brokerage firm, Goldman won government approval to set up its own joint-venture investment bank in Beijing. And to jump-start the venture, Goldman also agreed to lend $100 million to one of the men Mr. Paulson met that evening at the marble-columned Noble Court restaurant in the Grand Hyatt: a 52-year-old Chinese banker named Fang Feng Lei. The Goldman deal, which the company hopes will mean millions of dollars in profits in the coming years, offers a rare glimpse into the maneuvers that many foreign companies undertake to get a leg up in the rough-and-tumble race to establish business in China. And like others before it, the joint venture was years in the making, involving frequent huddles with high Communist Party officials. What was so unusual about the Goldman deal is that a blueblood American firm was willing to pay $67 million to help the government dissolve an entirely unrelated state-owned enterprise, Hainan Securities, whose officials have been accused in lawsuits of embezzling millions of dollars from investor accounts. Why the Chinese government chose Hainan Securities remains unclear. But Mr. Fang and another power broker at the dinner table that evening, Wang Qishan, the mayor of Beijing, had ties in Hainan Province - Mr. Wang had been Hainan's party secretary from 2002 to 2003. And Mr. Fang had overseen a real estate investment with Hainan Securities in the mid-90's. Goldman officials declined to comment on any aspect of the Hainan Securities money or the joint-venture loan, including what kind of collateral Mr. Fang pledged to back the loan. But there is no evidence that Mr. Fang or Mr. Wang was involved in fraud at Hainan Securities, or that Goldman's donation money will benefit them in any way. Analysts say major investment banks like Goldman are expecting a growing number of Chinese companies to tap the capital markets and they expect increasingly wealthy Chinese to start investing. 'There's a lot of talk now about a dysfunctional stock market,' said Li Jin, an assistant professor at Harvard Business School, 'but in the future China's capital markets will be huge.' Carson Wen, a Hong Kong securities lawyer, added: 'Everyone wants to be in China because it's a market that holds a lot of potential for the long term. And Goldman wants to be one of the first with control over their own venture.' Until now, most foreign investment banks have largely taken Chinese companies public in Hong Kong or New York, or married Chinese companies with Western counterparts. Goldman will have greater control over a venture that will be able to take companies public in China and sell shares directly to Chinese investors - a level of control that neither its rival Morgan Stanley nor any other foreign investment bank can yet claim. Goldman is paying an additional $30 million for its one-third stake in the joint venture, to be called Goldman Sachs Gaohua Securities, bringing the cost of its ticket to China to nearly $200 million. And that just gets Goldman a foot in the door; it does not cover the cost of buying equipment, renting office space or hiring staff members. Most foreign investment banks operate profitably out of Hong Kong. Goldman already employs about 1,000 people there. The new Beijing investment bank, whose chairman will be Mr. Fang, has not yet begun operations. Goldman's push into China comes a decade after Morgan Stanley and the China Construction Bank won government approval to form the nation's first joint venture investment bank, the China International Capital Corporation, or C.I.C.C. The bank, which had a $35 million investment from Morgan, ran into trouble almost immediately. Cultural clashes and disputes over who controlled the new company rattled Morgan executives in the first few years. In 1997, for instance, when China Mobile was preparing a $4 billion stock offering, C.I.C.C. did not underwrite the deal with Morgan Stanley; it worked with Goldman Sachs instead. According to former bankers, an important player in pushing the deals to Goldman was C.I.C.C.'s deputy chief executive, Mr. Fang, who had sparred with Morgan executives over how to operate in China. For his role in the China Mobile offering, Mr. Fang earned a reputation as a visionary who knew how to move deals through the Chinese bureaucracy. 'He's a big deal maker,' said Cao Yuanzheng, chief economist at Bank of China International and a former colleague of Mr. Fang. 'This isn't like the U.S. Here in China, you have to know about reforms and state-owned companies. You need a special guy and that's him.' Early in 2000, Mr. Fang left C.I.C.C. to join a rival state-owned bank. Morgan Stanley, which operates out of Hong Kong with about 700 employees, mended relations with C.I.C.C. Since then, Morgan Stanley has bounced back with some huge initial public offerings of Chinese companies in Hong Kong and New York, including a state-owned oil giant, Sinopec, and China Unicom. And C.I.C.C., which operates independently but is 34 percent owned by Morgan, has grown into a powerhouse, pulling ahead of both Morgan and Goldman with more than $18 billion in mainland equity deals in the last four years. Morgan shares in the firm's profit. That may explain why, a few years ago, Goldman executives began talking to the man many say has the inside track on stock deals in China: Mr. Fang. The son of a midlevel government official, Mr. Fang grew up in Beijing and was a farmer, soldier and factory worker before attending Zhongshan University, where he discovered a passion for economics. Mr. Fang also worked on his connections, particularly with two officials who are important figures in the Goldman deal: Mr. Wang and Zhou Xiaochuan, the head of China's central bank. In 2003, Mr. Zhou was China's top securities official when regulators seized Hainan Securities. Such relationships run deep. In 1991, after a trip to the United States, Mr. Fang broached the idea of creating a Western-style investment bank to Mr. Wang, then vice governor of the China Construction Bank. Mr. Wang, a protégé of former Prime Minister Zhu Rongji, is a Mr. Fix-It in Chinese government circles. Four years later, in 1995, Beijing approved Morgan Stanley's joint venture with China Construction Bank. Mr. Fang became a top executive in the new venture, C.I.C.C., and Mr. Wang was named chairman, later succeeded by Mr. Zhou. At C.I.C.C., Mr. Fang was called the rainmaker for his behind-the-scenes work on two landmark deals: China Mobile's 1997 stock offering; and the restructuring of PetroChina, another big state-owned oil company, which went public in 2000. After leaving the Morgan venture in 2000, Mr. Fang worked for the Bank of China International and then seemed to drift for several years, former colleagues said, taking time to study in the United States. Then late in 2002 or early 2003, he got involved in government discussions on what to do with Hainan Securities. In the early 1990's, Hainan Securities was considered a pioneering retail brokerage firm. But by 2003, it had become a symbol of the country's troubled brokerage industry. Mounting debt and a series of lawsuits accusing company officials of embezzling millions of dollars from investors had led regulators to seize control of the firm. That was when Mr. Zhou, who was China's top securities regulator, turned to Mr. Paulson of Goldman Sachs. According to people involved in the talks, Mr. Zhou asked if Goldman was interested in paying an entrance fee to acquire a stake in a troubled state-owned brokerage house. Goldman officials were reluctant to invest in any brokerage firm with a checkered past. But by June 2003, Mr. Fang and Mr. Wang stepped into the negotiations and helped Goldman massage the deal, the people involved in the talks said. The result was that Goldman would pay off some of Hainan Securities' debt and then start a joint-venture bank with Mr. Fang. Goldman Sachs, people involved in the talks say, will have no future relation to Hainan Securities, which the government is expected to shut down once investors are repaid. And Goldman structured the agreement so that it could eventually get majority control, something Morgan Stanley never won with C.I.C.C. But why Hainan Securities? It had a prominent presence on the freewheeling island of Hainan, which turns out to have been fertile ground for cementing relationships with Chinese officials who would in time have leading positions in the economy. 'It was a very small circle of people in the finance sector at that time and even fewer people in Hainan,' said Zhang Gaobo, a former top executive at Hainan Securities, which was founded by former central bank employees. 'So everyone knew and saw each other frequently.' Mr. Fang had met often with the founders of Hainan Securities in the early to mid-90's. He set up a real estate subsidiary in Hainan for China Construction Bank at the request of Mr. Wang, then the bank's head, in 1992. That company, Intime Holdings, invested more than $1 million in a beachfront real estate project with Hainan Securities, according to company documents. That real estate project now includes a hotel that Mr. Fang's brother operates. The property on which the hotel sits was later acquired by a conglomerate that Mr. Fang and Mr. Zhou, the central banker, helped prepare for a public offering when they were with C.I.C.C. Lu Tao, one of the Chinese officials overseeing the $67 million payout, said safeguards were in place to ensure that none of the donation money went to any related parties, including friends or relatives of Mr. Fang or government officials. In many ways, Mr. Fang's ties to Hainan are just the kind of connections Goldman is banking on. After all, in financial circles here, Mr. Fang is considered the ultimate relationship man. 'Whenever anyone needs a chop, they go to Fang,' said a former C.I.C.C. colleague, referring to the highly sought-after government approval stamp. Yet Victor Shih, who teaches political science at Northwestern University, said there are dangers in relying too heavily on the politically connected in China. 'When you get someone well connected,' he said, 'you get all the connections, but it's also volatile. If they fall out of favor, or get involved in some corruption case, you're in trouble.' Still, people close to Goldman's deal said that after the firm did its due diligence, it decided to bet on Mr. Fang and his connections, including agreeing to lend him and his partners $100 million. At a banquet in November to celebrate the deal, Mr. Fang and Richard Gnodde, Goldman's Asia president, dined with Wei Liucheng, Hainan's governor. Mr. Wei is the former chief executive of Cnooc, a state oil company that Mr. Fang helped take public in 2001 when he worked for Bank of China International. Such old ties help explain why Goldman sees Mr. Fang as the ideal Chinese partner.

Subject: China Worries About Missing the Poor
From: Emma
To: All
Date Posted: Fri, Mar 04, 2005 at 10:55:21 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/04/international/asia/04china.html China Worries About Economic Surge That Skips the Poor By JOSEPH KAHN BEIJING - Chinese leaders open their annual legislative session this weekend trying to resolve a vexing pair of problems: the economy is growing too fast, and most people feel left out of the boom. China's bubbly economy, which expanded 9.5 percent last year despite efforts to cool it down, has produced a yawning wealth gap and fueled a surge of social unrest that top leaders worry could undermine Communist rule. Although the leadership has focused on social inequality and wealth distribution for over a year - it was also the theme of the 2004 legislative session of the National People's Congress - there have been several mass riots and thousands of small protests over land seizures, corruption and unpaid wages. In a series of top-level meetings ahead of this session, including a secretive conclave of senior economists and government officials at the Diaoyutai State Guest House a few weeks ago, policy makers bemoaned the severity of the country's social ills and pondered economic changes to assuage the growing impatience evident in rural communities, according to people briefed on the session. President Hu Jintao, who will consolidate his position as China's top political and military leader during the meeting of the legislature, has ordered Communist Party members nationwide to study his thoughts on building a 'harmonious society' through 'scientific development.' The ideological campaign emphasizes the need to reduce social conflict and take a step back from the pro-growth orientation of previous leadership. 'At past meetings, the stress was on fast growth - how many bridges were built, how tall the new buildings are,' said Hu Jinguang, a legal scholar at People's University in Beijing who follows the workings of the legislature. 'Now the main emphasis is on social well-being and spreading the wealth.' Delegates to the congress, which is controlled by the Communist Party, have put forward dozens of proposals to reduce rural taxation, extend pensions and welfare to peasants, and provide better education and health care in rural areas, reflecting an emphasis on populist themes. The legislature, which has only one full session a year, each lasting about 10 days, has little practical authority and is generally used to ratify decisions made by party leaders. But delegates occasionally raise contentious local issues that the leadership has ignored. Aside from economic matters, President Hu has promoted a measure to ban secession by any Chinese territory. The legislation would probably lead to military action if Taiwan tried to solidify its independence from mainland China. The text of the measure remains a secret and may simply restate China's vow to fight Taiwanese independence with force. But American officials have criticized the effort, saying it risks upsetting recent progress in calming cross-strait tensions. Also on the congress's agenda is formal approval of Mr. Hu's accession to the chairmanship of the Central Military Commission, a post he inherited when Jiang Zemin, the former top leader, retired last fall. The move will complete a leadership transition that began in 2002. Though China's fast economic growth has made it the envy of the developing world, the leadership is preoccupied with trying to rein in lending by state banks that some fear could cause high inflation or lead to a sharp correction. Ma Kai, a top economic planning official, told state news media this week that excesses in business and government investment, strains on natural resources, shortages of electricity and oil, transportation bottlenecks and rising production costs threatened economic stability. 'At present, macro-adjustment remains at a crucial stage,' he said, alluding to the government's efforts to cool the economy. 'The slightest slackening may lead to a reversal, wasting our previous efforts.' The government is expected to budget a smaller deficit this year, reduce issuance of state bonds for development, and impose limits on lending to industries, including real estate, steel and automobiles, that are viewed as saturated or bubbly. On social issues, officials are promoting tax relief for peasants and subsidies to increase grain output as a way to raise rural incomes. With rural incomes averaging less than one-third the incomes in urban areas, China has one of the largest wealth gaps in the world. Delegates will also discuss changing land development laws to make it harder for local governments to seize farmland to build factories, offices, hotels or shopping malls. China now has millions of landless peasants, and their circumstances and growing discontent are not entirely unlike the conditions the Communists exploited to rise to power in 1949. Mr. Hu has made some headway refocusing economic policies to help those left behind, and officials are promising to do more. But many experts say the changes are administrative rather than structural. 'This new leadership is much more concerned with disadvantaged groups,' said Hu Xingdou, a management expert at the Beijing Institute of Technology and an outspoken critic of the government. 'But they have to consider institutionalizing this stream of thought so it is not just the idea of a benevolent leader.' The government has yet to overhaul land ownership rules in rural areas, or to eliminate discrimination in admission to top schools that favor urban residents, or to ease population controls that classify 800 million people as rural residents with limited access to urban services. Moreover, President Hu has kept a tight lid on public discourse. Since becoming party chief, he has increased censorship of the media. A wide range of important topics, from the wealth gap to large corruption cases, are effectively off limits for state media even as they take center stage in the mostly private proceedings of the congress.

Subject: When depreciation runs out
From: Pete Weis
To: All
Date Posted: Fri, Mar 04, 2005 at 10:13:09 (EST)
Email Address: Not Provided

Message:
At a time when Fannie Mae loses are now being exposed and approaching 12 billion, rental properties are in high demand. And by the way - 'real estate is more liquid' as long as lots of folks want to buy and other folks want to sell. But when sellers overwhelm buyers, it suddenly becomes very illiquid. Investors buy more of housing market March 4, 2005 BY MARY UMBERGER CHICAGO TRIBUNE Real estate speculators are buying at a pace that far exceeds previous estimates of their influence on the housing market, according to a first-of-its kind report the National Association of Realtors released this week. Collectively, investors and second-home buyers bought more than one of every three homes sold in last year's record market, the report said. 'I am astonished,' said David Lereah, the association's chief economist. He said the data suggest a sea change in the role of real estate in the nation's economy. 'What we're seeing is that real estate is no longer just a place to live. It's a viable alternative to stocks and bonds,' Lereah said. 'Sept. 11 changed real estate forever, the way people look at it. They're nervous about stocks and bonds and they're placing money in real estate, which has proven to be a stable and wealth-building asset.' The report, based on two surveys, found that investors accounted for 23 percent of the nation's 2004 home sale transactions and second-home buyers made an additional 13 percent of all sales transactions. Previous estimates gleaned from other databases had suggested that 8.5 percent of all 2004 sales transactions were investments. The report said that sales activity surged last year. Investor activity was 14 percent higher than in 2003, and second-home purchases topped the preceding year by nearly 20 percent. Federal Reserve officials and other economists have expressed concern that scorching-hot investor activity in certain markets may be inflating home-appreciation rates artificially, which could lead to collapsing prices. Fiserv CSW, a Cambridge, Mass., firm that tracks price appreciation, calculates that national home values, adjusted for inflation, have appreciated about 40 percent since 1995, and some metro areas, such as San Diego, are up as much as 160 percent. 'If you go back to the '80s, during that cycle, adjusted for inflation, price appreciation was 18 percent,' explained David Stiff, an analyst for the firm. 'In the prior boom in the 1970s it was 15 percent.' Lereah said he isn't nervous about price declines. 'I could worry about certain investments, such as interest-only loans or negative-amortization loans - people investing purposely on strong price appreciation rather than on the returns,' he said. A conservative approach to investment 'would be to follow the historical 4 to 6 percent price appreciation' in determining its soundness, Lereah said. 'For people who aren't doing that and using interest-only loans to get into those places, I think there's a yellow flag there,' Lereah said. 'People have to understand the local markets and they have to do their homework.' But Stiff, among others, says the investor activity is worrisome. His company has been warning about overheating for the last year. 'It's kind of alarming,' said Stiff. 'I presume investor activity is concentrated in some metropolitan areas, such as southern California, Florida, Las Vegas and Phoenix. But even I am surprised that it's that high. 'It's at the end of a housing cycle that you start to see people investing irrationally,' Stiff said. He singled out increasingly widespread reports about homeowners cashing out equity in their principal residences to invest in properties around the country. 'If anything is a sign of a price bubble, that is it.' But Lereah, the chief forecaster for the nation's largest real estate trade association, said that, to the contrary, such investment can be a positive. 'As an economist, I think that's good. The markets are actually working. Real estate is being more liquid. You could never have done that 20 years ago. Real estate was a large, tangible, awkward asset, and only moguls could do that.' The National Association of Realtors said the typical vacation home buyer is 55 and earned $71,000 in 2003. The report was national in scope and did not single out investment activity in individual metropolitan areas.

Subject: What of International Real Estate?
From: Terri
To: Pete Weis
Date Posted: Fri, Mar 04, 2005 at 10:52:47 (EST)
Email Address: Not Provided

Message:
Pete, is there analogy in real estate markets abroad from Ireland to Hong Kong? I will look for articles on widespread purchase of real estate for investment in other countries. South Africa? Brazil? France?

Subject: Hopeful Numbers
From: Terri
To: All
Date Posted: Fri, Mar 04, 2005 at 09:33:29 (EST)
Email Address: Not Provided

Message:
Good economic growth, good productivity, good job creation, low inflation and low interest rates, international bull market in stocks. There is a reason for hopefulness.

Subject: Hedge Fund assets Frozen
From: johnny5
To: All
Date Posted: Fri, Mar 04, 2005 at 09:08:57 (EST)
Email Address: johnny5@yahoo.com

Message:
'Never put all your eggs in one basket' 'Don't get too greedy' If they had invested in real estate instead of hedge funds - thier wealth would not have went up in smoke as fast - poor richies all broke now :( http://www.palmbeachpost.com/business/content/business/epaper/2005/03/04/a1d_hedge_0304.html KL Financial hedge fund assets frozen By David Sedore Palm Beach Post Staff Writer Friday, March 04, 2005 A federal judge Thursday froze the assets of a West Palm Beach hedge fund investment firm and its operators, which the Securities and Exchange Commission claimed defrauded investors of least $70 million. The SEC alleged in an emergency lawsuit in U.S. District Court in Miami that KL Financial Group engaged in a 'massive hedge fund fraud.'' It could be the largest investor fraud in Palm Beach County history. Sources familiar with KL Financial's high-risk trading operation put its investor losses much higher, at as much as $300 million. The firm's investor clients included some of Palm Beach's wealthiest and best-known businesspeople and socialites, sources said. The investment operation abruptly shut down after investigators from the SEC and FBI raided its downtown West Palm Beach offices last Friday and Monday. Federal Judge Kenneth Ryskamp granted the government's request to freeze the firm's assets and those of KL Financial's three principals. Ryskamp appointed Guy Lewis, a former U.S. attorney for South Florida, to oversee a thorough examination of the firm's finances and trading history. Its principals are John Kim of Jupiter, Won Sok Lee of Riviera Beach and Yung Bae Kim of Irvine, Calif. The Kims are brothers. None of the three could be reached for comment Thursday. The judge set a court hearing March 17 to decide whether to make the asset freeze permanent. 'This fraud was fueled by brazen lies about the hedge funds' investment track record,' David Nelson, director of the SEC's Miami regional office, said in a statement. 'Our priorities now are to hold these defendants accountable and to return as much as we can to defrauded investors.' According to the SEC, KL Financial told investors its hedge funds were producing investment returns as high as 150 percent a year when they actually were racking up big losses. At least 250 investors lost money they had invested since 1999. Of the $81 million that the firm took in from investors, the SEC now can account for only $11 million. Ivan Harris, the assistant director for enforcement in the SEC's Miami office, said former federal prosecutor Lewis' job will be to go through the KL books and attempt to reconstruct what happened to the remainder of the money. By definition, hedge funds, which are not regulated by securities officials, cater to the rich with high-risk, high-return investments. KL Financial, which operated since October from the entire 17th floor of the Esperante building, was no exception. Well-known West Palm Beach trust and estates lawyer Ronald Kochman introduced many of his friends to KL Financial and put his own money on the line as well. He said he's lost everything. The firm solicited money from area businesspeople who accumulated their wealth over a lifetime of work and saw a chunk of it disappear in a flash. Some invested as little as $10,000, while others put in millions of dollars. Boca Raton attorney Jim Sallah and law partner Gary Klein say they represent 20 investors who collectively lost $20 million with KL Financial. Sallah was pleased with the judge's selection of Lewis to figure out how the firm's investment losses mounted. 'You're going to want a former prosecutor,' Sallah said. 'He's going to go in there and start dissecting everything.'

Subject: America by the numbers? why invest here?
From: johnny5
To: All
Date Posted: Fri, Mar 04, 2005 at 07:47:49 (EST)
Email Address: johnny5@yahoo.com

Message:
http://www.citypages.com/databank/26/1264/article12985.asp America by the numbers No. 1? Image by Jane Sherman by Michael Ventura February 23, 2005 No concept lies more firmly embedded in our national character than the notion that the USA is 'No. 1,' 'the greatest.' Our broadcast media are, in essence, continuous advertisements for the brand name 'America Is No. 1.' Any office seeker saying otherwise would be committing political suicide. In fact, anyone saying otherwise will be labeled 'un-American.' We're an 'empire,' ain't we? Sure we are. An empire without a manufacturing base. An empire that must borrow $2 billion a day from its competitors in order to function. Yet the delusion is ineradicable. We're No. 1. Well...this is the country you really live in: The United States is 49th in the world in literacy (the New York Times, Dec. 12, 2004). The United States ranked 28th out of 40 countries in mathematical literacy (NYT, Dec. 12, 2004). Twenty percent of Americans think the sun orbits the earth. Seventeen percent believe the earth revolves around the sun once a day (The Week, Jan. 7, 2005). 'The International Adult Literacy Survey...found that Americans with less than nine years of education 'score worse than virtually all of the other countries'' (Jeremy Rifkin's superbly documented book The European Dream: How Europe's Vision of the Future Is Quietly Eclipsing the American Dream, p.78). Our workers are so ignorant and lack so many basic skills that American businesses spend $30 billion a year on remedial training (NYT, Dec. 12, 2004). No wonder they relocate elsewhere! 'The European Union leads the U.S. in...the number of science and engineering graduates; public research and development (R&D) expenditures; and new capital raised' (The European Dream, p.70). 'Europe surpassed the United States in the mid-1990s as the largest producer of scientific literature' (The European Dream, p.70). Nevertheless, Congress cut funds to the National Science Foundation. The agency will issue 1,000 fewer research grants this year (NYT, Dec. 21, 2004). Foreign applications to U.S. grad schools declined 28 percent last year. Foreign student enrollment on all levels fell for the first time in three decades, but increased greatly in Europe and China. Last year Chinese grad-school graduates in the U.S. dropped 56 percent, Indians 51 percent, South Koreans 28 percent (NYT, Dec. 21, 2004). We're not the place to be anymore. The World Health Organization 'ranked the countries of the world in terms of overall health performance, and the U.S. [was]...37th.' In the fairness of health care, we're 54th. 'The irony is that the United States spends more per capita for health care than any other nation in the world' (The European Dream, pp.79-80). Pay more, get lots, lots less. 'The U.S. and South Africa are the only two developed countries in the world that do not provide health care for all their citizens' (The European Dream, p.80). Excuse me, but since when is South Africa a 'developed' country? Anyway, that's the company we're keeping. Lack of health insurance coverage causes 18,000 unnecessary American deaths a year. (That's six times the number of people killed on 9/11.) (NYT, Jan. 12, 2005.) 'U.S. childhood poverty now ranks 22nd, or second to last, among the developed nations. Only Mexico scores lower' (The European Dream, p.81). Been to Mexico lately? Does it look 'developed' to you? Yet it's the only 'developed' country to score lower in childhood poverty. Twelve million American families--more than 10 percent of all U.S. households--'continue to struggle, and not always successfully, to feed themselves.' Families that 'had members who actually went hungry at some point last year' numbered 3.9 million (NYT, Nov. 22, 2004). The United States is 41st in the world in infant mortality. Cuba scores higher (NYT, Jan. 12, 2005). Women are 70 percent more likely to die in childbirth in America than in Europe (NYT, Jan. 12, 2005). The leading cause of death of pregnant women in this country is murder (CNN, Dec. 14, 2004). 'Of the 20 most developed countries in the world, the U.S. was dead last in the growth rate of total compensation to its workforce in the 1980s.... In the 1990s, the U.S. average compensation growth rate grew only slightly, at an annual rate of about 0.1 percent' (The European Dream, p.39). Yet Americans work longer hours per year than any other industrialized country, and get less vacation time. 'Sixty-one of the 140 biggest companies on the Global Fortune 500 rankings are European, while only 50 are U.S. companies' (The European Dream, p.66). 'In a recent survey of the world's 50 best companies, conducted by Global Finance, all but one were European' (The European Dream, p.69). 'Fourteen of the 20 largest commercial banks in the world today are European.... In the chemical industry, the European company BASF is the world's leader, and three of the top six players are European. In engineering and construction, three of the top five companies are European.... The two others are Japanese. Not a single American engineering and construction company is included among the world's top nine competitors. In food and consumer products, Nestlé and Unilever, two European giants, rank first and second, respectively, in the world. In the food and drugstore retail trade, two European companies...are first and second, and European companies make up five of the top ten. Only four U.S. companies are on the list' (The European Dream, p.68). The United States has lost 1.3 million jobs to China in the last decade (CNN, Jan. 12, 2005). U.S. employers eliminated 1 million jobs in 2004 (The Week, Jan. 14, 2005). Three million six hundred thousand Americans ran out of unemployment insurance last year; 1.8 million--one in five--unemployed workers are jobless for more than six months (NYT, Jan. 9, 2005). Japan, China, Taiwan, and South Korea hold 40 percent of our government debt. (That's why we talk nice to them.) 'By helping keep mortgage rates from rising, China has come to play an enormous and little-noticed role in sustaining the American housing boom' (NYT, Dec. 4, 2004). Read that twice. We owe our housing boom to China, because they want us to keep buying all that stuff they manufacture. Sometime in the next 10 years Brazil will probably pass the U.S. as the world's largest agricultural producer. Brazil is now the world's largest exporter of chickens, orange juice, sugar, coffee, and tobacco. Last year, Brazil passed the U.S. as the world's largest beef producer. (Hear that, you poor deluded cowboys?) As a result, while we bear record trade deficits, Brazil boasts a $30 billion trade surplus (NYT, Dec. 12, 2004). As of last June, the U.S. imported more food than it exported (NYT, Dec. 12, 2004). Bush: 62,027,582 votes. Kerry: 59,026,003 votes. Number of eligible voters who didn't show up: 79,279,000 (NYT, Dec. 26, 2004). That's more than a third. Way more. If more than a third of Iraqis don't show for their election, no country in the world will think that election legitimate. One-third of all U.S. children are born out of wedlock. One-half of all U.S. children will live in a one-parent house (CNN, Dec. 10, 2004). 'Americans are now spending more money on gambling than on movies, videos, DVDs, music, and books combined' (The European Dream, p.28). 'Nearly one out of four Americans [believe] that using violence to get what they want is acceptable' (The European Dream, p.32). Forty-three percent of Americans think torture is sometimes justified, according to a PEW Poll (Associated Press, Aug. 19, 2004). 'Nearly 900,000 children were abused or neglected in 2002, the last year for which such data are available' (USA Today, Dec. 21, 2004). 'The International Association of Chiefs of Police said that cuts by the [Bush] administration in federal aid to local police agencies have left the nation more vulnerable than ever' (USA Today, Nov. 17, 2004). No. 1? In most important categories we're not even in the Top 10 anymore. Not even close. The USA is 'No. 1' in nothing but weaponry, consumer spending, debt, and delusion.

Subject: European and American Productivity Gains
From: Terri
To: All
Date Posted: Fri, Mar 04, 2005 at 07:26:51 (EST)
Email Address: Not Provided

Message:
The productivity growth in America is being experienced increasingly in Europe, and this to is most promising.

Subject: Good for europe - but not America
From: johnny5
To: Terri
Date Posted: Fri, Mar 04, 2005 at 07:40:46 (EST)
Email Address: johnny5@yahoo.com

Message:
Dearth of a Nation By Benjamin Wallace-Wells, Washington Monthly. Posted March 3, 2005. America's economy is losing its high-tech competitive edge and Washington hasn't noticed. by Benjamin Wallace-Wells There is a moment in the lifespan of every cool new gadget – two years after Bill Gates buys one, a year and a half after the popular press gets wind of it – that its price drops enough to show up in significant numbers on the shelves at Best Buy, the electronic superstore. At this instant, the product becomes accessible for middle-class Americans, something they can imagine themselves buying, and so these electronics stores have become temples to innovation, the place most Americans go to get as close to the cutting edge as most of them dare. On weekend afternoons, Best Buy is as bustling as a souk, full of grandmothers and little kids tooling around with digital video cameras and geeked-out salesmen explaining to the moms that the cell phones in their hands have nearly the computing power of desktop PCs. But it's the men who are the most transported, moving from department to department with gawky reverence. At a Best Buy I visited recently in Alexandria, Va., I watched one dad gaze in wonder at row upon row of giant plasma televisions – elegant silver-framed screens that seemed not just to capture the way the world looks, but to improve upon it. He watched bees extract honey from flowers, and spiraling footballs drop into the hands of receivers, and you could almost see a two-part thought process play out over his face: First, If I wait a year, these sets will be half the price. Second, Screw it, I'm buying one now! But there was something else I noticed: Whereas a decade ago the most creative, groundbreaking stuff came from Silicon Valley, now it all seemed to come from overseas. The plasma televisions were from Korea; the computer-like cell phones were from Finland; the feature-packed digital cameras were from Japan. During the last six months, we have begun, quietly, to enter a newly tense moment, with university presidents, business leaders, and columnists delivering ominous-sounding reports and editorials about the threat to American innovation posed by a freshly competitive world – the renewed vitality of western Europe, Japan and Korea, and the ravenous growth of China and India. 'We no longer have a lock on technology,' David Baltimore, a Nobel laureate and the current president of the California Institute of Technology, wrote recently in the Los Angeles Times. 'Europe is increasingly competitive, and Asia has the potential to blow us out of the water.' What worriers like Baltimore are beginning to grasp is that these changes are emerging just as the American economy is being made more vulnerable by the movement of manufacturing and service jobs overseas. As a result, we've become increasingly dependent on maintaining our edge in discovering the new technologies and applications that create whole new industries – just as other countries are closing that gap. This is a fundamentally new threat. In the '70s and '80s, Japanese and European firms adopted American technology and made key improvements in process and design to shave cost and increase quality. Now, foreign companies are making many of the most important breakthroughs themselves. This shift is part of a change in strategy: instead of copying our innovations, foreign governments have decided to copy our very model of innovating. They have studied our centers of invention, the Silicon Valleys and Research Triangles, where university scientists, venture capitalists, high-tech entrepreneurs, and educated, creative workers, many of them from overseas, congregate. These creative centers, our competitors have learned, were the result of federal policy – decades of investment in basic scientific research; patent law changes that allowed universities to capitalize on discoveries made in their labs; financial reforms that gave rise to the venture capital industry; and immigration laws that opened the door to talented foreigners. Over the last decade, our competitors have implemented similar policies at home: They have built universities, reformed financial markets, invited in immigrants, and made the development and adoption of new technologies national goals. Now, they're reaping the benefits. The technologies behind plasma screens emerged have been refined and expanded in labs under a research partnership between the Korean government and the electronics maker Samsung. Europe established its lead in mobile phones when European countries set a single standard for mobile communications (American firms are hobbled by lower-quality spectrum and three competing standards). Foreign competitors are edging out the United States not just in today's snazzy consumer goods, but in the technologies that will define the marketplace in the years to come. Most economists and new economy thinkers believe that the likeliest candidate for the Next Big Thing is the research being done in nanotechnology, a catch-all term for the manipulation of matter at the molecular level. Nanotechnology could someday be used to repair broken DNA to prevent cancer, create supercomputers the size of pinheads, or fabricate building materials 150 times the strength of steel. American scientists have been tinkering with nanotechnologies for 20 years. But some of the most cutting-edge research today is coming from overseas. Last August, Israeli scientists announced that they'd managed to develop manipulable nano-wires, tiny organic tools they could use to rearrange atoms and conduct electricity over microscopic spaces, a breakthrough a leading MIT nanotechnologist admitted American researchers had been chasing 'for many years.' In September, Japanese scientists announced that they would soon be able to use nano-engineering to build a computer chip 30 times more powerful than Intel's best. The breakthrough led American analysts to conclude that the United States was beginning to lose the race to bring nanotechnology products to market. The worry of economists and business leaders is not simply that Japan, Israel, or South Korea will beat us, like one football team does to another. It is, more precisely, that we'll only be able to take advantage of rising wages in those countries (and afford our own here) if we continue to create new, cutting-edge products and services to sell to those countries – and right now America does not seem to be doing as much of that as we were just a few years ago. This new competition from other developed countries, and the failure of America to fully keep pace, is one cause of our anemic job creation, three years after what was, by historical standards, a brief and fairly light recession. Another reason, of course, is the rise of China and India, where U.S. firms have not only moved manufacturing plants but also 'outsourced' service sector jobs. America's employment base is being squeezed by these two pincers – China and India from below, and the developed world innovating from above. Over time, those pincers may come together, as China and India also become proficient in high-end innovation. China is already opening universities at a breathtaking clip, while Intel, Hewlett-Packard, Microsoft, and Verizon have all opened research labs there – the kind that anchored the development of Silicon Valley. 'It's become inevitable,' says Ross Armbrecht, president of the Industrial Research Institute, which is the think tank for the research arms of America's corporations, 'that more and more of the most far-reaching innovations will be going overseas, to India and China, in the near future.' Economics is a negotiation in uncertainties, and so nobody's really sure what all of these changes will mean for the well-being of the American middle class. But when you survey economists, policymakers, and business leaders about America's long-term future, it's hard to find many rank optimists; there are the Panicked, and then there are the Merely Tense. Richard Lester, the head of MIT's Center for Innovation, told me he belongs in the latter camp: 'Things look somewhat bleak in the long-term, but if you look around Boston, at the incredible concentration of talent and opportunity here, we've still got a head start, and if we're smart we can probably build on it.' Among the Panicked are economists such as MIT Nobelist Paul Samuelson, who has recently argued that the rapid spread of innovative capacity to other countries with lower labor costs makes him doubt the whole doctrine of 'comparative advantage,' on which much of modern economics rests. If there's a way to escape this grim future, economists agree, it is for America to reverse its slowly slumping innovation machine. Perhaps the hottest area of economic research right now centers around technology, trying to figure out what exactly the United States did in the '90s and how we can do it again. In university economics departments and corporate executive suites across the country, the sense that we're in a pivotal fight for continued economic preeminence is already common knowledge. But in Washington, these new economic realities have barely been noticed. The Heroism of the 30-Year Mortgage On an overcast day in mid-December, President Bush assembled a group of CEOs at the Reagan Building – a behemoth of a federal office complex that has become the favorite venue for small-government conservatives – for a conference to promote his economic agenda. The tone of the conference, so soon after a winning election, was upbeat, cheery, back-slapping, the happy Chamber of Commerce banter of executives who have recognized a problem that they know how to fix. At the end of the day, the president himself took the stage. He said the economy was fundamentally strong and that government's role would be to 'create an environment that encourages capital flows and job creation through wise fiscal policy.' To do this, he said, he would ask for Congress to privatize Social Security and make his tax cuts permanent. He compared himself favorably to Franklin Roosevelt. He left the stage. During the same conference, two floors up in the very same building, a group called the Council on Competitiveness held another event for the press, in which it laid out a very different vision. This group, comprised of 400 blue-chip business executives (the CEOs of IBM, Pepsi, and General Motors, among others) and university presidents – as rough an approximation of the American establishment as you could fit in a single room – was nearly as downbeat as the president was buoyant. The astonishingly fast rise of international competitors, they warned, has meant that the American economy has reached an 'inflection point,' a 'unique and delicate historic juncture' at which America, 'for the first time in our history ... is confronting the prospect of a reverse brain drain.' The report made a point of noting that the United States remains the world's dominant economy, the leader in fields ranging from biotechnology to computers to entertainment, but the CEOs nevertheless cited worrying evidence that this dominance might not last. For decades, the United States ranked first in the world in the percentage of its GDP devoted to scientific research; now, we've dropped behind Japan, Korea, Israel, Sweden, and Finland. The number of scientific papers published by Americans peaked in 1992 and has fallen 10 percent; a decade ago, the United States led the world in scientific publications, but now it trails Europe. For two centuries, a higher proportion of Americans had gone to university than have citizens of any other country; now several nations in Asia and Europe have caught up. 'Those competitor countries ... are not only wide awake,' said Shirley Ann Jackson, the president of the American Association for the Advancement of Sciences, 'but they are running a marathon ... and we tend to run sprints.' While the president's talk focused almost exclusively on the need to free up capital for investment, these CEOs barely mentioned that as a problem. Instead, they stressed various below-the-radar government actions that they felt were undermining America's competitive edge: security arrangements that have crimped the supply of educated immigrants; recent cuts in science funding (the president's 2005 budget sliced money for research in 21 of 24 areas); and the reassigning of what research funding remains to applied research, most of it in homeland security and the military, and away from the basic scientific research that economists say is the essential engine of future economic growth. They also expressed concern about those policies Washington was not pursuing but should be: broadening access to patents; increasing research into alternative fuels; and bringing information technology into the health care market. When the newspapers reported the event the next day, the president's speech got front-page treatment. The CEO's presentation received only a short item on page E3 of The Washington Post, and no mention at all in The New York Times. This gap in media coverage reflected not only the power of a newly elected president to dominate the news, but also what might be called a macroeconomic bias. When the press and most Americans think of economic policy, they think of macroeconomic matters – tax rates, budget deficits, trade balances – whose fluctuations have instant, tangible effects on interest rates, stock prices, and exchange rates – things newspaper readers and casual investors can see, track, and relate to. But there is another set of ways in which Washington has always affected the long-term health of the economy: by making investments, regulatory changes, and infrastructure improvement to spur the economy forward, creating new industries and giving new tools to old ones. This category of policies has not traditionally been given a single name but might best be called 'microeconomic policy.' Historically, this has been the heroic side of economic policy: The Louisiana Purchase may have been a shrewd maneuver for continental expansion, but it was also a jobs program for landless citizens eager to carve their own farms in the wilderness – which is how Jefferson sold the treaty to Congress. The land grant college system, signed into law by Abraham Lincoln, provided the nation's farmers with expert guidance on the latest agricultural techniques to improve their crop yields. No entrepreneur could figure out how to mass produce cars profitably, writes Harold Evans in his excellent new book They Made America, until Henry Ford fought an aggressive bid against restrictive patents. The pharmaceutical, financial, and airline industries blossomed thanks to the creation of the FDA, SEC, and FAA, which gave customers some assurance of safety when they popped pills, traded stocks, or boarded flights. The G.I. Bill provided a generation of veterans with the college educations they needed to build the post-war middle class. The creation of the federally-guaranteed 30-year mortgage proved the decisive tool in the growth of the post-war American suburb. These investments and regulatory changes aren't merely tools of the past; it is impossible to imagine the '90s boom emerging without them. Early investment from the Pentagon helped nurture the internet. The algorithm that powered Google was developed when co-founder Larry Page, then a Stanford graduate student, won a federal grant to write a more efficient sorting and search engine for libraries. The innovative new medicines that have driven the expansion of the biotech and pharmaceutical industries arose from university research largely financed by the National Institutes of Health. The commercialization of these and other discoveries was financed by a venture capital industry that developed only after legislation, sponsored by Republican lawmakers and signed by President Jimmy Carter, enabled an advisory firm to hold significant stock in a start-up. For most of the country's history, both political parties have favored various microeconomic initiatives – though Democrats have been more comfortable with using government to intervene in the marketplace, while Republicans have tended towards a laissez-faire approach that stressed lowering the cost of capital. These tensions sparked big debates in the 1980s about 'industrial policy,' with (mostly) Democrats arguing for various kinds of sector-specific technology investments and relief from Japanese competition and (mostly) Republicans arguing that the federal government should cut taxes, trust the market, and not 'pick winners and losers.' Still, each party has traditionally played on both the macro and microeconomic policy fields. Kennedy cut marginal tax rates when they were excessively high in the early 1960s. Clinton cut the deficit to reduce interest rates. Eisenhower built the interstate highway system. Reagan gave crucial tariff protection to America's then-ailing semiconductor industry. Under President Bush, however, the GOP's natural economic policy tendencies have been hyper-charged by a grand political vision. Karl Rove, Grover Norquist, and other Republican strategists have argued that massive annual tax cuts and the privatization of Social Security will not only increase the flow of capital into the marketplace, but will also put Democrats at a long-term electoral disadvantage and usher in a new era of GOP dominance. That these policies also require the government to take on trillions of dollars in extra debt, just as the first baby boomers are reaching retirement and trade imbalances are reaching historic levels, is seen by GOP leaders as a risk worth taking. And so the White House and Congress have pursued tax cutting and Social Security privatization with relentless focus, to the exclusion of almost everything else. As The New York Times columnist Daniel Altman has written, the president has chosen economic advisers such as N. Gregory Mankiw, Lawrence Lindsey, and R. Glenn Hubbard who support this singular view. 'What you have in Washington now is an inability to get beyond the macroeconomic, to understand that there are so many other investments government needs to be making and actions it ought to be taking, and that our future is going to hinge in large part on what decisions we make there,' Michael Mandel, the influential economist and columnist for BusinessWeek, told me in January. 'And right now in Washington, they're not even looking at any of that.' Even when the Bush administration's leading economists discuss innovation, it is mostly in this light – they argue that reducing the cost of capital will lead companies to invest in new technologies. They rely in part on the research of economists such as Dan Sichel of the Federal Reserve and Dale Jorgenson of Harvard, who examined the sources of the '90s boom and found that capital availability played an important role. But not even Jorgenson thinks this was the whole story: 'You need something to invest in, and so all those other things you're talking about were crucially important too, in the long run,' he told me in January. 'If you're looking at Washington today, you have to ask, what are they doing to make those investments now?' Bush v. Newt The same White House that has been bold, and recklessly so, on macroeconomic policy has been timid, and recklessly so, on microeconomic policy. It has made only a few feints at such policies and investments, and compared to the relentless energy with which the administration has pursued tax cuts and Social Security reform, its attention to such microeconomic strategies has been only tepid, intermittent, Potemkin-like – done to quiet a constituency or send a political signal. A good example is broadband. Most experts predict that when a critical mass of homes and businesses acquire high-speed internet connections, an explosion of economic growth will follow as whole new industries, such as video-conferencing and online video gaming, become possible. But these new industries are likely to flourish in whichever countries achieve near-universal broadband first, and at the current pace, that won't be the United States. For four years, the FCC has pursued a 'deregulatory' telecommunications policy that has effectively blocked competition, giving phone companies little incentive to build out their broadband networks. Over the same period, the United States has dropped from 4th to 10th in the world in percentage of its homes and businesses with broadband. Not surprisingly, South Korea, which is first on the list, is now the world's leader in developing online video games, the fastest-growing segment of an industry that's bigger than movies, and its software companies are beginning to lure top American programmers to Seoul. Early last year, Sen. John Kerry (D-Mass.) began to use a line in his stump speeches that challenged the president on America's declining broadband position. The president responded by proposing the goal of achieving '90 percent broadband access' by 2007. The goal was bold-sounding but empty: By most measures, 90 percent of Americans already have 'access' to broadband in the sense that they could, if they wished, sign up for it; the problem is that, compared to other countries, relatively few Americans have done so. A similar inattention has held in wireless – a technology that venture capitalists believe would explode if the government would make a simple regulatory change. Since the president came into office, bankers, venture capitalists and economists have been urging the FCC to reassign unused, high-quality spectrum that is now reserved for television broadcasters and the military. 'Nobody was using this,' says Wharton's Kevin Werbach; reassigning it was 'a no-brainer.' The FCC, under Chairman Michael Powell, did nothing for two years and then delegated the matter to a task force to investigate how best to reassign spectrum. The task force reported two years ago, but the commission has still not begun to reassign spectrum. Meanwhile, the United States has fallen only farther behind in wireless technologies to European and Asian firms. But there is perhaps no economic sector that is undergoing a more profound evolution, or in which government investments could make a bigger difference, than energy. As India and China continue their rapid industrialization, and with it their need for oil, analysts predict that the price of oil, already sky-high, will grow even more prohibitive – which means that whichever companies develop the most effective alternative fuels and energy-efficiency technology will revolutionize the industry, and whichever countries can produce those breakthroughs may become rich on it, the Bahrains of the 21st century. Right now, however, the United States is not poised to be one of those countries. Demand in America for electric-gas hybrid cars already outstrips supply, but Ford is so behind the curve that it's leasing its hybrid technology from Toyota. Europe, meanwhile, is setting the pace on the next promising auto technology; clean diesel-electric hybrids. Companies in Europe and Asia have also made more progress than have their American counterparts in developing the technology for crafting energy-efficient appliances, offices, and factories – a consequence of higher energy taxes and stricter environmental regulations in those countries. The Bush administration's most vigorous response to all this has been to increase the funding for research into hydrogen-powered cars. Hydrogen technology is promising. But it is also decades away from the market, and even hydrogen buffs believe the administration has gone about its program the wrong way, trying to build fuel cells before figuring out the more daunting challenges of how to extract and transport hydrogen. Moreover, there's a creeping suspicion that hydrogen may end up being far too expensive to compete with other, more feasible, and probably cheaper fuels like biomass ethanol, a technology in which America happens to be a leader. Betting on a single alternative fuel source, hydrogen, at the expense of others is a classic case of 'picking winners and losers.' The truth is, no one knows yet which technologies or energy sources will define the future. A better strategy, says Harvard's John Holdren, would be for the federal government to raise automobile fuel efficiency (CAFE) standards, impose a carbon cap-and-trade system for factories and power-plants, and let the market decide which new energy sources and technologies are the best. These ideas now have broader backing than they did a decade ago. The bipartisan National Commission on Energy Policy issued a report in December calling such measures the most critical to ensure America's energy future – and that commission's members includes the CEOs of old-line energy giants such as Exelon and ConocoPhillips. And, Holdren told me, executives at old economy companies from Monsanto to Dow Chemical have signed on. 'Five years ago, we didn't have a shot at getting them on board,' said Holdren, 'but the situation is getting dire enough that now they're leading the charge.' Still, many sectors, including the automobile and power industries, vehemently oppose higher CAFE standards and carbon emission limits, and the president has repeatedly rejected them. There is no better example of the administration's Potemkin-style microeconomic policy than the way it has handled the issue of rising medical costs. Here, the administration has talked a good game. During last year's presidential campaign, the president vowed to bring health care out of the 'buggy and horse days' by getting the industry to adopt information technologies, such as electronic medical records-keeping and systematic case-management systems, which experts say could save hundreds of billions of dollars and tens of thousands of lives. To this end, he promised a new $50 million health care IT initiative. It was an absurdly small amount, and probably no match for the perverse incentives that keep for-profit medicine from investing in these technologies (see 'Best Care Anywhere,' January/February 2005). But at least it was something. That is, until the president signed his 2005 budget into law, which zeroed out the $50 million program. David Brailer, the economist and physician the White House had put in charge of the program, wound up with no money to do anything to install information technology in hospitals – no pilot programs, no cash for education, no seminars for hospital executives. Newt Gingrich, the right's high priest of health IT, told The New York Times that the president's defunding of his own program was a 'disgrace.' (After Gingrich's hue and cry, the White House put the money back in the proposed 2006 budget it submitted to Congress, though some insiders remain skeptical that the program will survive). Faster, Faster Technology today is diffusing faster than ever. As the Council on Competitiveness has noted, it took 55 years for the automobile to spread to a quarter of the country, 35 years for the telephone, 22 years for the radio, 16 years for the personal computer, 13 years for the cell phone, and only seven years for the Internet. Because technologies are adopted so quickly, it has become more important than ever for a country's industries to be at the cutting edge – there's simply much less catch-up time. (Fall five years behind on building car factories in the early 20th century and you lost some profits; fall five years behind on hybrid cars and you may have lost an industry). For this reason, the last four years of drift may have already done significant damage to America's long-term economic prospects. The pity is, there was no good reason for the drift. Finding ways to strengthen border security while still providing enough visas for educated immigrants and graduate students is hardly the world's most difficult public policy challenge, and every Fortune 500 corporation in America would cheer such moves. There are no serious ideological reasons why both parties couldn't support reform of patent laws (though certain powerful interest groups would object). It's hard to find a good excuse for why we're falling behind on broadband, or have failed so far to reassign valuable wireless spectrum. (Indeed, a country which until recently had large budget surpluses should by now have found the money to begin wiring the country with fiber-optics, providing higher-quality streams which can transport large data files far faster than broadband.) And even the most politically difficult actions, such as raising CAFE standards and imposing a flexible carbon emissions cap to spur energy innovation, should have been possible after 9/11, with the nation willing to make sacrifices and dire warnings from all political wings about our dependence on Middle Eastern oil. But what worries economists even more than the past four years of drift is the prospect of continued inaction. The speed of technological change is now too fast, and the economic competition too fierce, for America to afford that. There is no law that says the United States will be the world's pre-eminent economic power forever. But neither is there any reason we can't rise to the challenge, as we did in the 1980s and 1990s. Then, as now, becoming more innovative is the solution to our problem. But first, we must recognize that we have a problem. Benjamin Wallace-Wells is an editor of The Washington Monthly. http://www.alternet.org/story/21400/ Johnny5 used to work at IBM, where the USA boys invented x-ray technology for motherboard and chip manufacture - the smaller wavelengths allowed for smaller logic gates and such - well IBM said we are making good with laser light technology - so they shelved the x-ray technology - the scientists involved got upset and went to asia. A few years later IBM was licensing the technology from asia - a technology they funded the invention of - way to go USA!

Subject: Re: Good for europe - but not America
From: Pancho Villa
To: johnny5
Date Posted: Fri, Mar 04, 2005 at 07:54:23 (EST)
Email Address: nma@hotmail.com

Message:
'Johnny5 used to work at IBM, where the USA boys invented x-ray technology for motherboard and chip manufacture - the smaller wavelengths allowed for smaller logic gates and such - well IBM said we are making good with laser light technology - so they shelved the x-ray technology - the scientists involved got upset and went to asia. A few years later IBM was licensing the technology from asia - a technology they funded the invention of - way to go USA!' Remember what has been called the biggest int. business machine's mistake in history ? I'm refering to when IBM contracted Microsoft to create the Disk Operating System (DOS) yet instead of making the agreement exclusive between IBM and Microsoft IBM choose to pay a little less and allow Microsoft to sell the same code to anyone who wanted it basically costing IBM a TON of cash.

Subject: Re: Good for europe - but not America
From: johnny5
To: Pancho Villa
Date Posted: Fri, Mar 04, 2005 at 08:12:49 (EST)
Email Address: johnny5@yahoo.com

Message:
I could tell you many stories my friend, the positive from the one you mentioned was that at least it was another american company that employed a lot of americans and paid a lot of american taxes. The future has our companies not being devoured from other companies in our country - but from the international scene and I just don't think we can compete anymore - what say you? Bill Gates predicted over 2 decades ago that his own company if it grew enough would become a slow behemoth laggard like IBM was back then and some new competitor would knock the king off the throne and that he must innovate to stop that, for the past 50 years we may have justifiably assumed that new competitor was american - no longer. How does MSFT continue to sell thier expensive office package when you can get free open office software that is just as good? http://www.openoffice.org/ another johnny personal - IBM used to make a particular token ring network card, well the engineers tested it with dell, packard bell, compaq - they wanted lots of market share so they made this card compatible with many systems - well they 'forgot' to test it with IBM's aptiva and other PC lines. So it was released to the market - an IBM network card that worked with basically every computer on the market - BUT an IBM - BWAHAH! That cost some people thier jobs - size matters - and when the left hand and right hand get too far away from the brain - you have collapse.

Subject: Re: That's what IBM stands for...
From: Pancho Villa
To: johnny5
Date Posted: Fri, Mar 04, 2005 at 08:37:56 (EST)
Email Address: nma@hotmail.com

Message:
http://arstechnica.com/articles/paedia/cpu/cell-1.ars http://arstechnica.com/articles/paedia/cpu/cell-2.ars

Subject: I-B-M?
From: Pancho Villa
To: Pancho Villa
Date Posted: Fri, Mar 04, 2005 at 09:25:01 (EST)
Email Address: nma@hotmail.com

Message:
Innovating Business Machines

Subject: Productivity Benefits
From: Emma
To: All
Date Posted: Fri, Mar 04, 2005 at 06:09:41 (EST)
Email Address: Not Provided

Message:
Convincingly the data speaks to a marked rise on productivity from 1995. Unless there should be a sudden halt in information technology advance and application, there is every reason to believe growth in technology can continue to exceed the 1.4% annual increase recorded from 1973 to 1995. With proper fiscal and monetary policy this increase in productivity growth will allow for faster economic growth that in turn can and should increasingly benefit workers.

Subject: Productivity Benefits - 1
From: Emma
To: Emma
Date Posted: Fri, Mar 04, 2005 at 06:18:45 (EST)
Email Address: Not Provided

Message:
I tend to think a productivity increase may occur early in a recession as a labor force is reduced, but the effect is soon lost, still the possibility is important to keep in mind. Then, might an age effect persist as younger workers make up a smaller proportion of the work force?

Subject: Productivity Benefits - 2
From: Emma
To: Emma
Date Posted: Fri, Mar 04, 2005 at 06:23:12 (EST)
Email Address: Not Provided

Message:
Improvements in production quality and products we use are evident everywhere. Why should American data, as data from other countries, not make allowance for quality improvements?

Subject: Re: Productivity Benefits - 2
From: johnny5
To: Emma
Date Posted: Fri, Mar 04, 2005 at 08:39:09 (EST)
Email Address: johnny5@yahoo.com

Message:
http://www.newyorkfed.org/research/epr/03v09n3/0309hult.pdf 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. 5. Conclusion 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: Measuring Productivity
From: Emma
To: All
Date Posted: Fri, Mar 04, 2005 at 05:34:27 (EST)
Email Address: Not Provided

Message:
June 21, 2001 Despite real concerns, gauging work hours is not a problem in measuring productivity growth. By Alan B. Krueger - New York Times HAVE you ever noticed that George Jetson has a much easier life than Fred Flintstone? To economists, the reason is obvious: thousands of years of productivity growth. Because productivity growth melts away problems of inflation, budget deficits, unemployment and stagnant income, there is great interest in knowing whether the upturn reported by the Bureau of Labor Statistics since the mid-1990's will persist. Thus the 1.2 percent decline in productivity last quarter, if it is more than a cyclical blip, is worrisome. But can the numbers be trusted? New research from economists at the Bureau of Labor Statistics and the Bureau of Economic Affairs presented at the Federal Economic Statistics Advisory Committee meeting in Washington this month suggests that one potential problem with the statistics -- the measurement of hours worked -- is much less of a problem than previously believed. Even small differences matter, so accuracy is crucial. Productivity grew at an annual rate of 2.7 percent from 1947 to 1975, then mysteriously slowed to 1.4 percent from 1975 to 1995, before rebounding to 2.8 percent after 1995. If productivity had grown at the higher rate all along, national income would be 30 percent greater today. In principle, labor productivity is easy to measure: simply divide economic output by the number of hours used to produce it. There are only two problems: the numerator and the denominator. Most attention has focused on the numerator. Economic output is notoriously hard to measure because the quality of goods changes constantly and because new goods are periodically introduced. How does one value the convenience of having an A.T.M. available 24 hours a day? In addition, the cost of undesired side effects of production, like pollution and work injuries, should be subtracted from output. Despite much research, output remains hard to measure. Many economists believe output growth has been understated in recent years, but that conclusion is mostly guesswork. Others criticize the measurement of hours worked. Most notably, Stephen S. Roach, Morgan Stanley's chief economist, has argued that the Bureau of Labor Statistics undercounts the hours people work because employees increasingly perform work after hours on cell phones, beepers and home computers. 'There has been a significant lengthening of work schedules in the last decade that has not been captured in the government's productivity measures,' he wrote in 1997. If so, the official numbers would exaggerate productivity growth in the 1990's. Mr. Roach called this 'the ugly little secret of the apparent productivity-led recovery.' A team of four researchers from the Bureau of Labor Statistics and the Bureau of Economic Affairs, led by Marilyn E. Manser, head of the Office of Productivity and Technology, has investigated Mr. Roach's hypothesis. It came up lacking. They carefully compared the official hours series with one they constructed from surveys of employees. Employees, they reason, would not underreport their hours, even if their employers might. They concluded, 'The official productivity estimates are biased trivially, if at all, by the absence of data on the actual hours of nonproduction and supervisory workers.' There are many reasons to be concerned about the official measure of work hours. This information comes mostly from the monthly survey of 400,000 establishments by the Bureau of Labor Statistics. Employers report the number of hours for which they paid production workers in manufacturing and nonsupervisory workers in other industries. Because it lacks the data, the B.L.S. assumes the hours of supervisors are the same as those of nonsupervisors outside manufacturing, and that hours move at the same rate for nonproduction and production workers in manufacturing. Another adjustment is made to convert hours paid to hours worked -- subtracting paid vacations, for example. Work hours of proprietors and farm workers are derived from the Current Population Survey, the survey of 50,000 households used to estimate the unemployment rate. Employers may not know, or care to know, how much their employees work off the clock. Moreover, supervisors' hours may have grown more quickly than those of nonsupervisors. Thus the researchers used employee reports of hours worked from the household survey to compute an alternative measure of productivity growth. Work hours are indeed higher when reported by employees. But the gap must be growing over time to affect the productivity growth rate. It is not. The two productivity growth series are strikingly similar: productivity grew 2.6 percent a year in the alternate series and 2.5 percent in the official one from 1995 to 1999. The rebound in the 1990's is even more striking in the alternate series. The researchers also investigated another possibility. In the 1990's, employment grew more slowly according to the Current Population Survey than according to the establishment survey. Perhaps the Current Population Survey understates employment growth. To adjust, the researchers computed total hours worked as the product of worker-reported hours per job from the survey and total jobs from the establishment series. Yet even with this measure, annual productivity growth was a robust 2.2 percent a year from 1995 to 1999 -- a full percentage point faster than in 1979-95, matching the official data. It is rare that macroeconomic statistics are so resilient to alternative formulations. Mr. Roach said he found the results of the new study 'counterintuitive' because he believes professional employees are increasingly working longer hours that are not recorded by either government survey. He pointed to Harris Poll data suggesting that workers typically work around 50 hours a week -- substantially more than the 41-hour week found in the Current Population Survey -- to bolster his argument that government statistics understate work hours. But the Harris Poll counts time spent keeping house, going to school and traveling to and from work as work time, which inflates the figures. Furthermore, the Harris Poll, just like the government data, finds no increase in work hours in the 1990's. Usually it is not newsworthy when government statistics turn out to be accurate; it is like reporting the number of planes that land safely at La Guardia each week. But productivity growth is ground zero in the debate over the new economy, as well as the main determinant of future prosperity. It is just reading tea leaves to forecast from currently available data whether the takeoff in productivity growth in the 1990's has evaporated. Still, the latest research suggests the productivity tea leaves are worth reading. Alan B. Krueger is the Bendheim Professor of Economics and Public Affairs at Princeton University and editor of The Journal of Economic Perspectives.

Subject: Johnny's Tour of Palm Beach County
From: johnny5
To: All
Date Posted: Fri, Mar 04, 2005 at 00:45:55 (EST)
Email Address: johnny5@yahoo.com

Message:
Mom bought a small dumpy house in west palm beach in 1970 for 22K. In 1990 it was appraised at 89K. Last year it was appraised for 165K. Yesterday johnny helped mama get a new appraisal - the realtor offered 250K. Small dumpy, no central AC, hurricane damage, holes in the ceiling - the realtor just wants the dirt. The house has little value he said. (it is on a canal where you can ride a boat over to don trump's country club) Now Johnny told his mama a bird in the hand is worth 2 in the bush dear mother - sell that sucker and take the money and get into something with much more stability than palm beach housing and buy the house back in a few years when the market busts. Mama says don't be so hasty johnny5 - patience is a virtue, next year I think I can get 350K!! :( Greed will be her undoing I fear. Johnny5 can't even convince his own mother to sell, what a failure johnny5 is. Johnny5 is very sad tonight, hopefully terri is right and next year when johnny's mom can get 350K she will sell or will she say - if I wait one more year I can get 500k!!?!? How do I help my mom Pete? She is caught up in this irrational exhuberance of real estate and can only see the tree - no forest exists. Johnny talked to several realtors in west palm beach and explained to them that prices can't keep going up like that - interest only loans and 5 year time horizons on those enforce certain specific limits - they assured johnny5 he does not understand palm beach county - they are not like any other place in the world. So not only are the residents of palm beach county in fantasyland, so are most of the banks and realtors. Johnny5 specifically argued several of the points here and other places why it could not continue - but I kept being assured that palm beach county was 'special' and prices will rise thier forever. Such optimism for some reason made johnny5 get sick after he ate the chinese general tso in the mall. (don't eat the jamaican place their either - the bbq goat made johnny's mom sick.) Johnny5 was going to eat at cityplace which is some huge european clone outdoor mall cafe type deal - but after driving around it for an hour johnny could not find any parking. Johnny5 could not find a nice hotel for less than 150 dollars in w. palm beach - much more than my motel 6 budget which usually runs 30 bucks a night. Johnny5 lives on the west coast of fl and next to clearwater florida did not see what makes west palm command such high prices compared to other parts of florida. The dollar egg mcmuffin in west palm cost the same as the dollar egg mcmuffin everywhere else - although their wal-mart and mcdonalds had architecture johnny has never seen at those same franchises in any other city. But the prices and interiors were the usual. Johnny is foolish, young and still learning and wants to know why west palm is special compared to clearwater or other areas of florida. One realtor told johnny5 the 'DON' is one of the richest people in the world, he came here and he could have went anywhere - I said isn't the 'DON' in bankruptcy? :(

Subject: Palm Beach has a special...
From: Pete Weis
To: johnny5
Date Posted: Fri, Mar 04, 2005 at 15:17:46 (EST)
Email Address: Not Provided

Message:
place in real estate history: The Florida Real Estate Craze When: 1926 Where: Florida The amount the market declined from peak to bottom: Land that could be bought for $800,000 could, within a year, be resold for $4 million before crashing back down to pre-boom levels. The prices were so inflated that to buy a condo-style property in 1926, you would've had to pay the same as you would now have to pay for a luxury home in the guard-gated communities in Miami ($4,500,000)--without adjusting for inflation! Synopsis: In the 1920s, the United States of America was chugging along like the British Empire of the 1700s, and it was only natural that people were beginning to believe such prosperity was infinite. But it wasn't the stock market that was the recipient of a bubble. It was the real estate market. In 1920, Florida became the popular US destination/residence for people who don't like the cold. The population was growing steadily and housing couldn't match the demand, causing prices to double and triple in some cases, which was not exactly unjustified at this point. But, news of anything doubling and tripling in price always attracts speculators. So, once people began pumping huge amounts of money into the real estate market it took off. Soon everyone in Florida was either a real estate investor or a real estate agent. Unfortunately, the rules are the same whether you pay too much for a stock or for a piece of land: you have to make that much more to claim a profit. This did happen for awhile, and land prices quadrupled in less than a year. Eventually, however, there were no “greater fools” to buy the disgustingly overpriced land, and prices began to adjust ever so subtly. Speculators realized there was a limit to the boom, and began to sell their properties to solidify their profits while they could. Then everybody simultaneously saw the writing on the wall, and panic selling ensued. With thousands of sellers and very few buyers, prices came down with a sickening thud, twitched a bit, and then crawled down even lower.

Subject: Re: Palm Beach has a special...
From: Terri
To: Pete Weis
Date Posted: Fri, Mar 04, 2005 at 18:35:34 (EST)
Email Address: Not Provided

Message:
Interesting posts. John Sayles has a fine film on Florida real estate.

Subject: Lincoln Beach
From: johnny5
To: Terri
Date Posted: Fri, Mar 04, 2005 at 19:50:53 (EST)
Email Address: johnny5@yahoo.com

Message:
http://www.pbs.org/now/transcript/transcript_sayles.html I read this and watched the videos from sunshine state here. Thanks Terri. http://videodetective.com/home.asp?PublishedID=642010 My 2 sisters were in west palm with mom when integration happened, my oldest sis got beat up almost daily because she was 'white.' She has very negative views on her experience with integration. I liked the scene on the escalator clause - what developer would sign that? hehe

Subject: Productivity Growth
From: Terri
To: All
Date Posted: Thurs, Mar 03, 2005 at 19:54:55 (EST)
Email Address: Not Provided

Message:
Significant productivity growth does not insure that the economy will grow faster, nor does it insure that wages will grow faster, but the potential is there. The potential is there for faster economic growth and better wage increases, so the increase in productivity growth from 1995 can prove a wonderful long term benefit. Productivity growth from 1995 to 2001 was 2.5%, while since then the rate has been a remarkable 4.3%. Since 1995, productivity growth alone has been far more than is needed to insure full Social Security benefits under the current system as far as can be projected. There is every reason to believe the data can be trusted, so this is indeed worth a 'wow.'

Subject: Hedonics Terri?
From: johnny5
To: Terri
Date Posted: Fri, Mar 04, 2005 at 00:30:45 (EST)
Email Address: johnny5@yahoo.com

Message:
You asked for academic papers criticizing CPI, along with hedonics problems they were posted - what particular points in them do you disagree with Terri? Thanks. http://www.321gold.com/editorials/willie/willie030205.html END OF PRODUCTIVITY GAINS: On the day it was announced, the market held the data within its field of vision. Since then it has been lost. The Q4 productivity came in at 0.8% which marks the end of high gains in efficiency. The markets have gotten it very wrong for over two years. Amidst widespread and deep job layoffs, and deployment of equipment in the place of workers, output per worker rose. There is more. With service outsourcing to China and India, with manufacturing offshored to Asia generally, the US Economy has imported productivity. This helps to explain why job growth is lousy within the USA. Asian has won the benefit. Market pundits proclaim that brisk job growth is next domestically here, yet demand comes from Asia, growth occurs in Asia, and investment goes to Asia. They have forecasted most everything wrong so far, so beware. Let me make the claim with productivity, that it is actually negative right now, after removal of nonsensical hedonic adjustments from the information technology sector. They double count output and greater equipment speed. This goes parallel with negative savings rate, due to the same goofy calculations. This curve ball has been a central topic in past Hat Trick Letter issues. Maybe we should ignore the signal.

Subject: Projected Bond Returns
From: Terri
To: All
Date Posted: Thurs, Mar 03, 2005 at 19:30:15 (EST)
Email Address: Not Provided

Message:
Past performance absolutely does not indicate future performance. The Vanguard Long Term Bond Index averaged 9.27% for the last 10 years through February 28. However the current yield of the fund is 4.95%. We can thus expect about a 5% return over the coming 10 years for this fund. A projected return of 9.3% for the coming 10 years would be a foolish dream. John Bogle taught us to take the current yield of the Long Term Bond Index and use that as the best estimate of return for the coming 10 years.

Subject: Subdued Bond Returns
From: Terri
To: Terri
Date Posted: Thurs, Mar 03, 2005 at 20:29:13 (EST)
Email Address: Not Provided

Message:
The Vanguard Long Term Investment Grade Bond Fund has averaged 9.2% annual returns since July 1973. The current yield however is only 5.1%, so we can expect a return that is significantly subdued these coming 10 years. The estimatefrom here is 5.1%.

Subject: 1,3 >> 0,47 >> 0,36
From: Pancho Villa
To: All
Date Posted: Thurs, Mar 03, 2005 at 18:45:03 (EST)
Email Address: nma@hotmail.com

Message:
The Myths of The Cheap Yuan Even a doubling of the yuan's value is not going to begin to eliminate China's cost advantages. By Kenneth Rogoff Newsweek International Feb. 28 issue - Politicians around the world seem convinced that if only China would stop tilting the scales of international currency rates, many of their economic woes would just melt away. If only Chinese goods weren't so temptingly cheap, Americans, currently engaged in the borrowing rampage of the millennium, would suddenly rediscover their Puritan roots. Mexicans, South Africans and, who knows, maybe even Europeans might see manufacturing plants again sprouting on their soil, instead of packing up and moving to China. The popular view is that by maintaining its decadelong peg to the dollar, China has prevented the natural currency appreciation that fast-growing economies normally experience. Well, here is the news. China probably will allow its currency, the yuan, to strengthen a little bit against the dollar sometime later this year. But, although on balance this will be a good thing for everyone, it is hardly going to reshape the patterns of 21st-century economic growth. Think about the United States, whose citizens have yet to realize that if they go on spending more than they earn, year after year, they will collectively go broke. In 2004, the United States spent about $600 billion more than it earned. Sure, if you look just at China's bilateral trade with the United States, it appears to be responsible for $80 billion of the problem. But this widely cited figure is something of an accounting illusion because, for many goods, China is just the last stop in a complex global manufacturing chain. High-end components are imported into China for final assembly and transshipment to the United States. Those nifty liquid-crystal computer screens may say made in china but they ought to say final assembly in china. Indeed, only 20 percent of the typical product imported by the United States from China actually represents Chinese value added. Since an appreciation of the yuan is not going to affect the cost of the other 80 percent, it is going to have only a limited effect on price. Of course, if China devalues its exchange rate, there is every reason to believe that other Asian currencies would follow. Even so, the impact is likely to disappoint those who think that the exchange-rate misalignments account for the lion's share of the United States' borrowing problems. U.S. Federal Reserve chairman Alan Greenspan is among those who recently voiced optimism that the dollar's decline to date will slice a big chunk off the U.S. deficit. Unfortunately, extensive empirical experience tells us otherwise. Middle-of-the-road estimates of how trade responds to exchange rates imply that a drastic 20 percent across-the-board decline of the dollar will eliminate at most one third of the deficit. Will a rise in the yuan at least have stemmed the Chinese manufacturing juggernaut? Not much. Walk down the streets of Beijing and you can buy a wide range of manufactured goods for 20 percent of what you'd pay in the United States or Europe. A modest increase in costs is hardly going to be decisive. Even at a discount chain like Wal-Mart, a big part of the price you pay for a Chinese good represents local, Western retailing costs. People seem to forget that Japan has been running giant trade surpluses for most of the last 30 years, even though its currency has appreciated by a couple hundred percent against the dollar over the same period. Currency movements can be very helpful but they are not a panacea for deeper structural imbalances in the global economy. According to International Monetary Fund estimates, China has more than 150 million unemployed workers. Even a doubling of the yuan's value is not going to begin to eliminate China's long-term cost advantages. Currency flexibility in China won't bring back the halcyon days of the 1970s to German manufacturing, and it won't bring mass silicon-chip manufacturing back to the United States. It will encourage the Chinese to buy more high-end American goods and services, and perhaps more agriculture goods as well. From China's perspective, introducing some currency flexibility will help prevent the economy from overheating and keep inflation pressures under check. And whereas today markets are mostly looking toward a stronger value for the yuan, someday things will flip. Inevitably, China will face a political or financial crisis, or both, that will have speculators racing for the exits. And when that happens, if China is still sitting on a currency peg, the country could easily suffer a catastrophic 1990s Asian-style currency crisis. The time to get out of a currency peg is now, while everyone wants to buy yuan instead of dump them. China may well be the economic story of the 21st century, as so many prognosticators have opined. And with 1.3 billion people, it really ought to have its own independent exchange rate, just the way Europe and the United States do. But if Western policymakers think that all their growth and financial problems are going to be solved when China finally floats its exchange rate, they had better guess again. Rogoff is professor of economics and Thomas D. Cabot Professor of Public Policy, Harvard University. http://www.curevents.com/vb/showthread.php?t=8649

Subject: Greenspan urges to 'save' the 'CA'
From: Pancho Villa
To: All
Date Posted: Thurs, Mar 03, 2005 at 18:28:15 (EST)
Email Address: nma@hotmail.com

Message:
Greenspan urges restraint on spending to cut deficits By Andrew Balls in WDC Alan Greenspan, the Federal Reserve chairman, called yesterday for “major deficit-reducing actions” to improve the federal budget outlook. In testimony before the House budget committee, he said that the fiscal deficit was “unlikely to improve significantly in the coming years” without decisive action by the administration and Congress. He repeated his call for action to improve the long-term budget outlook through reforming Social Security and Medicare; In testimony billed as an outlook on the economy and fiscal issues, Mr. Greenspan focused almost entirely on budget issues, saying only that the economy had delivered solid performance last year and continued to grow this year at a “reasonably good pace”. The federal fiscal deficit reached 3.5% of GDP last year. The budget faces long-term challenges as spending on the elderly increases with the retirement of the baby boom generation, starting in 2008. The Bush administration has forecast a steady reduction in the fiscal deficit over the next four years but it has left a number of big items – including the war in Iraq, reforming the alternative minimum tax and Security reform – out of its budget arithmetic. (Where’s Greg ?) The Fed chairman called on Congress to adopt budget rules to help rei(g)n in the deficit, including the discretionary spending caps and rules that changes in spending and taxation be revenue neutral, which applied during the 1990’s. This would provide a better basis for facing future challenges associated with the ageing that Congress should also adopt automatic stabilizers that would cut spending or raise taxes in the event of unanticipated budget shortfalls. That would aid “mid-course” corrections to bring the budget back into balance when it veered off track, he said. “In my judgment, the necessary choices will be especially difficult to implement without the restoration of a set of procedural restraints on the budget making process”. Mr. Greenspan reiterated his preference for spending curbs rather than tax increases in restoring fiscal discipline, and also stressed that this was a personal preference rather than the view of the FED. He repeated his guarded support for the private savings accounts favoured by the WH as a part of Social Security reform. This had a greater chance of increasing national savings to deal with an ageing population than the alternative of trying to increase savings through the Social Security trust fund, since Congress has shown a tendency to pay for spending and tax cuts. (Why??) However, Mr. Greenspan stressed that government health programmes presented problems that were larger than and more intractable than the pension system.

Subject: Re: Greenspan urges to 'save' the 'CA'
From: Pancho Villa
To: Pancho Villa
Date Posted: Thurs, Mar 03, 2005 at 18:29:56 (EST)
Email Address: nma@hotmail.com

Message:
Sorry for that double post folks!

Subject: Greenspan urges to 'save' the 'CA'
From: Pancho Villa
To: All
Date Posted: Thurs, Mar 03, 2005 at 18:26:20 (EST)
Email Address: nma@hotmail.com

Message:
Greenspan urges restraint on spending to cut deficits By Andrew Balls in WDC Alan Greenspan, the Federal Reserve chairman, called yesterday for “major deficit-reducing actions” to improve the federal budget outlook. In testimony before the House budget committee, he said that the fiscal deficit was “unlikely to improve significantly in the coming years” without decisive action by the administration and Congress. He repeated his call for action to improve the long-term budget outlook through reforming Social Security and Medicare; In testimony billed as an outlook on the economy and fiscal issues, Mr Greenspan focused almost entirely on budget issues, saying only that the economy had delivered solid performance last year and continued to grow this year at a “reasonably good pace”. The federal fiscal deficit reached 3.5% of GDP last year. The budget faces long-term challenges as spending on the elderly increases with the retirement of the baby boom generation, starting in 2008. The Bush administration has forecast a steady reduction in the fiscal deficit over the next four years but it has left a number of big items – including the war in Iraq, reforming the alternative minimum tax and Security reform – out of its budget arithmetic. The Fed chairman called on Congress to adopt budget rules to help rei(g)n in the deficit, including the discretionary spending caps and rules that changes in spending and taxation be revenue neutral, which applied during the 1990’s. This would provide a better basis for facing future challenges associated with the ageing that Congress should also adopt automatic stabilizers that would cut spending or raise taxes in the event of unanticipated budget shortfalls. That would aid “mid-course” corrections to bring the budget back into balance when it veered off track, he said. “In my judgment, the necessary choices will be especially difficult to implement without the restoration of a set of procedural restraints on the budget making process”. Mr Greenspan reiterated his preference for spending curbs rather than tax increases in restoring fiscal discipline, and also stressed that this was a personal preference rather than the view of the FED. He repeated his guarded support for the private savings accounts favoured by the WH as a part of Social Security reform. This had a greater chance of increasing national savings to deal with an ageing population than the alternative of trying to increase savings through the Social Security trust fund, since Congress has shown a tendency to pay for spending and tax cuts. (Why??) However, Mr Greenspan stressed that government health programmes presented problems that were larger than and more intractable than the pension system.

Subject: Re: Greenspan urges to 'save' the 'CA'
From: Pete Weis
To: Pancho Villa
Date Posted: Thurs, Mar 03, 2005 at 21:51:05 (EST)
Email Address: Not Provided

Message:
'This (payroll taxes in the stock and bond markets) had a greater chance of increasing national savings to deal with an ageing population than the alternative of trying to increase savings through the Social Security trust fund, since Congress has shown a tendency to pay for spending and tax cuts. (Why??)' Why? : For the same reasons our Fed chairman would recommend ARM's when mortgage rates have reached their lowest point in 40 years, knowing fully well he would begin raising rates which he expected would push long term rates higher.

Subject: Re: Greenspan urges to ...(part II)
From: Pancho Villa
To: Pancho Villa
Date Posted: Thurs, Mar 03, 2005 at 18:34:47 (EST)
Email Address: nma@hotmail.com

Message:
Greenspan considera insostenibile la actual política fiscal de Estados Unidos Sandro Pozzi, Nueva York Alan Greenspan, presidente de la Reserva Federal (FED), advirtió ayer ante el Congreso que la política fiscal actual en EE UU es insostenibile, porque el incremento futuro del gasto en pensiones y la sanidad dificultariá la corrección del desequilibrio que sufre la economia. Greenspan urgió un amplio cambio estructural, con el argumento de que la actividad económica no será capaz de proveer los recursos necesarios para hacer frente al reto de enjececimiento. Greenspan concentró el grueso de su testimonio en los problemas vinculados a la ola de jubilaciones entre la generación del baby boom, que está previsto que comience en 2008. El presidente de la Reserva Federal volvió a urgir a los legisladores en Washington que aporten soluciones para poder hacer frente a un cambio demográfico sin precedentes, que afectará de lleno al sistema de pensiones (Seguridad Social) y de asistencia sanitaria a los jubilados (Medicare). Su intervención no introdujo ninguna sorpresa, aunque aportó datos concretos para la reflexión ante lo que se avecina. En la actualidad, según Greenspan, 3.25 empleados estaounidenses contribuyen con sus impuetos a financiar la asistencia pública de un jubilado. Si se mantienen las politicas en vigor, la carga se doblará prácticamente para el año 2030, con dos trabajadores en activo financiando a un jubilado. El problema se agravará cuando esos jubilados, a los 65 años, accedan al Medicare. El gasto combinando del sistema de Seguridad Social, Medicare y Medicaid (asistencia sanitaria a los más pobres!) representa el 8% del PIB estadounidense. Las previsiones de la Reserva Federal elevan el gasto total en los tres capitulos hasta el 9.5% para 2015 y se disparará al 13% para 2030. Esta escalada pantea un „gran problema“ del lado del déficit, porque como reconocia Greenspan, el crecimiento económico no será suficiente para neutralizar el impacto del cambio demográfico, a no ser que se produzca un espectacular incremento de la productividad. Desequilibrio La FED espera que el desequilibrio fiscal se vaya corrigiendo conforme se reduzca el gasto en Defensa y Seguridad Nacional. „No puede continuar indefinidamente“, señaló, pero a reglón seguido dijo que las proyecciones presupuestarias de la Casa Blanca y el Congreso „ no muestran una mejora sustancial en los próximos años“. Por todo esto, la Reserva Federal insiste en que el Gobierno debe revisar su política de gasto y de ingresos para lidiar con el desequilibrio fiscal. El incremento de imuetos, continúa, plantea „un serio problema para economía y la base de ingresos“. El cambio estructural que defiende Greenspan en los sistemas de pensiones y de salud debe orientarse por ello a garantizar que los jubilados tendrán recursos suficientes para cubrir sus necesidades. En este sentido dijo que el incremento del ahorro es „esencial“, algo que no ha conseguido el actual sistema de Seguridad Social, y por eso apoyó la idea de crear cuentas de ahorro privadas, como propone el presidente George Bush en su idea de privatizar parcialmente las pensiones en EE UU. Lo único en claro, según el presidente de la Fed , es que „las consecuencias de no hacer nada serán severas para la economia“, en lo se interpretó como un claro llamamiento al ala demócrata del Congreso. „La única cosa que está clara es que las elecciones serán duras y el rendimiento futuro de nuestra economía dependerá de ellas“, reiteró. Greenspan concluyó diciendo que los legisladoires „deben ser prudentes“ a la hora de considerar „nuevas iniciativas fiscales“ y dijo que si hay que cambiar las promesas que se han hecho a los ciudadanos respecto a su jubilacíon, „es mejor hecerlo pronto, antes de que el problema se venga encima“. „Los futuros jubilados deben disponer del tiempo necesario para ajustar sus plantes de trabajo, ahorro y de guastos“, apostilló.

Subject: Go, go Carly go!
From: Pancho Villa alias Joey
To: All
Date Posted: Thurs, Mar 03, 2005 at 17:12:51 (EST)
Email Address: nma@hotmail.com

Message:
Fiorina joins World Bank short list Ousted H-P chief a candidate for high-profile job March 1, 2005 Carly Fiorina, the celebrity chief executive recently ousted from the top spot at Hewlett-Packard, has emerged as a strong candidate to become the next president of the World Bank, a Bush administration official said Tuesday. Fiorina abruptly joined a short list of candidates for the influential post, along with Randall Tobias, the White House’s global AIDS coordinator, and John Taylor, Treasury Under Secretary for International Affairs. Her candidacy initially was reported by the online edition of The New York Times and then confirmed by The Associated Press, citing an unidentified official. Although the World Bank is technically a United Nations agency with 184 member countries, the United States is considered the largest shareholder and traditionally has the right to appoint its president, while Europe provides the leader of the related International Monetary Fund. James Wolfensohn, the current World Bank president, has announced his plans to step down when his second five-year term ends in May. A spokesman for the Treasury Department declined to comment, saying the administration does not comment on personnel appointments in advance. The Financial Times reported Tuesday that deputy Defense Secretary Paul Wolfowitz also was on the short list for the World Bank job, but the Times story knocked down that speculation. The Times said Wolfowitz was expected to issue a statement indicating he had been asked to stay on at the Pentagon, where he has been one of the chief architects of the White House policy in the war on terror, including the decision to invade Iraq. The World Bank provides billions of dollars a year in grants, loans and technical assistance to developing countries with the aim of fighting global poverty. Fiorina, who walked away from her last job with a severance package worth $45 million, has little experience fighting poverty but would bring to the job an element of glamour as well as her extensive management experience as one of the most powerful women in the corporate world. Fiorina's spokeswoman, Kathy Fitzgerald, did not immediately return a phone call left on her answering machine by The Associated Press.

Subject: Re: Go, go Carly go!
From: johnny5
To: Pancho Villa alias Joey
Date Posted: Thurs, Mar 03, 2005 at 17:35:37 (EST)
Email Address: johnny5@yahoo.com

Message:
Carly's comments at Davos did not inspire - perhaps this would be her chance to prove those comments right. With a little funding from the world bank we really could turn africa into the world leader in GDP growth over the coming years.

Subject: Re: Go, go Carly go!
From: Pancho Villa
To: johnny5
Date Posted: Thurs, Mar 03, 2005 at 18:18:48 (EST)
Email Address: nma@hotmail.com

Message:
Go, go Paul Wolfowitz go!(?) The choice is up to you, Johnny

Subject: Wolfowitz
From: Pete Weis
To: Pancho Villa
Date Posted: Thurs, Mar 03, 2005 at 21:40:16 (EST)
Email Address: Not Provided

Message:
This is a serious question. Where would Wolfowitz do the least damage - where he is now or as head of the world bank?

Subject: Mexican Oil Seeks Expansion
From: Emma
To: All
Date Posted: Thurs, Mar 03, 2005 at 10:11:04 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/03/business/worldbusiness/03pemex.html?pagewanted=all&position= Mexican Oil Chief Seeks Expansion By ELISABETH MALKIN MEXICO CITY - Luis Ramírez Corzo, director general of the Mexican state oil monopoly, sketches three outlooks for his industry's future, each with a different price tag. By investing $5 billion a year, the company, Petróleos Mexicanos, can just about keep pumping oil. Without new discoveries, Mexico, now the world's fifth-largest producer of crude, could be importing oil within a decade. For $10 billion a year, the level of the company's investment now, the industry can make enough discoveries to keep exporting. But for $20 billion a year, Mexico could boast a world-class industry that exports crude, natural gas and petroleum derivatives. 'Everything depends on something as simple as defining what kind of company we want,' Mr. Ramírez Corzo, who took over at Pemex Nov. 1, said in a recent interview. 'It will have to correspond to what kind of player we want to be in the world.' The United States is watching closely. Last year Mexico outstripped Saudi Arabia as the second-largest supplier of imported petroleum in the United States, after Canada. Clearly, Mr. Ramírez Corzo is aiming high. To get there, he wants to open Mexico's oil industry - now the world's most closed and still a badge of national pride - to alliances with foreign oil companies. Only they have the capital and expertise to drill for the vast new deposits that Pemex says it believes lie under the deep waters of the Gulf of Mexico. But to attract the foreigners, Pemex will have to let them take a share of the reserves they find, a common industry practice prohibited by Mexico's Constitution. Though some influential legislators pounce on even the smallest change in the constitutionally enshrined government control of the industry as a step toward a sellout to foreign interests, Mr. Ramírez Corzo hopes to sway the Congress. And the Treasury must be weaned from its dependence on tax revenues from Pemex, which account for a third of the national budget. But his immediate task, he says, is to overhaul Pemex, by rewriting the union contract, freeing Pemex's finances and management from government control, creating an independent board and cutting billions of dollars in operating costs. Previous Pemex leaders have stumbled on far more modest proposals, but Mr. Ramírez Corzo, impatient with political rhetoric, says the company faces a breaking point. 'We have to convince Mexican society, the legislature and our workers that we are talking about an opening,' he said, 'and it has to be an intelligent one, because it is to avoid privatization.' Most of the $40 billion Pemex has invested over the last four years has gone to pump oil, with less than $5 billion spent on exploration. It is still squeezing oil out of its Cantarell oil field, which supplies 2.1 million of Mexico's 3.4 million barrels of crude a day. And it is pumping from adjoining fields, which should lift production to 4 million barrels a day in 2007. But reserves are falling. Mr. Ramírez Corzo, a petroleum engineer who had led Pemex's production and exploration unit, is staking his reputation on the issue of developing deepwater reserves with private partners. 'It just can't be that Mexico and Pemex are the only country and the only company that are closed to these kinds of schemes,' he said. For decades, Pemex, created after the 1938 expropriation of foreign oil operations, has neglected exploration, its refineries, its natural gas deposits and its petrochemical industry as it pumped oil to provide cash for the government. Last year, record oil prices pushed Pemex revenues up 18 percent, to $69.1 billion, but after the nearly 61 percent of revenues it must pay in taxes it had a $1.3 billion loss. As usual, it borrowed to finance investment, and closed 2004 with debt of $44.9 billion. The country's largest corporate employer, with 140,000 workers, it has 50 government agencies overseeing it. Successive scandals have reinforced a reputation for corruption. And its 100,000-member union clings to decades-old privileges. Mr. Ramírez seems undeterred by a deadline of two years before a new president - all are limited to one term - appoints a new Pemex chief. And there are glimmers that the momentum is inching in Mr. Ramírez Corzo's direction. In October, the lower house of Congress, the Chamber of Deputies, unanimously passed a tax bill that would gradually give Pemex more of its revenue - some $2 billion to $2.5 billion more a year beginning in 2006, said Francisco Salazar, chairman of the chamber's energy commission. 'We need to strengthen the company so that it is in a better negotiating position' with future foreign partners, he said. The proposal has stalled in the Senate, but is far from dead. Legislators are also considering bills that would give Pemex more management autonomy. In the meantime, Mr. Ramírez Corzo says he hopes to cut $2 billion in costs, adding to the $2 billion he cut when he was head of the production unit. While there, he also pushed through multiple service contracts to develop natural gas reserves in northern Mexico under which Pemex pays a set fee but does not share control or profits; he hopes to negotiate more such deals. A harder task may be to bargain with the labor union. Although the union is less powerful than it was two decades ago, Pemex still pays hundreds of millions of dollars a year for workers' benefits. The union can demand that its workers be placed in some jobs contracted out to private companies. And rigid work rules mean it takes 27 workers to operate a Pemex well, for example, compared with the industry average of 10, Mr. Ramírez Corzo said. Victor Manuel García Solís, a union spokesman, said workers had been producing more oil with a much smaller work force, and questioned how they could be more efficient. 'If you want to make beans at home there is one way to do it: you soak them and boil them,' he said. 'There is only one way to get petroleum out of the ground.'But Mr. Ramírez Corzo has found that unexpected events can overtake his agenda. Three big pipeline spills in December and January generated front-page pictures of oil-soaked birds and dead cows, and Mr. Ramírez Corzo said Pemex would have to spend $12 billion in maintenance through 2008. That pales beside Pemex's estimates for developing its deepwater reserves: $15 billion a year for 15 years. But Mr. Ramírez Corzo said that prospective resources could reach 54 billion barrels. Even if a fraction of that is recovered, it will sharply increase Mexico's current proven crude reserves of 14.1 billion barrels. Other experts agree with the tactic, though they warn that estimates are guesswork. 'Looking 10 years down the line, what can replace Cantarell?' said Matthew Shaw, an analyst at the consulting firm of Wood Mackenzie in Edinburgh. 'Most people will say deep water is where it's at.' But first, said George Baker, a Houston analyst who publishes the newsletter Mexico Energy Intelligence, 'You need to get public opinion on your side.' David Shields, an analyst based in Mexico City, said: 'Pemex does remain a symbol. Even if a fair number of people may be convinced or half-convinced that some kind of opening is necessary, people do not like the idea of Shells and Exxons coming in.' Some opponents of opening the Mexican industry to outsiders are implacable. 'The real objective of this is to make Pemex disappear,' said Senator Manuel Bartlett, who is against the tax reform and is challenging the multiple service contracts in court. But other legislators argue the time might be ripe for limited private investment, and the public must be convinced. 'We have to explain why it is indispensable,' said Senator Demetrio Sodi.

Subject: Drilling for Oil by the Yard
From: Emma
To: All
Date Posted: Thurs, Mar 03, 2005 at 10:09:55 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/03/business/03houston.html?pagewanted=all&position= Drilling for Oil by the Yard By SIMON ROMERO HOUSTON - Emma Goston, a 91-year-old retired housekeeper, has not been getting much sleep lately thanks to the 24-hour industrial moan coming from across the street in her working-class Houston neighborhood, not far from downtown. Unlikely as it may seem, the noise comes from an oil exploration rig. Oil drilling has long been a more common sight on the arid plains of West Texas, but oil prices topping $50 a barrel are now luring wildcatters to urban areas written off until recently as uneconomical by the energy industry. In fact, crude oil rose $1.37 on Wednesday, or nearly 3 percent, to $53.05 a barrel, the highest closing price since Oct. 26. Traders are concerned that producers and refiners are not keeping up with demand. Small oil companies like Ballard Exploration of Houston, which began drilling in front of Ms. Goston's home in the Northmore neighborhood several weeks ago, are relying on old geological maps from the 1930's and new exploration methods in their attempts to find oil amid this city's unruly sprawl. 'It's dirty and noisy now,' Ms. Goston, who has lived in the neighborhood for nearly 50 years, said in an interview in front of her home, the rig steadily humming in the background. 'You could say it's a little ugly with that thing right there. This area was beautiful once.' Back in the 1930's, before the Northmore neighborhood went up, pumpjacks sucked oil out of swaths of grassy pasture known as the Eureka Oil Field. These days, on top of that field that was once thought depleted, is a district of crumbling one-story bungalows that rarely sell for more than $50,000, cheap even in Texas. And yet Northmore is just 15 minutes by car from the gleaming downtown towers that serve as headquarters for the largest concentration of energy companies on the planet. Even as a handful of those companies are eager to tap old oil fields around Houston, city officials are quick to point out that they do not foresee a surge in urban oil exploration here. Wes Johnson, a spokesman for the city's Department of Public Works and Engineering, said just two permits had been issued in recent months to allow drilling in Houston and a third was pending. 'I think there would be more, but only if it's something profitable for the companies involved,' Mr. Johnson said. Still, few cities are as hospitable as Houston in weighing approval for energy ventures of any size within their limits. Mr. Johnson, the public works official, said companies with drilling ambitions just need to pay a fee of $255; drill more than 500 feet from city water wells and more than 1,000 feet from Lake Houston; get a permit from the Texas Railroad Commission; and secure the permission of nearby residents. And because residents may be entitled to royalties if oil is found, voilà: a 150-foot drilling rig goes up in an area like Northmore. Still, a rig operating in the middle of a residential area is raising eyebrows even in Houston, a city known for abhorring zoning restrictions of nearly every stripe. Some geologists suggest that the location of the drilling rig has as much to do with the gap between rich and poor in Houston as with geology. 'You try this in River Oaks and they'd have your hide,' Theron Sage, an associate professor of geology and environmental science at the University of Houston, said of the exclusive district of Tudor-style mansions where this city's wealthiest residents live. (River Oaks is about a 20-minute drive from Northmore.) 'This is one of the oddities of $50 oil,' Ms. Sage said. 'This type of thing doesn't happen with $20 oil.' Some cities, of course, have long coexisted with oil drilling in their midst - the La Brea Tar Pits in Los Angeles, for instance. But most of those fields were explored decades ago and some long forgotten. The emergence of urban oil exploration in Houston illustrates the lengths to which some companies are going in their search for oil in areas long written off. New drilling technology, which allows companies to search for oil underground horizontally as well as vertically, and closer readings of well data stretching back to the 1930's, have enabled companies to home in on promising areas. Tyson Dunn, the operations manager for Ballard, the company drilling in Northmore, said noise from the rig was only temporary and would end this week. If Ballard finds enough oil at the site, it would then install a production wellhead that is less noisy and intrusive, Mr. Dunn said. 'There might be some complaining now, but we could quickly go from 'Hey, this rig's a little noisy,' to 'Come and drill over here,' ' Mr. Dunn said. It is impossible to determine what payments nearby homeowners in Northmore with rights to royalties from mineral exploration might receive, he said, since it is not yet known whether, or in what quantity, oil can be recovered at the location. But Mr. Dunn said payments for some homeowners in Northmore could be relatively generous even if the company produces just several hundred barrels of oil a day at the site. Henry Idlebird, a retired operator of a grocery store near Northmore who lives across the street from the rig, said he was hoping it struck oil. 'Those of us with the mineral rights don't want them to draw a line around Oriole Street and leave us out,' said Mr. Idlebird, 78, citing the name of his street. 'I'll be happy when they're done drilling, but I'll be much happier if we can see some profit out of this.' Such comments appear to be in line with sentiment around Texas about drilling. Eighty-three percent of respondents said they would be in favor of oil or natural gas drilling on their land if they were paid for it, according to a survey released in January by the Texas Alliance of Energy Producers, a group supported by the state's energy industry. Not everyone living around the rig is as sanguine as Mr. Idlebird about Ballard's potential to make money from the operation. 'I work at night and sleep during the day, and I just don't feel comfortable with the idea of some roughneck peeping in my windows,' said Mary Hall, 45, an elderly-care nurse who lives directly in front of the rig in a rented bungalow. Her husband, Quantrell Hall, 48, a manager of a rhythm and blues nightclub called Tymes Square, said: 'The thing is really noisy. I grew up around here so it's a strange sight for me.' Although oil is often associated with the rise of Houston a century ago, oil drilling rigs are much more plentiful hundreds of miles away in Texas in the Permian Basin or offshore in the waters of the Gulf of Mexico. Houston seized on greater opportunity decades ago not in producing oil but in refining and transporting it. The city later evolved into a center for deal making and the plotting of oil exploration strategies around the world. All that seems lost, however, on some of the people in Northmore who stare at the rig from their windows each day. They say they wonder what, if anything, is in it for them. 'You'd think they'd have hired some of us in the neighborhood to work for them, at least on a temporary basis,' said Charles Brooks, 31, a certified welder who lives a few houses down from the rig. 'All I see when I drive past there is a 'Do Not Enter' sign. It's not good to put your hopes too high.'

Subject: in Springfield?
From: jimsum
To: Emma
Date Posted: Thurs, Mar 03, 2005 at 21:41:45 (EST)
Email Address: jim.summers@rogers.com

Message:
Wow. This was foretold by the Simpsons. On one episode, they struck oil under Springfield Elementary. I thought the premise was pretty far-fetched at the time :-) As I recall, Mr. Burns got all the oil in the end.

Subject: Re: in Springfield?
From: Emma
To: jimsum
Date Posted: Thurs, Mar 03, 2005 at 22:09:25 (EST)
Email Address: Not Provided

Message:
The Simpsons know all there is to know :)

Subject: Disability Insurance
From: Emma
To: All
Date Posted: Thurs, Mar 03, 2005 at 10:07:53 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/03/business/03scene.html?pagewanted=all&position= Disability Insurance Side of Social Security Raises Questions By ALAN B. KRUEGER DISABILITY insurance could be the Achilles' heel of President Bush's efforts to carve personal accounts out of Social Security (although there is a lot of competition for that distinction). The program faces challenges that are at least as daunting as those on the retirement side of Social Security, and fitting the existing program into a system of personal accounts could have serious unintended consequences. Disability insurance is the Eisenhower-era program added to Social Security to provide financial support for people with a disability that prevents them from working. Some 90 percent of workers are covered. The program is financed by a 1.8 percent payroll tax and has a trust fund that, on paper, is separate from the Old Age and Survivors Insurance trust fund. Benefits are computed using the Social Security retirement benefit formula. Although President Bush has stated only broad principles for changing Social Security and has yet to negotiate with Congress, he indicated in an interview with The Washington Post in January that he did not plan to change the disability or survivors components of Social Security. Two major problems would result from maintaining the existing disability program in the face of private accounts. First, disabled workers currently start receiving Social Security retirement benefits when they reach age 65. Because their disability benefits equal their Social Security benefits, the transition is seamless. Presumably, under President Bush's plan, the disabled would move off disability benefits and draw on their personal accounts and (smaller) guaranteed Social Security benefit when they reach retirement age. But most disabled workers would not have accumulated much wealth in their personal accounts because they would have had a shorter work life than other retirees. Their benefits would drop sharply at age 65 and, in many cases, their incomes would fall below the poverty line. This is no small problem. David Autor, an economist at the Massachusetts Institute of Technology, points out that one in eight people who start receiving Social Security retirement benefits each year are coming from the disability rolls. If disability benefits were continued at their current level after retirement age, a different problem would arise: disability would be more lucrative than retirement for workers who had poor investment returns on their personal accounts. The disability program already has difficulty in making consistent judgments as to whether workers are disabled - in one study, one in six cases were judged differently by different state disability examiners - so many marginally disabled workers who applied would probably be allowed benefits. Older workers could flood into the disability program, weakening its already frail financial health. The second problem is that leaving disability insurance alone abdicates responsibility for fixing its financial difficulties, which are much more imminent than the retirement program's financial problems. According to a forecast by the Social Security trustees, the Old Age and Survivors Insurance trust fund will last until 2044, while the disability trust fund will be exhausted in 2029. Integrating the disability program into a system of personal accounts is complicated because it is inherently an insurance program. Disabled beneficiaries take out far more from the system than they put in. Workers collectively insure the risk of disability. It is inconceivable that personal accounts could fulfill this role. Moreover, only about a quarter of workers have employer-provided long-term disability insurance, so it is unlikely that the private sector could provide adequate insurance by itself. The disability program poses a major obstacle to changes in Social Security because a large number of workers apply to and are accepted into the program; 17 percent of all Social Security recipients are on disability benefits. Despite improvements in health and life expectancy, the number of workers and their dependents receiving disability benefits increased to 8 million in 2004 from 3.9 million in 1985 because of weak earning opportunities for low-skilled workers and more expansive coverage of disabilities, according to research by Professor Autor and Mark Duggan of the University of Maryland. Unfortunately, research by various economists suggests that transforming the disability program to encourage work and self-sufficiency the way that welfare was transformed may not be possible. Susan Chen of Duke University and Wilbert van der Klaauw of the University of North Carolina at Chapel Hill recently produced the latest study of the work behavior of those whose applications for disability insurance were rejected. They argue that rejected applicants have better health and work prospects than accepted applicants, and, therefore, their experiences provide an upper bound on how well disability beneficiaries could be expected to fare in the labor market if they were not on the program. The economists find that in the 1990's only a quarter of rejected applicants age 35 to 64 worked in the two years after their applications were denied. One objection to these results is that rejected applicants may refrain from working to strengthen a subsequent appeal for benefits, but Professors Chen and van der Klaauw found that the employment rate of rejected applicants was not higher if the window was expanded to 11 years after the application was denied. A further indication that raising employment among the disabled is difficult comes from early results of the 1999 Ticket to Work program, a federal initiative that increases access to rehabilitation and employment services, gives providers of those services a stronger incentive to place participants in jobs, and makes it easier for beneficiaries to go back to work without immediately jeopardizing their benefits. Fewer than 1 percent of disability beneficiaries have used these new services. From all appearances, disability beneficiaries are indeed a group largely incapable of substantial gainful employment, at least in the current labor market. As President Bush barnstorms the country for his plan to convert part of Social Security into personal accounts, he should not overlook the consequences for the disability insurance program. Unfortunately, he did not heed the advice his Social Security Commission gave him three years ago and set up a 'separate policy development process' to address the disability program.

Subject: Re: Disability Insurance
From: johnny5
To: Emma
Date Posted: Thurs, Mar 03, 2005 at 17:30:00 (EST)
Email Address: johnny5@yahoo.com

Message:
Last week at my dad's kidney center they circulated some material about cutting out 700 people from receiving the free dialysis care they get now - of course after they stop taking dialysis they will die, but the gubbment can't afford them anymore. Few people in dialysys can get work, you can't hold down a steady job. What are they supposed to do? Keel over from renal failure?

Subject: Re: Disability Insurance
From: johnny5
To: johnny5
Date Posted: Thurs, Mar 03, 2005 at 23:42:54 (EST)
Email Address: johnny5@yahoo.com

Message:
Yeah that was it Emma, I just got the sheet, it is governor bush's medicaid reform proposal - florida is one of the lowest states in the nation for medicaid reimbursement of dialysis patients. The petition is supposed to be delivered to the governor on march 15. 'Florida Dialysis Day 2005'

Subject: Medicaid?
From: Emma
To: johnny5
Date Posted: Thurs, Mar 03, 2005 at 20:08:36 (EST)
Email Address: Not Provided

Message:
Florida's Governor is pushing for an overhaul of the state Medicaid system. Possibly this is a result, for I know of no effort to cut back on Social Security Disability support.

Subject: Productivity Growth
From: Terri
To: All
Date Posted: Thurs, Mar 03, 2005 at 09:56:59 (EST)
Email Address: Not Provided

Message:
Notice that productivity last quarter rose at 2.1%. There is no reason to believe that economic growth will slow to the 1.9% predicted by the Social Security actuaries. Again, we have grown at 3.4% these last 75 years. Productivity alone can insure we grow well above 1.9%, and if we grow at noly 2.2% there will be no Social Security problem for generations to come. Social Security and Medicare and Medicaid are central to our wondrous New Deal legacy, and they must be preserved and strengthened, and they will be.

Subject: Why Bonds Funds
From: Terri
To: All
Date Posted: Thurs, Mar 03, 2005 at 07:19:56 (EST)
Email Address: Not Provided

Message:
Vanguard bond funds are investments, offering possible capital gains. They range from taxable to tax exempt. Indeed the long term bond funds have offered splendid returns for more than 30 years. The returns and safety and flexibility have been superb.

Subject: Does past performance...
From: Pete Weis
To: Terri
Date Posted: Thurs, Mar 03, 2005 at 15:08:30 (EST)
Email Address: Not Provided

Message:
indicate future performance? Since stocks and bonds have done well since the early 80's does it mean they will do well in the near future? Why did stocks do so well in the 20 years preceding 2000? Why have bond funds done so well since the early 80's? What were the conditions? Are those fertile conditions (for bonds and index funds) still there or have they dried up? What kinds of conditions do we have now and what type of investments do they favor? What's below the surface?

Subject: why not bonds?
From: johnny5
To: Pete Weis
Date Posted: Thurs, Mar 03, 2005 at 17:19:29 (EST)
Email Address: johnny5@yahoo.com

Message:
http://www.fallstreet.com/mar205.php What Is And What Should Never Be Contrary Investor recently published an excellent overview of the U.S. consumer price index (CPI). Not only does this report show how the disparity between actual home prices and the ‘cost of housing’ component of CPI is understating inflation, but it also discusses why the U.S. government and Federal Reserve Board benefit from an understated CPI. Although the CPI issue has been covered before, few reports are as readable. If the Contrary Investor commentary had been clipped by three paragraphs there would be no need for criticism. However, the temptation to push the ‘rigged CPI’ theme further than required was, unfortunately, too strong: “This brings us to what we believe is one last important issue. And an extremely important issue it is. What about the trillions and trillions of dollars sitting apparently quite complacently in the US bond markets at the moment? Are the majority of current US bond holders complete idiots? Can they not do the simple calculations presented above?” At first, the idea that ‘US bond holders are complete idiots’ makes perfect sense. After all, if CPI is vastly understating inflation bond holders should not be happy about receiving ‘negative real rates of return’. Nevertheless, remember that Contrary Investor focuses solely on home prices to propose that inflationary pressures are understated (instead of say commodity prices). Accordingly, after further investigation some logical contradictions emerge: if U.S. interest rates (and mortgage rates) are artificially low would this not mean that housing prices/activity are/is artificially high? And if home prices are artificially high could it not also be the case that bond holders are astutely aware that the inflationary threat from escalating housing prices (which is not covered in full in CPI) is overstated? Confusing I know. And while the above questions are not put forward in an attempt to paint an intelligent face on the average bond holder – the majority of U.S. Treasury purchases are being made with no consideration to housing prices but by foreign central banks with the goal of currency tinkering - to even suggest that a rigged CPI is responsible for bond holders acting irrationally is absurd. Realizing the limitations of their CPI/interest rate theory, the Contrary Investor article in question reiterates the pessimistic party line when it comes to explaining the interest rate conundrum: “For now, unprecedented systemic liquidity creation and resulting leverage has skewed the connection between the fixed income markets and the underlying reality of inflationary pressures in the real economy.” What is the end result of the fixed income market underestimating inflationary pressures? A falling bond market of course: “At some point, the markets will reflect economic reality.” The Song Remains The Same The interest rate ‘conundrum’ highlighted by Contrary Investor is being explored elsewhere, and similar ends - albeit with a different emphasis on the means – are being forecasted. For example, in Bill Gross’s latest he repeats his ‘artificially low’ theme unrelentingly: “...the frenzy to capture carry has been the inevitable result, producing artificially low yields out the curve, artificially low spreads, and artificially low volatility…” As if to offer proof that his macro predictions have recently gone astray for completely capricious reasons, Mr. Gross points out that the interest rate ‘guessing game’ is being ‘complicated by buyers who have non-interest rate concerns’. We will have to wait and see if the term ‘non-interest rate concerns’ ends up being presumptuous or prescient, but it is nonetheless amusing (put into context Gross is arguing that that crazy Asian central banks are responsible for taking logic out of the bond market). Along with C.I. and Gross there are – quite literally - countless other sources offering color on why long-term U.S. interest rates are not reflecting ‘reality’. For a taste: Fekete blames the yen carry-trade, BCA and others point to pension asset allocation switches, Puplava blames the overly transparent Fed, and - bordering on the ridiculous - Hutchison suggests that Satan may be to blame. Why The Blame Game? When the U.S. stock markets rallied to unthinkable heights during the 1990s market bears – at least those that were not fired or mocked into a den of hibernation – played the blame game. To be sure, in an effort to explain why stock prices were ridiculously high bears and/or value investors blamed the Fed, Wall Street, Corporate America, and the SEC/FASB. If the truth be told, gullible/naive investors who believed the Fed, Wall Street, Corporate America, and the SEC/FASB were looking out for their best interests were to blame for the stock market bubble, but I digress. Not surprisingly few paid attention to the bears until the stock markets peaked in early 2000 and the crash began. In similar fashion, today’s curve bears – or those that blame the Fed, hedge funds, pensions funds, and the actions of foreign central bankers for creating an interest rate conundrum by riding carry trades to the top off a cliff – are largely ignored by the mainstream. The blame game is a defensive mechanism: under attack from investors, clients, and the media the first response from someone like Roach is to fight back. Only when, and if the collapse of the carry transpires will the curve bears be vindicated. If the blame game continues long enough Gross, Roach, Grant, Fleck, Puplava and others will ostracized further, which – ironically – would provide strong anecdotal evidence that their dire predictions are drawing closer. Over The Hills But Not Far Away “A flat or inverted curve stymies the business of lending and borrowing. It's ice on the wings of the U.S. financial economy.” James Grant If the Fed continues to push up short term interest rates mathematics say that either long-term interest rates must rise or the yield curve will invert (recession warning). Given that rising long-term interest rates would threaten to pop a U.S. economy recovery that is being supported largely by the U.S. housing bubble, and that a flatter curve would stifle financial market activity that is being supported primarily by leveraged carry trades, one would think that so long as the Fed is tightening the macro outlook reeks of uncertainty. But this couldn’t be further from the truth -- instead of being afraid market participants are fighting the Fed; credit spreads have narrowed further in 2005, stocks have remained sturdy, and there has been a mad – as insane – rush of capital into hedge funds. The counterintuitive reaction in the markets to Fed tightening is why curve bears are prophesizing that the unwinding of ‘the carry’ will not go smoothly. By ‘not go smoothly’ this is not to say that a flattening curve will not only spark earnings woes in financial stocks – a moderate decline in earnings does not necessarily mean the unwind is proceeding chaotically - but that some leveraged market participant(s) will collapse and/or trigger a chaotic unwind of theirs and other carry trades. The danger under such a scenario is that long-term U.S. interest rates will not simply rise, but spike uncontrollably higher. Mr. Gross and others have been selling the ‘collapse’ outlook for some time, and the odds of such a scenario – according to curve bears – only continued to increase. “And for those institutional foreign bond holders, and the 'hedgies' domiciled in the Caymans, there’s no doubt too that a higher and higher short rate reduces and in some cases eliminates 'carry,' leading to collapsed positions and ultimately higher yields further out on the curve.” Gross Incidentally, whether or not some ‘leveraged participants’ (i.e. hedge funds) are near the brink is a matter of curve speculation. To be sure, Greenspan has long been against regulating hedge funds (and the OTC market for that matter), and – even as hedge funds expand to service a wider clientele – he has maintained his stance that hedge fund are secluded investment vehicles for institutional types only. As such, thanks largely to Greenspan a thorough investigation of hedge funds is impossible at this time. “Institutional investors have accounted for a growing share of hedge fund investments, and they can and should protect their own interests rather than rely on the limited regulatory protections…” Greenspan. Aug 2004. How Mr. Greenspan kept a straight face while belting out ‘their own interests’ is unknown. Regardless, in light of previous statements what is clear is that Alan offers as much intellectual contradiction when it comes to the hedge fund regulation issue as he is does with gold. “Had the failure of LTCM triggered the seizing up of markets, substantial damage could have been inflicted on many market participants, including some not directly involved with the firm, and could have potentially impaired the economies of many nations, including our own.” Greenspan. Oct 1998 Suffice to say, with liquidity aplenty ‘the seizing up of markets’ seems like distant nightmare not likely to come to pass anytime soon…and yet the Fed keeps tightening. Good Times Bad Times Those that have been successful in plotting the bond market’s path in the past – Bill Gross included – are currently confronted by logic defying developments that “are as rare as Ahi tuna that never hits the grill.” With this in mind, and contrary to the conclusions of Contrary Investor, the reality isn’t that ‘markets will reflect economic reality’, but that the financial markets are prone to bouts of excessive optimism and pessimism that push the envelope of what is historical precedent. The value investor has profited in recent years from owning gold to hedge against a dollar decline, by purchasing equities when traditional valuation measures are attractive and business prospects are understood, and by holding cash. With the exception of cash – which has (depending on which cash) underperformed during the U.S. stock market bounce - the value investor is still well served by deploying the same type of strategy today. In fact, the only BIG question the value investor needs to ask is whether or not an end to the carry will send gold (which is a future inflation indicator) into a death spin. What determines success for the value investor is whether or not they remain stubborn enough to remember that the immediate path of any financial market is largely unpredictable; that while history often rhymes a bet on an exact repeat is simply that. Clichés aside, the plight of the curve bears is a reminder that seemingly logical investment choices are not always the correct and profitable choice in the short term. Accordingly, instead of trying to play the curve, the value orientated long-term investor should only acquire positions that stand to profit in both good and bad economic and financial market times. Babe I’m Gonna Leave You Obviously the above value investing notes are the required caveat before drawing out some final speculations on the of carry disintegration theme. To reiterate the sentiment of the caveat, unless the investor remains grounded they run the risk of turning their risky macro speculations into win/lose investment choices. With that warning out of the way, the CRB index hit a 24-year high this week, the U.S. housing market is showing signs of slowing down, according to CSFB risk appetite is in the euphoria zone, and the Fed is promising to raise interest rates. Making perfect sense out of all of these things is impossible, and is not really required. Rather, what is required is the basic knowledge that current trends in interest rates, commodity prices, rigged inflation reports, and asset prices (the housing example will suffice) can not continue indefinitely -- unless you believe in miracles something or someone related to the curve is inevitably in for a rude awakening. Along with all of the fantastic financial market occurrences today, the trillion plus dollar hedge fund market is growing wildly, and - if history indeed rhymes - is likely to continue growing at a phenomenal rate until the next LTCM arrives. Quite frankly, it will take an increase in long-term U.S. interest rates or some type of type of financial crisis for investor intrigue in hedge funds to go down like a lead balloon. But make no mistake, when hedge fund excitement starts to wane the nightmare of market seizure could quickly come into view. In summary, the U.S. Federal Reserve Board will continue raising interest rates until, as Puplava puts it, ‘something breaks in either the financial markets or the economy’. If, after this inevitable break, risk appetite craters like a Lead Zeppelin the nightmare that is market seizure will quickly arise, and those investors that attempted to defy logic will be exposed as the ‘complete idiots’ they are. Only after all of this will the curve bears switch their focus and begin attacking the soft landing voices as being overly optimistic. The U.S. economic and stock market recovery was the best that money could buy, but signals from New York to Tokyo are now flashing a warning: money is going to continue getting tighter. With apologies to Led-Zeppelin, Dancing Days are not here to stay.

Subject: Housing Market Stability
From: Jennifer
To: All
Date Posted: Thurs, Mar 03, 2005 at 06:15:51 (EST)
Email Address: Not Provided

Message:
Though there is always investment risk and the risk in real estate investment is no doubt higher than in 2000 or 2003, many of us have long term fixed rate mortgages at low rates and have not borrowed against the rise in our home value so we are reasonably insulated from much of the price change in the different markets in the country. We must hope such households will provide stability to the housing market.

Subject: Housing turnover
From: Pete Weis
To: Jennifer
Date Posted: Thurs, Mar 03, 2005 at 10:21:57 (EST)
Email Address: Not Provided

Message:
When rates are dropping or during a period of low mortgage rates at the end of a long droping period, we tend to have a high turnover rate in the housing market. The low point for housing turnover was the early 80's when rates reached their highest point. Remember also, that refinancing has been running at very high levels so we have home equity at all time lows. While you have done the smart thing, many of your fellow Americans have not. The following comes from Securitization.net and was written by an outfit, Applied Financial, for those in the mortgage industry. The article deals with prepayment problems for lenders. The title - 'Projecting Housing Turnover: An Important Issue in Our Present Housing Climate'. 'The most recent existing home sales rate has been about 6.5 - 6.9 million units per year. This is an entirely unprecedented rate in terms of absolute numbers and relative to the existing housing stock. The question is what would make a reasonable assumption about the index going forward. Some modelers make certain assumptions about the future state of the economy or home price appreciation rates. As a consequence these modelers make certain predictions about the expected rate of US home sales. Other institutions even go as far as to predict that under unchanged interest rate scenarios, the rate of existing home sales will drop to about 4.8 million units per year. This prediction is actually disparate from what most economists currently feel. Their general estimates place it at about 5.8 million units per year.'

Subject: Re: Housing turnover
From: Jennifer
To: Pete Weis
Date Posted: Thurs, Mar 03, 2005 at 10:49:30 (EST)
Email Address: Not Provided

Message:
Pete, I save all your posts and comments on housing. Also, our city has limited property taxes which have shielded us from tax increases as assessments have risen. This is not so in surrounding cities. Still, the regional market shows no signs of faltering.

Subject: Sinn Fein economics for the provo riche
From: Setanta
To: All
Date Posted: Thurs, Mar 03, 2005 at 05:48:34 (EST)
Email Address: Not Provided

Message:
its coming up to St. Patricks Day and the Sinn Fein representatives are on their way to the US in order to raise funds for, officially, the 'Peace Process' or more likely 'the boys back home'. they raise a fortune over there, and i put it down to a Irish-America seasonal giddyness brought on by the day. i emplore you to read the following article and tell any of your friends who are sympathetic to these 'couragous freedom fighters' and may contibute unwittingly to the misery these animals inflict on our country. they are not freedom fighters, they are criminals. they do not defend the irish from the british. they murder and intimidate the nationalist community in belfast and believe that they are above the law. they do not recognise the republic of ireland and her government, courts, police or army. their aim is to gain control of the North and then set their sights on the South. should they gain control of the north, you will see the same war, as waged on the streets of belfast, being waged on the streets of dublin. i am from dublin, i am a catholic, i believe in a united ireland, my family is irish through and through. sinn fein and the ira are not a vehicle for irish liberation. the peace process is, yet sinn fein/ira has refused to participate in decommissioning as stipulated in the good friday agreement (endorsed by both populations, north and south). during the last round of talks they were planning a raid on a cash holding centre of the Northern Bank and made off with STG25million. it speaks volumes on their committment to peace. they also refuse to call the kidnapping and murder of Jean McConnville a crime. she was a widow with 10 children who gave aid to a dying british soldier, the ira hid her body for 15 years and refused to admit the murder. they do not consider it a crime because it was sanctioned by a kangaroo court set up by the IRA Governing Council, this IRA Governing Council being the 'legitimate' government of ireland. Sinn Fein economics for the provo riche 28/02/2005 What next for Sinn Féin? There seem to be three general theories doing the rounds. The first is that the doves succumb, in their own parlance, to the hawks, and the IRA goes back to war. The second is that Sinn Féin forces the IRA to disband, in which case Sinn Féin - the nationalist socialist party - is back at the electoral races. The third eventuality is that they are one and the same group, and that Sinn Féin/IRA always had a peace tactic rather than commitment to a peace process, and that they have been secretly trying to hoodwink all of us as part of a long-term strategy to increase influence and ultimately to gain control in the Republic. Whichever theory you subscribe to, what happens next will have long-term ramifications for our economy. Strangely, the economic consequences of the peace - to paraphrase the title of John Maynard Keynes' brilliant analysis of the 1918 Versailles treaty - are often overlooked. There can be little doubt that prosperity and peace go together. The first lesson of economic history is to avoid war at all costs. War destroys everything. Continuously successful countries have avoided wars for hundreds of years. In Europe, Switzerland and Sweden are fine examples. Although it is hard to prove conclusively, there is an obvious overlap in terms of timing at least, between the end of the war in the North and the blooming of the economy of the Republic. It is impossible to distinguish chicken and egg. Common sense suggests, though, that given the semi-detached nature of most of Ireland's relationship with the North, the direct impact of no bombs in Belfast on jobs and wealth down here was probably negligible. But there is no doubt that the ceasefire affected perceptions of Ireland internationally - the vibe, the image, the marketing spiel, the entire background noise was positively influenced by the ceasefires. What's next? Let's say the doves and hawks theory is correct and Gerry Adams gets pushed aside in favour of hardliners who see fit to go back to war. The first economic casualty will be perceptions of Ireland in America. Times have changed, both in the White House and in corporate America, and even a low-level campaign would have serious negative effects on direct American investment. A second direct casualty would be tourism, the biggest employer in the state. We sometimes underestimate how many people were scared to come here in the bad old days - particularly British visitors, who are our best customers by far. A third impact would be on Ireland as a place to live. Again we are talking about perceptions here, not reality. Immigrants are attracted to countries for a variety of reasons, one of which is the received wisdom about the place. A renewed IRA campaign - with CNN pictures beamed into living rooms around the globe - would dissuade immigrants from coming here. All these factors would undermine business, consumer and investor confidence. At the moment in Ireland, confidence is crucial to keeping the whole indebted show on the road and anything that punctures that effervescence would have dramatic consequences. But what if there is no war and either the IRA disbands or our short memories allow a cynical peace tactic rather than process to prevail? In this situation, Sinn Féin/IRA would continue to win at the ballot boxes. We then have to consider the financial impact of Sinn Féin's economic policies. But what are Sinn Féin's economics? A look at their manifestos does not help to give a title to Sinn Féin's economic philosophy. It is certainly not capitalism, nor is it real socialism. It's neither liberalism nor collectivism. Sometimes the best way to categorise policies is to examine who benefits from them. In the past decade, the main beneficiaries of Ireland's boom have been the much-maligned nouveau riche. But if Sinn Féin's economics were to dominate in the future, the main beneficiaries will be a new class. Let's call them the ‘provo riche' (Provo being a term used in Belfast to refer to the Provisional IRA). At the moment, the provo riche are, allegedly, a bunch of money launderers and bank robbers. But in an era of Sinn Féin economics, the provo riche would proliferate. The main problem with the provo riche manifesto is that (like its bank robbing genesis) it says very little about creating wealth, but lots about taking wealth. Here, for example, is the provo riche policy on taxation taken from Sinn Féin's 2005 pre-budget submission: “It is essential to reform and re-weigh the taxation system in favour of the low paid and to increase the overall tax take by targeting wealth, speculative property and corporate profits.” Measures should include the end of tax avoidance schemes, measured increases in corporation tax and increased capital gains tax for owners of multiple properties and a 50 per cent tax band for incomes over €100,000. So far so extortionate. So the provo riche's policy is about taking money from the rich, but what does the manifesto say about creating money and wealth? Not a lot, frankly. But back in 2003, at a submission to the Oireachtas Committee on the Constitution, the provo riche had the following to say about your house: “Private property has been and remains an instrument of oppression of people the world over.” There are those (maybe the 86 per cent of Irish people who own their own homes) who would argue the opposite: that private property and ownership is the very cornerstone of a civilised, law-abiding society, that with property rights come responsibilities - the sort of responsibilities that bind families and communities together. Once a manifesto deviates from private ownership, at the very least it puts huge faith in the promise of public ownership. And this is at the core of the provo riche economic doctrine. It believes in the state - the power of the state, the control of the state over people and the primacy of the will of the collective over the rights of the individual. In some areas there is a benefit to this approach, and, if wealth is generated, most of us support the idea of redistribution to help others. But you need to have a view about creation not just redistribution. And central to wealth creation is the ownership of property, capital and ideas. All these seem to be anathema to the provo riche. In Putting People First, a serious, wide-ranging and interesting Sinn Féin policy document, the party outlines its views on multinationals, which are crucial to our economy. It states: “Sinn Féin believes there needs to be a fundamental rethink around the role of foreign investment and trans-national corporations in the Irish economy.” It goes on to suggest that we should be managing trade and investment and increasing tax on these companies. It fails to see the positive side to multinationals and their contribution to our economic health. Throughout its economic publications, Sinn Féin displays ‘national socialist' thinking. This means everything national, small and local is good, and everything, international, big and cosmopolitan is bad. High tax seems to be an end rather than a means, and the philosophy is predicated on an all-knowing, all-powerful state taking our money and spending it for us in areas the state - that is Sinn Féin - sees fit. At best, this is the economics of a 1970s student bedsit. If the manifesto were introduced to the letter, the country would risk bankruptcy. All would suffer - except maybe the provo riche.

Subject: Re: Sinn Fein economics for the provo riche
From: Jennifer
To: Setanta
Date Posted: Thurs, Mar 03, 2005 at 08:55:06 (EST)
Email Address: Not Provided

Message:
There must be peace through Ireland.

Subject: Re: Sinn Fein economics for the provo riche
From: Terri
To: Jennifer
Date Posted: Thurs, Mar 03, 2005 at 09:42:07 (EST)
Email Address: Not Provided

Message:
Peace for Ireland.

Subject: Vanguard Returns
From: Terri
To: All
Date Posted: Wed, Mar 02, 2005 at 19:20:09 (EST)
Email Address: Not Provided

Message:
http://flagship5.vanguard.com/VGApp/hnw/FundsByName Vanguard Returns 12/31/04 to 3/1/05 S&P Index is 0.2 Large Cap Growth Index is -1.2 Large Cap Value Index is 1.7 Mid Cap Index is 1.3 Small Cap Index is -0.9 Small Cap Value Index is -0.9 Europe Index is 2.3 Pacific Index is 0.6 Energy is 15.5 Health Care is 0.9 REIT Index is -5.4 High Yield Corporate Bond Fund is 0.9 Long Term Corporate Bond Fund is 1.7

Subject: Sector Indexes
From: Terri
To: Terri
Date Posted: Wed, Mar 02, 2005 at 20:02:51 (EST)
Email Address: Not Provided

Message:
http://flagship2.vanguard.com/VGApp/hnw/FundsVIPERByName Sector Indexes 12/31/04 - 3/2/05 Energy 20.0 Financials -0.9 Health Care 0.4 Info Tech -4.7 Materials 4.8 REITs -5.3 Telecoms -3.1 Utilities 4.1

Subject: Bond Fundss and Safety
From: Terri
To: All
Date Posted: Wed, Mar 02, 2005 at 19:10:48 (EST)
Email Address: Not Provided

Message:
There is simply no reason to worry about market swings if an investor understand how to use bond funds. Vanguard Investment Grade Bond Fund has a 3.5% yield and a 2 year duration. The diversity and quality of the bonds make credit risk negligible. This leaves interest rate risk. A severe interest rate increase of 3 percentage points would lead to about a 6% decline in share price. But, yield would gradually rise to 6.5%. The first year would see a total return between 0% and 1%. The second year return would be 6.5%. The full risk then over time is negligible. An investor may be frightened of a high proportion of stocks in a portfolio, but then bond funds are a wonderful cushion.

Subject: countrywide cd's beating bonds
From: johnny5
To: Terri
Date Posted: Thurs, Mar 03, 2005 at 05:30:54 (EST)
Email Address: johnny5@yahoo.com

Message:
http://bank.countrywide.com/CWBRates.aspx Why buy vanguard when I can get 3.5% from a 12 month cd?

Subject: From west palm beach
From: johnny5
To: All
Date Posted: Wed, Mar 02, 2005 at 17:28:20 (EST)
Email Address: johnny5@yahoo.com

Message:
I am in palm beach today meeting my mom - the news here freaks me out! http://www.palmbeachpost.com/goodlife/content/home_garden/epaper/2005/02/13/m1a_house_prices_0213.html Since 1999, median home prices in Palm Beach County have skyrocketed 125 percent (to $301,000) while median family income has risen only 6 percent (to $57,000). That begs the question: Who is buying all these expensive homes? 'A house at $500,000 or even $800,000 is not even considered extremely high anymore,' said Brad Hunter, an economist with Metrostudy, a West Palm Beach-based housing consultant. 'Five or six years ago, that was filthy rich.' 'Our clientele is not really Floridians,' said Monica Gorban, sales manager at Versailles, where homes started around $300,000 four years ago but now sell for $700,000 to $2 million. 'The majority of our buyers are from the North.' And some are among a new breed of homeowner who has been capitalizing on creative mortgage options and Florida's unstoppable real estate market for years to leap-frog into ever-more luxurious digs. Dave Adeimy and Raul Puente count themselves among the latter. Ordinarily, a guy who earns $35,000 a year cleaning driveways couldn't afford real estate worth $800,000. But Adeimy, a West Palm Beach native, and his girlfriend, Wanda Stan, a secretary, have mastered the real estate game. Two years ago, they sold their modest homes and used the profits to buy new houses at preconstruction prices. One is a townhouse in Abacoa purchased for $240,000. Used to be, the goal of home ownership was to . . . well, own the house. But for homeowners like Adeimy, Stan and Puente, the object of owning a house is to sell it — after holding it just long enough for its value to increase. Puente now has an $800,000 mortgage, but he's not worried. Thanks to new mortgage options, his monthly payment is the same as it was on his previous $300,000 loan. 'People who buy big homes don't use regular 30-year fixed(-rate) mortgages. The payments are just too high,' said Rob McElroy, president of Boca Raton-based Family First Mortgage. 'There are much better alternatives.' The most popular of those alternatives is the interest-only loan, an adjustable rate mortgages with an introductory low-payment period, typically of five years. Financial experts warn, however, that such loans can be fiscal suicide for those on fixed incomes or borrowers who can't qualify for a conventional mortgage. Because of their misleadingly low initial rates and their potential to increase debt quickly, deferred-interest loans in particular are considered so risky that many lenders refuse to write them. Analysts say they should be used only by people who have a specific, short-term goal, such as a renovator who plans to sell in six months when remodeling is completed. But all forms of pay-later loans carry risk because they force borrowers to rely on increasing property values to offset their lack of old-fashioned, pay-down-the-principal security. If home prices continue to rise, owners can sell at potentially huge profits in a few years without paying a penny toward principal. But if appreciation slows or mortgage rates go up — or both — they might find themselves facing two unpleasant options: Sell low, or deal with a skyrocketing payment. Many feel it's a risk they have to take. According to a recent study by the Florida Housing Data Clearinghouse at the University of Florida, more than 32,000 county residents are already in over their heads, paying more than 50 percent of their income for housing. At the same time, Americans are further in debt. In 1981, Americans saved 11 percent of their incomes, on average. Today, the average American saves nothing. Meanwhile, credit-card debt has climbed from 4 percent of income to 12 percent. Middle-class families' credit-card debt load increased 75 percent in the 1990s. Personal bankruptcies reached an all-time high of 1.6 million a year in 2002. Hunter believes buyers looking to cash in on the real estate boom should bear in mind that the nature of a bubble, housing or any other kind, is that they usually burst. 'People have it in their minds that South Florida home prices always go up, but that's actually not true,' Hunter said. Adjusting for inflation, he said prices of new homes actually went down in the late 1990s. Adeimy remembers what can happen when a housing bubble bursts. In the late 1970s, when he was 22 and interest rates hit 12 percent, it nearly catapulted him into bankruptcy. 'I had all these properties. I got in trouble and couldn't keep up the payments,' he said. He gave his houses back to the bank then, and figures if the bubble bursts this time, he can do it again. 'The worst that can happen is we sell it for less than we paid,' he said. This fool didn't learn from his own damn mistakes - how can he learn from history or listening to others - Terri does this truly not worry you? What will it take?

Subject: Re: From west palm beach
From: johnny5
To: johnny5
Date Posted: Wed, Mar 02, 2005 at 17:34:59 (EST)
Email Address: johnny5@yahoo.com

Message:
At least the first fool remembered the 70's, this fool only remembers the 80's - remember the academic paper posted on how people have selective memories and how short they seem? Is this really how we want our country to grow - through psychotic speculation and not good sound investment? No wonders SS is being diced and sliced - where are the 'sound' people in our financial world? http://www.palmbeachpost.com/business/content/business/epaper/2005/03/02/a1d_corcoran_0302.html Wednesday, March 02, 2005 BOCA RATON — The sizzling local real estate market doesn't appear to be bottoming out anytime soon, one of the nation's foremost real estate brokers said Tuesday. 'There's only been one bubble burst, after the stock market crash (in 1987), and then it took three years for prices to come down,' Barbara Corcoran said. 'I think prices are going to go up really aggressively for a very long time. I don't see anything changing that, except a natural catastrophe.' Corcoran, chairwoman of The Corcoran Group, New York City's largest residential real estate company, spoke after a 40-minute presentation at Office Depot's Success Strategies for Businesswomen Conference. The three-day event at the Boca Raton Resort and Club ended Tuesday afternoon. Despite last year's devastating hurricanes, sales of used homes remain strong in Palm Beach, Martin and St. Lucie counties. The yearly median price of an existing single-family home in Palm Beach County rose above $300,000 for the first time, according to a January report from the Florida Association of Realtors. On the Treasure Coast, existing-home sales and median prices also hit

Subject: Re: From west palm beach
From: johnny5
To: johnny5
Date Posted: Wed, Mar 02, 2005 at 17:44:59 (EST)
Email Address: johnny5@yahoo.com

Message:
They see fantasy wet dream property price increases and then bitch that insurance rates are going up to adjust?? People never cease to amaze me. When did gambling on your home become the trendy thing to do in south florida? They had 4 hurricanes last year - they probably sipped some martini while their house blew away and said no matter - we will buy more houses on hurricane highway - are these your kids Terri? (hehe - just kidding) http://www.palmbeachpost.com/news/content/news/epaper/2005/02/13/a18a_house_pro_cons_0213.html Why you might not want to Some of the risks of playing the real estate game are hard to quantify: Will mortgage rates go up? Will appreciation slow down? Others are as certain as . . . well, taxes. If you want to try to make money by moving frequently — or if you're a long-time homeowner who's considering cashing in and trading up — don't be fooled by super-low, interest-only or deferred-interest mortgage payments. No matter how low your principal-and-interest payment, you'll still have to pay taxes and insurance, and those are certain to rise significantly if you buy a more expensive home. Taxes will go up When you move, your taxes will be assessed at the new home's market value, which generally is the price you paid for it. Tax officials and real estate agents say you should assume your taxes on a new home will be at least 2 percent of the purchase price a year. Actual taxes will vary by location. For a $500,000 home, that means about $10,000 a year, or $833 a month, will be added to your mortgage payment to cover taxes. Long-time homeowners might consider this scenario: You've lived in your house for 10 years. Your taxes are $2,500, or $208 a month. Although your home's market value has doubled or tripled since you bought it, your tax increases have been held down to 3 percent or less since the Save Our Homes constitutional amendment went into effect in 1995. In addition, your Florida homestead exemption means you don't pay taxes on the first $25,000 of your home's assessed value. All of that changes when you buy a new house. Your taxes will now be assessed at the new home's value, even if the previous owner's taxes were held down under Save Our Homes. If your new home costs $450,000, say, your new tax bill will be roughly $750 a month. At $600,000, that bill jumps to $1,000 a month. You also lose your $25,000 homestead exemption for the first year your own a new house. (You must reapply by March 1 of the next year). Prospective home buyers should not assume taxes noted on the real estate agent's listing are what they will pay. That figure is what the previous owners paid, and in today's market, that figure is almost certainly far below what a new owner will pay. Before buying a new house, check with the Palm Beach County Property Appraiser's office Web site to see an estimate your new taxes will be. Visit www.pbcgov.com/papa. Click on Records Search, enter the address of the home, then click on Tax Calculator. Premiums will be higher Still more sticker shock is likely when you learn what it will cost to insure your new house. Premiums are based on the replacement costs of your new home. If your new home costs more to buy, it will cost more to replace, and most major carriers in Florida have asked for permission to raise rates. If you live in eastern Palm Beach County (east of Interstate 95 for homes south of PGA Boulevard; east of State Road A1A if your house is north of PGA Boulevard) and have a mortgage, you'll be required to have additional hurricane insurance. Rates for hurricane insurance from Citizens Property Insurance, the state's insurer of last resort, also are going up. Additionally, if you live in a flood zone, you'll need federal flood insurance. What you need to know: Call your insurance agent and ask for a 'conditional quote' on your new house, or ask the seller how much he pays. The figure you get will be only an estimate of your future bill, but it gives you one more tool in which to evaluate the ultimate costs of your new home. Make sure you get separate quotes for each type of insurance you'll need. http://www.palmbeachpost.com/business/content/business/epaper/2005/03/02/a1d_nationwide_0302.html Wednesday, March 02, 2005 f tWEST PALM BEACH f-t — Nationwide Insurance policyholders had a chance to vent their frustration and ask questions at a public hearing Tuesday addressing the company's controversial request for double-digit homeowners insurance rate hikes. About 100 people were scattered throughout the Harold and Sylvia Kaplan Jewish Community Center's gymnasium in suburban West Palm Beach at an afternoon hearing where they questioned Nationwide's regional officers and representatives from the Florida Office of Insurance Regulation. The Office of Insurance Regulation held the hearings — including two in Clearwater Monday — as part of its rate increase review process. Nationwide has asked the state to let it raise homeowners insurance premiums by an average of 28.3 percent statewide. It is asking for an 89.3 percent increase in Martin County, a 33.1 percent increase in Palm Beach County and a 9.2 percent increase in St. Lucie County. Nationwide's request touched off concerns about insurance rate increases burdening homeowners who already are struggling to recover from the quartet of hurricanes that hit Florida last year. In early February, Florida Insurance Commissioner Kevin McCarty asked insurance companies to honor a rate hike freeze until the Florida legislature can address the issue. Reforming the state's homeowners insurance laws will be one of the legislature's primary objectives when it convenes for a regular session next week. Jeff Rommel, Nationwide's regional vice president, said the insurance company would be asking for these premium increases even if Florida hadn't seen a single hurricane last year. 'We need to set aside so we can pay for catastrophic events in the future,' he said. Nationwide spokesman Joe Case said the company has asked the state for rate increases annually and has not received the amounts it was seeking. 'We're playing catch-up,' Case said of the latest proposed increases. 'People realize in Florida people were getting a bargain, but the risk was larger.' Most comments and questions from the crowd centered on problems with specific claims and concerns about how Nationwide was managing its money and calculating its increases. Rommel told the crowd of mostly senior citizens he understood that the large rate increases were difficult for people living on a fixed income. But he said the increases were carefully considered and necessary in order for the company to keep paying customers' claims. Henrietta North, a 20-year Nationwide policyholder from Boynton Beach, was not satisfied. She chided the insurance company executives for raising rates. 'Where are people on a limited income and Social Security supposed to get the increase? Eat dog food, give up our prescriptions and die?' said North, who says she has never filed a claim. 'You should be ashamed of yourselves.'

Subject: More Wmd's?
From: johnny5
To: All
Date Posted: Wed, Mar 02, 2005 at 12:41:54 (EST)
Email Address: johnny5@yahoo.com

Message:
Duh where did my money go? Didn't General RE insure them? BWAHAHA! http://www.palmbeachpost.com/business/content/business/epaper/2005/03/01/a1d_hedge_0301.html West Palm hedge firm closes, leaving clients wondering By David Sedore Palm Beach Post Staff Writer Tuesday, March 01, 2005 WEST PALM BEACH — The telephones could be heard ringing and ringing Monday from outside the offices of KL Financial Services, but there was no one there to answer. KL Financial, a hedge fund manager that catered to wealthy investors and held as much as $300 million of clients' money, unexpectedly closed after visits from investigators with the Securities and Exchange Commission and FBI on Friday and Monday, according to sources familiar with the investment firm. 'My life savings are essentially gone,' said one KL Financial client who asked not to be identified. When contacted Monday, law enforcement officials were tight-lipped about the hedge fund firm. 'My official response is no comment,' said Carlos Castillo of the U.S. attorney's office in Miami. Calls to the SEC were not returned. In October, KL Financial moved its 2-year-old local office from North Palm Beach to the entire 17th-floor of the Esperante building in downtown West Palm Beach. As a hedge fund manager, the firm specialized in making high-risk, high-reward investments for its rich clients. The business started in Irvine, Calif., eight years ago, according to those familiar with the firm. There's little paper trail on the company, mainly because as a hedge fund it falls outside the purview of state and federal securities regulators. John Kim and Won S. Lee are listed as principals of the firm, according to a document filed with the state. One of the principals is believed to have recently left the country. By all accounts Monday, what was emerging from interviews and a visit to the company's offices was that something went awry at KL Financial, and now investors want to know what happened to their money. Boca Raton lawyer Gary Klein said his clients who had invested with KL Financial collectively lost about $10 million. It's unclear exactly what happened but his clients' records offer a few clues, Klein said. The attorney said the hedge fund firm was engaged in margin trading, which means it was borrowing against the value of its investments to cover the cost of buying more securities. 'They were clearly margined to the hilt,' Klein said. One customer who had money invested with the company for two years said KL Financial reported annual investment returns of 67 percent and 40 percent the last two years. 'And those were its two worst years,' the customer said. 'It seems too good to be true, and it was.' He said each quarter he received a statement showing profits and a check. The hedge fund manager mostly found its clients by word-of-mouth. West Palm Beach attorney Ronald Kochman, one of the firm's clients, recommended the hedge fund to friends and legal clients. 'I don't know a lot,' said a somber Kochman, whose legal office is also in the Esperante building. 'Most important, my thoughts are with the numerous innocent victims. I've lost all the money I have in the world. I'm sure the SEC and the FBI will catch those responsible.' On Monday afternoon, after a locksmith finished his work on the door to KL Financial's offices, two of the firm's traders came with the hope of picking up personal belongings. They said they didn't know what had happened to their employer. An official with the firm emerged from an office marked private but declined to answer a reporter's questions. 'We were told not to show up for work,' one of the traders said as he left. 'So, here we are.'

Subject: African Solutions to African Problems
From: Emma
To: All
Date Posted: Wed, Mar 02, 2005 at 12:01:53 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/02/27/international/africa/27togo.html?pagewanted=all&position= West Africa Wins Again, With Twist By LYDIA POLGREEN DAKAR, Senegal - When Togo's military installed the son of the country's longtime strongman as president earlier this month, ignoring the Togolese Constitution, their actions seemed taken from a very old playbook, a throwback to an earlier era in African history when coups and tyrannical governments were the rule rather than the troublesome exception, and African leaders were reluctant to criticize one another, lest their own foibles come to light. But the African response to the Togolese military's actions were taken out of a new playbook, one in which the old insistence on 'African solutions to African problems,' is no longer what it once seemed - a euphemism for African leaders looking the other way while despots and corrupt governments rampaged. Faure Gnassingbé stepped down as interim president on Friday, following three weeks of intense pressure from Togo's neighbors to move the country back to constitutional rule. Mr. Gnassingbé is the 38-year-old son of Gnassingbé Eyadéma, who died on Feb. 5. He had ruled the former French colony with an authoritarian hand since 1967, four years after he helped lead Africa's first post-colonial coup. Mr. Gnassingbé's departure has been hailed as a huge success for African diplomacy. 'We have demonstrated a capacity to solve our own problems,' Mohammad Ibn Chambas, executive secretary of the Economic Community of West African States, or Ecowas, the regional trade group that led the effort to restore the Constitution in Togo, said in a telephone interview on Saturday. The swift reversal was one result of a new phenomenon: African leaders and institutions showing stiff resolve and complete unity, Mr. Chambas said. Ecowas and the African Union were quick and merciless in their condemnation, and worked from the first day of Mr. Gnassingbé's rule to push him from power. 'We have spoken with one voice, we have been clear about the principle and we have insisted that there is a minimum bar for governance, and when it is not met we will not tolerate it,' Mr. Chambas said. Olusegun Obasanjo, the president of Nigeria and the region's most powerful leader, was perhaps the most vociferous critic of the change of power in Togo, and he scolded Mr. Gnassingbé when the latter went to Abuja, the Nigerian capital, for talks. He also refused to accord him the pomp of an official state visit , a pointed and significant diplomatic snub. When Mr. Gnassingbé offered to hold elections but remain in power until then, African leaders immediately dismissed the gesture as an insufficient half-measure. Western nations played a role, but it was small. The United States, the United Nations and European countries issued strongly worded statements condemning the change of power and later insisted that Mr. Gnassingbé step down. But the diplomatic effort to force the Togolese government back to constitutional rule was almost entirely an African affair. 'Africans took the lead on this, which is precisely what we want them to do,' said a senior Western diplomat in Lomé, the Togolese capital. 'This is exactly how it is supposed to work.' But it often does not work that way. Chris Landsberg, an analyst at the Center for Policy studies, a private, nonpartisan research institution in Johannesburg, who has written extensively about African diplomacy, said that the tough words on Togo were a good sign, but that Africa had plenty of tougher problems that called for action. 'If only they could insist on democratic norms, irrespective of the size of country, the historic legacy of country, if only you could be consistent,' Mr. Landsberg said. 'If only they can find a way to remind themselves that we must start to be tough with the Zimbabwes as well.' Togo, a tiny, poor country with a per capita income of $270 per year and few allies, 'just doesn't have any of the pretense of being a player from a power politics point of view,' he said. Zimbabwe has been ruled by Robert G. Mugabe for more than two decades and has slipped deeper into ruin as he has become increasingly despotic. But Mr. Mugabe is still widely seen as an icon of African resistance to colonial rule. African leaders, notably South Africa's influential president, Thabo Mbeki, have advocated a policy of quiet diplomacy to nudge, not shove, Mr. Mugabe into retirement. This stance has put Mr. Mbeki at stark odds with the United States. Secretary of State Condoleezza Rice recently called Zimbabwe an 'outpost of tyranny.' In other examples of how African leaders have handled crises of governance, there were few objections when, in the vast, resource-rich but troubled Congo, Joseph Kabila was anointed to succeed his father, Laurent D. Kabila, as president after his killing in 2001. African - and Western - leaders have been reluctant to criticize other African leaders, too, who were at first heralded as hopes for a new era of democratic rule but who have since shown signs of leaning toward autocracy, like Yoweri Museveni of Uganda and Paul Kagame of Rwanda. In the peculiar brotherhood of African leaders, a circle shaped by shared opposition to colonial and Western domination, it is one thing to criticize a change of power but another thing entirely to take a sitting leader to task. Before condemning Mr. Gnassingbé's actions, African leaders took pains to hail Mr. Eyadéma - who had been accused by human rights groups of massacring his political opponents and who had won three deeply flawed elections - as a great African statesman. 'As much as you have a body of 25 countries showing eagerness and enthusiasm to break from the past, we can't remind ourselves enough that we have another 25 or more outside of that club,' Mr. Landsberg said. 'It is as though you have a contradictory, two-speed Africa: those that are serious about the future and those that aren't.' But such inconsistency is hardly unique to Africa, analysts are quick to point out. The United States rallied to the side of Ukraine's opposition leader, Viktor A. Yushchenko, and criticized the flawed election late last year that led to his initial defeat, but has treaded much more lightly in dealing with the Russian president, Vladimir V. Putin, whose rapid centralization of power has led to serious questions about his commitment to democracy. Mr. Chambas, the Ecowas official, said that Africa was just beginning its journey to democratic rule, and that bumps along the way were inevitable. 'Today we have made one step,' he said. 'We hope that we will continue to move forward in our efforts to bring democracy to our region.'

Subject: Where Has All the Prilosec Gone?
From: Emma
To: All
Date Posted: Wed, Mar 02, 2005 at 11:59:42 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/02/business/02prilosec.html?pagewanted=all&position= Where Has All the Prilosec Gone? By ALEX BERENSON Call it the case of the disappearing Prilosec. For a year, supplies of Prilosec OTC, a popular heartburn drug sold over the counter, have fallen far short of demand. Procter & Gamble, which markets the drug, first promised that more Prilosec would be available by December, and then by January. But many pharmacy shelves still remain bare of the drug. Now the University of Utah, which tracks drug shortages, says the shortage of Prilosec OTC will continue until at least April. 'I have none in stock right now,' said Sandy Greco, executive vice president for purchasing and marketing at Kinray, a drug distributor that supplies 3,000 pharmacies across the Northeast. 'Zero.' Mr. Greco said he contacted Procter & Gamble every day to ask for more Prilosec OTC but rarely received any. Procter & Gamble and its partner, AstraZeneca, a British drug company that owns the rights to Prilosec OTC, say they underestimated demand for the drug and are working to increase production and correct the shortage. 'America's frequent heartburn problem has been much more frequent than we could have ever predicted,' said Kurt Weingand, a spokesman for Procter & Gamble. But many Wall Street analysts, consumer advocates and academic researchers who study drug costs discount that explanation and say they believe that AstraZeneca could easily meet demand for the drug if it chose. The shortage of Prilosec has been very good for AstraZeneca's bottom line because it has increased sales of Nexium, a far more expensive prescription heartburn medicine that AstraZeneca also sells, said Michael Krensavage, a drug industry analyst at Raymond James. Most doctors view the two drugs as essentially identical, yet the cost of Nexium is more than five times that of Prilosec OTC, about $4 a pill compared with 70 cents. 'Over-the-counter Prilosec works as well,' Mr. Krensavage said. 'It's an utter travesty for the American consumer.' The persistent shortage has also been costly for health plans whose patients have turned to prescription heartburn medication because of the shortage. David Brennan, chief executive of AstraZeneca operations in the United States, said the company was not deliberately keeping Prilosec OTC in short supply. Any responsibility for the shortfall rests with Procter & Gamble, which underestimated demand, he said. 'P.& G. has always had the lead on the responsibility for forecasting,' Mr. Brennan said. 'They can't call us one week and say we need twice as much as we needed last weekend.' Dr. Weingand of Procter & Gamble said AstraZeneca had met its contractual commitments and was working to increase supply. Procter & Gamble does not profit from the shortage of Prilosec OTC, because it does not make or market Nexium. The unusual regulatory history of Prilosec, however, has enabled AstraZeneca and Procter & Gamble to control the over-the-counter version of the drug, even though Prilosec lost patent protection in 2002 and became available without a prescription two years ago. In most cases when a drug becomes available over the counter, the maker is no longer allowed to sell it by prescription, unless there are differences in the dosage. But in 2003, the Food and Drug Administration decided to allow AstraZeneca to keep selling prescription Prilosec alongside Prilosec OTC - even though they both contain the same medicine, 20 milligrams of omeprazole - because patients are not supposed to take Prilosec OTC for more than two weeks at a time without a doctor's supervision. Under F.D.A. rules, that decision gave AstraZeneca three years to sell Prilosec OTC without competition. The over-the-counter version will face no generic competition until 2006, even though prescription Prilosec already faces competition from prescription generics. As a result, AstraZeneca and Procter & Gamble are able to market Prilosec OTC with no fear of competition from other makers. And the shortage of Prilosec OTC has meant that doctors and patients who want a reliable supply of Prilosec or Nexium can get it only with a prescription. But few insurers will pay for prescription Prilosec anymore, contending they should not cover the prescription version of a medicine that is also available over-the-counter. Insurers, however, generally do pay for Nexium, which AstraZeneca has heavily marketed as 'the healing purple pill,' a newer and better version of Prilosec, which AstraZeneca called 'the purple pill.' In 2003, the last full year for which data is available, AstraZeneca spent $260 million promoting Nexium to American consumers, by far the highest consumer marketing budget for any drug. That relentless marketing helped drive Nexium sales to $2.7 billion in the United States last year, and $3.9 billion worldwide, an 18 percent increase from 2003. The growth in Nexium sales is one of the few bright spots recently for AstraZeneca, which faces safety questions about several of its newest medicines, including Crestor, an anticholesterol drug the company had hoped would be a blockbuster. Thanks largely to Nexium, AstraZeneca's overall profit rose to $3.8 billion in 2004 from $3 billion in 2003. Nexium is also important to Merck, which was once AstraZeneca's partner in the United States and is still paid more than $1 billion annually by AstraZeneca, mostly from royalties on Nexium sales. For consumers, the shortage of Prilosec OTC is more inconvenience than crisis. After all, heartburn is not fatal. But from the point of view of companies and governments that must pay for the medicines, the costs resulting from the shortage of Prilosec OTC are not trivial. Heartburn drugs are among the most widely prescribed medicines in the United States, with more than $13 billion in sales in 2004, about 6 percent of all drug costs. A study by the University of Arkansas last fall suggested that substituting Prilosec OTC for Nexium, Prevacid and other prescription heartburn drugs could cut spending on those medicines by about 50 percent, or almost $7 billion nationally - enough money to pay for health coverage for more than a million uninsured Americans. In the study, researchers examined a program in Arkansas that switches patients covered by the state's employee health plan from Nexium and other prescription drugs to Prilosec OTC. A doctor's approval is necessary for the switch. To ensure that pharmacists have an incentive to call doctors and get approval, the program offers them a $13 fee each time they filled a prescription with Prilosec OTC. The program began last March. By the end of April, about 60 percent of patients had switched to Prilosec OTC, cutting the state's costs for heartburn drugs in half. Patients also benefited because the state lowered their co-payments for Prilosec OTC to $5, said Donna West, an assistant professor of pharmacy at the University of Arkansas. No patients have complained about the changeover, Dr. West said. But she said that the scarcity of Prilosec OTC had hampered the state's efforts to expand the program and discouraged other health plans from adopting similar measures. 'The one problem we've had is that there's a shortage,' Dr. West said. The success of AstraZeneca in promoting Nexium stands in contrast to the woeful consequences that Schering-Plough, a New Jersey-based drug company, faced when it lost patent protection on Claritin, a best-selling allergy medicine. Like AstraZeneca, Schering-Plough also introduced a follow-on prescription medication, Clarinex, to replace Claritin. And Clarinex, like Nexium, is effectively the same medicine as the drug it replaced. But Schering-Plough could not persuade the F.D.A. to allow it to continue to sell a prescription version of Claritin. As a result, Schering-Plough had no monopoly on over-the-counter Claritin sales and faced generic competition as soon as the drug went over the counter in December 2002. For Schering-Plough, that competition was devastating. Sales of Claritin plunged, and many insurers refused to cover Clarinex. Schering-Plough had combined sales of $1.4 billion in 2004 for Claritin and Clarinex, compared with sales of $3.2 billion for Claritin alone in 2001. By contrast, AstraZeneca's total sales of Nexium and Prilosec were close to $6 billion last year, about the same as the peak sales of Prilosec in 2000. Mr. Brennan said AstraZeneca expected Nexium sales to remain strong, in part because people who were taking pain drugs like Vioxx might now switch to Advil or aspirin, which can irritate the stomach and encourage the use of heartburn drugs like Nexium. Shipments of Prilosec OTC, meanwhile, have increased fourfold in the last few weeks, and the shortage is easing, Dr. Weingand said, adding that he could not disclose details of the agreement between Procter & Gamble and AstraZeneca. 'We have a supplier; we have to work with them to ship and market this drug,' he said. 'We have done the best we can.'

Subject: Why We Must Save and Invest
From: Terri
To: All
Date Posted: Wed, Mar 02, 2005 at 11:08:03 (EST)
Email Address: Not Provided

Message:
http://www.federalreserve.gov/boarddocs/testimony/2005/20050302/default.htm Alan Greenspan: 'I fear that we may have already committed more physical resources to the baby-boom generation in its retirement years than our economy has the capacity to deliver. If existing promises need to be changed, those changes should be made sooner rather than later. We owe future retirees as much time as possible to adjust their plans for work, saving, and retirement spending. They need to ensure that their personal resources, along with what they expect to receive from the government, will be sufficient to meet their retirement goals.' Alan Greenspan is not coming down hard on fiscal policy, rather he is coming trampling on a generation that has been working faithfully and has a right to well earned Social Security and Medicare benefits. What a sad faith breaking comment by Alan Greenspan.

Subject: We Must Save and Invest
From: Terri
To: Terri
Date Posted: Wed, Mar 02, 2005 at 11:58:10 (EST)
Email Address: Not Provided

Message:
There are simple and conservative ways to invest in the most difficult of climates, and the need is to know just such ways, just the companies that can be trusted. Though I have no idea how to play the secular and cyclical game in advance, I do know there was a bear market for stocks from January 2000 to October 2002, and there has been an international bull market since. Bonds have been in a bull market since December 1981, and were especially bullish from January 2000 till January 2005. So, we can save and think about conservative investing together and be increasingly confident that we are preparing properly for the future.

Subject: Re: We Must Save and Invest
From: johnny5
To: Terri
Date Posted: Wed, Mar 02, 2005 at 12:19:54 (EST)
Email Address: johnny5@yahoo.com

Message:
I suppose that is my problem, I don't trust the gubbment, big business, accountants, mutual fund managers, financial planners, wall street, lawyers, politicians etc etc. It's sad to say terri but I have much more faith in you and pete - practically anonymous strangers I will never meet than I do of the formerly mentioned entities. I came from a small town, dealt with small town people, lived in europe and dealt with small town europeans, and was easy with trust. Then I went to work for IBM for a few years and lost all that - haha!

Subject: Et Tu Warren?
From: johnny5
To: johnny5
Date Posted: Wed, Mar 02, 2005 at 12:33:18 (EST)
Email Address: johnny5@yahoo.com

Message:
http://www.forbes.com/home/feeds/ap/2005/01/07/ap1745721.html New York AG Serves Subpoena on General Re 01.07.2005, 09:06 AM Billionaire investor Warren Buffett's Berkshire Hathaway Inc. said it received a subpoena from the New York state attorney general's office demanding information about its re-insurance subsidiary General Re Corp. The subpoena was delivered Thursday, eight days after the U.S. Securities and Exchange Commission asked for identical information about the re-insurance business, Berkshire Hathaway said in a statement late Thursday. Buffett is chairman of Omaha-based Berkshire Hathaway, which said the subpoena seeks documentation and information relating to nontraditional or loss mitigation insurance products from General Re and all its affiliates - the same information sought by the SEC. Federal and state regulators have been examining loss mitigation products to see whether insurance companies sold products that may not really be insurance, but instead may be aimed at helping companies smooth out earnings. 'Berkshire Hathaway and General Re will cooperate fully with the New York State Attorney General,' the release, sent Thursday night, said. General Re, based in Stamford, Conn., is one of the four largest reinsurance companies in the world. Reinsurance policies are generally sold to other insurers and other businesses.

Subject: Brother, do you have a dime?
From: Pete Weis
To: All
Date Posted: Wed, Mar 02, 2005 at 10:19:54 (EST)
Email Address: Not Provided

Message:
Delay, one of the many highly decorated veterans among the Republican leadership, wants to make sure those national guard men and women being yanked out of their jobs here in the US to fight over in Iraq don't attempt to use the bankruptcy 'loophole' to shortchange any of the many prudently managed credit card outfits. Of course we need to make sure there is a loophole for these corporate insiders to protect assets from creditors overseas. This must be part of the 'trickle down' economic strategy which is so important to America. Another key - if we are about to have more Enrons and Worldcoms in our future, we need to limit class action law suits. Oh, and another thing - we need to get rid of these dam unions and..... March 2, 2005 Proposed Law on Bankruptcy Has Loophole By GRETCHEN MORGENSON The bankruptcy legislation being debated by the Senate is intended to make it harder for people to walk away from their credit card and other debts. But legal specialists say the proposed law leaves open an increasingly popular loophole that lets wealthy people protect substantial assets from creditors even after filing for bankruptcy. The loophole involves the use of so-called asset protection trusts. For years, wealthy people looking to keep their money out of the reach of domestic creditors have set up these trusts offshore. But since 1997, lawmakers in five states - Alaska, Delaware, Nevada, Rhode Island and Utah - have passed legislation exempting assets held domestically in such trusts from the federal bankruptcy code. People who want to establish trusts do not have to reside the five states; they need only set their trust up through an institution in one of them. 'If the bankruptcy legislation currently being rushed through the Senate gets enacted, debtors won't need to buy houses in Florida or Texas to keep their millions,' said Elena Marty-Nelson, a law professor at Nova Southeastern University in Fort Lauderdale, Fla., referring to generous homestead exemptions in those states. 'The millionaire's loophole that is the result of these trusts needs to be closed.' Yesterday in Washington, Republicans in the Senate beat back the first in a series of Democratic amendments aimed at softening the effects of the bankruptcy bill on military personnel, and the majority leader of the House vowed to get quick approval of the bill if the Senate did not significantly alter it. 'We will grab hold of it just like we did class action if it is a good and clean bankruptcy reform bill,' said Representative Tom DeLay, a Texas Republican, referring to the quick action the House took last month on a measure limiting class-action lawsuits. The Senate bill is favored by banks, credit card companies and retailers, who say it is now too easy for consumers to erase their debts through bankruptcy. It is almost identical to previous versions that have been introduced in Congress, unsuccessfully, since 1998. Perhaps because the current bill was written so long ago, some legal authorities say, it does not address the new state laws that have allowed asset protection trusts to flourish. 'This is just a way for rich folks to be able to slip through the noose on bankruptcy, and, of course, the double irony here is that the proponents of this bill keep pressing it as designed to eliminate abuse,' said Elizabeth Warren, a law professor at Harvard Law School. 'Yet when provisions that permit real abuse by rich people are pointed out, the bill's proponents look the other way.' Senator Charles E. Grassley, an Iowa Republican, is the main sponsor of the bankruptcy bill. His press secretary, Beth Levine, said the senator's staff was unaware of the trusts and the loophole for the wealthy that they represented. 'The senator is always open to suggestions for closing these loopholes,' she said. Money held in asset protection trusts can elude creditors because federal bankruptcy law exempts assets governed by 'applicable nonbankruptcy law.' Intended to preserve rights to property under state law, the exemption makes it difficult for creditors to get hold of assets that they would not be able to seize through a nonbankruptcy proceeding in state court. Asset protection trusts have become increasingly popular in recent years among physicians, who fear large medical malpractice awards, and corporate executives, whose assets are at greater peril now because of new laws. The Sarbanes-Oxley legislation, for example, requires chief executives and chief financial officers to certify that their companies' financial statements are accurate; anyone who knowingly certifies false numbers can be fined up to $5 million. In addition, under Sarbanes-Oxley, executives may have to reimburse their companies for bonuses or other incentive compensation they received if their company's financial reports have to be restated in later years. 'Given all the notoriety of what we're seeing today, from HealthSouth to WorldCom, there is probably more of an impetus for executives to consider going this route,' said Scott E. Blakeley, a lawyer at Blakeley & Blakeley in Irvine, Calif. 'And yet in the bankruptcy bill, this topic is not touched.' While it is difficult to quantify how much money is sitting in domestic asset protection trusts, their popularity is undeniable, bankruptcy specialists said. 'I've heard figures for foreign asset protection trusts and those probably are in the billions,' said Adam J. Hirsch, a law professor at Florida State University. 'I haven't seen any figures for domestic asset protection trusts, but they could very well be the same.' Current federal bankruptcy law protects assets held in a type of trust, known as a spendthrift trust, traditionally set up by one family member to benefit another. But current law does not protect the assets of people who set up spendthrift trusts to benefit themselves. And the law limits the purposes of the trusts that qualify for exemption. Retirement planning or paying for education are two approved purposes for such trusts. By contrast, domestic asset protection trusts can be set up by the same people who plan to benefit from them. In addition, there are no caps on the dollar amount of assets they can hold and no restrictions on their purpose, Ms. Marty-Nelson said. One limitation is that the trusts cannot be set up by people who are already insolvent. The states that allow these trusts do so to attract the significant money management and trustee fees that accompany them, Mr. Hirsch said. 'It's what is known in the parlance of legal policy analysis as a race to the bottom,' he said. The authors of the Delaware law, for example, noted when it was passed in 1997 that it was meant to 'maintain Delaware's role as the most favored jurisdiction for the establishment of trusts.' In some ways, asset protection trusts are similar to the homestead exemption that keeps homes in Florida, Texas and other states out of the reach of creditors. But the bankruptcy law now under consideration limits this exemption to $125,000 for those who purchased the home within 40 months of their bankruptcy filing or for those who have committed securities fraud. Ms. Marty-Nelson said the bankruptcy bill should at least apply such a cap to domestic asset protection trusts. Better yet, she said, the bill should exclude these trusts from the federal exemption altogether. 'Congress can and should close this huge loophole,' she said.

Subject: A Bad Bill Made Worse
From: Emma
To: Pete Weis
Date Posted: Wed, Mar 02, 2005 at 10:42:36 (EST)
Email Address: Not Provided

Message:
A bill that protects business at the expense of middle and low income families who become troubled; a bad bill made worse by a loophole to protect wealthy households.

Subject: Saving and Investing
From: Terri
To: All
Date Posted: Wed, Mar 02, 2005 at 08:58:06 (EST)
Email Address: Not Provided

Message:
If we wish to live well in the future, we must save and invest with complete regularity. This is essential.

Subject: U.S.: Housing -- Bubbly?
From: Terri
To: All
Date Posted: Tues, Mar 01, 2005 at 20:53:14 (EST)
Email Address: Not Provided

Message:
http://www.morganstanley.com/GEFdata/digests/20050228-mon.html#anchor1 U.S.: Housing -- Bubbly? Richard Berner (New York) Most macro forecasters — crystal ball gazers all — have eaten a lot of ground glass trying to call a top in housing activity in the past two years, including yours truly. Likewise, home prices have defied all calls, including mine, for a peak in appreciation, not to mention the bears’ forecasts of a sharp decline. Undaunted, I’m taking a stand: Housing fundamentals, in my view, are as good as they get, and activity is likely to decline over 2005 and 2006. Among the reasons: Previously favorable demographics are turning less supportive, much pent-up demand seems to have been satisfied, soaring housing prices have made purchase less affordable, interest rates are gradually rising, and starts are slightly out of line with sales. Importantly, however, a precipitous decline is unlikely: Stronger job and income growth should underpin new and replacement demand. Indeed, the combination of strong job growth and rising rates should also be good news for apartment owners, as newly employed would-be buyers get priced out of the single family market. And home prices? I stick to my view that prices henceforth are likely to rust, not bust. What are the key forces behind this long-awaited peaking in housing? First, favorable demographics contributed strongly to pent-up demand for housing in the 1900s, but those trends are starting to cool. Most important, an unprecedented wave of immigration into the United States in the last three decades, especially in the 1990s, became the dominant factor in U.S. population growth. For example, the 13.2 million immigrants who arrived in the 1990s and the 7 million births to immigrant women accounted for at least 60% of U.S. population growth over that decade. Immigrants, many in diverse ethnic groups, accounted for more than one-third of household formation in the 1990s. In addition, the 1990s economic boom brought many minorities into the labor force. Thus, minorities accounted for two in five net new homeowners from 1994 through 2003, according to the Harvard Joint Center for Housing Studies. Likewise, the growth in households of traditional prime homebuying age (30–44)was 7.8% and thus underpinned housing demand in the 1990s. Partly as a result, the homeownership rate soared from 63.8% in 1993 to 69.2% at the end of 2004, amounting to an 11 million increase in households owning their own home. However, the immigration boom has cooled since 9/11, and the growth of prime-age households has also slowed in the past five years. The result will likely be slower growth in housing demand. A second key force: Improved affordability helped to unleash that pent-up demand, underpinning it through 2004. But the combination of soaring home prices and the coming rise in rates will be a one-two punch reducing housing affordability in the next two years. The 48.5% jump in home prices over the past five years has begun to make housing less affordable, especially for the first-time homebuyer. While the rise has not been ubiquitous in every region, bicoastal increases have reduced affordability for a large part of the population. For example, of nine Census regions, Pacific region (Washington, Oregon, and California) average home prices measured by the Office of Federal Housing Enterprise Oversight (OFHEO) jumped by 79.1% in the past five years; by comparison, they rose just 25.1% in the West South Central region (Oklahoma, Arkansas, Louisiana, and Texas). In contrast, stable mortgage rates have helped to keep housing affordable, at least so far. In my view, that is set to change: 15–30-year rates may back up 75–100 basis points, and rates on one-year adjustable-rate mortgages may rise by 150 bp over the next year. Moreover, there may be a brewing inventory problem in single-family homebuilding. One-family housing starts soared to a record 1.76 million in January 2005, suggesting unbridled strength. But starts are likely getting a little ahead of sales, which have slipped steadily from their peaks of early 2004. Existing home sales, although still at high levels in January, have declined 3.7% from their peak, while sales of new homes had in December slipped 9.2% from their highs early in 2004. That sales have slipped as rates came back down over the summer of 2004 strongly hints that pent-up demand has faded. And even if demand stabilized, inventories of unsold new homes have risen 15.6% from a year ago, so there could be a minor problem realigning starts and sales. And what about home prices? The pace of home price appreciation is unsustainable, at 13% from a year ago in the third quarter, measured by the OFHEO nationwide price index. But neither the pace nor the level of prices is prima facie evidence of a bubble. As I see it, nationwide housing ‘valuations’ are only back to neutral from being undervalued, consistent with my thesis that home prices will rust, not bust, for the next few years. My valuation metric — a crude ‘price-earnings’ ratio for housing — corroborates that view. Of course, that does not mean that home prices will be unaffected by rising interest rates; far from it. Waning pent-up housing demand and rising rates suggest that both housing demand and prices will likely cool significantly. And that does mean more limited opportunities for home equity extraction, significantly lower mortgage originations, and deterioration in mortgage credit quality even though income and job growth are improving. Far from obsessing about the macroeconomic implications for the American consumer, therefore, investors should regard these developments as a yellow flag for those who lend to consumers. Finally, what should equity investors do about housing stocks? The homebuilders’ stocks have been on a tear, with the Philadelphia Stock Exchange Housing Index (HGX) more than doubling over the past two years and up 37.4% since mid-October. Bulls claim that the homebuilders are cheap, trading at 8–10x forward-looking earnings. I’m skeptical: While I’ve long thought that homebuilders are more disciplined and rational than in the 1980s and 1990s, it’s still a cyclical business, and next year’s earnings could be down. Thus, just as fading demographics and rising rates will curb housing demand and house prices, they may also be a double whammy for homebuilders’ stocks in the next several months.

Subject: Re: U.S.: Housing -- Bubbly?
From: Pete Weis
To: Terri
Date Posted: Tues, Mar 01, 2005 at 22:21:04 (EST)
Email Address: Not Provided

Message:
Some folks on this board may be tired of my constant harping on the dangers of a housing drop, but.... Although this writer sees a peak in housing coming, IMO he is not grasping the reasons behind the housing boom or the impact a drop in housing would have on the economy. From where does he think those jobs are coming? I'm more in agreement with Robert Shiller that we will at some time begin to see a housing drop which will be a real problem - probably much more of a problem than the drop in the stock markets. We've certainly had other periods where we've had much better job growth than we have had over the last 3-4 years and at the same time only saw modest gains in housing (even with steady interest rates). Yet we have seen the broadest, largest, quickest runnup in housing prices in history over the last 4 years. So I suspect it had very little to do with job growth - afterall, 2003 was a very bad year for jobs with net losses in some months. Yet the housing boom marched on right through 2003. Let's face it - the housing boom is due to cheap and easy money with a bit of irrational exuberance thrown in. It's also interesting to note that the housing industry is either directly of indirectly responsible for the lion's share of whatever job growth we are having. When you consider the trillions it is pumping into our economy you can really begin to understand this. The late 90's were good years for the housing markets and loan originations amounted about a trillion a year in 1998 and 1999. Once the Fed started lowering its rates loan originations began to catapult - reaching a peak of 3.7 trillion in 2003. Now remember our gross national product amounts to just over 10 trillion per year. So unless we get a truely significant uptick in high paying hightech type jobs in a hurry, we are in big trouble if the housing juggernaut turns into tinkerbell. So I think this guy is soft peddling the dangers of a housing market which is becoming a bit 'bubbly'.

Subject: What would scare Terri?
From: johnny5
To: Pete Weis
Date Posted: Wed, Mar 02, 2005 at 01:06:01 (EST)
Email Address: johnny5@yahoo.com

Message:
Pete with terri and others sticking strong to thier bullride and putting thier wealth into long vanguard index funds, the markets, housing and equity will continue to go up beyond all rationality. Mutual fund, FDI and 401K cash flows will keep fueling the fire - my uncle just gave 250K TO raymond james to help terri out and feed more wealth into the system. 15 trillion in the equity markets are held by private investors - when there is no one left to buy the equity and buy the housing and we have a horrendous glut of it all - then the bear will show. When the baby boomers start retiring in 5-10 years and stop contributing fuel to the fire but instead start drawing down thier stocks and housing for travel and entertainment and no longer working and contributing through thier 401K's - then the bull will fall. I think we are in a secular bear, but everyone is buying, will continue for a bit, and now we are back to timing when the market goes down. As you said earlier, when terri stops preaching the bull and gets out of her vanguard index funds then it will be time to short the market. When does terri see people stop contributing wealth to equities or housing? When the baby boomers retire? When osama nukes a major city? When saudi arabia goes dry? When liquidity dries up in housing and we have 2 houses for every person? That is all we need to figure out, when people like terri and my uncle will feel sick to put one more dollar into the long side - and invest on that behavior - so terri - what will it take to make you hate the markets and want to short them? Anything? Is the academic papers on efficient markets so convincing to you that you will never stop buying vangaurd index funds? When do you personally expect to stop contributing to your funds and enjoyr your retirement and spend all those great gains?

Subject: Military or Story?
From: Pancho Villa
To: All
Date Posted: Tues, Mar 01, 2005 at 17:53:50 (EST)
Email Address: nma@hotmail.com

Message:
‘Politics in an information age is not only about whose military wins but whose story wins.’ Joseph S. Nye Jr. Stephen Walt is one of the most thoughtful and balanced practitioners of the realist school of international politics. He was a prescient and powerful critic of the Bush administration’s decision to invade Iraq. Would that his advice had prevailed. Here he offers a sensible and moderate design for a mature foreign policy. Again, his advice beats the current alternative, but his realist paradigm limits his attention to some issues. Before commenting on what is missing, I might quibble a bit with some of what is there. Walt argues that there are three grand strategies that the United States could follow to preserve its primacy. It could seek global hegemony, engage selectively, or be an “offshore balancer.” Why only three options? Even in the debate among neoconservatives such as Charles Krauthammer and Frank Fukuyama, they mention four, and there are surely others. And what exactly is the difference between selective engagement and offshore balancing? Since Walt wants to stay engaged through multilateral institutions and allies, would sometimes intervene for humanitarian reasons, and would keep significant troops in Asia, the difference seems a minor matter of degree. Yes, fewer troops are needed in post–Cold War Europe, but the administration agrees with that. Perhaps is just boils down to a (sensible) return to the more subtle “over the horizon” presence in the Persian Gulf. And is it really true that no foreign government is going to risk transferring nuclear weapons? What about the published reports that Pakistan’s A.Q. Khan transferred nuclear-weapons blueprints to countries such as Iran and Libya? Walt acknowledges that American power is most effective when it is seen as legitimate, and that American efforts at public diplomacy remain weak and ineffective, but he tends to focus on hard rather than soft power, and his conclusions have little to say about public diplomacy. In part, this may be because realists often use a shorthand that defines power only in terms of tangible resources rather than behavior. Power is the ability to influence others to get what you want, and there are ultimately three main ways for a nation to achieve power: by using or threatening force; by inducing compliance with rewards; or by using “soft power”—attracting followers and co-opting them. There is no reason for realists to neglect soft power. It is simply a form of power, and nations (and non-state actors) struggle to deprive others of their soft power and to balance in that domain even if they cannot balance in the military domain—witness the coalition of France, Germany, China, and Russia depriving the United States of the legitimizing strength of a second Security Council resolution in 2003. When a country can induce others to follow by employing soft power, it saves a lot of carrots and sticks. This is a lesson the United States seems to have forgotten in the past few years. Soft power is based on culture, political ideals, and policies. Historically, Americans have been good at wielding soft power. Think of young people behind the Iron Curtain listening to American music and news on Radio Free Europe, or of Chinese students symbolizing their protests in Tiananmen Square with a replica of the Statue of Liberty. Many American values, such as democracy, human rights, and individual opportunity, have proved deeply attractive when backed by sound foreign policies. American soft power has diminished in recent years, particularly in the wake of the invasion of Iraq. Polls showed dramatic declines in the popularity of the United States, even in countries such as Britain, Italy, and Spain, whose governments had supported the United States. America’s standing plummeted in Islamic countries around the world. In Indonesia, the world’s largest Islamic nation, three quarters of the public said they had a favorable opinion of the United States in 2000, but within three years that fraction had shrunk to 15 percent. Yet the cooperation of these countries is essential if the United States and its allies are to succeed in a long-term struggle against terrorism. Some anti-Americanism is an inevitable reaction to America’s size. The United States is the big kid on the block, and its disproportionate military power is bound to engender a mixture of admiration, envy, and resentment. But as Walt properly notes, it matters if the big kid on the block is seen by the others as a friend or as a bully. In the world of traditional realism, politics was typically about whose military wins. But politics in an information age is equally about whose story wins. This is particularly true in the struggle against transnational terrorism. And there the news is not good. The Pentagon’s Defense Science Board recently reported that the United States is being outflanked in that “war of information.” American efforts since September 11 have fallen significantly short. Last year a bipartisan advisory group reported that the United States spent a paltry $150 million on public diplomacy in Muslim countries in 2002. The combined cost of the State Department’s public-diplomacy programs including international broadcasting that year was just over a billion dollars—about the same amount spent by Britain or France, countries one fifth the size. It is also equal to one quarter of one percent of the military budget. The United States currently spends 450 times as much on hard power as on soft power. If we spent just one percent of the military budget, it would mean quadrupling the spending on soft power. If the United States is going to win the struggle against terrorism, it will need learn again to combine soft power with hard power. Stephen Walt recognizes this, but he does not dwell on it, perhaps because his realist paradigm does not stress soft power. But better an intelligent, moderate, and mature realism than a truncated neoconservative Wilsonianism that stresses ideas but loses touch with reality. Joseph S. Nye Jr. is a Distinguished Service Professor at Harvard University. He is the author of Soft Power: The Means to Success in World Politics and The Power Game: A Washington Novel. http://www.bostonreview.net/BR30.1/nye.html

Subject: Uruguay Veers Left, in a Latin Pattern
From: Emma
To: All
Date Posted: Tues, Mar 01, 2005 at 16:41:47 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/01/international/americas/01uruguay.html?pagewanted=all&position= With New Chief, Uruguay Veers Left, in a Latin Pattern By LARRY ROHTER MONTEVIDEO, Uruguay - When tiny Uruguay inaugurates its new president here on Tuesday, it will make a clear break with the country's past. After 150 years in which two moderate parties alternated in power, Uruguay's five million people will have turned decisively to the left. But more than that, the moment is fraught with symbolism for the region. Uruguay's shift consolidates what has become the new leftist consensus in South America. Three-quarters of the region's 355 million people are now governed by left-leaning leaders, all of whom have emerged in the past six years to redefine what the left means today. They are not so much a red tide as a pink one. Doctrinaire socialism carries the day far less than pragmatism, an important change in tone and policy that makes this political moment decidedly new. From Brazil to Argentina to Ecuador and Venezuela, while demonstrating important differences in style and substance, these new leaders are united in their conviction that the free-market reforms of the 1990's have failed and by a renewed focus on egalitarianism and social welfare, but not to the point where it breaks the bank. They are sympathetic to the symbols and rhetoric of the left's revolutionary past, cozy with Fidel Castro, and frequently anti-American in their talk, but they continue to pursue economic policies that are favorable to American interests and sensitive to perceptions of Wall Street. None, for instance, would even think of nationalizing foreign-owned companies, as both Mr. Castro and Salvador Allende of Chile once did. From one country and leader to the next, the governments can be described as representing similar 'tendencies within a spectrum that allows for various colorations,' in the words of Gilberto Dupas, director of the Institute of Advanced Studies at the University of São Paulo. Indeed, though many of the new leaders have roots on the revolutionary left, they now seem inspired less by Che Guevara than Felipe González, the Socialist who was formerly Spain's prime minister. They have shown they are willing to play by the established rules of the game, even if it forces them to abandon cherished ideological goals. That overriding pragmatism has left the Bush administration less overtly antagonistic to the trend than it might have been in another era, with the clear exception of President Hugo Chávez in Venezuela, who is more fiery and provocatively populist than most. Still, across the board, the attitude toward the United States has been one characterized by at least polite distancing, the case here and in neighboring Brazil and Argentina, as the economic reforms being rejected are closely associated with Washington and the financial institutions it backs, the World Bank and the International Monetary Fund. 'There is a growing consensus against the way the United States is using its power,' said Marta Lagos, director of Latinobarómetro, a Chilean public opinion firm that regularly conducts surveys of political attitudes around the continent. 'Ten years ago that was an attitude typical of the elite, but now we see it across the board, regardless of class or level of education.' That backlash has left these governments groping for a middle way between the unrestrained capitalism of the 1990's - what Mr. Chávez invariably calls 'savage neoliberalism' - and the earlier reliance on the state as the main engine of development. To critics on the left, it reeks of a sellout. But others see it as maturing into the mainstream. President Luiz Inácio Lula da Silva of Brazil, for example, has followed the same policies of fiscal restraint and openness to foreign investment that he criticized as a candidate, and President Lucio Gutiérrez of Ecuador has maintained the policy of his predecessors, who adopted the dollar as the county's currency. Even Argentina, where President Néstor Kirchner has defied the I.M.F. and forced foreign creditors to take big losses on their debt holdings, has run up large budget surpluses. 'You have to see much of what is said as good use of communications for the purpose of maintaining their popularity,' said Eduardo Gamarra, director of the Latin American and Caribbean Center at Florida International University in Miami. 'It's a domestic rhetorical game, but when they are put against the wall, they have to make pragmatic decisions.' Now it is Uruguay's turn, as this small country sandwiched between Brazil and Argentina marks the arrival in power of Tabaré Vázquez, a 64-year-old physician, and the coalition known as the Progressive Encounter/Broad Front/New Majority. The new president proudly describes himself as a man of the left and says that his first actions in office will include restoring diplomatic relations with Cuba and re-examining an investment treaty with the United States. 'We have changed because the world has changed,' said Senator José Mújica, the most prominent of the former Tupamaro guerrilla leaders who now preside over Congress here. 'We live in a unipolar world in which attempts at socialism have failed and there are no alternatives. We have to take a pragmatic line.' The doctor's ascendance is indicative of the region's sharp turnabout from a decade ago. At the outset of the 1990's, 'The Washington Consensus' - the name given to the recipe of open markets, privatization and stabilized budgets being pushed by the United States - seemed to have swept away everything before it. Voters were pleased to see inflation, a traditional bugaboo in the region, quickly brought under control and looked forward to other gains. But over the past decade, freer trade and increased foreign investment have failed to narrow the gap between rich and poor and left millions of poor people outside the economy and looking in resentfully. Between 1998 and 2003, once inflation is taken into account, Latin America as a whole did not grow at all, according to International Monetary Fund figures. As a result, in one country after another, the candidates who have been most successful in appealing to voters are those who, like Dr. Vázquez here, promise that the state will play a greater role and not leave the market to its own devices. The egalitarian argument resonated particularly strongly here and in neighboring Argentina, two countries that were once middle class and have fallen on hard times in recent years. Once known as the 'Switzerland of South America,' Uruguay enjoyed a European-style welfare state whose last remnants were stripped away in the crises of the 1990's. 'What all of them have in common is that they favor measures to bring in the segment of the population that has thus far been excluded from the market,' Ms. Lagos said of the new leftist leaders. 'That is combined with a massive rejection of the I.M.F. and the Washington Consensus.' The shift is not without political consequence for the United States. With Washington still pushing free trade and economic liberalization, many South American nations have begun a flirtation with China in hopes of finding some kind of counterweight. But their main, stated focus has been to try to encourage trade and integration with each other in a way similar to, though far less evolved than, the European Union. Brazil and Venezuela in particular have been moving toward what Mr. da Silva described as a 'strategic alliance' when he called on Mr. Chávez at midmonth. During the visit, the two countries signed agreements that ranged from Brazilian financing of irrigation and subway projects in Caracas to a joint venture to build an auto lubricants plant in Cuba. Mr. Chávez also talked of 'military cooperation' with Brazil and expressed interest in buying as many as 24 Brazilian-made patrol planes. 'Instead of the United States and Europe, Brazil, Argentina and Colombia,' Mr. Chávez said in explaining his trade preferences. 'Even if it costs a bit more, it is necessary to make this a priority. It's not a one-day deal, the gains will come over the long term.'

Subject: China : Was the War Pointless?
From: Emma
To: All
Date Posted: Tues, Mar 01, 2005 at 15:52:28 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/01/international/asia/01malipo.html?8hpib=&pagewanted=all&position= Was the War Pointless? China Shows How to Bury It By HOWARD W. FRENCH MALIPO, China - After a walk up a steep stone staircase, first-time visitors are astonished when the veterans' cemetery just outside this town finally pops into view: as far as the eye can see, the curving arcade of hillside is lined with row after row of crypts, each with its concrete headstone emblazoned with a large red star, a name and an inscription. Long Chaogang and Bai Tianrong, though, had both been here before. The two men, veterans of China's war with Vietnam, which began with intense combat in mid-February of 1979, return from time to time looking for lost friends. And for more than an hour this day, they climbed up and down the deserted mountainside near the Vietnam border searching in vain through the names of the 957 soldiers buried here, stopping now and then to light a cigarette and place it on a tomb in offering to a comrade. The silence that prevails here, disturbed only by a gentle breeze rustling through the cemetery's bamboo groves, is fitting for a war that is being deliberately forgotten in China. By official reckoning, 20,000 Chinese died during the first month of fighting, when this country's forces invaded Vietnam in the face of spirited resistance, and untold others died as the war sputtered on through the 1980's. There are no official estimates of Vietnamese casualties, but they are thought to have been lower. Sixteen years on, China has produced no 'Rambo,' much less a 'Deer Hunter' or 'Platoon.' There have been a few movies, novels and memoirs about the suffering of the soldiers and their families. But no searing explorations of the horror or moral ambiguity of war. There are no grander monuments than cemeteries like these, found mostly in this remote border region. China, in short, has experienced no national hand-wringing, and has no Vietnam syndrome to overcome. Many of the veterans themselves are hard-pressed to say why they fought the war. Most are reluctant to discuss it with an outsider, and even rebuff their families. Asked what the war was about, Long Chaogang, a reticent 42-year-old infantryman who saw heavy combat, paused and said, 'I don't know.' Asked how he explained his past to his family, he said that when his 12-year-old daughter had once inquired he simply told her it was none of her business. Forgetting on such a great scale is no passive act. Instead, it is a product of the government's steely and unrelenting efforts to control information, and history in particular. Students reading today's textbooks typically see no mention of the war. Authors who have sought to delve into its history are routinely refused publication. In 1995, a novel about the war, 'Traversing Death,' seemed poised to win a national fiction award but was suddenly eliminated from the competition without explanation. If the Chinese authorities have been so zealous about suppressing debate it is perhaps because the experience, which effectively ended in a bloody stalemate, runs so contrary to the ruling Communist Party's prevailing narratives of a China that never threatens or attacks its neighbors, and of a prudent and just leadership that is all but infallible. The ungainly name assigned to the conflict, the 'self-defense and counterattack against Vietnam war,' seeks to reinforce these views. That China initiated hostilities is beyond dispute, historians say, and the conflict was fought entirely on Vietnamese soil. It is also generally held that if the war did not produce an outright defeat for China, it was a costly mistake fought for dubious purposes, high among them punishing Vietnam for overthrowing the Khmer Rouge leader of Cambodia, Pol Pot, a Chinese ally who was one of the 20th century's bloodiest tyrants. Since then, some historians have speculated that the war may also have fit into the modernization plans of China's former paramount leader, Deng Xiaoping, by highlighting the technological deficiencies of the Maoist People's Liberation Army, or P.L.A. Others say the war was started by Mr. Deng to keep the army preoccupied while he consolidated power, eliminating leftist rivals from the Maoist era. Today, veterans often cling to these explanations but also fume about being used as cannon fodder in a cynical political game. 'We were sacrificed for politics, and it's not just me who feels this way - lots of comrades do, and we communicate our thoughts via the Internet,' said Xu Ke, a 40-year-old former infantryman who recently self-published a book, 'The Last War,' about the conflict. 'The attitude of the country is not to mention this old, sad history because things are pretty stable with Vietnam now. But it is also because the reasons given for the war back then just wouldn't stand now.' Mr. Xu, who now works as an interior designer in Shanghai, said he had traveled the country at his own expense to research the book and found that at library after library materials about the war had been removed. A compendium about the 1980's so complete as to have the lyrics of the decade's most popular songs said nothing of the conflict. 'It's like a memory that's been deleted, as if it never even happened,' Mr. Xu said. 'I went to the P.L.A. historians for materials, and they said 'Don't even think about it.' The attitude of China is like, let's just look toward the future and get rich together.' The war did produce one star of popular culture. A singer named Xu Liang, who lost a leg in combat, became a hero and idol when he appeared on national television seated in a wheelchair in uniform and sang about the virtues of personal sacrifice. Mr. Xu (who is unrelated to the author of 'The Last War') went on to give more than 500 pep talks around the country before disappearing from public view around 1990, just after the war's end. Today, he is so disillusioned that he tells people who recognize him on the streets of Beijing that they must be mistaken. Asked whether the war was just, he said China's leaders used Vietnam as a convenient enemy to quell internal conflict. 'Propaganda is in the government's hands,' he said. 'What does a worthless ordinary man know? When they want to do something, they can find a thousand justifications, but these are just excuses. They are not the genuine cause.'

Subject: Private investors >important cent banks
From: johnny5
To: All
Date Posted: Tues, Mar 01, 2005 at 14:25:07 (EST)
Email Address: johnny5@yahoo.com

Message:
So much news on central banks keeping things stable when the key is private accounts - 15 trillion private versus 3 trillion central bank. http://www.morganstanley.com/GEFdata/digests/20050228-mon.html#anchor4 Global: How Diversified are Private Investors? Portfolios? Rebecca McCaughrin (London) Private investors — the other side of the coin. This week’s announcement by the Bank of Korea and the dollar’s subsequent slide have reinvigorated concerns over central bank diversification. We still think official diversification is a long-term issue, and that central banks have yet to diversify their reserves significantly into non-dollar assets (see S. Jen and R. McCaughrin, Are Central Banks Really Diversifying? February 4). In this note, we shift gears, focusing on the rest of the world — namely private investors and how diversified their portfolios are. Central banks pale in importance to global financial markets compared to private investors. In the last three years, much attention has been devoted to the activities of foreign central banks. This is more a function of the growth in the reserves they manage, which rose by 8% over 2002, 15% in 2003, and 16% in 2004. In terms of the stock of outstanding assets, private investors are far more important for financial markets. Cross-border securities holdings by private investors totaled more than $12 trillion as of year-end 2002 according to the IMF, and could easily have grown to $15 trillion by year-end 2004 based on the growth in liabilities in the G-4 economies. That compares with just $3.7 trillion in the stock of official FX reserves at year-end 2004. How prominent are dollar assets in private portfolios? While the dollar is the preferred currency in central bank portfolios, international trade invoicing, and FX market turnover, we believe that private investors’ portfolios are more balanced. Private investors are nearly as willing to hold Euroland securities as US securities in their international portfolios. To calculate the weights of private holdings of foreign securities, we relied on the IMF’s coordinated portfolio investment survey (CPIS), an annual survey that tracks the portfolio assets and liabilities of 68 economies. (Note that the data are based on geographical attribution rather than currency denomination.) To determine the country weights, we stripped out holdings that are technically not cross-border transactions (e.g., intra-Euroland holdings and holdings by/in major financial centers), and excluded any country that did not report both assets and liabilities. While this reduces the stock of investment, we are more concerned with the weights of the individual countries and these adjustments help to reduce large biases. Based on our pared-down sample of 38 countries, investment in US securities accounted for 30% of total foreign securities holdings, while Euroland securities represented 27%, the UK 17%, and Japan 6%, as of year-end 2002. More recent flow data in the G-4 show a similar distribution. These ratios imply that private investors already maintain well-diversified international portfolios. What accounts for the discrepancy? We should not be too surprised by the lower weight of dollar assets in private portfolios relative to official institutions’ reserves. First, private investors are under no obligation to maintain stability in currency and financial markets and are willing to hold a larger share of riskier assets. By contrast, defending the de facto dollar zone is a key priority of Asia’s central banks. Second, the portfolio liabilities of the legacy Euroland countries were already sizeable; the introduction of the euro and integration of the region’s financial markets only amplified the trend. Bottom line: While the dollar reigns supreme as the world’s reserve currency and dominates in international trade invoicing and FX transactions, US assets do not enjoy the same superiority in private investors’ portfolios. Investors are nearly as likely to hold Euroland as US assets. While this suggests that large shifts by private investors are unlikely since they are not necessarily overweight US assets (in contrast to their central bank counterparts), even small shifts are potentially destabilizing, given that private investors’ portfolios are four times the size of central bank reserves. For this reason, while we concede that the risk of official diversification is a lingering concern and one that will continue to bolster the dollar bears, we should not dismiss the importance of private investors.

Subject: Gold in the Boom in Home Prices
From: Emma
To: All
Date Posted: Tues, Mar 01, 2005 at 11:03:45 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/01/national/01spec.html?ei=5070&en=dd177ab86dcd51cd&ex=1109826000&pagewanted=all&position= Speculators Seeing Gold in a Boom in the Prices for Homes By MOTOKO RICH SUNNY ISLES, Fla. - Within six months last year, Carlos and Betti Lidsky bought and sold two condominiums. Then they bought and sold two houses. They say they will clear a half-million dollars in profit, and none of the homes have even been built. Now Mr. Lidsky, a lawyer, and his wife, a charity fund-raiser, have put down a deposit on a fifth property, a $1.3 million condo in a high-rise under construction, and are planning to sell before the deal closes, without even taking out a mortgage. 'It is much better than the stock market,' Mr. Lidsky said. 'This is an extraordinary, phenomenally good result.' In several metropolitan areas, from Miami to Riverside, Calif., where the real estate market is white hot, rapidly rising prices are luring a growing number of ordinary people into buying and selling residences they do not intend to occupy, despite warnings from some economists that prices cannot continue to rise as steeply as they have in the last few years. According to LoanPerformance Inc., a San Francisco mortgage data firm, about 8.5 percent of mortgages nationwide in the first 11 months of last year were taken out by people who did not plan to live in the houses themselves, up from 5.8 percent in 2000. In some markets, that proportion is much higher: in Phoenix, more than 12 percent of mortgages were taken out by investors; in Miami, the figure is 11 percent. The National Association of Realtors, a trade organization that represents real estate brokers, said in a study being released on Tuesday that the percentage of homes bought for investment might be as high as one-quarter of the 7.7 million sold last year. 'Americans are treating real estate as a viable alternative to stocks and bonds,' said David Lereah, chief economist at the Realtors association. And some are buying at least two properties at a time. Like the day traders of the 1990's dot-com boom, people are investing in a market that seems to just go up. Promoters use Web sites to attract investors, promising quick profits. One site, getpreconstructionprofits.com, is run by a pair of investors who offer online training for $197. On their home page, they say people can earn over $100,000 in six months investing in unbuilt real estate. Some economists say the influx of investors into the real estate market could have negative consequences. 'Investors are now seemingly buying based on the expectation that house prices are going to grow as rapidly as they have in the recent past, long into the future,' said Mark Zandi, the chief economist at Economy.com, a private research group. 'How quickly and high fixed mortgage rates rise will determine whether the speculative fever in the market just goes flat or whether it caves.' For now, low interest rates are helping to fuel the frenzy. Sometimes, homeowners borrow equity from their primary residence to finance down payments. These buyers, some of whom lost money when the stock market crashed five years ago, believe real estate is a safer bet. Rita Lawrence, a construction business owner in Phoenix, has bought three houses in the last two years. Ms. Lawrence and her husband rent out two of them, and they hope to sell the third - which they are buying for $195,000 - for $249,000, after a quick renovation. Taxes can take a sizable part of the profits in these deals. Investors who sell within a year of purchase face federal short-term capital gains taxes of up to 35 percent, and 15 percent if they wait a year. Still, investors have been seduced by the steady upward march of house prices over the past few years. Since 2000, the national median price of a house has increased by 33 percent. And in the fourth quarter of last year, out of 129 metropolitan areas covered by the Realtors, 62 markets showed double-digit price rises over the same period a year earlier. Demand for investment properties has risen in markets with the most spectacular price increases, according to brokers. As buyers were priced out of Los Angeles, they moved into San Bernardino and adjacent Riverside County, where prices rose by 35 percent last year. Nancy Overgaag, a mortgage broker at Financial 2000 in Redlands, Calif., said about one-third of her customers were looking to invest in real estate. Even in Manhattan, where average sales prices topped $1 million last year, investors are piling into the market, brokers say. Some investment buyers are willing to rent out their properties at a monthly loss, anticipating future sales price rises. Dru Finley and her husband, Hsiao-Li Pan, who live in Brewster, N.Y., bought a one-bedroom condominium in Battery Park City in Lower Manhattan last summer for $499,000. They rent it out for $2,225 a month, about $1,000 less than their mortgage and maintenance costs. The couple hope to make up the shortfall when they sell the condo in a few years. 'It seems that real estate always goes up,' in the long term, Ms. Finley said. Many homeowners are tapping the paper wealth in their own homes to buy more real estate. Mark Purnell, who manages internal technology for a software company in Southern California, said the four-bedroom house he bought eight years ago in Rancho Santa Margarita, south of Los Angeles, had quadrupled in value to $800,000. Last year he took out a $150,000 home equity loan and, with his brother, bought three houses in Phoenix. Mr. Purnell, 36, who is renting out those houses, said he would buy more in Phoenix but could not find anything. So he is turning his attention to Palm Springs, Calif. His Phoenix real estate agent, Kim Martin of Re/Max Achievers, said that investors had helped deplete inventories of available properties from about 25,000 this time last year to about 8,000 now. In a backlash against speculative investing in some popular markets like Phoenix and Las Vegas, some homebuilders now prohibit renting or selling houses for at least a year after closing. As a result, investors have started to back off in Las Vegas, where the pace of the price rises started to ease towards the end of last year. But in Miami, the speculative craze is promoted in part by developers and brokers who help buyers to resell quickly. Brokers in Miami work overtime to get their clients into V.I.P. sales events before developers start pitching buildings to the public. The Lidskys were heading out of town early last year when they got a call from Michelle L. Judd, a sales associate at Ocean IV, a high-rise being built in Sunny Isles by a consortium led by the Related Group of Florida, the same company that built the condo where they have lived since 2003. Ms. Judd was offering to sell them a second unit, but only if they would put down a deposit that day. Shortly before their flight, Mr. Lidsky drove to the sales office and without viewing any floor plans, ended up writing deposit checks totaling $159,380 for a $479,900 two-bedroom condo, and an adjoining four-bedroom unit for $1,113,900. The money came from a bank line of credit not secured by their current home. Within three months, Ms. Judd called again: she had buyers for the two-bedroom willing to pay $625,000 and $1.425 million for the four-bedroom. Such get-rich-quick stories have increased demand for preconstruction condo units in and around Miami. While many buyers do intend to move in to their homes, as many as half the original buyers of some condos resell them before they are built. Of the 280 units at Ocean IV, Ms. Judd said, nearly 130 had resold. Thomas Daly, a principal investor with the Related Group in 18 condo projects, said the company did not 'encourage investors' but that once a project was initially sold out, the developer would help buyers resell their properties quickly 'to accommodate our purchasers.' Developers of some projects do not allow buyers to resell before closing, because they fear this could artificially inflate prices. One of those projects, Arté City, a 202-unit condo complex being built in Miami Beach, is still attracting investors, although they are those who are willing to wait longer to sell. Jaime Nack, a 29-year-old event producer in Santa Monica, Calif., bought a one-bedroom unit at Arté City for $270,000, financing the down payment with a second mortgage on her one-bedroom condo in Santa Monica. Ms. Nack plans to rent out the unit for a couple of years before selling. Because of its proximity to the beach, 'I think it will be safe even if the market drops a bit,' she said. Some real estate watchers in Miami wonder whether that drop will come soon. With more than 60,000 units in some phase of development in the Miami area, 'the supply may be greater than the ultimate demand,' said Michael Y. Cannon, managing director of Integra Realty Resources-South Florida, a market analyst. A similar situation in 1986 sent the market spiraling, and it took seven years to recover. For now, investors like the Lidskys are still buying. They intend to buy at least one more unit - their sixth in less than a year - in another condo. But the couple, who acknowledged being 'killed' in the stock market five years ago, sounded a note of caution. 'Maybe we won't lose money, but I just think it is not going to keep up,' Ms. Lidsky said . 'At some point there are just going to be too many apartments in this area.'

Subject: Fat Fanny falls out of bed
From: johnny5
To: Emma
Date Posted: Tues, Mar 01, 2005 at 11:13:44 (EST)
Email Address: johnny5@yahoo.com

Message:
http://www.321gold.com/editorials/willie/willie022805.html Fat Fanny Falls Out of Bed Jim Willie CB Archives Jim Willie CB is the editor of the 'HAT TRICK LETTER' Feb 28, 2005 Fanny Mae's bloated condition might represent an accurate reflection of the protruding haunches of many US citizens, either male or female. The Federal National Mortgage Agency just has a feminine nickname. The handle could easily have been named after Fat Albert of the Cosby Kids. Fanny was depicted in my January piece entitled 'Queer Eye for the Bond Guy' as the canary in the bond coal mine. It justifiably stands as the weakest link in the vast bond chain of USDollar-based debt securities, that is, of bonds held internationally. Its foundation has in all likelihood vanished. Its operational cash flow might be fractured, vulnerable to rising rates and vulnerable to falling rates. Its integrity is as compromised as per diem accounts in state legislatures, or credit card accounts in households, or political campaign funds for losing candidates. Its portfolio is as cluttered and confusing as any attic or basement or garage. Its officers are as clueless or corrupt as those of Enron, WorldCom, Tyco, or Adelphia. What remains to be seen is if Fanny babysitters go to prison for fraud which is as clear as day. THE FANNY CAVE-IN SIGNALS DISTRESS TO THE BOND MARKET AND A REMOVAL OF A KEY OBSTACLE TO GOLD AND ITS ADVANCE. MONEY FROM BONDS AND HOUSING SPECULATION WILL GREATLY ASSIST GOLD. To say the FNM share price looks sickly would be a generous assessment. It has fallen out of bed, her massive hind haunches having rocked the bond world upon impact with credit market floors, some floorboards broken to be sure. It will be difficult to replace the bond mine canary with a mechanical chirping device, made in China. Shock waves are sure to hit the housing market in delayed reaction, later, perhaps much later than would be its due. Confirmation is offered as scattered debris. Critical support had held at 60-61 for two years, now shattered with a close on Tuesday under 58. We have the breakdown seen from the 50week moving average (in blue) turning below the 100week MA (in red), a strong signal of downward momentum. A memorable event came in March 2003, when St Louis Fed Governor Poole warned of economic meltdown if Fanny Mae were to collapse. He warned that its capital foundation was inadequate, and was curiously criticized. It is my belief that its capital foundation is non-existent, and now operates merely as a financial centrifuge, in Doug Noland's keen words. FNM recovered to 75 per share in the ensuing two months after Poole's warning, an exercise in total denial of its deteriorated fundamentals. What seemed to have precipitated the breakdown (call a spade a spade) is Chairman Greenspan's commentary last week before the Senate Banking Committee. He gave stern notice that rates will continue to rise, as the Fed continues its tightening cycle. In 1996, our incompetent Federal Reserve Chairman defied his own best judgment. He issued the alarm that stock investors were reacting with undue excitement in his 'Irrational Exuberance Speech.' Yet he behaved like a monetary drug dealer in the following months and years to betray good judgment. His gain was icon status, declaration as maestro, hailed by clowns in the US Congress such as Sen Phil Grahm as 'the best central banker in history.' He has had his boots licked by Congressional Reps and Wall Street honchos for years in a disgusting regular display. Why? Because he supplies the magic elixir. Before the senators last week, Greenspan admitted that despite his 150 basis point rate hikes at the last six FOMC meetings, the long maturity bonds are unaffected. He admitted his confusion and described the puzzle which has confused him. Let this be known, NEVER IN THE HISTORY OF THE FED HAS THE LONG END FAILED TO REACT WITH SHOCK TO HIKES IN THE SHORT END. Welcome to the Kondratiev Winter. Attempts to call back the tide will fail in all respects except in the financial sector, and in there for only a limited timespan. We have made modern history. Last week Greenspan called the refusal of long rates to rise a 'conundrum.' The flattening yield curve has him and many others perplexed. This is unprecedented, and will surely go down as the 'Yield Curve Conundrum Speech.' Our Fed Chairman essentially admitted his ignorance of what he has done, and how the world financial system has not reacted to the maestro cue. The Fed Reflation initiative, to promote price inflation, to manifest debt as inflated away, to stimulate with financial amphetamines, it has failed miserably, whether the Fed and financial markets recognize it or admit it. We have stimulated Asian economic growth, factory buildup, and job creation. We have flat job growth, unless you maintain childlike acceptance of official statistics. We have a high jobless rate, unless you maintain childlike acceptance of official statistics. We have very poor (if any) economic growth, unless you maintain childlike acceptance of official statistics. We have negative productivity, unless you maintain childlike acceptance of official statistics. We have negative savings, unless you maintain childlike acceptance of official statistics. We have utter capital hemorrhage in trade gaps, noted but not recognized in childlike denial of importance. We have massive federal budget deficits from the costly drain of war and lowered tax schedules, noted but not recognized in childlike denial of importance. WE HAVE THE FIRST RECESSION LABELED AS ECONOMIC GROWTH IN MODERN HISTORY. Welcome to the Age of Orwell, where almost every single economic statistic is a total and complete lie. The economic reporting apparatus is as described for former Treasury Secy Paul O'Neil a 'show business' devoid of substance or credibility. Even as irrational exuberance marked 1996 as the top for stocks, this conundrum comment will mark 2005 as the top for bonds. The Fanny Mae breakdown confirms it. The 30 basis point rise in the 10-yr TNote yield from just below 4.0% to almost 4.3% accentuates the point. The long-term picture might indicate a move in the FNM share price back to pre-bubble days seen in the year 2000, like the 48-50 range. Would such a dreaded move foretell residential real estate prices reversing back to year 2000 levels, 30% to 40% lower ??? Look next for extreme heterogeneity and unevenness in US housing market, as some areas like north Miami, Hawaiian islands, inner loop Boston, northern Chicago, Orange County, Georgetown & Alexandria, to remain firm in price. Expect softening prices in areas without remarkable advantages, where appreciation has been at least 30% in the last four years. Where the uplift has been greatest will come the biggest falls. In Podunk and East Hilljack, don't expect much of a housing price fall. Funding might get difficult in the coming months, surely by next year. A bear market in bonds has been the missing link for the gold bull market to crank into the next higher gear. There are other missing links, significant to be sure. The other glaring omission on the landscape has been rising Asian currencys. Unless and until the Japanese yen is permitted to lift, unless and until the Chinese yuan currency peg is released, price inflation WILL NOT be unleashed in its full fury within the US Economy. In essence, Asia (in particular China) has blocked with near total interference the reflation initiative program. They have prevented pricing power in consumer products. They have prevented as a result a return to profitability in all sectors outside the financial sector. The end result has been pathetic job growth. The gold community would do well to identify China as the biggest obstacle to the gold bull charge. Trade war will change that though. Beware as foreign central banks diversify out of USTBonds. Let's not forget that garbage paper known as 'Agency Debt' which Fanny Mae so successfully panders across the globe. It is as though Asian central banks purchase our mortgage bonds in order to keep the US consumer going like the Energizer Bunny. You gotta love the word 'diversify' which is euphemism for 'get the hell out of US$-denominated debt.' The latest is South Korea, who announced that $67 billion in US$-based reserves is enough, maybe too much. They join China, Russia, India, Indonesia, and others who have begun to see the writing on the walls. Their foreign exchange reserves are in jeopardy. How much longer can the Bank of Japan do the US Fed's bidding in secret overnight transactions in the largest carry trade operation the world has ever known ??? Is the BoJ the Far East outpost for the Fed ??? Is intervention their M.O. ??? Anyone who claims there is no inflation cannot define the term, nor notice the monstrous inflation at work in Tokyo.

Subject: China's Oil Diplomacy in Latin America
From: Emma
To: All
Date Posted: Tues, Mar 01, 2005 at 10:45:26 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/01/business/worldbusiness/01oil.html?pagewanted=all&position= China's Oil Diplomacy in Latin America By JUAN FORERO BOGOTÁ, Colombia - Latin America is becoming a rich destination for China in its global quest for energy, with the Chinese quickly signing accords with Venezuela, investing in largely untapped markets like Peru and exploring possibilities in Bolivia and Colombia. China's sights are focused mostly on Venezuela, which ships more than 60 percent of its crude oil to the United States. With the largest oil reserves outside the Middle East, and a president who says that his country needs to diversify its energy business beyond the United States, Venezuela has emerged as an obvious contender for Beijing's attention. The Venezuelan leader, Hugo Chávez, accompanied by a delegation of 125 officials and businessmen, and Vice President Zeng Qinghong of China signed 19 cooperation agreements in Caracas late in January. They included long-range plans for Chinese stakes in oil and gas fields, most of them now considered marginal but which could become valuable with big investments. Mr. Chávez has been engaged in a war of words with the Bush administration since the White House gave tacit support to a 2002 coup that briefly ousted him. Still, Venezuela is a major source for American oil companies, one of four main providers of imported crude oil to the United States, inexorably linking the two countries' interests. Analysts and Venezuelan government officials say those ties will not be severed, as Venezuela is a relatively short tanker trip from the United States and Venezuelan refineries have been adapted to process the nation's heavy, tar-like crude oil. 'The United States should not be concerned,' Rafael Ramírez, Venezuela's energy minister, said in an interview, 'because this expansion in no way means that we will be withdrawing from the North American market for political reasons.' In recent months, though, China's voracious economy has brought it to Venezuela, and much of South America, in search of fuel. 'The Chinese are entering without political expectations or demands,' said Roger Tissot, an analyst who evaluates political and economic risks in leading oil-producing countries for the PFC Energy Group in Washington. 'They just say, 'I'm coming here to invest,' and they can invest billions of dollars. And obviously, as a country with billions to invest, they are taken very seriously.' China's entry is worrisome to some American energy officials, especially because the United States is becoming more dependent on foreign oil at a time when foreign reserves remain tight. It was the limited supplies that pushed a barrel of oil to $55 in October, driving up retail prices and hurting economies. On Monday, crude oil for April delivery settled at $51.75 in New York, up 26 cents. The Senate Foreign Relations Committee, headed by Richard G. Lugar, Republican of Indiana, recently asked the Government Accountability Office to examine contingency plans should Venezuelan oil stop flowing. Chinese interest in Venezuela, a senior committee aide said, underlines Washington's lack of attention toward Latin America. 'For years and years, the hemisphere has been a low priority for the U.S., and the Chinese are taking advantage of it,' the aide said, speaking on condition of anonymity. 'They're taking advantage of the fact that we don't care as much as we should about Latin America.' To be sure, China, the world's second-largest consumer of oil, has emerged as a leading competitor to the United States in its search for oil, gas and minerals throughout the world - notably Central Asia, the Middle East and Africa. China has accounted for 40 percent of global growth in oil demand in the last four years, according to the Energy Department, and its consumption in 20 years is projected to rise to 12.8 million barrels a day from 5.56 million barrels now. Most of that oil will need to be imported. The United States now uses 20.4 million barrels a day, nearly 12 million of it imported. Aggressively seeking out potential deals, China tries to out-muscle the big international oil companies, always beholden to shareholders. Chinese companies, which have substantial government help, can dispense government aid to secure deals, take advantage of lower costs in China and draw on hefty credit lines from the government and Chinese financial institutions. 'These companies tend to make uneconomic bids, use Chinese state bilateral loans and financing, and spend wildly,' Frank A. Verrastro, director and a senior fellow at the Center for Strategic and International Studies in Washington, told the Senate Energy Committee early in February. 'Chinese investors pursue market and strategic objectives, rather than commercial ones.' China already operates two oil fields in Venezuela. Under accords signed in Beijing in December and Caracas in January, it would develop 15 declining oil fields in Zumano in eastern Venezuela, buy 120,000 barrels of fuel oil a month and build a plant in Venezuela to produce boiler fuel used in Chinese power plants. Energy analysts say these deals, though mostly marginal, show that China is willing to wade in slowly, with larger ambitions in mind. 'These are steps you have to take to have a longer-term relationship,' said Larry J. Goldstein, president of the Petroleum Industry Research Foundation in New York. 'We don't know enough about whether they will lead to larger projects, but my sense is that they will.' Under the agreements, Venezuela has invited China to participate in much larger projects, like exploring for oil in the Orinoco belt, which has one of the world's great deposits of crude oil, and searching for natural gas offshore through ambitious projects intended to make Venezuela a world competitor in gas. Analysts note that part of China's effort is to learn about Venezuelan technology, particularly the workings of its heavy-oil refineries. Much of the oil that will be exploited in the future will be tarlike, requiring an intricate and expensive refining process. In return, China is offering the Venezuelans a $700 million line of credit to build housing, aid that helps Mr. Chávez in his goal of lifting his compatriots out of poverty. The recent trip also yielded plans to invest in telecommunications and farming. 'It's a country that permits you to get more out of agreements than just energy accords,' Bernardo Álvarez, Venezuela's ambassador to the United States, said of China. Venezuela, with a view to exports to China, says it is exploring plans to rebuild a Panamanian pipeline to pump crude oil to the Pacific, where it would be loaded onto supertankers that are too big to use the Panama Canal. Another proposal, with neighboring Colombia, would lead to the construction of a pipeline across Colombia to carry Venezuelan hydrocarbons, which would then be shipped to Asia from Colombia's Pacific ports. Mr. Chávez has promoted these plans in three visits to China. In the most recent, in December, he unveiled a statue of Simón Bolívar in Beijing. Trade between the two countries could rise to $3 billion this year from $1.2 billion, Mr. Chávez said, celebrating their links as a way for Venezuela to break free of dependence on the American market. 'We have been producing and exporting oil for more than 100 years,' Mr. Chávez told Chinese businessmen in December. 'But these have been 100 years of domination by the United States. Now we are free, and place this oil at the disposal of the great Chinese fatherland.' China, though, is not just interested in Venezuela. Much of Latin America has become crucial to China's need for raw materials and markets, with trade at $32.85 billion in the first 10 months of 2004, about 50 percent more than in 2003. Mining, analysts say, is among China's priorities, whether it is oil in Venezuela, tin in Chile or gas in Bolivia. Chinese involvement in Latin America is 'growing by leaps and bounds,' said Eduardo Gamarra, director of the Latin America and Caribbean Center at Florida International University, adding, 'It's driven by the need for privileged access to raw material and privileged access to hydrocarbons.' In Brazil, the state-owned Petrobras and China National Offshore Oil have been studying the viability of joint operations in refining, pipelines and exploration in their two countries and in other parts of the world. This comes after a $1 billion Brazilian agreement with another Chinese company, Sinopec, to build a gas pipeline that will cross Brazil. In Bolivia, Shengli International Petroleum Development has opened an office in the gas-rich eastern region and announced plans to invest up to $1.5 billion, though it is awaiting a new hydrocarbons law being drafted before committing itself to deals. In Ecuador, China National Petroleum and Sinopec have been looking at oil blocks that the government is trying to develop. In Peru, the Chinese vice president signed a memorandum of understanding in January that could lead to more exploration deals. Currently, a subsidiary of China National Petroleum produces oil. The Colombian state oil company has been discussing exploration and production with the Chinese. Part of the lure is in new, more beneficial terms for oil companies and an improving security situation.

Subject: Mr. Gates Goes to Washington
From: Emma
To: All
Date Posted: Tues, Mar 01, 2005 at 10:38:53 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/03/01/opinion/01tue2.html Mr. Gates Goes to Washington The Microsoft chairman Bill Gates was on the mark when he described the American high school system as 'obsolete,' compared with education abroad, adding that the American system was undermining the work force of the future - and 'ruining the lives of millions of Americans every year.' The governors made the right response, announcing that they had formed a coalition that would adopt higher standards, more rigorous courses and tougher examinations. The burning question of the moment, however, is whether the governors who applauded Mr. Gates in Washington will revert to the bad old status quo once they get home. The tendency among the states to embrace the lowest common denominator in education has been especially evident since Congress passed the No Child Left Behind Act, which required the states to place a 'highly qualified teacher' in every classroom and administer yearly tests in the early grades with the aim of closing the achievement gap between rich and poor students. Many states have taken the easy way out by embracing obfuscation and mediocrity at just about every juncture. Many have simply redefined the existing teacher corps as 'highly qualified,' regardless of whether the teachers have mastered the subjects they teach. Many have reported graduation and dropout rates that are clearly inaccurate to keep the public from knowing how poorly the schools are actually performing. A dismaying Carnegie Foundation report entitled 'Reading Next' shows that the states have set the reading achievement bar very low so students can be moved from grade to grade - even though about 70 percent enter the first year of high school reading below grade level. Given the facts, it should come as no surprise that American high school students are losing ground compared with their peers abroad, and now score near the bottom in the industrialized world. The problem, as Mr. Gates pointed out in his incendiary speech, is the American high school system itself, which was never designed for the purpose of providing high-quality education for all of its students. On the contrary, it was created to send an elite to college while keeping the other students off the streets until they were old enough for unskilled farm and factory jobs. Those jobs have largely disappeared. But the high schools remain, and changing them will require more than a few pledges made at a conference in Washington. The governors will have to speak some hard truths to the voters about the demands that will have to be made on students and teachers, as well as taxpayers. In other words, the high school reform can succeed only if the governors are willing to expend real political capital.

Subject: Ineffecient Market Hypothesis
From: johnny5
To: All
Date Posted: Tues, Mar 01, 2005 at 03:05:12 (EST)
Email Address: johnny5@yahoo.com

Message:
http://www.gmo.com/siteservercontents/marketcommentary/archive/everythingweknow 20mins.1068214767.doc Everything I Think I Know about the Market in 20 Minutes Jeremy Grantham, Chairman GMO 1.The dominant academic theory on the stock market is that it is very efficient. This theory, known as the Efficient Market Hypothesis (EMH), assumes investors are exposed to accurate data and act only in the most effective ways to maximize their profits. The market, in contrast to the EMH, is extremely inefficient, for at least four important reasons. 2.First, exposure to being wrong in the short run rather than maximizing the clients’ chances of being right in the long run. This phenomenon is now known as ‘career risk’ or ‘agency risk’. 3.Second, most professionals, including many of the best, prefer to engage in Keynes’ ‘beauty contest’, trying to guess what other investors will think in the future and “beating them to the draw” rather than behaving like effective components of an efficient market; spending their time and talent seeking long-term values. There is some evidence that per unit of talent “greater fool” investing may be more profitable and less full of career risk than value investing. (Keynes certainly thought so.) 4.Third, investment firms insist on trying to maximize their profits rather than their clients’ wealth. Bullishness and optimism are simply better for business, so estimates of corporate earnings are almost always high (on average by about 15%) and asset allocation advice is almost always based on the view that stocks are cheap. 5.And fourth, even if the markets were free of these institutionalized inefficiencies, the markets would still be gloriously inefficient because individuals insist on behaving in ways that do not remotely maximize their economic return, but behave in ‘irrational’ or nonrational ways, the study of which is now known in the trade as ‘behavioralism’. Examples of noneconomic behavior include tendencies to ‘herd’, an ability to mentally suppress disagreeable or dissonant data, overconfidence, a tendency to optimism, and problems with balancing risk. 6.Even those rare individuals who can process data efficiently are exposed to heavily biased data and must inevitably make suboptimal decisions. 7.Given that behavioralism is a complex and relatively new field, it is good to be aware that you do not need a Nobel Prize for behavioral economics to exploit behavioral inefficiencies. You only need to know how investors behave, not why. 8. There seem to be four important manifestations in the market of noneconomic behavior: A. a profound tendency to extrapolate today’s conditions into the indefinite future B. an exaggerated need at the market level for comfort C. a tendency to push stocks further in the direction they are already moving: momentum D. a willingness to overpay at the stock level, for excitement and growth. All four factors are symmetrical in that they can also work in reverse, pushing asset classes and stocks down. 9. Extrapolation (A). Keynes described extrapolation as the convention we adopt to deal with uncertainty. The most impressive example of this is in the bond market where, in 1982 with 13% inflation, the 30 year government bond sold at 16%, extrapolating 13% inflation for an astonishing 30 years. Similarly, in 2003 with inflation at 2%, the 30 year bond sold at 5%. For stocks, the lowest p/e was in 1982 with high inflation and low profit margins, and the highest p/e was in 2003 with the reverse. All of these prices made sense if the data really could be extrapolated, but were nonsense in a world that regresses to the mean. 10a. Comfort (B). The three comfort factors that best explain the level of the market, expressed by its price to normalized earnings ratio, are stability of GNP: the stability and level of inflation and profit margins. Each of these three factors has a strong positive correlation with the level of the market – that is, high comfort levels coincide with high market levels. These factors all revert to the mean, however, so that high comfort levels strongly predict below average stock returns. High comfort, therefore, does not justify high market levels but merely explains them. 10b. Therefore, stock markets tend to top when inflation and interest rates are low, and responding to low short rates by investing in stocks will mostly be investing at tops and therefore be painful. 10c. In contrast, the more rational factors that are taught in Finance 101 – the real discount rate and estimated future growth – have no useful correlation with the level of the market’s price to earnings ratio. 10d. Perversely, comfort at the stock level is considered boring and typically sells at a discount. 11a. Growth (C). In contrast to asset classes that are driven up by increased comfort and destabilized and driven down by excitement and volatility, relative stock values are driven up by excitement: rapid growth in sales or profits, rapid technological change, and above all, acceleration in any of the above. 11b. In the long run, stocks with the highest past growth in earnings appear to underperform the market by about 1% a year partly because inferior and superior growth rates regress to average faster than expected, and partly because growth stocks are both exciting and more generally acceptable to clients and hence present less career risk than value stocks. 12. Momentum (D). This is a short-term tendency for prices to keep moving in the same direction, often away from fair value. Momentum is a restatement of Newton’s First Law, “bodies in motion tend to stay in motion”. Stocks, commodities, and currencies all exhibit momentum. Career risk and some behavioral factors tend to reinforce momentum as do some routine aspects of portfolio management. The net result is that positive momentum tends to predict near-term outperformance in contrast to past high growth that predicts underperformance. 13a. In comparison to the stock market where individual and institutional inefficiencies are constantly pushing prices away from fair value, the real world of economics is governed by the harsh law of regression to the mean. Excessive profit margins and rapid growth cannot be sustained and fall back towards average, and overpriced assets simply do not return enough to hold their prices in the long run and fall back to prices that deliver an adequate return. 13b. Other things being equal, value or contrarian investing (specializing in stocks with low growth, low price earnings ratios, high yields, etc.) outperforms the market by about 1% a year. A price you pay as a professional, though, is that value stocks are less palatable to clients. 13c. At the asset class level, there appear to be few, if any, exceptions to regression. Of the 27 bubbles we have identified in the twentieth century - in stock markets, commodities, and currencies - all 27 regressed back to the pre-existing trend. There were absolutely no ‘new eras’. (We defined ‘bubbles’ as two standard deviation events, which are statistically the type of event you would expect every 40 years in a normal distribution.) 14. The key to investment management for stock portfolios, is balancing Newton (momentum) and regression (value). When contrarian or value stocks badly underperform the market, those stocks with strong relative price momentum are particularly likely to outperform and vice versa. 15a. Although all important issues in investing are mean reverting, their timing is not. You can know that overpriced markets will go back to trend but not when. (Like feathers in a hurricane, you can not know how high they will go or how long they will stay up, but you know one thing with absolute certainty: they will hit the ground). This timing uncertainty introduces enormous career and business risk, which means that unless human nature changes, the market will always be inefficient and these opportunities will always exist. 15b. Counterintuitively, market inefficiency is likely to increase as the arbitrage mechanism – the flow of money from overpriced to underpriced assets – weakens with increased specialization. The degree of specializing has increased steadily for 30 years from total asset management, to stocks and bonds separately, then growth and value, and large cap and small cap. With this reduction in arbitrage, the deviations in asset class values widened, culminating in the widest ever in March 2000. Deviation from benchmarks (‘style drift’) is now a sure way to be fired, and the responsibility for arbitraging asset class differentials – a responsibility which has also been quite sensibly ducked by consultants – has flowed back to institutional committees. 16a. Institutional committees are, in general, poor custodians of the arbitrage mechanism. Committee members turn over fast and include few people with broad portfolio or asset allocation experience. Policy benchmarks for institutional funds are typically inherited and only very occasionally checked against their peer group who largely inherited theirs anyway. They usually bear little relationship to efficient portfolios in a Sharpe ratio sense of having the best global mix of real return, real risk, and diversification. They are typically massively U.S. centric because that is traditional and is what they inherited. 16b. Institutional committees have a dread of changing benchmarks because of a fear of ‘market timing’. This fear usually prevents them from even nudging their asset mix to cheaper, higher return assets even in 60 year floods like the 2000 tech bubble. Instead of ‘market timing’ or more respectable ‘asset reallocation’, crises are typically met, in the name of tradition or conservatism, with paralysis, or a ‘watch the locomotive coming’ effect. 16c. Typically, more intellectual energy goes into picking small cap managers than in reconsidering the wisdom of the policy mix, despite statistical proof that the policy mix – the distribution of assets – is far more determining of absolute and relative performance than the choice of manager. In fact, in financial markets as inefficient as ours, getting the big picture right is everything. 16d. To make matters even worse, institutional committees tend to be run by the ‘Great American Executive’ (GAE) justifiably the pride and joy of U.S. capitalism. He or she got there by making decisions fast: bad managers, for example, do not regress back to normal and need firing yesterday. But investing is all about patience and the GAE cannot spell ‘patience’. If he could, he would have been fired years ago. This mismatch means that most investment committees are very often chaired by the wrong type of person. 17a. Real risk in an inefficient market is not benchmark deviation but the probability of losing real money. The objective should be to have the most efficient portfolio that is the lowest real risk per unit of real return (Sharpe Ratio). 17b. The Sharpe Ratio and Modern Portfolio Theory (MPT) works well for asset class mix, but high beta (or volatility) is a very poor measure of high risk for stocks probably because volatility is positively correlated with factors that come at a premium: excitement, growth, information flow, and liquidity. As a measure of how wrong MPT in this area has been, portfolios of high risk (high beta) stocks reranked every January 1st and held for a year have substantially underperformed low risk (low beta) portfolios at least since 1968, a period to which I attach extreme importance since it conveniently includes my entire investment career. 17c. The risk that drives the inefficient market is not volatility but a mix of career risk and business risk to the professional investor. For example, equity fund managers who knew for sure (because an angel told them) that there was a 70% chance next year of cash beating stocks would hold cash in their own account but remain 100% invested in stocks in their funds. Which professional wants to risk a career on a 30% chance of failure? 18a. Manager selection in an inefficient market is harder than picking stocks as 90% of what passes for brilliance or incompetence in investing is either the ebb or flow of the investor’s style or luck. 18b. Therefore, since both investment styles and luck regress, a manager’s past performance tends to be negatively correlated with future relative performance. 18c. Clients have to choose between the only facts which are past performance and the conflicting marketing theories of different potential managers. As sensible businessmen, clients will usually feel they have to go with the past facts. They therefore tend to rotate into previously strong styles, which regress, dooming most active clients to failure. Fortunately, most of their peer group is doing the same. 19a. Size of assets under management is the ultimate barrier to exploiting market inefficiency. For example, when you double your assets you must either buy your ‘B’ team stocks or buy twice as much of your ‘A’ team stocks, pushing their price further against you and eating into your ability to outperform. Asset managers who wish to protect their ability to outperform for their clients must close their funds to new money at some appropriate level. But with zero marginal cost to manage another dollar, this is incredibly painful (and rare) for commercial enterprises to do. Size is the perfect example of the Peter Principle: do well with $5 billion and they’ll give you $20 billion, etc. My rule of thumb, from 15 years ago, is that every time you double your assets in a specialized fund you reduce your outperformance by 30%. This was a guess, but 15 years later it still seems like a good guess. 19b. The good news is that if you have an underperforming manager then the more money he has, if it widens his stock selection, the more it will tend to reduce his underperformance! 20a. The case for indexing in an inefficient market is that investing is a zero sum game; it creates no value but merely shuffles the chips around. 20b. But trading and management costs are certain (totaling about 1% a year for institutions and about twice that for individuals.) To win by 2% a year with 1% costs, you must therefore find someone to lose by 4% a year. Good luck! 20c. Indexing, the purchase of the entire market, is therefore hard to beat individually and of course impossible collectively, and relative passivity is therefore not a vice. 20d. That the market is a zero sum game with costs constitutes a sufficient and rigorous case for indexing. Basing indexing on market efficiency is not only clearly wrong, but completely redundant. 21a. Asset allocation in an efficient market would need to be done only once. Once an efficient portfolio had been arrived at with the best mix of risk and return, you could hold it forever and it would also be the policy benchmark. Efficient market believers must deplore asset allocation as a counterproductive waste of time and money. (And they do!) 21b. But asset allocation in our inefficient market offers regular opportunities for modest improvements in portfolio efficiency and occasional opportunities for great improvements in risk and return. Our markets are capable of moving to over twice fair value (U.S. – March, 2000; Japan – December, 1990) and under half fair value (U.S. – July, 1982). 21c. Distortions in the pricing of asset classes disappear in an average of around 6 years. (That is to say, historically asset prices have crossed their trend line every 6 years on average.) But the average contains some extreme outliers. These offer even greater opportunity and even greater career risk. 21d. A career survival strategy would be to stay very close to the hopefully reasonable policy benchmark for the 80% of the time that prices are approximately normal, and save career risk units for outliers when real money can be saved or made and risks reduced. Outliers are easy to spot and you will win, but not necessarily with the same group of clients you started with if it takes too long to win. 22.Finally, the Efficient Market Hypothesis ironically owes its very existence to some of the same behavioral factors amongst academics that make the market so inefficient: wishful thinking – that this very soft science be more like physics*; the ability to handle dissonance – the willingness to mentally suppress data that does not agree with prior beliefs; overconfidence – the willingness to believe so fervently that opponents are considered “heretics”; herding – all acceptable academics believed in market efficiency; and of course career risk – if your boss preached market efficiency it was dangerous to your career health to discover a market inefficiency. Its existence also owes a lot to poor statistical analysis of existing data (especially regarding momentum) and on the lack of personal investment experience on the part of academic believers. (Other than this, we love them.) *Professor Andrew Lo, “We would love to have three laws that explain 99% of economic behavior; instead we have about 99 laws that explain maybe 3% of economic behavior.”

Subject: Saloman brothers bear quits!
From: johnny5
To: johnny5
Date Posted: Tues, Mar 01, 2005 at 03:07:47 (EST)
Email Address: johnny5@yahoo.com

Message:
He must not have read the previously posted grantham article on 'career risk' A Prominent Wall Street Bear Calls It Quits [WSJ] By RAY A. SMITH Staff Reporter of THE WALL STREET JOURNAL February 28, 2005; Page C1 One of Wall Street's most high-profile bears during the stock market's bull run in the 1990s -- and more recently a big bear during the real-estate boom -- is going into hibernation, this time for good. David Shulman, the former chief equity strategist at Salomon Brothers, will retire from his position as senior REIT analyst at Lehman Brothers Holdings Inc. on March 11. Mr. Shulman had been bearish on the stocks of REITs, or real-estate investment trusts, for the past couple of years -- and wrong, as the stocks delivered annual returns of more than 30% in each of those years and trounced the broader market. And Mr. Shulman isn't shuffling off into the sunset quietly: He still thinks REIT stocks are too expensive. Such strongly held, and loudly voiced, views about a stock or market's downside have been notably rare over the years. In general, Wall Street abhors a bear, or at least doesn't seem to hire many of them to prominent positions, and Mr. Shulman's career shows how hard it is to be a skeptic among professional supporters. 'Wall Street is in the business of selling stocks,' says Michael Metz, the chief investment strategist at Oppenheimer Holdings Inc.'s Oppenheimer & Co., who was another prominent bear during the 1990s. 'You don't want to be too negative on your products. People want to hear upbeat, good news. You have a better chance of being heard if you're bullish. If you're bearish and right, people hate you. If you're bearish and wrong, people laugh at you. You can't win.' Mr. Shulman is unrepentant, though he acknowledges that he was early on his negative call on the stock market in the 1990s as well as a bearish view on real estate in the 1980s. 'I still stand by what I said then,' Mr. Shulman says. He sees parallels between the stock market right before the bubble burst and the current fevered REIT market. That a REIT crash hasn't happened yet only means 'things take longer than you would rationally think,' he says, adding that the REIT rally is 'another lesson in how powerful the weight of money can be in the market.' Mr. Shulman was one of a handful of bearish chief strategists, including Mr. Metz and J.P. Morgan Chase & Co.'s Douglas R. Cliggott, whose views during the bull market subjected them to ridicule by stampeding bulls. Some bearish strategists, such as Merrill Lynch & Co.'s Charles Clough, left their jobs just before the market crashed. As it turns out, Mr. Shulman and the other bears ultimately were right, just early. Mr. Shulman, 62 years old, says he had been planning to retire for more than a year, but he isn't severing his ties to the industry altogether: He plans to help students at his alma mater, Baruch College in New York, get Wall Street and real-estate jobs, and will guest lecture at Baruch and two other schools. Meanwhile, David Harris, who has worked as an analyst in Lehman's REITs group since 1998, has taken over as Lehman's senior REIT analyst. This wouldn't be the first time Mr. Shulman has left a prominent Wall Street forecasting job after making a series of against-the-crowd calls. He started as chief equity strategist at Salomon Brothers in 1992 and held the post for six years until Salomon merged with the Smith Barney securities unit of Travelers Group. After the merger, the bearish Mr. Shulman was passed over for the job of chief equity strategist at the combined firm. He left for a job with a private investment firm. Mr. Shulman joined Lehman Brothers to cover REITs in 2000. His resignation comes less than a month after he published his most bearish note on the sector, an outlook for 2005 titled 'More Than a Real Estate Mania.' In it, he likened selecting REIT stocks for a top-picks list to 'rearranging the deck chairs on the Titanic' and predicted the widely tracked Morgan Stanley REIT index would fall 18% this year. (It rose nearly 32% last year.) At the time his 74-page report was published, REIT stocks were down early in the young year, and despite a recovery of about 2% this month, the sector as a whole is down 7% so far in 2005. 'We view REIT share prices as extraordinarily vulnerable,' he wrote in the report. After listing several measures that suggested REIT shares were overpriced, he concluded: 'If you do not sell now, when do you sell?' Lehman Brothers says the decision to leave was entirely Mr. Shulman's. 'After a long and distinguished career, Mr. Shulman has decided to return to academia,' says Steve Hash, director of global equity research at Lehman Brothers. 'People still call him Dr. Doom, but you know what? He has seen ups and downs, and people have to realize trees don't grow to the sky, and he helped you realize that,' says Tim Pire, managing director of Heitman, a Chicago-based investment fund with $2.8 billion in real-estate securities under management. Of course, Mr. Shulman may yet be vindicated on REITs. The group fell nearly 15% last April when there were fears of long-term interest rates rising. And REITs dropped 9% in January, in part over concerns that prices had gotten too rich. http://online.wsj.com/article/0,,SB110956022803065638,00.html?mod=todays_us_money_and_investing

Subject: Exxon Changes thier Tune!
From: johnny5
To: All
Date Posted: Tues, Mar 01, 2005 at 02:06:38 (EST)
Email Address: johnny5@yahoo.com

Message:
A few weeks back I posted a link where Chevron said we were in a secular oil bull, but Exxon said we were just in a cyclical market and prices would fall. Well today they changed their tune - how does the world's largest oil company become so wishy-washy flip-flopping? It confuses me. http://biz.yahoo.com/ap/050228/exxon_mobil_report_4.html Associated Press Exxon Mobil Says Energy Demand Will Rise Monday February 28, 5:00 pm ET Exxon Mobil Says Energy Demand to Rise 50 Percent by 2030, With Oil, Gas, Coal Dominant DALLAS (AP) -- Exxon Mobil Corp. said Monday that it expects global energy demand to rise 50 percent by 2030 with oil, natural gas and coal remaining dominant because they are the only fuels abundant and versatile enough to meet growing needs. Exxon Mobil, the largest U.S. oil company, said it expected oil and gas to provide about 60 percent of the world's energy, while total fossil fuels, including coal, should remain around 80 percent. In the 'very long term,' the energy supply will become more diversified, the company said in its annual report filed with the Securities and Exchange Commission. Environmentalists have long criticized Irving-based Exxon Mobil, accusing it of opposing efforts to regulate burning of fossil fuels, which many scientists believe is linked to rising global temperatures. Exxon Mobil's annual report indicates the company has not changed its position, even as the Kyoto accord on global warming took effect -- without U.S. ratification -- in February. Exxon Mobil, which earned a record $25.33 billion in operating profits last year and recently eclipsed General Electric Co. as the largest U.S. corporation by stock market value, also said it is in good position to make 'substantial investments to develop new energy supplies.' However, Exxon Mobil operated 8.5 percent fewer wells at the end of 2004 than it did a year earlier. The company increased its undeveloped acreage by 17 percent, with most of the rise in Africa and South America. The company said it expects global energy demand to grow 1.7 percent a year through 2030, fueled by economic growth of nearly 3 percent a year. It said oil demand would grow 1.5 percent a year but use of gas would grow even faster, mostly to meet electricity demand that it expects to double by 2030. Demand for liquefied natural gas, or LNG, will quadruple, the company said. This week, Exxon Mobil and Qatar Petroleum announced the launch of a $12.8 billion liquefied natural gas project to supply gas to Britain for the next 25 years, which officials called the world's largest-ever LNG development. Worldwide oil and gas fields are declining 4 percent to 6 percent per year, requiring expensive new technology to develop new fields are more use of arctic technology and deepwater drilling, the company said. Exxon Mobil said production would shift increasingly to West Africa, the Caspian Sea area, the Middle East and Russia by 2010. North America and Europe will decline as a percentage of the company's production but still represent over half of 2010 volumes, it said. Exxon Mobil shares rose 5 cents to close at $63.31 in Monday trading on the New York Stock Exchange, just below its 52-week high of $63.69.

Subject: International Diversification
From: johnny5
To: johnny5
Date Posted: Tues, Mar 01, 2005 at 10:27:36 (EST)
Email Address: johnny5@yahoo.com

Message:
Emma recently posted an article that we should diversify internationally - someone doesn't think china is such a good place anymore - why? http://biz.yahoo.com/ap/050301/hong_kong_exxon_mobil_sinopec_1.html HONG KONG (AP) -- Exxon Mobil Corp., the largest U.S. oil company, is selling its entire stake in China's biggest oil refiner for up to US$1.4 billion (euro1.1 billion), Dow Jones Newswires reported Tuesday. Exxon Mobil -- the last of three international oil investors in China Petroleum & Chemical Corp., or Sinopec -- is selling 3.17 billion shares in the oil refiner for between HK$3.38 (43 U.S. cents; 33 euro cents) and HK$3.53 (45 U.S. cents; 34 euro cents) a share, an unidentified source familiar with the situation told Dow Jones. Sinopec was not immediately available to comment on the deal, Dow Jones said. No other details were available. Texas-based Exxon Mobil holds close to 19 percent of Sinopec's H shares, which are shares of mainland Chinese companies listed in Hong Kong. The company's move follows a similar divestment by Royal Dutch/Shell Group and BP PLC. Shell sold its entire stake of 1.85 billion shares in Sinopec for about US$747 million (euro566 million) last March, while BP sold its stake for around US$727 million (euro550million) in February 2004. Shell, BP and Exxon Mobil bought a combined stake of 41 percent at Sinopec's initial public offering in October 2000. Analysts said the three companies were apparently selling their stakes in Sinopec to take profits on their investments. 'The exit price for all three companies has been around double their entry price -- not to mention the dividends that have been paid,' said Eva Chu, an analyst with Singapore-based Kim Eng Securities. But analysts said the sale will likely drag down Sinopec's share prices in the short-term if Exxon Mobil prices its shares at a discount.

Subject: How many economic teams...
From: johnny5
To: All
Date Posted: Mon, Feb 28, 2005 at 16:00:21 (EST)
Email Address: johnny5@yahoo.com

Message:
has Bush had? From The Washington Post, 2/23/05: http://www.washingtonpost.com/wp-dyn/articles/A45323-2005Feb22.html Dropping Report's Iraq Chapter Was Unusual, Economists Say Concern About Impact on White House's Credibility Cited By Jonathan Weisman Washington Post Staff Writer Wednesday, February 23, 2005; Page A17 At the National Security Council's request, the White House excised a full chapter on Iraq's economy from last week's Economic Report of the President, reasoning in part that the 'feel good' tone of the writing would ring hollow against the backdrop of continuing violence, according to White House officials. The decision to delete an entire chapter from the Council of Economic Advisers' annual report was highly unusual. Council members -- recruited from the top ranks of economic academia -- have long prided themselves on independence and intellectual integrity, and the Economic Report of the President is the council's primary showcase. The withholding of a completed chapter struck some economists from both political parties as evidence of the council's waning influence. 'This is extraordinary,' said William A. Niskanen, a CEA member in the Reagan White House and the chairman of the libertarian Cato Institute. 'The council has been unfortunately weakened.' Outgoing CEA Chairman N. Gregory Mankiw declined to comment.

Subject: Bush sub-cabinet vacancies?
From: johnny5
To: johnny5
Date Posted: Mon, Feb 28, 2005 at 16:03:14 (EST)
Email Address: johnny5@yahoo.com

Message:
Audio program The neck of government is PARALYZED: Is this a good time for all these vacancies? http://www.npr.org/templates/story/story.php?storyId=4502653 Politics Vacancies Remain Unfilled for Bush Subcabinet Positions by Renee Montagne Morning Edition, February 17, 2005 · Paul Light, professor at the Wagner School of Public Service at New York University, discusses second- and third-tier vacancies in the Bush administration and why they've been hard to fill.

Subject: Re: Bush sub-cabinet vacancies?
From: Pancho Villa
To: johnny5
Date Posted: Mon, Feb 28, 2005 at 18:28:28 (EST)
Email Address: nma@hotmail.com

Message:
http://www.msnbc.msn.com/id/7018146/

Subject: R. Glenn Hubbard
From: johnny5
To: Pancho Villa
Date Posted: Mon, Feb 28, 2005 at 19:02:22 (EST)
Email Address: johnny5@yahoo.com

Message:
Who do you like better? Mankiw, Rosen, Or Hubbard? Bush's former econ man: http://www0.gsb.columbia.edu/whoswho/bio.cfm?ID=55 Teaching and research interests Professor Hubbard is a specialist in public finance, managerial information and incentive problems in corporate finance, and financial markets and institutions. He has written more than 80 articles and books on corporate finance, investment decisions, banking, energy economics and public policy, including a textbook, Money, the Financial System, and the Economy. In a recent book, Tax Policy and Multinational Corporations, he argues that U.S. tax policy significantly affects financing and investment decisions of multinational corporations. Hubbard has applied his research interests in business (as a consultant on taxation and corporate finance to many corporations), in government (as deputy assistant of the U.S. Treasury Department and as a consultant to the Federal Reserve Board, Federal Reserve Bank of New York and many government agencies) and in academia (in faculty collaboration or visiting appointments at Columbia, University of Chicago and Harvard).

Subject: Don't Blame Wal-Mart
From: Emma
To: All
Date Posted: Mon, Feb 28, 2005 at 15:52:54 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/02/28/opinion/28reich.html Don't Blame Wal-Mart By ROBERT B. REICH Berkeley, Calif. — BOWING to intense pressure from neighborhood and labor groups, a real estate developer has just given up plans to include a Wal-Mart store in a mall in Queens, thereby blocking Wal-Mart's plan to open its first store in New York City. In the eyes of Wal-Mart's detractors, the Arkansas-based chain embodies the worst kind of economic exploitation: it pays its 1.2 million American workers an average of only $9.68 an hour, doesn't provide most of them with health insurance, keeps out unions, has a checkered history on labor law and turns main streets into ghost towns by sucking business away from small retailers. But isn't Wal-Mart really being punished for our sins? After all, it's not as if Wal-Mart's founder, Sam Walton, and his successors created the world's largest retailer by putting a gun to our heads and forcing us to shop there. Instead, Wal-Mart has lured customers with low prices. 'We expect our suppliers to drive the costs out of the supply chain,' a spokeswoman for Wal-Mart said. 'It's good for us and good for them.' Wal-Mart may have perfected this technique, but you can find it almost everywhere these days. Corporations are in fierce competition to get and keep customers, so they pass the bulk of their cost cuts through to consumers as lower prices. Products are manufactured in China at a fraction of the cost of making them here, and American consumers get great deals. Back-office work, along with computer programming and data crunching, is 'offshored' to India, so our dollars go even further. Meanwhile, many of us pressure companies to give us even better bargains. I look on the Internet to find the lowest price I can and buy airline tickets, books, merchandise from just about anywhere with a click of a mouse. Don't you? The fact is, today's economy offers us a Faustian bargain: it can give consumers deals largely because it hammers workers and communities. We can blame big corporations, but we're mostly making this bargain with ourselves. The easier it is for us to get great deals, the stronger the downward pressure on wages and benefits. Last year, the real wages of hourly workers, who make up about 80 percent of the work force, actually dropped for the first time in more than a decade; hourly workers' health and pension benefits are in free fall. The easier it is for us to find better professional services, the harder professionals have to hustle to attract and keep clients. The more efficiently we can summon products from anywhere on the globe, the more stress we put on our own communities. But you and I aren't just consumers. We're also workers and citizens. How do we strike the right balance? To claim that people shouldn't have access to Wal-Mart or to cut-rate airfares or services from India or to Internet shopping, because these somehow reduce their quality of life, is paternalistic tripe. No one is a better judge of what people want than they themselves. The problem is, the choices we make in the market don't fully reflect our values as workers or as citizens. I didn't want our community bookstore in Cambridge, Mass., to close (as it did last fall) yet I still bought lots of books from Amazon.com. In addition, we may not see the larger bargain when our own job or community isn't directly at stake. I don't like what's happening to airline workers, but I still try for the cheapest fare I can get. The only way for the workers or citizens in us to trump the consumers in us is through laws and regulations that make our purchases a social choice as well as a personal one. A requirement that companies with more than 50 employees offer their workers affordable health insurance, for example, might increase slightly the price of their goods and services. My inner consumer won't like that very much, but the worker in me thinks it a fair price to pay. Same with an increase in the minimum wage or a change in labor laws making it easier for employees to organize and negotiate better terms. I wouldn't go so far as to re-regulate the airline industry or hobble free trade with China and India - that would cost me as a consumer far too much - but I'd like the government to offer wage insurance to ease the pain of sudden losses of pay. And I'd support labor standards that make trade agreements a bit more fair. These provisions might end up costing me some money, but the citizen in me thinks they are worth the price. You might think differently, but as a nation we aren't even having this sort of discussion. Instead, our debates about economic change take place between two warring camps: those who want the best consumer deals, and those who want to preserve jobs and communities much as they are. Instead of finding ways to soften the blows, compensate the losers or slow the pace of change - so the consumers in us can enjoy lower prices and better products without wreaking too much damage on us in our role as workers and citizens - we go to battle. I don't know if Wal-Mart will ever make it into New York City. I do know that New Yorkers, like most other Americans, want the great deals that can be had in a rapidly globalizing high-tech economy. Yet the prices on sales tags don't reflect the full prices we have to pay as workers and citizens. A sensible public debate would focus on how to make that total price as low as possible.

Subject: The man in the mirror
From: johnny5
To: Emma
Date Posted: Mon, Feb 28, 2005 at 16:12:18 (EST)
Email Address: johnny5@yahoo.com

Message:
Great article, when I watched the special by 'the brain' farber on cnbc last night the CEO made a good point - wal-mart is just an agent for the customer. We have to look at ourselves for what is driving the growth. Down here in florida it's hot and humid on main street - I much prefer going from my air conditioned vehicle to an air conditioned wal-mart than going in and out of several mom and pop stores while I cook and sweat under the sun.

Subject: Bye-Bye Housing Boom
From: johnny5
To: All
Date Posted: Mon, Feb 28, 2005 at 15:41:15 (EST)
Email Address: johnny5@yahoo.com

Message:
Bye-Bye, Housing Boom By Michael Kinsley Sunday, February 27, 2005; Page B07 Pop! That is the sound of the real estate bubble bursting. And it's a good thing. It is obvious to me that today's real estate prices are a speculative bubble that is bound to burst. Of course, this has been obvious to me for about three decades and wrong almost all of that time. Nevertheless. One piece of evidence is the Dinner Party Index. The boom is over when more people are bored by real estate anecdotes ('My next-door neighbor got three times her asking price before she even put it on the market, from a professional mind reader who divined that she was thinking about selling. . . .') than have new ones. Another reason the value of your house is about to plunge is that the Los Angeles Times, the New York Times and The Washington Post all say that it isn't. A recent L.A. Times article reported that the median price of a local house had gone up only 17 percent in the past year. Headline: 'L.A. County Home Prices Cool Slightly.' Subhead: 'Slowdown may not last.' To describe a 17 percent annual increase as a 'slowdown' assumes that annual gains of 20 percent or more are the norm. And the evidence for 'may not last' is quotes from real estate agents whistling in the dark. You've got a bubble when today's prices assume large future increases. If you think prices will be 20 percent higher in a year, you'll be willing to pay 19 percent more today. But if others share that belief, today's price will already be 19 percent higher. Betting on appreciation makes sense only if you are even more optimistic than other buyers. That is hard to be right now. In Washington, where house prices have doubled in five years, The Post says, 'Experts Predict Steady Gains in 2005, but More Moderate Than in Past Years.' But whatever 'experts' say, it is not the nature of price explosions to segue gracefully into more moderate growth. When today's run-ups are based on beliefs about tomorrow's run-ups, the self-feeding frenzy goes into reverse when those assumptions are dashed. The New York Times also must be talking to experts. 'In Housing Sales, Frenzy is Giving Way to Balance,' it says. And it reports from suburban Westchester County that 'Housing Market Is Still Going Strong.' In 2004 the median sales price rose from $564,000 to $645,000. 'More and more families are seeing the residential real estate market as the best and safest place for their money,' a real estate agent says. And the article adds chirpily, 'Even the ongoing problem of a lack of houses for sale in Westchester eased somewhat last year.' Like a roller coaster, a financial bubble has a moment of eerie stillness at the top. Buyers have adjusted, sellers haven't. So sales dry up. When the New York Times spins a surplus of unsold houses as a sign that 'the ongoing problem of a lack of houses for sale' has been solved, it means that you had better not count on the Times to tell you when it's time to bail. Let's step back a moment. All the housing in the United States is worth about $14 trillion. If the value of existing housing (not counting new construction) goes up 7 percent this year, which is the recent national average, homeowners will seem to be about a trillion dollars richer. But will the nation be a trillion dollars richer? No. These are the same houses, in the same place. That trillion dollars comes partly from non-homeowners, who must pay more to buy in. And it is partly illusory. If many current homeowners tried to cash in, the drop in prices would quickly wipe out that trillion. When the price of something goes up, two things happen: the economy starts to produce more of it, and existing units are worth more. For most of what we buy, the first effect overwhelms the second and constrains it. A rise in the price of a can of tuna fish does not produce many self-satisfied anecdotes from people who have a third of their net worth in Chicken of the Sea. But real estate is different, mainly because it requires land. As the cliché goes, they're not making any more of it. Perusing the real estate ads like pornography and imagining what our houses are worth is the great American pastime. But a real estate crash, if it came, would have some advantages. The 19th-century American Henry George explained how rising real estate values harm the economy by operating as a tax on both labor and capital. Money for labor makes people work harder. Money for capital makes people save more. Both make the country richer. Money for land just makes the owner richer. There are all sorts of complications and qualifications, but the basic point is a good one. People do foolish things under the impression that they are getting richer because their houses are worth more. They save less, they spend more. Egged on by television commercials, they 'consolidate their debts' (i.e., buy a new boat) with a second mortgage. And who really gains from soaring house prices? First-time buyers don't. Nor does anyone who plans ever to trade up. The only beneficiaries are those who are selling their last house, after a lifetime of appreciation. The bigger the house, the bigger the windfall. This is yet another thank-you from America to the so-called Greatest Generation. I'm not sure it's necessary. And I'm not sure it will continue. I'm pretty sure it won't. So I'm going to sell my house before it's too late. Right? Are you kidding? http://www.washingtonpost.com/wp-dyn/articles/ A54743-2005Feb25.html

Subject: Political Driection in Brazil
From: Emma
To: All
Date Posted: Mon, Feb 28, 2005 at 12:47:22 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/02/28/international/americas/28brazil.html?pagewanted=all&position= Success Brings Brazilian Party a Surprise: Disarray By LARRY ROHTER RIO DE JANEIRO - These should be the most satisfying of times for the Brazilian Workers' Party. As the party's leaders and faithful mark its 25th anniversary, they are securely in power with President Luiz Inácio Lula da Silva's popularity at high levels, their membership expanding, their finances strengthened and their image abroad burnished. But here at home, the Workers' Party, Latin America's largest left-wing party, is marking the date with what the Brazilian press describes as an 'existential crisis.' Supporters and critics alike are questioning the party's principles, policies, methods and structure, accompanied by the most humiliating political defeat - in a vote for speaker of the house - that the party has suffered since Mr. da Silva took office in January 2003. The party's fundamental quandary, politicians and academics here have repeatedly said, is that even after two years in power, it seems unable to decide whether it wants to be a governing party, an opposition party or both at the same time. The party has seemed to take each of those positions at various times, with some of the fiercest criticism of Mr. da Sllva coming from within his own ranks, creating an appearance of confusion and indecision. 'It's true that we have a problem with our vocation to be the government,' Jorge Viana, one of only three Workers' Party governors and a close ally of Mr. da Silva's, acknowledged in an interview. 'We played the role of the opposition very well, but now that we've achieved power, we're not showing the same unity of action.' Outsiders tend to view the problem as ideologically tinged. They see a rift between people like Mr. da Silva and the circle around him - who have had to learn to deal with the realities of exercising power - and other, more traditional factions that cling to a Marxist-Leninist program that the president and his allies have in practice renounced. 'There's an unresolved schizophrenia between the reformist and revolutionary tendencies within the party,' said Denis Rosenfield, a philosophy professor at the Federal University of Rio Grande do Sul who has written a book, 'The Workers' Party at the Crossroads.' 'The problem is that both are the real Workers' Party, so what you get is an encouragement of peasant invasions of farms and ranches at the same time that representatives of agribusiness are being appointed to the cabinet.' Francisco de Oliveira, a sociologist who was one of the founders of the party but is now a critic, accuses Mr. da Silva of abandoning basic party principles, especially on economic issues, in his eagerness to win power after losing his first three runs for the presidency. Brazil is 'still waiting for the first year of the Workers' Party government,' Mr. de Oliveira contends, because Mr. da Silva's government is merely the continuation of those that preceded it. Mr. de Oliveira and other analysts on the left blame what they see as excessive pragmatism for the party's setbacks in October's municipal elections. In that vote, the party picked up posts in medium-size cities in the interior where it had been weak in the past, but it was defeated in two of its traditional urban strongholds, São Paulo and Porto Alegre. 'The party has lost its transformative aura, and that is going to weigh heavily in 2006,' when the next presidential elections are scheduled, Mr. de Oliveira predicted. 'Lula is going to find that winning a second term is not as easy as he thinks.' In the October election, voters in the city of Fortaleza, population two million, were treated to the odd spectacle of Mr. da Silva's team supporting the Communist Party candidate over their own party's nominee. But the disobedient Workers' Party candidate, Luzianne Lins, won handily and has become a symbol of resistance to what is seen as the party leadership's imperious, top-down management style. At an appearance at the World Social Forum in Porto Alegre last month, Mr. da Silva was warmly greeted by foreign delegates, but he was booed and hissed by some of his own party's members. He compared the dissenters to prodigal children, who would eventually seek to return to the party and would be welcomed with open arms after realizing the error of their ways. But in an effort to impose more discipline, party leaders expelled a handful of senators and members of Congress in December 2003, some of whom then helped found the Party of Socialism and Liberty. That action, however, only provoked accusations of authoritarianism, or 'democratic centralism without socialism,' as some critics called it, and did not, it seems, quell the internal rebelliousness. This month, for instance, two Workers' Party candidates ran for president of the lower house of Congress. One, unpopular with the rank and file, was handpicked by party leaders, while the other defied repeated warnings that he would be punished unless he withdrew and supported Mr. da Silva's favorite. Even though the Workers' Party has the largest delegation, both candidates ended up losing, with the winner, Severino Cavalcanti, coming from a small right-wing party. His surprise victory this month has been widely interpreted as a sharp rebuke by small parties that are allied with the government but are angered by what they see as arrogance and disdain in the way the Workers' Party treats them. 'I lost, but it's the government's defeat,' said Luiz Eduardo Greenhalgh, who was the party's choice. Nonsense, Mr. da Silva replied, still stinging from the vote. 'The government didn't compete for the post, it was the party,' he said. Additional fireworks can be expected next month, when the party will convene an assembly and hold a series of round-table discussions to commemorate the party's 25th anniversary. Mr. da Silva's closest aide, José Dirceu de Oliveira e Silva, has been quoted as calling the events 'pure nitroglycerine' because of the opportunities they offer the party's malcontents to criticize the leadership and expose internal contradictions that remain unresolved. On another level, the Workers' Party may have become a victim of its own success. Back in 1980, it truly was a workers' party, closely linked to labor unions in São Paulo, and later on it also became the voice of disgruntled civil servants. But with its recent growth, that social base has shifted, and with it the character of the party and its political style. 'There is even a businessman's wing, and that is a source of grievance for the old militants, who could always be counted on to take to the streets for political crusades,' said Alexandre Barros, a leading political consultant in Brasília. 'The new party member is a regular middle-class citizen who votes and talks positively of the party, but doesn't engage in mass politics.' But Mr. Viana said such problems were the byproduct of success and should not be interpreted as evidence of a lack of purpose or direction. 'It's not the party that has an identity crisis,' he said, 'it's just some people in the party who have that problem.'

Subject: What would Blondie and Santana cut ?
From: Pancho Villa
To: All
Date Posted: Mon, Feb 28, 2005 at 09:56:09 (EST)
Email Address: nma@hotmail.com

Message:
Budget critics: What would Jesus cut? By David R. Francis Immoral. That's what several religious groups are calling President Bush's latest budget. The charge has political ramifications. It threatens to undermine some of Mr. Bush's support from voters concerned with values. But it also raises a deep question: Can budgets be moral or immoral? Is that really how the nation's spending plan should be judged? This emerging challenge is turning the 'values' debate on its head. Liberals are putting policy issues in moral terms. Conservatives are resisting it. 'Budgets are moral documents, providing a framework for laying out priorities and values,' says Yonce Shelton, public policy director for Call to Renewal, a progressive, faith-based organization in Washington. His biggest complaint: The administration is 'trying to balance the budget on the backs of the poor,' at the same time it is expanding tax cuts for the wealthy. 'It's not a moral-based approach,' he says. Conservatives disagree. An 'ethical' budget calls for effective spending, says William Beach, an economist at the conservative Heritage Foundation. He calls it 'disingenuous' and 'ethically vacuous' to say budget cuts in ineffective programs are immoral without offering alternatives to such cuts. In his State of the Union address early this month, Bush argued that the 150 programs he wants cut or axed 'are not getting results, or duplicate current efforts, or do not fulfill essential priorities.... Taxpayer dollars must be spent wisely, or not at all.' Although not quarreling with the need for program efficiency, liberal critics do not accept the argument that the Bush cuts aim only at that efficiency goal. 'The Bush budget is not one of shared sacrifice,' says Robert Greenstein, executive director of the Center on Budget and Policy Priorities (CBPP), a liberal think tank in Washington. 'It maintains all the old tax cuts and adds new ones [$146 billion over 10 years] heavily tilted to the top,' while slashing benefits for the poor. Groups critical of the proposed cuts forecast widespread social damage. They say some 300,000 people will lose food-stamp benefits, a cut in child-care assistance will affect 300,000 children, large reductions in housing assistance will leave more people with disabilities and AIDS out in the cold, and 600,000 will be hit by cuts in a supplemental nutrition program. The list goes on. Whenever the White House proposes budget cuts, those affected lobby hard to stop them in Congress. The nation has a long tradition of liberal religious bodies pushing for low-income housing, more funding for Head Start, and many other programs that benefit poor people. But the new budget, by eliminating or cutting so many programs, may be expanding such concerns deeper into the religious spectrum. The 'immoral' label is one of the biggest political risks Republicans face with the budget, says Stanley Collender, a budget expert with Financial Dynamics Business Communications. Last week, Mr. Greenstein spoke to religious groups in New York and Washington on the 'moral standards' in the budget. Early in the month, CBPP and the Children's Defense Fund hosted a press conference on the same topic, featuring a few church leaders - Bishop Peter Weaver, president of the bishops' council of the United Methodist church; James Forbes, senior minister of Riverside Church (New York); and Barbara Shaw, president of overseas missionary activities of the African Methodist Episcopal Zion Church. To Greenstein, the Bush budget is not moral because it hits the politically weak, that is, the poor and disadvantaged, and benefits the powerful, the companies, and the well-to-do who make campaign contributions. Moral issues extend to the president's 'faith-based initiative,' Mr. Shelton maintains. The budget provides an extra $150 million for that program, aimed at encouraging churches and other charitable groups to help those in need. But, he says, the budget then dumps onto these organizations the burdens arising from tens of billions of dollars of cuts in programs for the poor, the handicapped, and those otherwise disadvantaged. 'Churches are part of the equation; but not the whole equation,' says Shelton, a former supporter of the initiative who indicates his continued support for welfare reform and some of the White House views on marriage and family. 'They are asking us to take the place of good [governmental] social policy.' He and others from his group - as well as a sister organization, Sojourners - have met with Republican and Democratic leaders in Congress. They have launched a nationwide 'grassroots network' and plan a bus tour across the country to put pressure on Congress 'to raise awareness of poverty as a religious and electoral issue.' 'Spending more money on nuclear warheads and tax cuts that benefit the rich is not a strategy that would be affirmed by the biblical prophets,' states one message to Sojourner supporters. It urges them to e-mail complaints to Congress. Another 'moral' issue is generational. 'I doubt there is any person who can stand up and say this [budget] reflects my values or the country's values,' says Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a nonpartisan group. That's because the huge deficits extending years into the future mean this generation is passing on bigger debts to future generations. In effect, the budget says, ' 'I want the goods and want someone else to bear the cost.' That is the ultimate in immoral action ... to ask your kids to pay for your spending,' she adds. http://www.csmonitor.com/2005/0228/p17s01-cogn.html

Subject: Hotel (debt) california
From: johnny5
To: Pancho Villa
Date Posted: Mon, Feb 28, 2005 at 11:22:17 (EST)
Email Address: johnny5@yahoo.com

Message:
Usually benson has stronger criticism - this is kinda ho-hum : http://www.321gold.com/editorials/benson022805.html Benson's Economic & Market Trends Hotel 'Debt' California Richard Benson Archives February 28, 2005 The song 'Hotel California' by the Eagles is a haunting reminder of what could be in store for the Baby Boom generation. The song's lyrics set the tone: Mirrors on the ceiling Pink champagne on ice And she said We are all just prisoners here Of our own device And in the master's chambers They gathered for the feast They stab it with their steely knives But they just can't kill the beast Last thing I remember I was running for the door I had to find the passage back to the place I was before Relax said the night man We are programmed to receive You can check out any time you like But you can never leave ... With a slight change in lyrics, the perfect theme song for Baby Boomers - who have illusions about being able to retire - could be called 'Hotel Debt California,' with the lyrics... 'you can buy, but you can never own.' In the new 'Ownership Society' that our government is marketing, black is called white and freedom is clearly defined as freedom from real choice. Indeed, given the way ownership operates in practice, George Orwell would feel right at home in today's world. Why have Americans chosen to accumulate so much debt? Why have lenders and the Federal Reserve made it so easy to go into debt? Are car manufacturers, who give you cash back to buy a car and drive it away, to be held accountable? Or, perhaps, we can blame the mortgage lenders who allow you to borrow more money and offer interest-only, low teaser rates and negative amortization loans. Are they being irresponsible? Consumers are paying so much for real estate these days that the thought of actually paying off their mortgage, and owning the home outright, is almost jokingly surreal. When there is a correction in the housing market, many people will find they have negative equity; in other words, they own nothing, but they owe quite a bit! Americans are headed into Debt Slavery, one credit card and one house at a time. To make sure they get there, Congress is rushing though a major reform of the Federal Bankruptcy Law. Since banks have been posting record profits, one must wonder why there is such a rush to prevent the little guy from getting a 'clean slate' in Chapter 7. Indeed, when sophisticated lenders, with millions of clients and infinite amounts of cash, continue to offer credit cards and increased credit lines, why is it that they are shocked when someone can't afford to pay the interest or late charges on their credit card bill due to illness or loss of a job. Even with bankruptcy filings - over 1.5 million a year - the banks claim to be totally caught off-guard. The banks claim they need protection from sophisticated deadbeats and can afford to pay for protection by contributing to Political Action Committees. Moreover, even though the banks know how to price risk, and charge double-digit interest rates, they're livid when people who fall on hard times can get away with not paying them back with interest. Congress seems determined to make sure that individuals enter the world of Debt Slavery and want the courts to be the collection agency. Bankruptcy reform means many a poor soul will be hounded for years through a Chapter 13 filing, instead of being given a fresh start in a Chapter 7 filing. If you file Chapter 13, any cash you make will be 'sucked out' of your paycheck and go towards your debts for many years to come. You can forget about paying off a mortgage or saving for retirement. (Surprisingly, these new bankruptcy laws will still allow corporations to stiff their creditors. Indeed, how could 'The Donald' afford to buy and/or maintain his mansions without stuffing his junk bond holders with his casinos in Atlantic City?) Debt Slavery is a cornerstone of the Ownership Society. Why? Because now the bank owns you! Congress has also passed new legislation that moves class-action lawsuits to the Federal courts, effectively making it more difficult to sue a large powerful corporation, such as Wal-Mart. The press recently reported that when employees at a particular Wal-Mart store had unionized because they were being treated like dirt, Wal-Mart simply closed the store. In the past, the press has reported other unfair labor practices by Wal-Mart, such as how they avoid paying their employees their full earned wages, and how some employees are forced to work off the clock and were even 'locked in' at night by a night manager. In seems that in today's world, it's important for corporations to 'own' their employees without having to pay for their pensions, healthcare or insurance. This first round of legislation to protect big business from legal liability is certainly not the last we've seen. So, who really owns us and our property? In an Ownership Society, the employer owns the workers, and the bank owns the house and the car. If you have a credit card, not only do you work for the bank, but you can't quit work! If you don't like the system, your job will either be shipped overseas, or an illegal immigrant will grab it. The irony of all this, of course, is that our government still allows illegal immigrants - who are willing to risk their lives for a chance to be a Debt Slave in America - to flood our borders and become 'workers' in America. Meanwhile, large corporations, our legal system, and government are working hard to make George Orwell's 'Big Brother' a reality. If there is a silver lining to this world that Kafka described so well, it was so succinctly stated by our President in his State of The Union Address, whereby he said, and I quote, 'in the future, if people retire at the age of 65, there just won't be enough working people to take care of them.' What better way to solve this tragic problem then to turn baby boomers into Debt Slaves today, with a debt burden so high they will never be able to make ends meet unless they work until they are truly disabled. Don't get me wrong. I hate socialism and love freedom. In a socialist country, the government owns everything and everyone is a slave. In our society, you don't have to borrow but we do because it's so easy and seductive. Under capitalism, Debt Slavery is purely voluntary. Our fear is that the average American doesn't truly understand the extent to which he is in hock, or how much the federal government may need to rely on us in the future for today's deficits because our country owes so much to foreign creditors. If the middle class ever wakes up in America - it might if the Hockey, Football and Baseball seasons are all canceled in the same year - there would be a great demand for the 'repudiation of old debt.' When that occurs, you may not wish to be an Asian investor holding a FNMA security, let alone a Russian or Korean Central Bank with too many dollars. With a Debt Slavery society wishing to break free, the easy and perhaps only way out may be inflation and the continued debasement of the currency. We are saddened about the path our leaders have taken us down. Where is the freedom that our parents had (and their parents before them) because without freedom from debt, we're really not free at all! Welcome to Debt California. February 28, 2005 Richard Benson Archives President Specialty Finance Group, LLC

Subject: Excellent post
From: Pete Weis
To: johnny5
Date Posted: Mon, Feb 28, 2005 at 15:07:51 (EST)
Email Address: Not Provided

Message:
Charles Dickens devoted a life's work to this issue. It seems - here we go again.

Subject: Embrace the debt
From: johnny5
To: Pete Weis
Date Posted: Mon, Feb 28, 2005 at 16:18:02 (EST)
Email Address: johnny5@yahoo.com

Message:
Better to be a slave on the nice southern plantation than a free indian hunted down and marched on the trail of tears no?

Subject: slaves of debt?
From: RL
To: johnny5
Date Posted: Tues, Mar 01, 2005 at 03:52:50 (EST)
Email Address: rafaelloring@yahoo.es

Message:
Oh poor guys! Slaves of debt! How dragged you to the bank? How pointed the gun at you and made you sign that loan to buy that brand new car? oh yes! corporations! goverments! sinister managers with their evil publicity hipnotyzed you What can do and individual's will against such great powers?! come on, what is this? RL

Subject: Re: slaves of debt?
From: johnny5
To: RL
Date Posted: Tues, Mar 01, 2005 at 04:14:17 (EST)
Email Address: johnny5@yahoo.com

Message:
Bwahah! One of my highschool buddies used to run a payday loan and title company business in georgia - right after the attorney general siezed his 200K bank account he said the same thing!! He never forced the first soldier to go into hock for that 1000%apr payday loan that they could never seem to get out of - he explained the risks before they agreed to the contract - he found it quite humurous when the newspapers in atlanta had testimony from army and air force generals in IRAQ saying they couldn't fight the war because the poor army grunts were being hounded by payday loan scam artists. He cried at the end. He told one Judge in Albany - sir - if this soldier can operate a $20 million dollar tank with missles and rockets - why can't he be expected to manage his own personal bank account and finances - are you really gonna blame ME that we are losing the war in IRAQ! My friend is out of business now RL - the gubbment of GA shut him down. I think you have to understand RL that many people are of a government safety net state of mind - daddy or gubbment or whoever has always provided and they make decisions that they will always be bailed out in the end. Rich Dad, Poor Dad talks a lot about these types of people. Smart financial people have this same attitude with fannie mae and such. The problem is that the magic man in the sky probably won't be there if we let the systemic risk get too great and these people keep going deeper and deeper into hock. SHouldn't a government protect its lesser financially educated citizens from thier own stupidity? Better financial education would be a major step in this regard - but after the frauds and accounting scams on wall-street - even the smarties are getting suckered in confidence scams.

Subject: More dust
From: Pete Weis
To: All
Date Posted: Mon, Feb 28, 2005 at 09:42:26 (EST)
Email Address: Not Provided

Message:
Wall Street Is Stuck With Fannie Mae By Jerry Knight Monday, February 28, 2005; Page E01 Fannie Mae's stock finally had a good day on Friday -- after a six-day slide that cost its shareholders $6 billion. As the stock skidded, investors unloaded 35 million shares, driving the stock to its lowest price since the summer of 2000. After a 75-cent gain Friday, the stock closed at $57.70 a share, off almost 19 percent since the first of the year. Last week continued a downhill trip that began in September, when Fannie Mae revealed that it had indulged in creative accounting. Like Freddie Mac two years ago, Fannie got in trouble for keeping its books in ways that violated standard accounting rules. Freddie's stock had recovered, but for the past two months it has skidded side-by-side with Fannie. All the way down, Fannie Mae's defenders kept insisting that the problems at the District-based mortgage funding company are in the past, that the stock has fallen too far but soon will bounce back to $80 or even $90 a share. In their dreams. Credit Suisse First Boston, which advised clients Friday to buy Fannie's stock and predicted that it is headed to $80 a share, only a month ago was saying the stock would recover to $90 a share. Just last summer the firm told clients that Fannie's stock could hit $105. Wall Street analysts can't afford to admit they're wrong about Fannie's prospects. They have urged too many people and institutions to buy the stock for them to cut off that limb now. Wall Street firms make too much money dealing in mortgage securities issued by Fannie Mae to do anything that would hurt Fannie or endanger their business relationship. And Wall Street has too much of its own money invested in Fannie to put out a 'sell' recommendation on Fannie Mae. If the big firms sold their holdings before telling clients to do so, the Securities and Exchange Commission would be all over them. If they told clients to sell before selling their own holdings, they'd hurt themselves. Citigroup, whose Solomon Smith Barney division repeated its 'buy' rating on Fannie stock last Tuesday, has been one of the biggest buyers of the shares. Earlier this month Citigroup reported that it bought more than 50 million shares of Fannie Mae in the last six months of 2004. As of Dec. 31, it owned 61 million shares -- a little more than 6 percent of Fannie's stock. In a written statement, Citigroup said the filing 'reflects both direct ownership and shares held in mutual funds or other investment vehicles owned by clients,' emphasizing that it doesn't actually own all the shares held in its name. The firm declined to discuss further its dealings with Fannie. Whether it's the bank's money or the clients' money, the value of those 61 million shares has fallen more than $800 million since the first of the year. Though mutual funds that hold large stakes in Fannie are not as intimately entwined with the company as Wall Street investment firms that deal in mortgage securities, the funds face a similar quandary: If they start selling their Fannie shares and word gets out, they could trigger a sell-off that would drive the stock even lower. Nobody wants to be the one who starts a run to dump Fannie Mae stock. But nobody wants to be the one left holding the bag. While Citigroup and several other Wall Street firms and mutual fund managers have been buying Fannie stock, the stock's performance makes it clear that other big institutional investors have been bailing out. Small investors can't be driving the stock down, because there aren't enough of them to account for the decline. Eighty-five percent of Fannie's shares are held by institutions. Exactly who's been selling, however, won't be known until April, when mutual funds report what stocks they bought and sold in the first quarter. The stock began to slide after Fannie Mae announced in mid-January that it was cutting the quarterly dividend it pays to stockholders to 26 cents a share from 52 cents. The dividend cut saves Fannie about $500 million a year, which will be stashed away to protect against future losses, a risk reduction demanded by federal regulators. The lower dividend made Fannie a much less attractive investment to those who buy stocks for income. 'I think the dividend cut was really damaging for Fannie Mae,' said Paul J. Miller, an analyst who follows the company for Friedman, Billings Ramsey & Co., the Arlington investment firm. Miller has a neutral rating on the stock and hasn't changed it recently. FBR trades and invests in mortgage securities, but unlike some Wall Street firms, does not manage offerings for Fannie Mae and Freddie Mac. Federal Reserve Chairman Alan Greenspan triggered a second round of selling by suggesting at a congressional hearing Feb. 17 that the federal government ought to restrict the growth of Fannie Mae and Freddie Mac. The two government-chartered, shareholder-owned mortgage companies help home buyers by providing money for mortgages. Both originally packaged mortgages and sold them to investors, but in recent years they've kept many of the mortgages. The growth in their own mortgage investments, Greenspan said, increases the risk that Fannie and Freddie might get in financial trouble, requiring a federal bailout. And if whacking the dividend and getting whacked by Greenspan weren't reason enough so sell the stock, Fannie Mae last week fessed up to more financial irregularities. As before, they involve arcane accounting issues, guaranteed to glaze over the eyes of most Washington investors. The details remain devilish, but the bottom line is that Fannie's bookkeeping irregularities are worse than we knew, another reason for prudent investors to be wary. To believe many analysts, none of those things matter. But based on what's happened to Fannie's stock, they matter a lot. 'A stock can only take so much bad news,' Miller said. 'People are panicking.' 'We think the stock is beginning to find a bottom,' Miller said Thursday, the day before Fannie's shares began to recover. When Miller talks about Fannie stock bouncing back, however, it's in terms of returning to the $65 range -- not the $80 or more a share envisioned by more bullish analysts. Unfortunately for individual investors, some of the analysts criticizing Fannie's stock are short sellers, who hope to make money when stocks fall. They are spreading horror stories suggesting that Fannie and Freddie may be about to blow up. Investors won't just shun the stock, they argue, they won't want the bonds and mortgage securities issued by the two companies either. The result could be a meltdown. Greenspan dismissed that threat in his congressional testimony, and so do most credible critics. But it's hard to argue with the cautionary outlook offered by truly independent analysts, such as Josh Rosner of Medley Global Advisors, a specialized research firm with offices in New York and Washington that advises large investors on issues involving regulation, legislation and government policy. 'The market is not properly acknowledging or discounting the problems' at Fannie Mae and Freddie Mac, Rosner said. And by 'discounting the problems' he means marking down Fannie's stock to account for them, not dismissing the problems. Rosner said it's a 'hopeless task' to evaluate Fannie's stock in light of the regulatory and legislative problems ahead. Like many analysts, he assumes that Congress will pass legislation this year to create a new federal regulatory agency to oversee the two mortgage giants. Fannie killed that bill last year, but odds are that it will pass this time, perhaps in more punitive form, and perhaps incorporating Greenspan's idea to limit Fannie's and Freddie's growth. If the legislation passes as written, it would take two years or more to get a new agency off the ground, so Fannie and Freddie face continuing battles with their present regulator, the Office of Federal Housing Enterprise Oversight, and ongoing investigations by the Securities and Exchange Commission and others. Until last week, investors had reason to believe that all of Fannie's regulatory problems had been aired, but Wednesday's announcement told them otherwise. There is simply no way of knowing whether there are more skeletons to come out of the closet. Fannie still faces the formidable job, ordered by regulators, of redoing all its financial reports for the past three years. The restatement is expected to result in a $9 billion write-off. Wall Street regards that as simply an accounting change, but Rosner cautions that new accounting, by new auditors, could reveal more losses. The case for buying Fannie Mae's stock is based on the premise that once the dust settles, everything is going to be all right. Rosner doesn't buy that. 'What comes after the dust settles,' he said, 'is more dust.'

Subject: A case for the secular bear
From: johnny5
To: Pete Weis
Date Posted: Mon, Feb 28, 2005 at 15:16:08 (EST)
Email Address: johnny5@yahoo.com

Message:
Is he full of it? http://homepage.mac.com/ttsmyf/ To make an apples to apples comparison, one must divide the Dow value for a particular time by the price index for that same time, and then compare quotients. I have done this to obtain the points in the plot, which thus shows the Dow’s purchasing power over time. Specifically: points are monthly averages starting with 1/24 (January 1924); each market datum = the monthly average of daily closing Dow values, divided by the CPI-U for that month, multiplied by (100*168.8/11281.26), making the all-time high in 1/00 equal to 100 (see plot) -- these data are designated the “Real Dow”.

Subject: Growth in Wal-mart - playing now on CNBC
From: johnny5
To: All
Date Posted: Sun, Feb 27, 2005 at 19:50:42 (EST)
Email Address: johnny5@yahoo.com

Message:
No webfeed that I can find - have to turn on satellite or cable. The Age of Wal-Mart: Inside America's Most Powerful Company The history and future plans of the retail giant. Channel: CNBC 42 Airing Time: Sun 2/27, 8:00 PM (120 minutes) Categories: Special, Special/Other Advisory: Special

Subject: Re: Growth in Wal-mart - playing now on CNBC
From: Pancho Villa
To: johnny5
Date Posted: Sun, Feb 27, 2005 at 20:39:30 (EST)
Email Address: nma@hotmail.com

Message:
Hmm, I 'think' that Johnny is on a 'CNBC'-trip this evening... ;)

Subject: Re: Growth in Wal-mart - playing now on CNBC
From: johnny5
To: Pancho Villa
Date Posted: Sun, Feb 27, 2005 at 23:38:57 (EST)
Email Address: johnny5@yahoo.com

Message:
It was wild Poncho - walmart is talking 2000 stores in china over the next few decades. They showed a new store in china with people beating each other up for an extra extra low price!! Now to get those low prices in america we had to send the work to cheap labor in china - now where is china supposed to send the work to get cheap labor - africa?

Subject: Re: Growth in Wal-mart - playing now on CNBC
From: Mik
To: johnny5
Date Posted: Tues, Mar 01, 2005 at 16:42:00 (EST)
Email Address: Not Provided

Message:
Why not Africa? BMW and Mercedes Benz acrs are already made in Africa.

Subject: Re: 1.35bn - 0.45bn = ?
From: Pancho Villa
To: johnny5
Date Posted: Mon, Feb 28, 2005 at 06:09:38 (EST)
Email Address: nma@hotmail.com

Message:
from the Economist: 'This has prompted the region's politicians and businessmen to come up with a typically Chinese solution: to grow their way out of the problem by extending the PRD(China's Pearl River Delta). The idea, first proposed in July last year by Zhang Dejiang, Communist Party secretary and hence the top official of Guangdong, is to create a 'Pan-Pearl River Delta' that would extend regional co-operation in trade and investment from the south and east of the country to the center and west. Also known as the '9 2', it would link the nine provinces of Gunagdong, Fujian, Jiangxi, Hunan, Guangxi, Hainan, Guizhou, Yunnan and Sichuan with the two special administrative regions of Hong Kong and Macau via a new web of road (not a proxy server yet), rail and air routes. Simultanously, trade and non-tariff barriers between the provinces would be eliminated to allow the PRD to develop new markets and free up the movement of labour.' 'With a population of 450m(!), roughly the same as the enlarged EU, and a gross domestic product of some $630 billion, the 9 2 zone encompasses a fifth(!) of China's land, a third(!) of its people, produces one third(!) of the country's exports and almost 40% of its economic output.' 1.35bn - 0.45bn = ?

Subject: Re: 1.35bn - 0.45bn = ?
From: johnny5
To: Pancho Villa
Date Posted: Mon, Feb 28, 2005 at 11:35:33 (EST)
Email Address: johnny5@yahoo.com

Message:
Ok so answer me this - when the domestic demand in china grows and they have 500-1000 walmarts there - and everything walmart sells is made there - and they are sending the yanks free stuff to the american walmarts for worthless dollars - what is to prevent them from nationalizing china walmart - kicking out the yanks and ceasing to subsidize the underperforming american walmarts?

Subject: Thousands Died in Africa Yesterday
From: Emma
To: All
Date Posted: Sun, Feb 27, 2005 at 19:39:45 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/02/27/opinion/27sun1.html?pagewanted=all&position= Thousands Died in Africa Yesterday When a once-in-a-century natural disaster swept away the lives of more than 100,000 poor Asians last December, the developed world opened its hearts and its checkbooks. Yet when it comes to Africa, where hundreds of thousands of poor men, women and children die needlessly each year from preventable diseases, or unnatural disasters like civil wars, much of the developed world seems to have a heart of stone. • Not every African state is failing. Most are not. But the continent's most troubled regions - including Somalia and Sudan in the east, Congo in the center, Zimbabwe in the south and Ivory Coast, Liberia and Sierra Leone in the west - challenge not only our common humanity, but global security as well. The lethal combination of corrupt or destructive leaders, porous and unmonitored borders and rootless or hopeless young men has made some of these regions incubators of international terrorism and contagious diseases like AIDS. Others are sanctuaries for swindlers and drug traffickers whose victims can be found throughout the world. In many of these places, poverty and unemployment and the desperation they spawn leave young men vulnerable to the lure of terrorist organizations, which, beyond offering two meals a day, also provide a target to vent their anger at rich societies, which they are led to believe view them with condescension and treat them with contempt. Training camps for Islamic extremists are now thought to be sprouting like anthills on the savanna. 'America is committed not only to the campaign against terrorism in a military sense, but the campaign against poverty, the campaign against illiteracy and ignorance.' Former Secretary of State Colin Powell said that. Well, America launched its war on terror after Sept. 11, but did not bother to look at some of the deeper causes of global instability. This country is going to spend more than $400 billion on the military this year, and another $100 billion or so for military operations in Iraq and Afghanistan. But that amount is never going to buy Americans peace if the government continues to spend an anemic $16 billion - the Pentagon budget is 25 times that size - in foreign aid that addresses the plight of the poorest of the world's poor. • For decades, most Americans either have preferred not to hear about these problems, or, blanching at the scope of the human tragedy, have thrown up their hands. But in terms of the kind of money the West thinks nothing of spending, on such things as sports and entertainment extravaganzas, not to speak of defense budgets, meeting many of Africa's most urgent needs seems shockingly affordable. What has been missing is the political will. This year, there is a real chance of scrounging up, and then mobilizing, this political will. Prime Minister Tony Blair of Britain, who has stood resolutely by President Bush at Mr. Blair's own political peril through the war in Iraq, has staked Britain's presidency of the Group of 8 industrial nations this year on tackling poverty in Africa. Mr. Blair wants his ally, Mr. Bush, to stand beside him at the coming G-8 summit meeting at Gleneagles in Scotland this July. After the G-8 meeting there will be a United Nations summit meeting in New York in September, where the world's leaders will examine progress made toward reaching the Millennium Development Goals of cutting global poverty in half by 2015. Chief among those goals was that developed countries like America, Britain and France would work toward giving 0.7 percent of their national incomes for development aid for poor countries. If the progress made so far is any guide, it is going to be a short meeting. While Britain is about halfway to the goal, at 0.34 percent, and France is at 0.41 percent, America remains near rock bottom, at 0.18 percent. Undoubtedly, President Bush will point to his Millennium Challenge Account when he attends the summit meeting. He will be correct in saying that his administration has given more annually in foreign aid than the Clinton administration in sheer dollars. His Millennium Challenge Account was supposed to increase United States assistance to poor countries that are committed to policies promoting development. This is a worthy endeavor, but it has three big problems. • First, neither the administration nor Congress has come anywhere close to financing the program fully. Second, the program, announced back in 2002, has yet to disburse a single dollar. Most important, relying mostly on programs like the Millennium Challenge Account, which tie foreign aid to good governance, condemns millions of Africans who have dreadful governments (Liberia, Congo, Ivory Coast) or no government (Somalia) to die. No donor nation is, or should be, willing to direct money to despotic, thieving or incompetent governments likely to misspend it or divert it to the personal bank accounts of their leaders. Strict international criteria of political accountability, financial transparency and development-friendly social and economic policies need to be established and enforced, not just by outside donors but by prominent and influential African leaders, like South Africa's president, Thabo Mbeki. Help for people living under governments that fail these criteria will have to be channeled mainly through international and nongovernmental organizations. Bypassed governments will not like this, but they cannot be allowed to stand in the way of outside help to the victims of their misrule. It is not the fault of Africa's millions of refugees that warring armies have burned their villages and fields and driven them into unsafe and disease-ridden camps, like those in the Darfur region of Sudan. And no fair-minded person would blame the victims of callous and destructive governments, like Zimbabwe's, for the economic and social misery they create. In the next few months, Mr. Bush could take a giant step towards altering the way the world views America by joining Mr. Blair in pushing for more help in Africa. It's past time; the continent is dying. In the Democratic Republic of Congo, which is anything but, some 1,000 people die every day of preventable diseases like malaria and diarrhea. That's the equivalent of a tsunami every five months, in that one country alone. Throughout the continent of Africa, thousands of people die needlessly every day from diseases like AIDS, tuberculosis and malaria. • One hundred years ago, before we had the medical know-how to eradicate these illnesses, this might have been acceptable. But we are the first generation able to afford to end poverty and the diseases it spawns. It's past time we step up to the plate. We are all responsible for choosing to view the tsunami victims in Southeast Asia as more deserving of our help than the malaria victims in Africa. Jeffrey Sachs, the economist who heads the United Nations' Millennium Development Project to end global poverty, rightly takes issue with the press in his book 'The End of Poverty': 'Every morning,' Mr. Sachs writes, 'our newspapers could report, 'More than 20,000 people perished yesterday of extreme poverty.' ' So, on this page, we'd like to make a first step. Yesterday, more than 20,000 people perished of extreme poverty.

Subject: Re: Thousands Died in Africa Yesterday
From: Pancho Villa
To: Emma
Date Posted: Sun, Feb 27, 2005 at 20:37:19 (EST)
Email Address: nma@hotmail.com

Message:
'It's time to export democracy'...

Subject: Re: Thousands Died in Africa Yesterday
From: johnny5
To: Pancho Villa
Date Posted: Sun, Feb 27, 2005 at 23:41:15 (EST)
Email Address: johnny5@yahoo.com

Message:
Carly Fiorina said Africa was going to be the new growth story at davos. All those new wal-marts in china will need to send production to people that will work even cheaper.

Subject: Foreign Stocks and Portfolio Risk
From: Emma
To: All
Date Posted: Sun, Feb 27, 2005 at 19:18:42 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/02/27/business/yourmoney/27stra.html Yes, Foreign Stocks Can Still Reduce a Portfolio's Risk By MARK HULBERT INVESTORS who look overseas to reduce the risks of holding stocks can find support in a new study. Contrary to recent objections that this strategy does not work well, if it works at all, the research has found that global portfolios have been significantly less risky over the long run than ones containing domestic stocks alone. The study, 'International Diversification: Have We Missed the Forest Through the Trees?,' was written by Clifford Asness, Robert Krail and John Liew, principals at AQR Capital Management in Greenwich, Conn. Until the late 1990's, many people in academia and on Wall Street said international diversification provided a free lunch. In theory, at least, a portfolio holding both domestic and foreign stocks would perform just as well over time as one containing only domestic ones, but with less risk - when risk is defined as volatility of returns. The key to this idea was the historically low correlation between domestic and international stocks - in other words, their tendency not to move in tandem. Thus, a portfolio with both kinds of stocks would be less volatile than one with domestic stocks alone. But in the late 1990's, a number of researchers found that the correlations were not constant through the market cycle. As a result, they said, the risk-reducing potential of such diversification was exaggerated. It turns out, for example, that correlations between domestic and foreign stocks tend to be highest when domestic stocks are declining sharply. Yet those are the very times when correlations need to be low in order to reduce portfolio volatility. And correlations tend to be lowest when domestic stocks are rising, which is when a low correlation is least helpful. Based on these findings, some people - including a few I quoted in previous columns - went so far as to recommend that stock investors cut or even eliminate their international exposure. The new study, however, says international stocks do a poor job of reducing risk only when an investor focuses on short holding periods. Over the long term, they deliver precisely what theory says they should. The authors studied two hypothetical American investors from 1950 through May 2004. The first investor focused only on one-year periods; the second focused on 10-year periods. The first investor would perceive no benefits from international diversification, the authors found, while the second would see many. First, consider the shorter-term investor. If he invested only in domestic stocks, his portfolio's biggest 12-month decline over all that time would have been 47.5 percent, after inflation. If, instead, he had divided his portfolio equally among stocks of the United States, Japan, Germany, France and Britain, his worst 12-month loss would have been about as big: 45.4 percent. Now, consider the second investor. His worst loss over a 10-year period for a domestic-only stock portfolio would have been a cumulative 40 percent. But for a portfolio divided among the five countries' stocks, the worst 10-year decline would have been about one-fourth as big: 11.3 percent. The study's conclusions do not apply only to American investors. The researchers also studied stock markets in Japan, Germany, France and Britain, again contrasting investors with short- and long-term perspectives. In each case, global diversification provided few short-term benefits for an investor, but big gains over longer periods. THE study did not address the argument that international diversification is no longer important because so many companies are multinational. But Mr. Asness says this objection is overblown. 'Investing in a U.S. portfolio is still a hell of a lot more a U.S. bet than a global bet,' he said, 'even if more a global bet than it was decades ago.' So even if the free lunch of international diversification may not be as big, he said, 'it's still a free lunch, so why not eat it?' The authors don't dispute previous findings that such diversification failed to cut risk over short time horizons. But they say, 'So what?' After all, investors should focus on the long term anyway. While short, sharp market plunges are painful, the new study notes that long, drawn-out bear markets are 'significantly more damaging' to investor wealth. 'Global diversification,' they add, 'does an exceptionally good job of protecting investors from these kinds of risks.'

Subject: John Kenneth Galbraith
From: Emma
To: All
Date Posted: Sun, Feb 27, 2005 at 19:04:39 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/02/27/books/review/27FRANKL.html?pagewanted=all&position= 'John Kenneth Galbraith': The Presidents' Man By THOMAS FRANK JOHN KENNETH GALBRAITH His Life, His Politics, His Economics. By Richard Parker. OPTIMISTIC superstition with regard to all things economic is a typically American folly, as vigorous and unrepentant today as it was in 1929. We shower high honors on any author who can repackage the comforting idea that the free market is a democratic expression of the popular will; we pay an army of lecturers to persuade us that each new corporate cost-cutting initiative is an unprecedented victory for the little guy; and we support an entire cable news channel that limns the wonders of the New York Stock Exchange and the Nasdaq. Wherever this superstitious mind is at work, there you will also find John Kenneth Galbraith deplored and reviled. I ran across his name repeatedly while researching a book on the origins of the new economy, that fevered epilogue to the last century. Tom Peters, to take just one example, assailed Galbraith as the patron saint of the large, vertically integrated corporation, a form of organization that Peters characterized as a ''hubristic exercise'' in defying market forces. Peters wasn't alone. Galbraith infuriated the faithful for a large part of the 20th century. The conclusions he drew when working on the United States Strategic Bombing Survey in the closing days of World War II -- specifically, that the massive aerial bombardment of Germany was without significant military effect -- caused terrific problems for officials who wanted the study to prove that bombing had won the war. Testifying before a Senate committee in 1955 on the nature of stock market bubbles, Galbraith incurred the wrath of investors everywhere; they'd noticed that the market fell while he spoke and naturally concluded cause and effect. None of this was a matter of chance. Galbraith's formal subject may have been economics, but his work can just as well be read as a long meditation on business's genius for self-deception, its consistent preference for flattering theory over troublesome reality. Galbraith is, after all, the originator of the familiar term ''conventional wisdom'' and his book on the bull market of the 1920's, ''The Great Crash, 1929,'' emphasized the role of ''incantation'' and ''mass escape into make-believe'' in that great orgy of speculation. The tension between theory and reality runs throughout Richard Parker's ''John Kenneth Galbraith: His Life, His Politics, His Economics.'' It defines as well Galbraith's relationship to his profession, which like so many other academic fields spent much of the 20th century insulating itself behind an impenetrable language -- in the case of economics, a language of equations and models and perfectly rational actors. Galbraith went in the opposite direction, becoming a public intellectual who spent his life advising politicians, honing his famously aphoristic style, even working as a journalist. His economics, as Parker, a senior fellow of the Shorenstein Center at Harvard's Kennedy School of Government, explains, ''integrated politics, power, ideology and historical circumstance to explain the actually lived economic world.'' Reality is messy. Or, as Galbraith himself put it with his typical pithiness: ''Specialization is the parent not only of boredom but also of irrelevance and error.'' Thus Parker's book is both a biography and a treatise on the misinterpretations and disastrous mistakes -- the mystery of stagflation, the bubble of the 90's, Vietnam -- that theoretical rigidity and deference to experts have brought over the last hundred years. It is also, thanks to Galbraith's longevity, his work in so many administrations and his battles with so many other economic thinkers, a fine one-volume history of economic thought in the 20th century. First came the smashup of classical economic theory during the Depression, when steadily worsening conditions exposed the free-market faith in naturally occurring equilibrium for the superstition that it was. (The leading lights of the Harvard economics department, where Galbraith was then a lowly instructor, were slow to catch on. ''These orthodox men believed in markets with a faith bordering on religion,'' Parker writes, in 1934 opposing the early recovery efforts of the Roosevelt administration, ''not on 'political' but on 'scientific' grounds.'' Free-market orthodoxy was soon brushed aside by the theories of John Maynard Keynes, whose American disciples -- Galbraith prominent among them -- saw a central role for government in managing the economy, thus furnishing theoretical justification to remedies long advocated by liberal reformers. Keynesianism conquered the corporate mind as well, and the nation heeded the advice of a new set of experts who promised to deliver growth and prosperity, mainly through military spending. So complete was its triumph that even Milton Friedman, still the standard-bearer of economic conservatism today, was moved to say in 1965, ''We're all Keynesians now.'' In the 70's, though, free-market orthodoxy returned, this time as an insurgent out of the University of Chicago, armed with an idea called rational expectations, whose ''sheer theoretical beauty and rigorous internal consistency'' had soon captured economics departments nationwide. Committed partisan though he was, Galbraith retained his critical edge, pointing out even during the Keynesian heyday that our affluence concealed a certain absurdity as well as a dangerous militarism. To this story of clashing ideas Parker adds farmer uprisings and student revolts, along with the minutiae of World War II price controls. I will confess that I was initially skeptical about the book's 820 pages of dense type, but every detail is justified and every digression fascinating. If the book has a failing, it is that Galbraith's dry, Anglified wit and his big Keynesian ideas seem to shrink when placed alongside his amazing doings. After all, John Kenneth Galbraith was not merely another Harvard professor. He was born in a remote corner of Ontario in 1908, when it was often the farmers who were the radicals and the Harvard professors who were the guardians of the status quo. Galbraith's father, in fact, was active in one of the left-wing rebellions that used periodically to sweep North American farm country. The son commenced the career that would eventually make him famous for his urbanity by studying animal husbandry at a little-known ag college in his home province. From there it was on to Berkeley, where he acquired a Ph.D. in agricultural economics -- an exciting and important subject at the time, given the agrarian reforms on which the New Deal had embarked -- and Harvard, where he landed an instructorship in 1934. He knew presidents from Roosevelt to Clinton. With John F. Kennedy he was particularly close, advising him again and again to avoid entanglement in Vietnam. Through it all he served as the urbane face of liberalism, commenting constantly on television and producing a long, admirable list of books and articles. What astonishes the contemporary reader is, first of all, that a genuine, independent intellectual like Galbraith was permitted to serve in government, let alone become the confidant of presidents. Facile anti-intellectualism is the order of the day now, as even Democrats race to embrace the free-market logic of the Chicagoans. The ''New Industrial State'' that the great liberal economist described in 1967 is now Public Enemy No. 1 of financiers and rebel C.E.O.'s determined to, as Tom Peters put it in 1992, blast ''the violent winds of the marketplace into every nook and cranny in the firm.'' Yet reading Parker's comprehensive account of the 20th century's economic battles, I can't help thinking that this ought to be Galbraith's moment. An old-school scoffer like Galbraith would remind us that all our elected officials have done with their heady incantations of the virtues of privatizing Social Security and the glories of deregulation is resurrect the superstitions of our orthodox ancestors, and trade in our affluent society for a faith-based 19th-century model in which the affluence accrues only to the top.

Subject: The 'Greenspan - Steve Miller Band: Abracadabra
From: Pancho Villa alias StùCazz
To: All
Date Posted: Sun, Feb 27, 2005 at 18:50:16 (EST)
Email Address: nma@hotmail.com

Message:
Greenspan Hypnotizes Himself by Melvyn Krauss On the eve of the last G-7 meeting in London, US Federal Reserve Chairman Alan Greenspan did a startling about-face by soft-pedaling America’s trade deficit. “Market pressures …appear poised to stabilize and over the longer run possibly to decrease the US current-account deficit and its attendant financing requirements,” he said. But just two months earlier, in Frankfurt, Mr. Greenspan had cautioned that the US deficit could not go on forever without the dollar depreciating. What is going on here? To be sure, the US trade figures have improved somewhat. The expected December trade deficit is $57 billion—an improvement on the record $60.3 billion gap in November. And the November figure will be adjusted downward because of a recently discovered statistical error by Canadian authorities. But politics, not economics, explains why the Fed chairman changed his tune about America’s weak external position. Mr. Greenspan’s statement in Frankfurt in November alarmed senior European Central Bank (ECB) officials, who considered it a “provocation” – one that promptly sent the dollar into an unwanted tailspin. The last thing the Fed Maestro needed was a repeat performance on the eve of the G-7 – a meeting that is supposed to exemplify international co-operation. So Mr. Greenspan decided to extend a peace offering to the Europeans. Politics also explains Mr. Greenspan’s pre-G-7 comment that “the voice of fiscal restraint, barely audible a year ago, has at least partially regained volume.” The Fed chairman is “hearing voices” because he is a team player who wants to encourage US budget cutting. How would it look if he had openly expressed misgivings about Bush’s plan to cut the budget deficit in half by 2009 just days before it was made public? What Mr. Greenspan chose to overlook, however, is that most experts are extremely – and rightly – skeptical of the Bush plan, which leaves out big-ticket items such as the cost of the Iraq War, and uses an unrealistic benchmark from which to measure the alleged 50% cutback. Timing the budget’s release for just after the G-7 made for a harmonious London meeting in which both Americans and Europeans could claim that the US was taking care of business—that is, its twin fiscal and current-account deficits. The Europeans gladly went along with this charade because they now fear dollar depreciation more than global imbalance. So far, Europe’s fragile economic recovery has been based largely on exports. The euro’s rapid appreciation against the dollar threatens to undermine this foundation. But internal European Union studies indicate that European exports are more closely linked to changes in external demand than the euro-dollar exchange rate. So long as external demand holds up – and recent growth numbers from China and the US are positive in this regard – Europe’s exports should continue to perform well. In any case, protecting exports by resisting euro appreciation – or, more precisely, dollar depreciation – is a poor way to promote economic growth. A strong currency keeps both inflation and ECB interest hikes at bay. This helps boost private consumption and investment. Moreover, because crude oil is priced in US dollars, a rise in the euro means a fall in energy costs. This, too, helps European growth. Over the longer term, a strong currency promotes efficiency in export industries, further insulating competitiveness from exchange-rate effects. Dollar depreciation improves Europe’s terms of trade and real income. America’s fiscal and external deficits will not disappear just because the chief magician at the Federal Reserve waves his wand and says abracadabra. On the contrary, the longer Greenspan plays down America’s dangerous macroeconomic imbalances with happy talk, the more damage they will ultimately inflict on the global economy. What the world needs now is the realist Greenspan of Frankfurt, not the cheerleader Greenspan of London. Simply put, there must be dollar depreciation to keep global imbalances in check. Instead of catering to European fears and prejudices about exchange rates, the Fed chairman should put politics aside and stick to sound economics. Melvyn Krauss is a Senior Fellow at the Hoover Institution, Stanford University. http://www.project-syndicate.org/commentaries/commentary_text.php4?id=1871&lang=1&m=series

Subject: Bernanke practices his Greenspeak
From: Pete Weis
To: Pancho Villa alias StùCazz
Date Posted: Sun, Feb 27, 2005 at 20:52:01 (EST)
Email Address: Not Provided

Message:
February 24 - Federal Reserve governor Ben Bernanke: 'The current account deficit is a concern. What that is basically - there are two ways of looking at the current account deficit. One is looking at it from the trading perspective, which most people are familiar with the idea that we are actually importing a lot more than we are exporting. So, in that sense we have a current account deficit. But another way to look at it is that we are investing more than we're saving. If you look at investment in terms of capital investment by firms, you look at residential investment - that is building new houses. You have seen a lot of investment but we have a relatively low savings rate. And so, having a low savings rate, we have to borrow from foreigners to make up the difference between our saving and the investment we want to do. So, what's called capital inflows - the money flowing in from foreigners to finance our investment is another way of looking at the current account deficit. So these different perspectives give you different ways of thinking about how you would address this problem. The trade perspective says, yes, part of the issue is getting balance in our trade. And that suggests that we should work with the world trade organization and other trade agencies to try to get fairer and free trade with other countries... On the other side, we have the savings and investing perspective. We have relatively low savings, we have a federal deficit which is subtracting from our savings. And that suggests that part of reducing the current account deficit would be to try to stimulate our savings. Reduce the deficit and take other actions that would increase our savings and therefore reduce capital inflows that are coming in - which is the other face of the current account deficit. Depending how you look at it, there are a variety of policies that should be undertaken. I think the current account deficit is going to be with us awhile. It will take a while to unwind. It can't go on at this level for ever. It is going to eventually have to come down. And I think it will eventually come down. But policies like increasing our savings would probably be a step in the right direction to help that happen.'

Subject: Playing now on C-Span
From: johnny5
To: Pancho Villa alias StùCazz
Date Posted: Sun, Feb 27, 2005 at 19:06:51 (EST)
Email Address: johnny5@yahoo.com

Message:
http://www.c-span.org/watch/index.asp?Cat=TV&Code=CS&ShowVidDays=30&ShowVidDesc=&ArchiveDays=30 http://inside.c-spanarchives.org:8080/cspan/cspan.csp?command=dprogram&record=138570443 Beyond Paradise and Power: Europe, America Brookings Institution Washington, District of Columbia (United States) ID: 183011 - 11/10/2004 - 1:30 - $29.95 Lindberg, Tod, Editor, Heritage Foundation, Policy Review Mead, Walter Russell, Senior Fellow, Council on Foreign Relations Fukuyama, Francis, Professor, Johns Hopkins University, School of Advanced Intl. Studies Daalder, Ivo H., Senior Fellow, Brookings Institution, Foreign Policy Studies Mr. Lindberg moderated a discussion with the authors of Beyond Paradise and Power: Europe, America and the Future of a Troubled Partnership, published by Routledge. The panelists discussed the current state of U.S.-Europe relations, as well as potential problems that may arise in future partnerships. After the discussion, the panelists responded to questions from members of the audience.

Subject: Re: Playing now on C-Span
From: Pancho Villa
To: johnny5
Date Posted: Sun, Feb 27, 2005 at 19:22:38 (EST)
Email Address: nma@hotmail.com

Message:
And on 'China Central Television'...(in 10-20 years)?

Subject: Re: Playing now on C-Span
From: johnny5
To: Pancho Villa
Date Posted: Sun, Feb 27, 2005 at 19:24:48 (EST)
Email Address: johnny5@yahoo.com

Message:
Even a smart chinese geek can watch the live webfeed with an anonymous proxy server. :)

Subject: The Way We Eat: Tex Macs
From: Emma
To: All
Date Posted: Sun, Feb 27, 2005 at 18:21:20 (EST)
Email Address: Not Provided

Message:
http://www.nytimes.com/2005/02/27/magazine/27FOOD.html?pagewanted=all&position= The Way We Eat: Tex Macs By AMANDA HESSER If you walk into Chipotle on 34th Street in Manhattan at lunchtime, you will have to wait in line. Behind a counter, workers assemble burritos and tacos -- and nothing else -- in an impressively streamlined production line. Fresh tortillas are heated on a griddle, then piled with fillings like rice flecked with fresh cilantro, naturally raised Niman Ranch pork and organic beans. Burritos, good-tasting if bulky, are rolled by the hundred. The riotous crowd of lunchgoers sits at steel-topped tables on plywood chairs; rock music pours from speakers. It's not just a busy day in a busy city restaurant; it's also a chance to witness -- and taste -- a shift in American fast food. This past week, Chipotle opened its 419th store, on Varick Street in Manhattan. Nearly a hundred more will open this year. And while this may be a triumph for the increasing number of diners interested in healthful, sustainable food, there is a strange twist: Chipotle's majority investor is McDonald's. To some people, it might seem like justice that a progenitor of trans fats would appear to be repenting for its supersize sins, but it's not. ''Fast casual'' restaurants like Chipotle, Qdoba Mexican Grill and Panera Bread have experienced steady growth over the past few years. McDonald's may be simply hedging its bets against its own seemingly bleak future. Just a few years ago, the lone hope for fast food was In-N-Out Burger, a small West Coast chain that has acted as a model of what fast food can be -- made of wholesome ingredients, freshly but quickly prepared. It was the anti-McDonald's, but it has remained a wee competitor, with just 189 locations, compared with the 13,700 McDonald's in America. Good fast food, it seemed, simply couldn't compete with the giants. And yet, In-N-Out won many fans, including Steve Ells, the C.E.O. of Chipotle. Ells started Chipotle in 1993 after working as a line cook at Stars in San Francisco. Smitten with the local taquerias, Ells opened the first shop in Denver. Chipotle (pronounced, like the dried, smoked jalapeño, chi-POAT-lay) was an unexpected hit. ''After things settled down a little bit, then I started thinking that opening another restaurant would be a good idea,'' Ells said. ''So I opened a second one.'' This one did well, too. ''So, I thought, O.K., maybe I should do just one more,'' Ells said. Once he opened six shops, Ells needed a partner and sent a business plan to the development arm of the McDonald's Corporation. Ells had mixed feelings about the partnership, but when McDonald's offered Ells a promise of autonomy and a lot of money, he took them. ''We have very different cultures,'' he said, and he claims they still do. Eating at Chipotle is about freedom of choice with a small set of choices. Customers are offered a menu of just four items: tacos, burrito, fajita burrito and a ''burrito bol'' (a burrito made without a tortilla; the bowl is made of recycled newsprint). These are assembled by spooning the fillings on top of a clean cutting board and sliding them down. The room for error -- or style -- is zero. At the condiment bar, there is a selection of just three hot sauces. Nothing to dilute the purity of the tightly swaddled burrito. Nearly all of the food at Chipotle is prepared in the restaurants, except the beans and the pork, which is cured with salt, juniper berries, bay leaf and thyme and then braised and shredded at a central kitchen in Chicago. Chipotle's pork is naturally raised (no antibiotics, no hormones), and the majority comes from Niman Ranch, which supplies restaurants like Chez Panisse. When Chipotle switched from serving conventional pork to Niman Ranch in 2001, it raised the price of the burrito by $1, to $5.50. ''Most of our customers didn't care,'' Ells said. ''Not all of our customers are looking for food with integrity. It's a delicate balancing act. We have to convince our customers that it's better for them. You can't be preachy. Customers don't want to be lectured about what kind of food they should eat.'' But that's not the only hurdle. Right now, the pork used at Chipotle comes from more than 400 farms. They've struggled to find enough naturally raised chicken and beef producers, so only about one-quarter of Chipotles serve naturally raised chicken and even less serve naturally raised beef. Meanwhile, Chipotle faces competition from Qdoba, a copycat chain that offers more choices, like poblano pesto burritos, but less discipline in its execution, and Panera Bread, which serves fresh but mostly ill conceived sandwiches. There may be other ''fast casual'' restaurants in the works. Anita Lo, a chef, and her partner, Kenny Lao, recently opened Rickshaw Dumpling Bar in the Flatiron district of Manhattan. They serve things like dumplings stuffed with wasabi shrimp and green-tea milkshakes. In planning the bar, Lo and Lao studied restaurants they admired. Their muse? Chipotle.

Subject: Some Real Estate Thoughts
From: Pete Weis
To: All
Date Posted: Sun, Feb 27, 2005 at 17:05:15 (EST)
Email Address: Not Provided

Message:
The belief that some areas which have had big run-ups will suffer but areas which have had only mild increases will not, may be flawed. It is much more complex than that. While it is true that regions which have had the largest increases (the Northeast, West Coast, certain parts of Florida, etc.) are likely to see the largest decreases in the event of a real estate bust, we have to consider all the factors which affect real estate valuations. A bubble which is vulnerable to correction is only one factor. (1): There is an interrelationship between 'bubble' markets and 'non-bubble' markets. Trouble in the bubble markets, especially if they affect a large enough percentage of overall real estate nation wide, would affect - (a) credit availability and loose lending practices nationwide. Lenders burned in bubble markets would want to reduce risk and government regulators will likely force higher reserves (already being discussed with regard to Fannie Mae and Freddi Mac) and stricter lending practices. Tighter lending practices mean fewer qualified buyers. (b) Retirees nest eggs from bubble markets would be affected since they would get less for the sale of their homes in the Northeast and have less to spend on a home in the Mid-Atlantic states or the Southeast. Bubble markets drive non-bubble markets. (2) A popular misconception - 'real estate will always rise with few serious interruptions because growing population will constantly increase demand'. I hear this all the time from real estate investment 'experts' and it seems to be the primary reason given for why real estate is a good overall investment. Yet, if this were true, then real estate in densely populated areas around the world like India, Central and South America would have some of the most expensive real estate in the world not some of the cheapest. (3)So what other factors affect real estate valuations? Well it's the obvious - (a)increasing or decreasing jobs and increasing or decreasing wages relative to inflation and (b) increasing or decreasing interest rates to go along with the relative tightness or looseness of lending practices mentioned above. (4) Stock market downturns, in the absence of dropping long term rates, push real estate markets downward. This is part of the reverse wealth effect. Likewise, downturns in real estate markets, if they are broad enough, have a downward effect on the stock market. As 401K's shrink the public tightens its belt and especially retirees reduce their expenditure on a retirement home. (5)The 'irrational exuberance' which Robert Shiller now says has taken hold of real estate is a factor in the upward swing in the housing markets. This often displays itself in the heavy purchasing of real estate in the form of houses and condo's to be rented out as an investment. The trouble with this is the use of variable rates to make these purchases and the dependency of owners to get increasingly higher rents to cover the higher costs (if rates go up). Any downturn in the economy makes investments in resort properties more risky since so many owners of resort condo's depend on rent to help them with the costs of their condo and fewer people spend money on resort vacations when their budgets get tighter. (6)Someone mentioned that the higher rates of the 70's and early 80's had little negative effect on real estate. But it's important to remember that the 70's were not preceded by the largest run-up in the shortest period of time, in real estate history. In addition, the 80's and 90's featured steady job and wage growth during the hightech boom which certainly helped to give real estate a boost. Can we expect the same thing in the next 10 to 20 years? Furthermore, I bought my first house in 1980 - I can assure you that the 13.75% mortgage I received kept the price I paid much lower. Ten years later with mortgage rates at 10% I sold the house for 2.5 times my purchase price. (7)Finally, as a general rule, the best time to invest in real estate is when interest rates are at their highest and ready to go down. The absolute worst time to invest in real estate is when interest rates are at or near their lowest and ready to head upward. YOU ARE ALWAYS STUCK WITH THE PRICE YOU PAY BUT NOT WITH THE INTEREST RATE YOU START WITH!

Subject: Capital flows misprice assets
From: johnny5
To: Pete Weis
Date Posted: Sun, Feb 27, 2005 at 18:28:13 (EST)
Email Address: johnny5@yahoo.com

Message:
This paper concurs with Pete - Ben Stien might lose some of his money having 50% of it invested in real estate. Do capital flows have a real impact on asset prices? That is, do capital flows drive asset values after accounting for market fundamentals or is capital simply flowing into assets at times of high growth opportunities. In the former case it impacts pricing whereas in the latter case it does not. http://www.hoyt.org/capital_flows/lit_review.pdf Commercial real estate is a cyclical, capital intensive, industry. There is significant anecdotal evidence that past private real estate cycles were strongly related to net mortgage flows (availability of construction and permanent debt). Figure 1 illustrates the close connection between flows and real estate values. It plots aggregate net mortgage flows and property returns derived from the NCREIF index (a de-lagged or unsmoothed version of it). With debt financing widely available, property values increased in the 1980s, but they fell substantially when the supply of debt was sharply curtailed in the early 1990s. The close association between debt flows and property values in the past has led to the perception held by many market participants that there is a systematic relationship that can potentially be exploited to understand the state of property investment markets; mortgage flows drive private property values. Based on the close association between mortgage flows and property values in the past, many market participants apparently still believe that monitoring of real estate (private) debt capital flows remains a fruitful exercise today.3 However, Figure 1 also shows that the link between private property returns and mortgage flows has not been the same since the early 1990s liquidity crisis. The correlation between real estate performance and debt capital flows is not as high as it previously was. The real estate world has changed significantly since the early 1990s in ways that suggest this may no longer be a relevant exercise. A structural change that took place in the real estate finance arena in response to the downturn and lack of debt financing, and real estate finance moved from primarily “Main Street” to both “Main Street” and “Wall Street” with the emergence of CMBS on the debt side and explosive growth in the REIT sector on the equity side. ....On the equity side, there are concerns, however that the “excess volatility” that characterizes stock markets, if due to market inefficiency could spillover into real estate markets. The changing structure of the commercial real estate market has led to an increased importance of equity flows into public market real estate vehicles (REITs and REIT mutual funds). It has been suggested that part of the run-up in REIT prices in the 1995-98 period was due to excessive optimism on the part of less than rational investors. Figures 2 and 3 shows that the flow of equity funds into REITs are closely tied to REIT valuations. Hence, it is crucial that any study of the link between capital flows and real estate pricing consider both the public and private markets, both debt and equity, and the interactions between these. ...More recently the reasonableness of real estate values, both public and private, have been called into question again as significant capital has flowed into the real estate sector given the dismal performance of the stock market. “Real estate pricing increasingly appears to be driven more by capital flows and the availability of cheap debt, than by current and future property earnings,” This paper reviews the existing literature on capital flows and asset pricing. It focuses on studies that examine the incremental impact of flows on the prices of assets traded in organized public markets (stocks, bonds and foreign exchange), though it also covers recent work on the effect of capital fund flows on venture capital investment values. The main text of the paper will review the key elements of important papers within a framework that carefully synthesizes and ties together the main findings and real estate implications for both private and public market valuations. It also provides directions for future research. A central premise of the EMH is that “the price is right”, and hence observed market prices do not differ from underlying “true” fundamental value. Under the EMH any deviation from fundamental value represents a profit opportunity that is quickly eliminated through the actions of rational traders who are constantly on the lookout for such opportunities. Underpriced assets are bought while overpriced assets are sold short, thereby bringing prices back in line with fundamental value. This costless arbitrage lies at the heart of the EMH. Competition for abnormal profits along these lines ensures that demand curves for individual stocks are flat, which implies that any shocks in asset demand unrelated to fundamentals do not impact prices. Prices equal fundamental value because the trading actions of rational arbitrageurs prevent the trades of any nonrational (or noise) traders from having a price impact. Given the historical dominance of the EMH paradigm, academic finance theory has not had much to say about trading activity and fund flows variables. This contrasts sharply with practitioner behavior in which technical trading rules based on money flows, transaction volume and market liquidity proxies are widely utilized in guiding investment timing decisions. This has changed in recent years as more researchers have seriously questioned the efficient markets hypothesis and brought behavioral economics to the forefront of academic finance. The behavioral approach posits two important shortcomings of the EMH. First, it explicitly recognizes that some investors are not rational in their behavior; systematic biases in beliefs imply 7 that some investors trade on non-fundamental information. Second, the behavioral approach questions the ability of the complete arbitrage mechanism that underlies the EMH and works to ensure demand curves for stock are flat. More precisely, the behavioral approach suggests that this arbitrage is not perfect because arbitrageurs are subject to fundamental (market) and noise trader risk and also face non-trivial transactions and mplementation costs that prevent them from taking fully offsetting positions to correct mispricing. The imperfect nature of the arbitrage mechanism would seem a natural for the private real estate asset market. Illiquidity and high transaction costs in direct real estate implies large arbitrage costs, which further limits the ability of sophisticated traders to enter the market and eliminate mispricing. Pontiff (1996) argues that arbitrage costs can lead to large deviations of prices from fundamental value, and he provides evidence that deviations in closed end stock fund prices from net asset value (NAV) are related to arbitrage costs. He interprets this finding as consistent with noise trader models of asset pricing. In addition to being characterized by significant market frictions, private real estate asset values are generally “noisy” indications of true value, adding another layer of risk to the arbitrage. Recent work on the limits of arbitrage has focused on the importance of short sale constraints in public securities markets, both in terms of cost and institutional restrictions that restrict the ability the ability of investors to sell stocks short. Specifically, in a world of heterogeneous investors, the existence of short sale constraints can generate deviations in asset prices from fundamental value. Optimistic investors take long positions, while pessimistic investors would like to take short positions. Short-sale constraints, however, inhibit the ability of rational investors to eliminate overpricing and imply that ththey sit on the sideline when they believe prices are too high, and also 8 that irrational investors are only active in the market when they are overly optimistic. Hence, in up markets asset values reflect the sentiment of these irrational traders. When they are too pessimistic they cannot act by shorting and are forced to the sidelines [Gervais, Kaniel and Mingelgrin (2001) and Baker and Stein (2002)]. Investor sentiment is directly linked to trading (turnover) and liquidity.5 The interaction of limited arbitrage and heterogenous investor beliefs has led to an interesting class of models in which trading by nonrational investors can drive asset prices away from fundamental value. Under the EMH, the addition of a stock to the index should not, in principal, affect the fundamental value of a firm’s shares and hence the change in demand created by the index redefinition should not impact the price of the firm’s shares. Harris and Gurel (1986) and Shleifer (1986) report that stocks added to the S&P 500 jump in value an average of just over 3 percent and that the jump is related to trading by index mutual funds. The authors interpret their findings as evidence in support of the idea that trading by nonrational (or uninformed) investors affects asset prices in a trading environment characterized by limited arbitrage. Barberis, Shleifer and Wurgler (2002) examine the impact of data revisions in the S&P 500 index on a stock’s relationship with other stocks in the index, as well as those outside the index. They find when a stock is added to the S&P 500 index its correlation with the index increases (both beta and R-squared), while its correlation with other similar matched stocks outside the index decreases. Their empirical analysis is used to test what they call a “trading-based” model of comovement in the stock prices of securities. Comovement refers to tendency for groups of like stocks to exhibit common return patterns. Strong patterns comovement in returns have been documented for closedend funds, value stocks, and stocks in the same industry (internet-related & REITs for example).6 Barberis, Shleifer and Wurgler (2002) note that the EMH explains comovement in prices as a function of comovement in market fundamentals (cash flows and risk adjusted discount rates). The authors, however, suggest that the fundamental story is incomplete and offer an explanation based on investor trading patterns. Correlated trading can arise from correlated investor sentiment and lead to comovement in different stock “categories” as noise traders move from one category to another. In such a world there will be common factors in returns of stocks in the same category that may be only weakly related to cash flows fundamentals. There is a role for uninformed demand to impact prices in a coordinated fashion with “similar” stocks. This last finding meshes well with studies of mutual fund flows and aggregate stock market performance, to which we now turn our attention. Do mutual fund flows affect (drive or cause) stock price change? Do stock returns influence (cause) mutual fund flows? Many in the financial press and investor community would immediately answer yes to both questions. That is, they adhere to the belief that flows of funds directly impact asset prices, consistent with the price pressure story. In fact, sharply increased flows of funds into equity mutual funds have been blamed as a major force behind the strong and sustained run-up of stock prices in the 1990s. This belief also transcends some of the academic community. Shiller (2000) suggests that the proliferation of equity mutual funds has enticed more uninformed investors to participate in the market. He claims the result has been a relatively greater focus on the market as opposed to individual stocks as naïve investors speculate on market or sector-wide movements through mutual funds. The implication is that there is a direct link between the growth in mutual funds and the level of stock prices, one that potentially has direct application to the REIT market of the 1990s. Warther (1995, 1998) was one of the first to empirically examine the link between aggregate stock market performance and mutual fund flows, with the ultimate goal of distinguishing between the information and price pressure hypotheses to determine if the rapid growth of the mutual fund sector was a destabilizing influence on the stock market. He suggests that MF flows are a logical place to look for indicators of unsophisticated investor sentiment, because mutual fund investors are considered by many to be the least informed investors in the market. The popular press often notes that fund flows are considered a yardstick of small-investor sentiment, and implies this sentiment is not completely rational. A third explanation of the contemporaneous positive correlation between flows and returns may have nothing to do with flows having a direct causal link to returns. Flows may passively respond to fundamental information rather than reveal it. Flows have zero correlation with permanent components of excess returns. Hence, flows have only a transitory effect on prices. Measured fundamentals – not flows – seem important in understanding permanent elements of excess returns. They conclude that investor flows are important for understanding deviations of exchange rates from fundamentals but not for understanding long-run currency values. This paper was motivated by the intense interest on the part of many real estate market participants in monitoring capital flows into real estate. This is viewed as a productive activity in part due to the perceived link between capital flows and property values or maybe more appropriately capital flows and deviations in price from fundamental value, given that there is little doubt that excessive mortgage debt flows fuelled the property price and development boom of the 1980s. The question that needs to be addressed is whether there is a systematic causal link between capital flows and real estate values that can be exploited in making real estate acquisition/disposition and lending decisions. Does monitoring of capital flows tell us anything we do not already know given that we have information on macro economic variables, space market fundamentals, property valuations, cap rates, and returns to other asset classes? Historically, from an academic viewpoint, fund flows were not considered relevant factor in asset valuation. According to the efficient markets hypothesis (EMH) any deviations of price from fundamental value is quickly arbitraged away; the price is always right. Recent work has begun to seriously study the limits of arbitrage including the transaction costs associated with implementing arbitrage trades to keep price at fundamental value. Much progress has been made in linking limits to arbitrage in a world of heterogeneous investors to stock price “bubbles” or episodes in which the trades of uninformed or irrational investors push stock prices too high, at least at a conceptual level. If relatively small frictions in the stock market, as compared to transaction costs, noise and liquidity in the private real estate market, can cause periods of overvaluation then it seems reasonable to assume that the real estate market is even more susceptible to such episodes. Hence, this review surveys key papers that aim to empirically document the link between uninformed demand and asset prices in financial asset and foreign exchange markets. Collectively, the papers reviewed do appear to provide significant evidence that at most times there is not a direct causal link between flows and returns (or asset values). That is, while capital flows and asset values are positively correlated, neither is directly causing the other; they simply respond 28 to the same fundamental economic news and provide a barometer of market liquidity. However, it does appear that in certain episodes of “extreme” environments capital flows are related to mispricing of assets that is related to the interaction of uninformed traders and limited arbitrage. Hence, tracking capital flows is a fruitful exercise in more volatile periods.

Subject: Re: Capital flows misprice assets
From: Pete Weis
To: johnny5
Date Posted: Sun, Feb 27, 2005 at 20:38:27 (EST)
Email Address: Not Provided

Message:
I might want some of Ben's real estate in 3-5 years if I'm lucky enough to have anything left myself. But I don't know - I have a feeling a lot of folks and perhaps lenders will be looking to offload. I'm not sure why he would think that real estate would do well while a stockmarket crash takes place. Afterall, 99% of that real estate is owned by middleclass folks whose stock investments would have tanked - not many of them will be buyers of expensive real estate or any real estate for that matter - many would be sellers or would attempt to sell. Some people argue that there will be more renters and therefore rental property is a good investment. But I wouldn't want rental property that had gone down significantly in value because I couldn't compete with all the lenders who might become landlords. In this kind of scenario assets in general loose value, while energy, food, and goods cost more with a falling dollar.

Subject: Some Real Estate Thoughts [cont.]
From: Pete Weis
To: Pete Weis
Date Posted: Sun, Feb 27, 2005 at 17:36:38 (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 ridiculously low) monthly payments. With many of these loans, the payments will rise after the beginning 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: Exceptional Real Estate Thoughts
From: Terri
To: Pete Weis
Date Posted: Sun, Feb 27, 2005 at 17:32:09 (EST)
Email Address: Not Provided

Message:
This is an exceptional essay. Every point made is clear and convincing; every point carries worries. Of course, it is obvious now that you mention it, the best time to buy real estate is when interest rates are high. A decline in rates immediately begins to widen the pool of potential buyers for the property. A rise in interest rates now and affordability will quickly shrink because prices are so high. A rise in rates will limit further price increases and drawing equity out of the property will quickly turn harder. Besides, after all the price increases has the extra debt incurred limited how much real estate can be relied on for 'retirement saving?'

Subject: NPR with ben stein - REIT's are it!
From: johnny5
To: All
Date Posted: Sun, Feb 27, 2005 at 16:41:38 (EST)
Email Address: johnny5@yahoo.com

Message:
Audio where ben says he has lots of real estate and expect low stock returns if not an out right crash over the next 10-20 years. http://www.npr.org/templates/story/story.php?storyId=4514481

Subject: Message Board Cleaning
From: Bobby
To: All
Date Posted: Sun, Feb 27, 2005 at 16:39:49 (EST)
Email Address: robert@pkarchive.org

Message:
I had to clean the message board since it reached the threshold of 700 messages, after which it would begin eating old messages. I'm sorry to interrupt the conversations everyone was having. You can find your old posts on the Message Board Archive. Again, sorry for the inconvenience. Message Board Archive www.pkarchive.org/MBArchive.html


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