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The Financial Crisis: Slowing Inflation Opens the Door For Fed to Cut Interest Rates Further | With U.S. consumer price inflation receding, the Federal Reserve has additional leeway to reduce interest rates further in the weeks ahead, though Fed officials currently don't see more rate cuts as a clear choice.</br></br>The U.S. consumer-price index was unchanged in September, the Labor Department said Thursday, after falling in August for the first time in almost two years. Excluding volatile food and energy prices, so- called core consumer prices -- which are believed to give a more stable reading of inflation -- advanced just 0.1% last month. And the year-over-year rate of inflation, at 4.9%, is coming down from high levels reached this summer.</br></br>There was widespread softness in pricing. Transportation prices fell 0.6% as airline fares and new-car prices dropped. Housing, which accounts for 40% of the consumer-price index, fell 0.1% for a second straight month, the first back-to-back declines since 2001. Clothing prices fell 0.1% for the month.</br></br>Other signs of economic weakness are building, including a report by the Fed on Thursday that U.S. industrial production dropped sharply in September.</br></br>The inflation readings underscore a growing belief inside the Fed that inflation pressures are easing, as many senior officials expected earlier this year. Indeed, financial shocks like the one the U.S. is experiencing could eventually lead to the opposite of inflation -- deflation, or a broad decline in prices -- though that doesn't look like a serious risk, given the amount of stimulus going into the U.S. economy. | yes | 1 |
Business and Finance | The Dow industrials jumped 119.01 points to 13357.74, down slightly for the week but up 1.1% for the month. New economic data, which showed that a key inflation measure remained tame in July, and a speech by Bernanke fueled hopes that the Fed will cut rates. The S&P 500 and Nasdaq both ended August higher.</br></br>The Fed won't bail investors out of bad decisions but will act if recent market turmoil threatens economic growth, Bernanke said in a much-anticipated speech.</br></br>---</br></br>Starwood named Coors Brewing CEO Frits van Paasschen as its new chief, hoping his experience managing brands can help propel the hotel company.</br></br>--- | yes | 1 |
Trying to Predict the Market? Five Pros Place Their Bets. | Did the plunge in the stock market two weeks ago leave you wondering what to do? Did the subsequent days of roller-coaster markets make you even more confused? Many money managers claim to have the winning strategy. Of course, they disagree. Here are five who are staking big bucks on their predictions.</br></br>David W. Tice, president of David W. Tice & Associates, manages the Prudent Bear mutual fund, started in 1995, and the Prudent Global Income Fund, launched in 2000. They have a combined $1 billion under management. The Bear fund aims to profit from a market downturn by betting that U.S. stocks will fall, a strategy known as "shorting." The Global fund is structured to benefit from a weakening U.S. dollar and rising gold prices.</br></br>The recent downturn is proof that easy money has helped prolong a period of financial prosperity, says Tice, who thinks a stubborn bear market is likely settling in. Tice admits he has seen red in recent years; the Bear fund posted losses in 2003 and 2004 but has recorded modest returns since. He says he underestimated the willingness of mortgage lenders to do business with higher-risk borrowers. But as lenders begin to pay the price for those risky loans, Tice says he is bulking up on short positions on financial institutions, as well as other companies that depend on access to credit. "We think this could be a 10- to 15-year decline," he said.</br></br>David Poiesz, head of the growth-equity investment team at OppenheimerFunds, manages the $1.3 billion Oppenheimer Growth Fund and co-manages the $2.8 billion Oppenheimer Equity Fund.</br></br>Some investors, he says, have too much money invested abroad after chasing higher returns in emerging markets. He views the recent market turmoil as a healthy reminder of the risks overseas, and says U.S. investors might find safer options at home. | no | 0 |
Spending Pickup May Not Be a Savings Grace | Author: Kelly Evans</br></br>U.S. consumers are loosening their purse strings just in time for the holiday season. But any joy may prove short-lived.</br></br>Consumer spending lately has been showing some resilience. Tuesday's revised report on gross domestic product showed spending rose at a 2.8% annualized rate in the third quarter, up from the 2.6% pace previously estimated. The fourth quarter is also off to a good start with October retail sales posting their biggest monthly gain in seven months</br></br>On Wednesday, the Commerce Department is expected to say consumer spending overall rose 0.5% in October from the prior month, more than double the September gain. Yet incomes are expected to rise by 0.4%.</br></br>What gives? Savings. | no | 0 |
Galbraith Scores Fed, Proposes Tax Boost: Action Criticized | John Kenneth Galbraith proposed an income tax increase yesterday as a much better way to head off inflation than the recent Federal Reserve Board boost in interest rates, which the Johnson Administration opposed.</br></br>Scorning the FedÛªs traditional independence of Congress and the White House as an ÛÏanachronism," Galbraith suggested a Congressional resolution affirming the PresidentÛªs ultimate authority over Federal Reserve policy.</br></br>Such action, he conceded, would draw ÛÏresounding speeches about the impossibility of entrusting the President w'ith such delicate and important power ÛÓ speeches which, if carried to their logical conclusion, would also have to deny him authority over such vastly more delicate and important matters as nuclear weaponry, Negro rights and relations with the Soviet Union.Û</br></br>The former Ambassador to India and author of "The Affluent SocietyÛ told the Joint Economic Committee of Congress ÛÏit would be silly to suggest that the recent interest rate will do irreparable damage."</br></br>With svelte sarcasm and facile rhetoric, however, he disparaged the FedÛªs recent action as ÛÏvisibly uninformedÛ as well as ÛÏimproper and unwise." | no | 0 |
Senate Banking Group Votes to Study Market | The Senate Banking Commit-1 tee yesterday unanimously! voted a full committee ÛÏstudyÛ! of stock market movements,1 with special attention focused on any ÛÏextremeÛ price fluctuations.</br></br>Senate Banking Chairman J. William Fulbright (D-Ark.) said* the study probably will get under way on February 21 ÛÏbut there is no reason for anyone to gel excited.Û ÛÏWe plan no Û÷investigationÛª of the market at the present time in the meaning often at-1 tached to that term,Û Fulbright told a news conference.</br></br>ÛÏHowever, the remarkable rises in market prices over the past 15 months, and especially! the past two-and-a-half months,! certainly warrant the Commit-j teeÛªs concern and study.Û j ! Sen. Homer E. Capehart find.), ranking Republican member of the Committee, I.said Republican committeemen ÛÏwent alongÛ with the Demo-' era tic move and will be ÛÏvitally interestedÛ in the study. He said the results could be ÛÏmost educational.Û</br></br>ÛÏ1 want to make it clear that we shall avoid this to the maximum extent possible,Û he said in a statement. ÛÏWe shall proceed with the utmost caution. ÛÏOne of the main propaganda points used by the Kremlin is the claimed instability of the capitalistic system. Thus we must strive to minimize violent fluctuations in our economy.Û</br></br>He said the only stock he personally owned is in a Coca-Cola bottling works in Bcrryville, Ark., which isn't listed on the ÛÏbig board.Û | no | 0 |
The Morning Brief: Finding a Successor To the Kyoto Protocol | The Wall Street Journal Online</br></br>The Morning Brief, a look at the day's biggest news, is emailed to subscribers by 7 a.m. every business day. Sign up for the e-mail here.</br></br>In his first official act as a new prime minister, Kevin Rudd today signed paperwork that will lead to Australia's ratification of the Kyoto Protocol, further isolating the U.S. on climate issues just as negotiators are meeting in Bali to start work on Kyoto's successor.</br></br>Mr. Rudd's signature would seem to bolster the United Nations- sponsored Bali conference's momentum, already building since the Nobel Peace Prize was co-awarded to the Intergovernmental Panel on Climate Change and its work documenting human-induced global warming. The latest scientific warning came just yesterday, in a study published by peer-review journal Nature Geoscience, which found the earth's tropical zones have begun to spread toward the poles. While some of the earliest signs of climate change came through melting ice in the Arctic, the study reports evidence of tropical expansion that could threaten subtropical societies. "Poleward movement of large-scale atmospheric circulation systems, such as jet streams and storm tracks, could result in shifts in precipitation patterns affecting natural ecosystems, agriculture, and water resources," it says, but cautions that the implications still aren't well understood. And yet, despite the warnings and burgeoning political consensus, there's also little certainty about what the Bali talks will produce.</br></br>While the U.S. delegation declared it won't be a "roadblock" to a new agreement, the Bush administration remains opposed to mandatory emission caps for greenhouse gases and some other steps many of U.S. allies support. China, which has seen billions of dollars in crops destroyed by the pollutants of its coal-burning power plants, and India, threatened by melting glaciers and devastating droughts, have both said they won't sign a treaty that slows their pace of economic development, as the Associated Press reports. Both countries are allowed to keep polluting under the 1997 Kyoto treaty, which itself has led to little actual reduction in greenhouse-gas emissions. The product of much geopolitical wrangling, it required only 36 countries to limit pollution, and just over of third of those countries were former Soviet-bloc countries, the Los Angeles Times notes. The likes of Russia, Latvia and Romania have sharply lowered their carbon dioxide emissions since 1990, but that's more due to how the 1991 collapse of the Soviet Union shut down smoke-belching factories, the Times says. And the Kyoto emissions were set far above the countries' actual emissions. | no | 0 |
Mortgage Rates Hit Record Lows | Fixed mortgage rates in the U.S. sank to record lows over the past week following the Federal Reserve's decision to lengthen the average maturity of its massive balance sheet, according to Freddie Mac's weekly survey of mortgage rates.</br></br>Freddie Mac Chief Economist Frank Nothaft noted that interest rates for adjustable-rate mortgages were nearly unchanged due to Fed plans to sell $400 billion in short-term Treasury securities, which serve as benchmarks for many ARMs.</br></br>The 30-year fixed-rate mortgage averaged 4.01% for the week ended Thursday, down from 4.09% the previous week and 4.32% last year. Rates on 15-year fixed-rate mortgages averaged 3.28%, down from 3.29% last week and 3.75% a year earlier.</br></br>Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 3.02%, unchanged from last week and down from 3.52% a year ago. One-year Treasury-indexed ARM rates averaged 2.83%, up slightly from 2.82% in the prior week but below the 3.48% average seen last year.</br></br>To obtain the rates, 30-year and 15-year fixed-rate mortgages required an average payment of 0.7 point. | no | 0 |
Steel Not Healthy, Despite Settlement | The steel industry has been hit by massive layoffs and plant closings across the country that bode ill for the nationÛªs economic recovery.</br></br>Pai't of the distress stems from general shutdowns in anticipation of the strike that was averted Sunday night when the nine largest producers granted the United Steelworkers of America a 30 per cent pay increase over three years.</br></br>But even after most of these plants get back into operation as many as one third of the industryÛªs roughly half million payroll employees may remain on furlough, according to one industry source. And some of the plants will stay closed indefinitely, he said.</br></br>Another steel executive estimated that the industryÛªs order books are only 45 per cent of normal for this time of year. This figure drops to 25 per cent for one of the nationÛªs biggest steelmaking facilities.</br></br>At BehlehemÛªs sprawling Sparrow Point plant in Balti-' moreÛÓsecond largest in the worldÛÓonly a third of the normal work force is on the job. And most of these are maintenance and service personnel. | yes | 1 |
Japan Reports Another Surge In Trade Surplus --- Total Leaped to $3.84 Billion In January; Imports Fell, Exports Expanded 9.7% | TOKYO -- Japan's merchandise-trade surplus more than quadrupled in January from a year earlier, as cheaper oil prices held down the value of imports and exports expanded by a healthy 9.7%.</br></br>The surplus widened to $3.84 billion from a revised $911 million a year earlier, marking the 13th consecutive month of year-on-year increases, a fact that is certain to put more political pressures on Japan to narrow the imbalance.</br></br>The trade surplus with the U.S. rose for the sixth straight month, climbing 2.4% to $2.45 billion from $2.40 billion. Exports to the U.S. increased 1% to $6.73 billion. Auto exports fell 19.4% in volume and 12.3% in value. Imports from the U.S. inched up 0.3% to $4.29 billion. But excluding a near-quadrupling in the volume of aircraft imports during the month, imports from the U.S. actually dropped 2%.</br></br>Many analysts said the numbers were in line with expectations and noted that January figures can be skewed by Japan's long New Year's holidays. Nevertheless, most analysts expect the surplus to widen through the year. One of the lessons from the January figures is that they show that "a stubborn recession in the U.S. isn't going to stop Japanese exporters from selling their products," said Jesper Koll, chief economist at S.G. Warburg Securities (Japan) Inc.</br></br>Mr. Koll said the 9.7% gain in overall exports in January shows that Japanese producers are selling their "record large inventory buildup into the overseas market." He noted in particular that exports to the Middle East had tripled from a year earlier. | no | 0 |
Economists Say Recession Is Ending with a Whimper | NEW YORK -- Economic storm clouds are clearing, but the streets are still slippery.</br></br>That's the midyear consensus of 40 economists surveyed by The Wall Street Journal. Although the recession is ending, they say, the recovery will be much weaker than the typical rebound since World War II. Many predict little or no change in the unemployment rate over the next several months.</br></br>Indeed, many analysts say the difference between recovery and recession will be so subtle that people who aren't economists may have difficulty seeing it.</br></br>"A lot of business people are saying to me: What recovery?" says Stuart Hoffman, senior vice president at PNC Financial Corp. in Pittsburgh. That's likely to remain a reasonable question all year, he says, because there are "many speed bumps that will keep us moving very slowly on the road to recovery."</br></br>Stiff tax increases imposed by many state and local governments this year are among the economic speed bumps Mr. Hoffman and many other analysts cite. They also point to the nation's low savings rate, and the huge debts amassed by consumers, businesses and government in the 1980s. And many predict defense spending and commercial construction will remain weak, and that U.S. export growth will be slow because of economic woes abroad. | yes | 1 |
Taxing Gasoline Tiaxing Gasoline | AN INCREASE IN the gasoline tax is the right first step toward a national fuel policy. Such a tax would provide a double benefit. It would encourage conservation of oil, at a time when our imports are rising and Arab atatesmen are hinting at imposing oil embargoes again. At the same time a higher gasoline tax would raise the v new revenues needed to make possible a reduction in federal income and payroll taxes for the families on the bottom 'half of the economic ladder, who have been most seriously hurt by inflation.</br></br>It is essential to begin reducing our dependence on foreign oil immediately. As a matter of sane social values, it is clearly better to make the largest reductions in gasoline than to make them in the other oil products Û¢ÛÓ like home heating oil, or the industrial fuels on which jobs depend. And sharply higher excise tax on gasoline ÛÓ unlike most of the other conservation proposals now under discussion ÛÓ could be put in place quickly with immediate effect. The Federal Energy Administration is right to push the idea, and the White House is right to listen carefully. It is dismaying to hear a succession of senators dismiss it out of hand.</br></br>The most prevalent reason for opposing the tax is that it would be too hard on the poor. But poor families use very little gasolineÛÓless than one third as much as the average. According to a report by the Washington Center for Metropolitan Studies. It would cost relatively little to rebate the tax increase to those poor families who depend on cars for their livelihoods.</br></br>Over the past six months the United States has attempted to talk oil prices down through international negotiation. Unfortunately, it has not worked. Our quiet diplomacy has been rewarded with a series of large increases in world prices. The most visible of them was delivered at the middle of last month, when the Organization of Petroleum Exporting Countries held its quarterly meeting in Vienna. In reply. President Ford and Secretary of State Kissinger publicly warned the oil exporting countries that these continuous increases were generating serious economic trouble for the entire world, trouble from which the OPEC countries themselves would not necessarily be spared. Since then, Kuwait has raised its effective price and Venezuela has raised taxes sharply.</br></br>Under these circumstances, how ought the United States respond? There is only one answer that makes any real sense for us and for the rest of the industrial world. | no | 0 |
Short-Term Rates Rise and Bond Prices Slump Despite Decline in Money Supply | NEW YORK -- Most short-term interest rates climbed yesterday, adding to uncertainty about the Federal Reserve System's credit policy and sending a chill through the bond market.</br></br>Even an unexpected decline of $300 million in the nation's money supply, reported by the Fed yesterday afternoon, did little to rejuvenate the credit markets. Bond prices slumped about 1/2 point, or around $5 for each $1,000 face amount. That was the third decline in a row, bringing the total drop to nearly two points.</br></br>Many analysts are expecting huge increases in the money supply over the next few weeks, partly because of federal income-tax refunds and partly because they expect faster economic growth. Bond traders fear that rapid money growth would intensify investor fears about the inflation outlook and would make the Federal Reserve much less willing to ease credit conditions.</br></br>Other Fed figures released yesterday contributed to confusion about Fed policy and the interest-rate outlook. "People were looking for clear evidence that the Fed had made a decisive move toward an easier policy, but the data didn't provide that," said Rudolf Thunberg of Ried, Thunberg & Co., a New Canaan, Conn.-based investment research firm. "The reserve data suggests that any move the Fed has made is a modest step indeed."</br></br>The federal funds rate, the rate on overnight loans of reserves between banks, ranged between 8.125% and 8.25% most of yesterday. That was up from an average of 7.69% in the week ended Wednesday, which was the lowest weekly average since mid-1978. Bond traders monitor the funds rate closely because it strongly influences many other interest rates, including those that dealers themselves pay to finance their securities holdings. | yes | 1 |
How the Recovery Went Wrong; Of the 11 recoveries in the last 60 years, this one is at or near the bottom in job growth and every other economic indicator. | President Obama, in speech after speech, proudly makes the following point: Although we inherited the worst recession since the Great Depression, we have generated net new jobs every month, and while we need to do more, we are going in the right direction.</br></br>Of course, recoveries always go in the right direction--that is, things get better over time. But merely going in the right direction is an incredibly low performance standard. Moreover, since deep recessions are generally followed by more robust recoveries, this should have been one of the strongest recoveries ever.</br></br>So what went wrong? All the available Keynesian levers for achieving economic growth have been pulled, yet the recovery is one of the weakest since World War II. The problem lies with the way the "stimulus" was carried out, the uncertainty of looming higher taxes, and the antibusiness rhetoric and regulatory strong-arming of this administration.</br></br>First, exactly how weak has this recovery been? The Federal Reserve Bank of Minneapolis tracks economic performance for each recovery and compares gross-domestic-product growth and job growth, the two most important indicators of economic performance. Over the past 60 years, there have been 11 recessions and 11 recoveries.</br></br>Sadly, this recovery is near the bottom of all 11. Cumulative nonfarm job growth is just 1.9% 34 months into recovery, the ninth-worst performance and well below the average job growth of 6.5%. Cumulative GDP growth is just 6.8% 11 quarters into this recovery, less than half the average (15.2%) and the worst of all 11. | yes | 1 |
Can China Lead a Recovery?; As American consumers struggle, some look east for a spending spark. | Correction: An Oct. 6 A-section article about China's role in the global economy incorrectly described a Morgan Stanley report on Chinese consumer spending. The report did not say that Chinese consumer spending will exceed U.S. consumer spending by 2018. It said that between now and 2018, Chinese consumers are likely to add more to global consumption than U.S. consumers, and that by 2018, Chinese consumers will be spending 40 percent as much as U.S. consumers, up from 16 percent in 2008. (Published 10/9/2009)</br></br>Chen Zizheng wheeled his shopping cart down one of the aisles at the Carrefour store near his house and paused in front of the bottles of Remy Martin, Johnnie Walker and Hennessy, each selling for an amount about equal to the annual salary he earned when he was a young government employee.</br></br>But those days were about 30 years ago, around the time Deng Xiaoping launched China on a path of economic reform and opening up. Now China's thriving economy has made it possible for people like Chen, a 67-year-old semi-retired aerospace industry official, to plop down 1,168 yuan, or $170, for a bottle of liquor at a branch of a French "hypermarket" chain.</br></br>"It's not that expensive for ordinary Chinese people now," he said, adding that he planned to serve Johnnie Walker Green Label to guests he was expecting to share moon cakes with during last weekend's mid-autumn festival.</br></br>"As Chinese society has developed and opened up, people have a better appreciation of imported liquor," said Chen, who used to buy the traditional Chinese stiff drink known as maotai. "When you choose a gift, other people will look at it and if it is brand stuff they will feel respected because you chose it for them." | yes | 1 |
Questioning a Cornerstone of Urban Aid Plans; Enterprise Zones Have Broad Support, but Critics and Advocates Wonder: Do They Really Fight Poverty? | One of the questions facing Congress as it moves toward action on an urban aid package is whether enterprise zones represent an efficient way to fight poverty.</br></br>The long-range urban aid legislation now being discussed in Congress almost certainly will include such zones, which some conservative Republicans have advocated as sound urban policy for the last decade.</br></br>President Bush has made enterprise zones a key part of his proposed six-point urban agenda. Democratic leaders of Congress have expressed a willingness to accept enterprise them under certain conditions, and big-city mayors also expressed support for the idea this week at their national conference in Houston.</br></br>At its core, such legislation would authorize tax breaks to attract businesses to distressed areas. If enacted, it would breach a consensus, reached in the 1986 tax bill, against using the tax code for other than fiscal purposes.</br></br>The types of tax breaks that the federal government should offer is another issue in the current debate. The administration wants to rely more heavily on cuts in capital gains taxes, while Democratic congressional leaders have emphasized tax credits for creating jobs. | no | 0 |
Apple Sees Volatile Trade on PC-Price Rumors | Dow Jones Newswires</br></br>NEW YORK -- Rumors of a new, lower-priced Macintosh computer drove options traders to Apple Computer on the first day of trading this year.</br></br>Last week, two independent Web sites reported that Apple will introduce a Mac priced below $600 at the MacWorld Conference & Expo to be held in San Francisco next week. One site, Think Secret, predicted that Apple will launch a Mac priced at $499, sans monitor, on Jan. 11.</br></br>Industry observers say the product would be aimed at personal- computer users who want a second computer to use with their iPod, the hand-held digital-music player made by Apple.</br></br>Merrill Lynch analyst Steve Milunovich wrote in a note yesterday that Apple could sell a Mac without a monitor for less than $500 without hurting margins. | no | 0 |
Business and Finance | AT&T'S EARNINGS leaped 41% in the second quarter, sharply higher than expected. The company cited cost-cutting efforts, including trimming jobs, consolidating facilities and writing down the value of inventories. Long-distance telephone revenue also showed strong growth.</br></br>Jim Walter Corp. received a $50-a-share, or $2.03 billion, leveraged buyout proposal from Kohlberg Kravis. The proposal sent the stock of the home builder and building-materials supplier soaring $12.50, to $58, indicating a higher offer is expected.</br></br>---</br></br>Two prominent Texas investors propose to raise up to $300 million to take control of several failing S&Ls and merge them into the largest savings association in the state.</br></br>--- | yes | 1 |
Democratic Leaders Close to Agreement on Campaign Finance Bill | House and Senate Democratic leaders are nearing agreement on final details of the first comprehensive bill to tighten campaign finance rules since the post-Watergate reforms of 1974 and plan to push the long-delayed measure through Congress by the end of next month.</br></br>General outlines of the legislation are clear: It would set voluntary spending ceilings for congressional candidates, provide incentives for compliance and tighten controls over special-interest spending on federal campaigns.</br></br>Some narrower but important points have also been resolved. For example, there is language to shield EMILY's List, which has been highly successful in fund-raising for Democratic women, from a ban on "bundling" contributions by special interests that then forward them to candidates and reap the credit.</br></br>But critical details remain to be worked out. There is the possibility of a crash-landing in the Senate if the bill does not meet bottom-line demands of a half-dozen Republican moderates who hold the key to whether the GOP can mount a successful filibuster to block final passage.</br></br>Nearly a decade in the making, the legislation was blocked for several years in partisan deadlock. Congress finally passed a bill in 1992 but it was vetoed by President George Bush, and an attempt to override the veto failed. | no | 0 |
Mobil Reports Flat Earnings in '91, With 1992 'Not Off to a Good Start | Mobil Corp. said yesterday that its profit was virtually flat in 1991, a year that began with spiraling oil prices and ended in a persistent recession,</br></br>Mobil Corp. said yesterday that its profit was virtually flat in 1991, a year that began with spiraling oil prices and ended in a persistent recession, ÛÏIt was a tough year for our industry, as a worldwide slowdown in economic growth dampened demand for energy and chemical products," Allen E. Murray, chairman of the Fairfax-based oil giant, said in a prepared statement. ÛÏUnfortunately, 1992 is not off to a good start. There has been no improvement in business conditions.Û</br></br>Like other major oil companies, Mobil was whipsawed last year by oil price gyrations caused by the Persian Gulf War. As the year began, it was enjoying the benefits of high crude oil prices caused by the tensions in the Middle East, but once the war began, prices sank, eliminating that advantage. The company then found itself coping with recession-related slowdowns in oil, gas and chemical product purchases.</br></br>Mobil earned $1.9 billion ($4.65 per share) in 1991, virtually the same as its profit in 1990, when a slightly higher number of shares outstanding .left per-share earnings at $4.60. Revenue fell 3 percent, to $62.7 billion from $64.5 billion in 1990. Nevertheless, Mobil remains by far the largest corporation based in the Washington area.</br></br>In the fourth quarter, Mobil earned $401 million (97 cents), a 39 percent drop from $652 million ($1.58) in 1990 that reflects the change in oil prices and economic conditions. Revenue in the quarter dropped 14 percent, to $16.6 million from $19.4 million in 1990. | no | 0 |
ECB Chief Plays Down Inflation Worries --- Duisenberg Warns Unions About Wage Demands; Rate Left Unchanged | FRANKFURT -- European Central Bank President Wim Duisenberg said an expected increase in euro-area inflation isn't cause for immediate concern, but he warned against "excessive" union wage demands based on that rise.</br></br>At the ECB's monthly news conference, Mr. Duisenberg repeated the euro has "strong upward potential" based on improving prospects for euro-zone economic growth and said he was pleased the currency has recently moved away from near parity with the dollar. Late in European trading, the common currency of the 11-nation euro zone was at $1.0332, strengthening from $1.0302 the previous day. In late New York trading, the euro rose to $1.0317 from $1.0313 Tuesday.</br></br>The ECB, as expected, left its refinancing rate unchanged at 3%, where it has been since a half-percentage point rise in November.</br></br>In addition to the good prospects for euro-zone growth, Mr. Duisenberg noted "generous" liquidity in the market and expected upward pressures on consumer prices. Although such comments could be seen as paving the way for an eventual interest-rate rise, Mr. Duisenberg stopped well short of sounding an inflation alarm. Rather, he said consumer-price increases the ECB sees for early 2000 "should not give undue cause for concern."</br></br>Euro-zone government bonds rose on Mr. Duisenberg's remarks, which markets took as lessening the chances of a nearterm rate rise. However, European stocks generally ended lower as markets focused on the possibility rates will soon rise in the U.S. | no | 0 |
'Hand to Hand' Group Reaches Out With Hot Meals for the Homeless | llene Leventhal, .1 Potomac homemaker, cut an unusual picture Sunday afternoon as she approached several homeless men huddled in blankets near the Federal Reserve Board building with a foil-wrapped package in each hand.</br></br>Slowly she circled the building, calling a friendly greeting to each man before getting close enough to hand out the food.</br></br>But no one was refusing the hot meals Sunday, as Leventhal and six friends made their weekly rounds of homeless enclaves on Virginia Avenue and Lafayette Square.</br></br>This week's menu: meatloaf, stuffed shells and macaroni casseroles freshly prepared in Potomac kitchens.</br></br>Everywhere Leventhal and her troupe parked their green and tan van. scores of men and women emerged from ramshackle piles of sleeping bags and old furniture to collect the food and rummage through Leventhal's Garfinckels, Britches and Lord & Taylor shopping bags for second-hand shirts, shorts and sneakers. | no | 0 |
Letters to the Editor: What's in a GDP? A Recipe for Clarity | Your concerns regarding the upcoming revisions of GDP (Intrinsic Value column: "New Recipe for the GDP Leaves Sour Taste," Dec. 21) merit a response.</br></br>All economists understand that we now measure goods and services using a historical (read "antiquated") benchmark year, which overstates output. Commerce's Bureau of Economic Analysis updates this benchmark every five years to correct this tendency. It's this standard, periodic "rebenchmarking" that produces the imminent revisions to GDP that you find controversial. You confuse these with a new methodology that does away with the "benchmark" method and its attendant problems. In reality, our new method won't significantly affect the estimates of recent growth, but it will reduce the need for future rewrites of economic history. That's why it's widely supported among economists.</br></br>Users will still be provided with a dollar value for GDP while getting more accurate estimates of growth rates for both GDP and its components. And your concern that GDP's components won't add up to the total is overstated. The "adding up" error will be a few hundredths of a percentage point. Contrast that to the revisions of half a percentage point or more that the new system will obviate.</br></br>You point to a second widely known problem in the data: that they don't reflect the apparent improved quality or convenience of many goods and services. Correcting for "quality changes" requires a good-by-good, industry-by-industry analysis. If credible numbers existed for these effects, then we'd be using them, but they don't -- yet. In fact, the first stage of the Bureau of Economic Analysis's program to make these adjustments will be released this summer. But we're limited by resources: President Clinton's 1996 budget produced adequate funding for this task that was stripped on the Senate floor.</br></br>In essence, you argue that fixing the first problem in our data is inappropriate unless the second is fixed as well. But the alternative -- postponing this revision until the quality measurement problem was "solved" -- is a bad idea. To do so, as Morgan Stanley's Steve Roach suggests, assumes that the two sources of errors in GDP estimates are offsetting in magnitude when, in truth, we don't know. In essence, postponing this revision means feeding financial markets a guess as to how our output has changed, one that would have to be revised regardless once real answers were available. | no | 0 |
Volume Up; Oils Strong | NEW YORK, March 4 W*)ÛÓOils resumed their role as pacemakers today and the stock market managed its third straight daily advance.</br></br>The 2,010,000 shares traded was the highest volume of the past eight sessions. It compared with 1,810,000 yesterday.</br></br>Although good by recent standards, this turnover was sub-averaec. The rise of the market also was modest.</br></br>Key stocks showed gains ranging from fractions to about a point for some but losers were plentiful and many issues were unchanged. The market rose at the start, expanded its gains somewhat by midsession, then backed away in the final hour.</br></br>Aside from oils, tobaccos and other defensive stocks did rather well but their performance was not unanimously higher. Some chemicals, nonferrous metals and farm implements also showed to advantage. The tone was lower among aircrafts, rails and motors. Leading steels were unchanged to a shade higher. | no | 0 |
Bernanke Rebuffs Frank on Rate Cut; Senator Questions Inflation Concern | Correction: A headline on a Feb. 16 Business article referred to Rep. Barney Frank (D-Mass.) as a senator. (Published 2/17/2007)</br></br>Federal Reserve Chairman Ben S. Bernanke yesterday rejected a Democratic lawmaker's suggestion that he consider cutting interest rates to bolster the economy.</br></br>Bernanke, testifying for a second day on Capitol Hill, this time before the House Financial Services Committee, repeated that the Fed is likely to hold rates steady for a while if slower economic growth nudges inflation lower this year and next as expected.</br></br>But the Fed also thinks inflation is too high and might go higher, Bernanke said. If he and his colleagues adjust borrowing costs in coming months, they are more likely to raise rates than lower them.</br></br>"In order for this expansion to continue in a sustainable way, inflation needs to be well controlled," Bernanke said in response to remarks by committee Chairman Barney Frank (D-Mass.). "If inflation becomes higher for some reason, then the Federal Reserve would have to respond to that by raising interest rates." | no | 0 |
Asian Central Banks Keep Up Intervention as Dollar Weakens | Author: David Roman</br></br>SINGAPORE--The central banks of South Korea, Singapore, Thailand and Indonesia were suspected of intervening in foreign exchange markets Wednesday to contain gains in their currencies, but analysts say the continued weakness of the U.S. dollar means Asian units should extend their rallies.</br></br>The wave of intervention, which has continued across the region for most of this year, hasn't been strong enough to reverse the strengthening trend in Asian currencies, as many policymakers are allowing their currencies to rise slowly to limit imported inflation.</br></br>That stance was reinforced after China, the top trading partner for key Asian countries, said in June it would let the yuan strengthen against the dollar--meaning that other Asian countries can maintain their export competitiveness against China even if their currencies rise a bit.</br></br>On Wednesday the Thai baht and the Malaysian ringgit hit their highest levels since the 1997 Asian currency crisis, while the Singapore dollar rose to an all-time high. | no | 0 |
DoubleClick Says Loss Widens On Slowdown in Web Advertising | NEW YORK -- DoubleClick Inc. reported a widened second-quarter loss as it struggles with a prolonged slowdown in Internet advertising.</br></br>DoubleClick, which handles online advertising for other companies, reported a net loss of $37.9 million, or 29 cents a share, compared with $22.1 million, or 18 cents a share, a year earlier. Revenue fell 20% to $101.9 million from the year-earlier's $128.1 million.</br></br>The results are far from the company's confident stance augured as late as January, when DoubleClick officials predicted a profit of seven cents to nine cents a share for the year. Four months later, officials reversed their prediction, saying the company wouldn't be profitable in 2001, blaming the economic slowdown across the Internet sector.</br></br>In a conference call after the close of markets, DoubleClick Chief Executive Officer Kevin Ryan said, "We don't see any indication that ad revenue is going to pick up in the third quarter."</br></br>DoubleClick said that after excluding eight different items, including amortization of intangibles, certain noncash compensation, a write-down of investments and a gain on issuance of DoubleClick Japan stock, its per-share loss would have been seven cents. This was in line with its guidance to investors in April, when it projected a loss after certain items of between five cents and seven cents a share on revenue of $100 million to $105 million. Despite its continuing losses, DoubleClick reported a strong cash position of $812.8 million, though down from $831.5 million at the beginning of the quarter. | no | 0 |
Dow Rises 17 but Nasdaq Index Falls in Tech Sell-Off | NEW YORK, Jan. 3ÛÓBlue-chip stocks rose today as investors responded to concerns about the economy by seeking less risky issues. But a sell-off in technology shares sacked the Nasdaq Stock Market</br></br>The Dow Jones industrial average rose 16.62 points to finish at 5194.07. Advancing issues outnumbered declining ones by nearly 5 to 3 on the New York Stock Exchange, and NYSE trading volume grew to 469.2 million shares from TuesdayÛªs 364.3 million.</br></br>Most broad-market indexes were higher, but the technology-heavy Nasdaq composite index fell 12.39 points, to 1046.26.</br></br>ÛÏItÛªs a vicious, two-tier market,Û said Larry Wachtel, an analyst for Prudential Securities. ÛÏIf youÛªre in a handful of blue chips, youÛªre sharing in another great day. If youÛªre in technology, youÛªre getting whacked around."</br></br>The NasdaqÛªs decline marked a continuation of TuesdayÛªs sell-off in technology stocks. Semiconductor issues fell after PaineWebber downgraded five of them, saying that despite strong industry trends, those stocks have a big downside risk. Alex. Brown & Sons also downgraded three technology stocks. | yes | 1 |
Futures Markets: Bond Contracts Soar for Third Day On Move by Fed | Treasury bond futures prices soared for the third consecutive day, setting life-of-contract highs after the Federal Reserve System unexpectedly injected permanent funds into the banking system.</br></br>Some traders saw the Fed move as a precursor to a cut in the discount rate, the rate banks pay on borrowings from the Fed. In adding funds, the Fed purchased short-term Treasury bills through an overnight system repurchase agreement.</br></br>The ensuing buying frenzy led the December and March contracts to life-of-contract highs for the third day in a row. December and March-delivery Treasury notes and Government National Mortgage Association certificates also set contract highs in heavy trading.</br></br>The market "caught a real case of disco fever," said Norman Frey, an analyst with Northern Futures Corp., Chicago.</br></br>Some analysts were skeptical. The rate on federal funds, the reserves that member banks lend one another overnight, didn't drop dramatically in reaction to the Fed's action yesterday, they noted. The fed funds rate would normally drop if a discount rate cut were in the offing, they added; that implied the Fed's purchases were technical in nature, aimed only at adding necessary reserves to the banking system. | no | 0 |
The Factory Of the Future; Little-Known Solectron Makes High- Tech Industry's Products | In a corner of a nondescript, red-brick building here are dozens of boxes emblazoned with Compaq Computer Corp.'s familiar red logo. The boxes contain printed circuit boards and related accessories for Compaq's high-end computer servers. The tops of the boxes show a return shipping location for Compaq at the address here.</br></br>But this is not a Compaq factory. Rather, it is one of 21 high- tech manufacturing plants that form the global manufacturing empire of a Silicon Valley company named Solectron Corp.</br></br>Most people have never heard of Solectron, or of the curious mix of state-of-the-art manufacturing systems and ancient Asian principles by which it operates. The name Solectron does not appear on any product.</br></br>What Solectron makes is nonetheless very familiar: cell phones, inkjet printers, personal computers and medical equipment that bear the names and logos of a virtual who's who of high tech -- International Business Machines Corp., Intel Corp., Hewlett-Packard Co., Motorola Inc., Nortel Networks Corp. and others that would rather not reveal who is building their products.</br></br>"We are their factory," said Gary Fain, the Solectron manager who oversees the Compaq assembly line. "We've got their name on it, but they never touch it." | no | 0 |
LEBHEKJBUMEsnEIntereSt RatCS During a Vear of Wild Gyrations | An international economist or investor will claim that the international sentiment toward currencies, trade and the economic outlook in the United States, as seen through the eyes of investors in Frankfurt, Tokyo and London, was the principal determinant of interest rates in 1987.</br></br>Our heavy dependence on capital from foreign investors to finance both the federal budget deficit and the current account deficit (of which the trade deficit is the largest component) were the underlying factors.</br></br>The international investor considers opportunity costs in evaluating investment prospects in terms of the premium on U.S. rates over domestic rates. Consequently, faced with larger investment risks in dollar-denominated securities, foreign investors demanded larger-than-usual yields to entice them into owning U.S. bonds.</br></br>In the United States, the main problems were what to do about the dollarÛÓwhether to defend it or allow it to move lower in hopes of reversing the trade deficitÛÓand how to attract foreign capital in order to finance the trade and budget deficits.</br></br>Initially, the TreasuryÛªs dollar policy was anchored in the Louvre Accord, in which the Group of Seven industrialized nationsÛÓthe United States, Japan, West Germany, Britain, France, Canada and ItalyÛÓagreed to support the dollar while the United States made efforts to reduce the budget deficit. | yes | 1 |
Labor Hits Deficit as Too Low | The AFL-CIO lashed out yesterday at the Democratic Congress and the President for refusing to run a big enough budget deficit to drive down the unemployment rate appreciably over the next two years.</br></br>The President has said a $60 billion deficit is all the country can tolerate next fiscal year without renewed inflation. The House and Senate both voted last week for deficits in the neighborhood of $70 billion.</br></br>The labor federationÛªs Executive Council, here for its regular quarterly meeting, said yesterday it was ÛÏappalled" by the House and Senate budget resolutions.</br></br>8.9 per cent last month. A $70 billion deficit will drive the rate down to only about 7.5 per cent by the end of next year, according to the House and Senate Budget committees.</br></br>The federation wants the rate reduced faster and further. It tried to persuade the Senate to raise its spending target another $9 billion in fiscal 1976, even at the cost of increasing the projected deficit. The $9 billion amendment failed, 64 to 29. | no | 0 |
j Monday, January 27, 1986 A17 | Suppose you were told that the president would agree to a budget-balancing plan that exempts over half of total spending from cuts and requires that half the cuts come from defense. Further, suppose you were told that the plan would require cuts in affected areas of 10 to 15 percent over 4 consecutive years, while outlays in unaffected programs such as Social Security would rise steadily at about 7 percent a year.</br></br>Given these facts, you might suppose that a deficit reduction plan weighted against defense and in favor of Social Security might be justified by an imbalance between defense and social spending that had grown: up over past years.</br></br>But consider the facts: since 1967, the year before Lyndon JohnsonÛªs guns-and-butter budget proposed a record peacetime deficit of $25 billion, the share of GNP devoted to entitlementsÛÓincluding Social Security, Medicare and MedicaidÛÓhas risen from 5.9 percent to 11.3 percent in 1985. Meanwhile, the share of GNP devoted to national defense has fallen from 9.2 percent in 1967 to 6.5 percent in 1985. Nondefense discretionary spending that finances government operations, grants to state and local governments, and research and education programs aimed at the young has stayed between 4 and 5 percent of GNP.</br></br>A clear pattern has developed. Defense spending is cyclical. It rose during the Vietnam conflict and fell sharply thereafter until 1981 when it reached 5.5 percent of GNP. In contrast, the growth of spending on entitlements has followed a steady, upward trend. During the decade between 1957 and 1967, spending on entitlements rose from 3.9 percent of GNP to 5.9 percent. It rose much more rapidly during the eight years after 1967, reaching 10.6 percent of GNP by 1975 and rising to over 11 percent of GNP in the 1980s.</br></br>It is the growth of spending on entitlements and other social programs that has made the guns-and-butter budget option far more expensive. Even Lyndon JohnsonÛªs 1968 guns-and-butter budget set out- lays at 21 percent of GNP. In 1985 the guns-and-butter option, with defense at 6.5 percent of GNP instead of 1968Ûªs 9.8 percent, cost nearly 25 percent of GNP. The difference absent a tax increase has meant deficits running at about 5 percent of GNP. | no | 0 |
aiucKs Kegisier croaa Advance: Two-to-One Winnore | NEW YORK, June 3ÛÓThe prospect of life with higher income taxes pushed the stock market higher again today. Stock Exchange ticker tapes were unable to keep up with the floor pace for most of the day as prices jumped from the opening, absorbed some profit-taking around mid-day and closed near their best levels of the session.</br></br>The Dow Jones industrial average posted a gain of 6.38 points at 905.38. Only six issues \ in the 30-stock average lost ground, while the other 24 were all higher.</br></br>Standard & PoorÛªs 500-stock composite was ahead 1.31 point io 99.99 and the New York Stock Exchange index jumped 0.69 point to 56 19.</br></br>13.09 million turned over on Friday, a session crammed between the Memorial Day holiday and the weekend.</br></br>The closing box score showed an advantage of more than two-to-one for the winners. There were 913 advancing stocks and 443 declines. On Friday, In the first response to President JohnsonÛªs statement that he will accept $6 billion in spending cuts in return for enactment of his tax increase, there were 861 gainers and 425 losers. The number of new 1968 highs rose to 219 from 172 and new lows edged up to 16 from 14. | yes | 1 |
Prices Mill Unevenly on Huge Turnover: 6 Million Shares Traded | NEW YORK. March 9 (AP)ÛÓStock market volume zoomed above six million shares today as prices milled turbulcntly.</br></br>Once again, turnover was the biggest in about 51 a years, harking back to the 7.72-million-share day of Sept. 26, 1955 when prices reeled under the news of President EisenhowerÛªs heart attack.</br></br>The Dow Jones industrial average fall 2.82 to 663.33. Standard & PoorÛªs 500-stock index rose .06 to 63.50.</br></br>The Associated Press average of 60 stocks dipped .20 to 238.10 with industrials down .60, rails up .30 and utilities unchanged.</br></br>Profit taking mingled with reinvestment and switching against a background of continued eager public participation in the market. Once again, many of the volume leaders were lower-priced issues. | no | 0 |
The Truth About the `D' Word | Official Washington and would-be presidents are scrambling to come up with credible - or at least sound-bite-worthy - plans to stimulate the economy. Inevitably, the debate goes to the budget deficit and, to underscore its size, its relationship to the amount of the GNP - an arbitrary ratio having no analytical significance.</br></br>What really matters is the impact of the deficit on the capital markets, where private and public borrowers compete with the federal government for funds and run the risk of being "crowded out" when rates become prohibitively high. To gauge its potential for driving up interest rates and impeding the economy, the deficit should be measured against the domestic personal savings pool, which underwrites all forms of debt, ranging from Treasury and corporate borrowing to home mortgages. Here, the numbers are truly alarming.</br></br>During the 1970s, the deficit as a percentage of personal savings averaged 38 percent. It soared to 117 percent in the 1980s, topped 160 percent in 1991 and in 1992 will likely reach 225 percent.</br></br>Obviously, the United States no longer has a large enough pool of domestic savings to meet the financing needs of a healthy private economy in tandem with a burgeoning federal deficit. Even in a meandering economy with modest private credit demands, our domestic bond market is feeling the pinch. Long-term interest rates in the United States are considerably higher than the tempo of the economy and inflation in this country would seem to indicate. Financial market participants and borrowers are getting a preview of the future: a worldwide capital shortage and high real rates of interest.</br></br>What kept interest rates from soaring during the extreme savings scarcity in the mid to late 1980s was a bounteous influx of funds from foreign investors, who filled the savings gap by purchasing billions of dollars of U.S. government securities. That's not apt to be repeated in the 1990s. Foreign investors are not as flush as they once were. At the same time, the triumph of market-oriented economic philosophies all over the world is accelerating the demand for investment capital. | no | 0 |
Eurobond Market Gets Issues in Yen, Canadian Dollars --- Special to The Wall Street Journal | LONDON -- Norway offered the first major yen issue since January to strong demand Thursday, and a 300 million Canadian dollar ($241.4 million) issue for BCE Inc. marked the largest launch in that sector.</br></br>No new bonds were launched in U.S. dollars, and seasoned Eurodollar issues closed mostly unchanged as the U.S. Treasury market continued to drift on dollar weakness and inflation concerns.</br></br>Norway's 50 billion yen ($394.3 million), seven-year issue, priced to yield 5.12% by lead manager Daiwa Europe Ltd., was well-received.</br></br>Syndicate specialists said the bonds were correctly priced, and co-managers said they had plenty of clients in Europe interested in the issue because of the borrower and the lack of supply in this sector.</br></br>But they were critical of the way the issue was handled by the lead manager, charging that Daiwa had widely pre-placed the paper in Europe Wednesday and then overnight in Tokyo. They noted that a preplacement period is usually a few hours before the official launch, not a full day. | no | 0 |
Fed Shifts to Worry Over Risk of Slump But Keeps Short-Term Rates Unchanged --- Markets Now Expect Cuts At the End of January As Inflation Fear Fades | WASHINGTON -- The Federal Reserve promised to throw a life preserver to the U.S., declaring that the risks of "economic weakness in the foreseeable future" exceed the risks of inflation. But it left short-term interest rates unchanged.</br></br>Financial markets now expect the Fed to begin cutting rates at the end of January, and to reduce them at least one-half percentage point by spring.</br></br>Abandoning its 19-month stance that it was primarily worried about "inflation pressures," Fed officials ended their meeting with a statement saying, "The drag on demand and profits from rising energy costs, as well as eroding consumer confidence, reports of substantial shortfalls in sales and earnings, and stress in some segments of the financial markets suggest that economic growth may be slowing further."</br></br>Although "some inflation risks persist," the Fed added, "they are diminished by the more-moderate pace of economic activity and by the absence of any indication that longer-term inflation expectations have increased." In contrast to recent Fed statements, this one included no mention of the inflationary dangers of tight labor markets.</br></br>Until a report in The Wall Street Journal this week, financial markets had expected the Fed to declare the risks of inflation and recession about equal. Even though the Fed went further than that, financial markets initially were disappointed that rates weren't cut. Stocks, which had been up before the Fed's announcement in the hopes of a rate cut, sank soon thereafter. As investors' concerns about corporate profits grow, the Dow Jones Industrial Average fell 61.05 to 10584.37, while the Nasdaq Composite Index dropped 112.81 to 2511.71, a painful 4.3% drop. | yes | 1 |
A Father's Advice: Watch Out for 'Miscellaneous' | Fifty years ago, shortly after my wife, Sara, and I were married, my father gave me some unconventional advice about how to organize my family budget.</br></br>At the time, I thought he was joking. But over the years, I began to understand what my father was really saying: "You'll have no trouble handling your major expenses. Your problem will be your miscellaneous expenses. If you can't control them, they'll wreck your family finances."</br></br>My father's advice, I have discovered, is especially relevant as the holidays approach and we get ready for a season of celebrating and spending. When we go shopping for holiday gifts, we may vow to be prudent, but we are often overwhelmed by the many temptations to spend frivolously.</br></br>The need to keep a lid on spending is a concern that many people share, but it is a special challenge for retirees who, like myself, live on fixed incomes, in my case augmented by my freelance writing. That challenge has become even tougher lately because the value of our investments has declined sharply during the 21/2-year bear market.</br></br>Sara and I, for instance, felt more comfortable when our stock in General Electric Co. was worth $55 a share than we do today with the stock trading at less than half that. Sara accumulated the shares when she worked at GE, and they have been a mainstay of our savings. | no | 0 |
U.S. Inflation Gauge Turns Lower; Producer-Price Index Falls for First Time in More Than a Year as Fuel Costs Decline | WASHINGTON--A gauge of U.S. inflation dropped in September for the first time all year, pulled lower by falling fuel costs.</br></br>The producer-price index for final demand, which measures changes in the prices firms receive when they sell goods and services, offered the latest sign that inflation pressures remain soft across the U.S. economy. The index decreased a seasonally adjusted 0.1% last month from August, the Labor Department said Wednesday.</br></br>It was the first decline in the measure in more than a year, following a flat reading in August. Excluding the more volatile food and energy categories, producer prices were unchanged. Economists surveyed by The Wall Street Journal had forecast prices would rise 0.1% in September.</br></br>"No inflation here," wrote Jennifer Lee, senior economist at BMO Capital Markets, in a client note Wednesday.</br></br>Producer prices rose 1.6% in September from a year earlier. Prices rose 1.8% for the 12-month period through August and 1.7% in July. | no | 0 |
Productivity -- Picking Up? | OVER THE PAST two centuries, in all of the worldÛªs rich countries, labor has been moving out of agriculture into industry.</br></br>Food production hasnÛªt fallen, because farmers' productivity has steadily risen. It has freed people for other kinds of work, making these economies grow and raising everybodyÛªs standard of living.</br></br>Now the same process is overtaking manufacturing. Within the past decade or so, in most of the industrial countries, employment in manufacturing has been failing. But with only one exception, Great Britain, manufacturing output has continued to rise throughout the industrial democracies. Productivity is increasing, and labor is shifting from factories to services. It will be useful to keep this process in mind when legislation on competitiveness and trade protection begins to move through Congress. People in Congress often talk as though the number of jobs in manufacturing were the true measure of industrial strength. That's wrong. As factories learn to produce more goods with fewer people,*prosperity rises.</br></br>But there are sharp variations from one country to another. The Labor Department has just published figures on manufacturing productivity through 1985 for most of the advanced countries.</br></br>Over those years the world's fastest gains in manufacturing productivity were not in Japan but in Belgium, where, it doubled. Factory jobs there fell by more than one third, while output rose 20 percent. Japan's productivity gain was nearly as great as Belgium's, and since manufacturing jobs there held steady, output nearly doubled as well. | no | 0 |
Finally, Bill Will Force Banks to Tell Real Interest | For almost 30 years, Morse - the father of truth-in-savings legislation - has been badgering Congress to force banks to tell you, straight, how much you're earning on savings accounts. All too often, you're getting substantially less than you think.</br></br>Morse's dream has finally came to pass. When President Bush signs the new banking bill, truth in savings will become the law of the land. Rep. Esteban Torres (D-Calif.) fought off all the last-minute attempts to bury the proposal.</br></br>"Usually, monsters rise up in the night to devour consumer legislation," says Edward Mierzwinski, a consumer advocate for the U.S. Public Interest Research Group in Washington and himself a persistent lobbyist for the law. "This time the consumer won."</br></br>Truth in savings won't take effect for at least 15 months, while the Federal Reserve writes regulations for it. During that process, Morse will stay on the lookout for monsters.</br></br>But the principle has been won. By mid-1993, many savers will learn - for the first time - what their bank accounts are really yielding and how that compares with other banks in the community. Even before that date, the shiftier institutions will doubtlessly clean up their act. | no | 0 |
Stocks Set New Peak, Then Backtrack: Recent Favorites Sag | NEW YORK, Oct. 22 (AP)ÛÓA heavy wave of selling in the final hour marred another stock market advance which put some averages at historic highs again today.</br></br>Some sharp losses among the recently strong color television set manufacturers and assorted electronics spread to some other volatile issues, prompting many trading elements to dump stocks rapidly. The ticker tape was running three minutes late at the close.</br></br>At the same time, the list was being given excellent leadership by General Motors which rose to a new high of 1117* before settling down to a net gain of % at 110%.</br></br>Big Three motors were pacemakers from the start as they rode on reports that sales of 1966 model cars were off to the fastest start of any model year.</br></br>The Dow-Jones industrial average, which had been up 4.77 at best, closed with a gain of 2.14 at its new high of 952.42. | yes | 1 |
Treasury Prices Soar as Greenspan's Remarks Suggest to Investors That Rates Won't Be Raised | NEW YORK -- Treasurys prices soared yesterday after Federal Reserve Chairman Alan Greenspan, appearing before the Senate Banking Committee, said there are signs that economic growth is slowing to a more sustainable level.</br></br>Investors wagered that his remarks mean there is less likelihood that Fed policy makers -- who meet again on Aug. 22 -- will raise interest rates again this summer.</br></br>It was the best day for the bellwether 10-year Treasury in over a year, and the best performance for the 30-year bond since February.</br></br>The 10-year Treasury note's price jumped 1 3/32 points, or $10.94 per $1,000 face value, to 103 15/32. Its yield fell to 6.00% from 6.15% late Wednesday, as yields move inversely to prices.</br></br>The 30-year Treasury bond's price surged 1 16/32 points; its yield fell to 5.808% from 5.911% Wednesday. | no | 0 |
Glitch Prompted Big Discount-Window Loan | WASHINGTON--First Tennessee Bank, a unit of First Horizon National Corp., was the biggest borrower of short-term funds from the Federal Reserve during the fourth quarter of 2010, following a technology glitch, according to data released Friday.</br></br>Based in Memphis, Tenn., the bank borrowed $1.017 billion on Nov. 24, 2010, the largest single loan during the period and bigger than any other bank's total borrowing.</br></br>First Tennessee tapped the central bank's discount window once because of a technology glitch that halted the wire-transfer service between the bank and its regional Federal Reserve bank on the day before Thanksgiving in 2010. The technology problem disrupted the ability of the bank's bond broker-dealer to settle securities on the eve of a holiday, said the bank's corporate treasurer, Tommy Adams.</br></br>In total, the banks borrowed $3.686 billion from the discount window from October 2010 through December 2010. That included many banks that borrowed money and rolled it over several days in succession. Many loans were for a single day.</br></br>Although most of the discount-window borrowers were U.S.-based banks, some of the Fed loans were made to local branches of foreign banks. The New York unit of Spain's second largest bank, Banco Bilbao Vizcaya Argentaria SA, borrowed $200 million in the quarter, making it the third largest discount-window lender in the period. A spokeswoman couldn't immediately comment. | no | 0 |
Let the Blue Chips Fly, But Don't Kowtow to the Dow | Once again, itÛªs time to talk about the stock market. The reason, of course, is that last week Wall StreetÛªs most sacred icon, the Dow Jones industrial average, broke through yet another barrier, closing above 6000. This came less than 11 months after the market broke 5000, and less than 20 months after it broke 4000.</br></br>Be still, my heart. For despite the hoopla surrounding this pseudo-event, there arc lessons here: some new, some old. The new one is that you snouiun t pay very muc attention to the Dow, which is a crummy measure of the stock market even though everyone uses it, including me. The old lesson is that you shouldnÛªt let any number ending in three zeros determine what you do, no matter what assorted pundits and experts tell you. After all, itÛªs your money, your life, your investment decisions.</br></br>That said, a 6000 Dow raises the same questions people asked when the Dow hit 4000 and 5000. If you're not in the market, is it too late to join the fun? If youÛªre in, should you get out just in case the market has peaked? Will the next thousand-point mark the Dow hits be 7000 or 5000? No one knows, least of all those of us at Newsweek. WeÛªre the people who put a bear on the cover 2400 points ago.</br></br>But hereÛªs some advice, anyway, before we move on to something more interestingÛÓwhy itÛªs wrong to deify the Dow. Point one: Yes, sooner or later the market will fall sharply, despite stocks having defied history and logic by rising almost continually since October 1990. Point two: For heavenÛªs sake, donÛªt chase hot stocks or hot mutual funds unless youÛªre prepared to lose your shirt. Trend-surfing is fun, but sooner or later, you miss the wave and get wiped. Point three: Please, please, please donÛªt take the Dow too seriously.</br></br>If the Dow hadn't already been around for 100 years, no one would create it now. To be sure, very smart people tend the average and try to keep it up to date. Over the years they've modernized the Dow by leavening its portfolio of heavy industrials with such non-industrials as Coca-Cola Co., Walt Disney Co. and McDonaldÛªs Corp. Still, the averageÛªs built-in flaws make it subject to weird and random movements. And that brings us to the main and final point. The Dow can tell you which way the market is going, but it's a crude tool. Obsessing about small movesÛÓlike whether 6000 says something that 5900 didnÛªtÛÓis like using a cleaver to perform open-heart surgery. | no | 0 |
Americans Run Out of Options to Boost Their Spending | With the economy strong and both inflation and unemployment low, why don't American workers feel better about it? Nearly three-fifths of those questioned in a Time Magazine/CNN poll last week said they did not "personally feel better as a result of the recent improvement of the economy."</br></br>Some analysts suggest that it is because workersÛª standards of living are not rising noticeably. Many of the newly created jobs pay relatively low wages and often have few benefits, while people who have had jobs all along resent the fact that their incomes are barely keeping up with inflation.</br></br>that inflation-adjusted incomes are not going up, it's that consumers as a group have run out of ways to buy more goods and services even when their incomes are stagnant.</br></br>The chart at the right shows one important means U.S. households used in the 1980s to keep their consumption rising when their real incomes did notÛÓtheir current savings.</br></br>In the 1960s and 1970s, personal saving generally dipped to about 6 percent of after-tax income during economic booms and rose to 8 |>ercent or 9 percent when the economy slumped and saving for a rainy day became more popular. | no | 0 |
Buying Fur Retailers Turns Fashionable As Fur Vault, Antonovich Stakes Are Sold | NEW YORK -- This isn't fur-buying season, but buying fur retailers seems to be getting trendy.</br></br>Centaur Partners II, a Bethesda, Md., investment partnership, said last week that it has amassed 25.6% of Fur Vault Inc. and may buy more. Just last month, a group of Canadians in the fur business bought a controlling interest in Antonovich Inc., another of the small handful of public fur retailers.</br></br>Fur-industry experts say the buying activity in the two firms, while unrelated, indicates that the business may be poised for profitability after several dismal years. In 1987, retail demand was strong and skin prices soared, but after the stock market crashed in October, sales plummeted and many fur stores were left with bloated -- and expensive -- inventories. Both Fur Vault and Antonovich posted losses two years in a row.</br></br>Melvyn J. Estrin, one of Centaur's partners, said in an interview, "We believe this is an undervalued stock." Fur Vault went public in 1984 at $11 a share and got as high as $15 in 1987, but it has been languishing lately at about $2.50. Centaur has been buying the stock for as much as $4.50 a share and now has 3.2 million common shares. Fur Vault shares fell 12.5 cents to $3.875 Friday in American Stock Exchange composite trading.</br></br>Mr. Estrin described Centaur's intentions as "friendly." He added, "We've had some discussions with Fur Vault and would like to get some positions on the board and help with input on the future of the company. We've left all our options open: We could buy or sell or increase our position." | no | 0 |
A Shot of Fiscal Help | The financial news for Maryland keeps getting worse. The latest estimate of the budget deficit is $450 million. Next year, the figure is expected to exceed $1 billion.</br></br>A study by the Maryland Budget and Tax Policy Institute found that the state has one of the leanest governments in the nation. Still, the deficit means that the legislature will have to cut the budget and find greater efficiencies in the delivery of services. It also will need to find additional revenue to meet the state's constitutional requirement to balance the budget.</br></br>House Bill 87, which I am sponsoring, would help with additional revenue by doing what Maryland hasn't done in decades -- raise the state excise tax on alcoholic beverage products.</br></br>The last time Maryland increased the tax on hard liquor, gasoline cost 23 cents a gallon, per capita annual income was $2,047 and Dwight D. Eisenhower was in his first term as president. Maryland's population was half what it is now. The year was 1955.</br></br>The last time Maryland increased its tax on beer and wine, gas cost 36 cents, per capita income was $5,291 and President Richard Nixon was in his first term. Four million people lived in Maryland. The year was 1972. | no | 0 |
Global Finance: Prepaid Cards on the Block | J.P. Morgan Chase & Co. took another step in its strategy to unload some of its minor businesses, exploring putting part of its prepaid card operations on the auction block.</br></br>The big New York bank said Thursday it is exploring the sale of the card business, which includes plastic disbursed by governments for tax refunds, child support, food stamps, unemployment benefits and state payrolls. The business also includes cards used for health-savings accounts.</br></br>Such cards are increasingly coming under scrutiny from regulators amid concerns about high fees.</br></br>The Consumer Financial Protection Bureau in September said that employers can't require that workers receive paychecks on debit cards, also known as payroll cards.</br></br>J.P. Morgan has been considering the move for several months as part of its strategy to sell operations that are risky or aren't significant to its bottom line. | no | 0 |
Ahead of the Tape | [Today's Market Forecast]</br></br>Line in the Sand</br></br>Financial officers have little to fear but the Fed itself.</br></br>Investors around the world spent the past few weeks fretting about whether the Federal Reserve will try to nip rising inflation in the bud by raising interest rates in late June. With an increase in the federal-funds rate next week to 5.25% now looking like a certainty, the focus in the days ahead shifts to whether the Fed will signal yet another increase in its benchmark interest rate in August.</br></br>A slew of economist reports out over the weekend say it is a distinct possibility that the federal-funds rate later this summer will hit 5.5%, the line in the sand for many chief financial officers. | yes | 1 |
Dow Rallies to Gain 75 Points | Author: Jonathan Cheng; Kristina Peterson</br></br>NEW YORK--Stocks staged a strong rally to finish in positive territory for the second day in a row, shaking off deep losses as optimism grew ahead of a fresh wave of bank earnings and guidance from the Federal Reserve.</br></br>The Dow Jones Industrial Average erased triple-digit losses to finish up 75.53 points, or 0.74%, at 10229.96, with materials and energy stocks leading the way.</br></br>The market started the day down heavily on the back of lower-than-expected corporate earnings, before launching a noontime surge that lasted the rest of the session.</br></br>Traders said the market's afternoon change of heart was initially sparked by speculation over what the top central banker might say in semiannual congressional testimony on Wednesday, including the possibility of a further loosening of monetary policy. | yes | 1 |
Home-Building Falls to Nine-Year Low: Credit Crunch, Consumer Fears ... | Home construction plunged to a nine-year low during January, the Commerce Department said yesterday, as consumers battered by recession stopped buying and cash-strapped builders slashed projects.</br></br>850,000, the lowest since 843,000 in January 1982. The January drop followed a revised 13.7 percent slide in December.</br></br>The dismal start to 1991 follows the building industry's worst performance last year since the 1981-82 recession.</br></br>No early end to the construction slump was in sight last month as applications for building permits skidded lower for the 12th straight month.</br></br>Analysts said the big decline in building activity was perplexing because interest rates are falling and home prices in many areas are softening. That was apparently outweighed by consumer fears about losing their jobs and developersÛª problems in getting bank loans. | yes | 1 |
Poor-Mouthing Aid; The truth is, it works. | People say that global poverty's a shame, but there's just no way to fix it. People say they'd welcome bigger aid programs, but aid is mostly wasted. Here is why these pessimists are utterly mistaken.</br></br>The doomsters say that pro-market policy reforms, supported by aid donors and especially by the World Bank, have been a failure. But two decades of reform have actually succeeded. Since 1980 the number of people living on less than $1 a day has fallen by about 200 million, even as the world's population has risen by 1.6 billion. That is a stunning achievement given that the ranks of the poor previously had swollen steadily at least since 1820.</br></br>The doomsters say that however much you throw aid at schools or health clinics, you never see much progress. But the adult illiteracy rate in the poor world has halved during the past three decades, and life expectancy has grown by 20 years during the past four. Again, a stunning achievement. The previous 20-year jump in longevity had taken since the Stone Age.</br></br>The doomsters say that even if some developing countries did well, there's no evidence that aid was the reason. But economists can measure aid's role by analyzing aid levels, growth rates and other variables across countries. The World Bank calculates that $1 billion in extra aid lifts more than 250,000 people above the $1-a-day line.</br></br>The doomsters say that even if aid has some effect, it's unproductive by the standards of advanced economies. Well, the World Bank's private-sector arm, which lends to businesses in the developing world, reports that the median project in its portfolio between 1998 and 2000 earned a post-tax return on capital of 10 percent. That compares well with the productivity of many multinational companies. At Alcoa, for example, the post-tax return on capital has averaged 9.6 percent during the past half-decade. | no | 0 |
Factory Orders In May Posted Decline of 2.5% --- Report Further Confirms Slowing U.S. Economy; Many Sectors Show Sag | WASHINGTON -- The 2.5% decline in factory orders in May offers further confirmation that the U.S. economy has slowed.</br></br>The Commerce Department said factories of many kinds, from oil refineries to computer manufacturers, reported falling orders in May.</br></br>As earlier government reports indicated, the declines were particularly pronounced among aircraft makers, who have been flooded with orders in earlier months. But excluding the volatile transportation goods sector, orders still fell 1.5%.</br></br>In all, factories booked $233.95 billion in new orders during the month, down from $239.91 billion in April. The May decline offset most of the 3% April increase.</br></br>"It's a sign that the economy is slowing more sharply than expected and underlines the need for the {Federal Reserve} to loosen monetary policy now," said Jerry Jasinowski, economist for the National Association of Manufacturers. The Fed's policy-making Open Market Committee meets Wednesday and Thursday to set monetary policy for the following six weeks. | yes | 1 |
'Free Enterprise1 in the Sky | What this country needs is a good depression. I know the last one was roughÛÓmy father told me all about it. There were bread lines, high unemployment, widespread poverty and, in short, a general calamity. The Depression did, however, lower prices. My father told me that, too.</br></br>A depression would catch Donald Trump tight around the kneecaps. It would get Pan Am in the neck. I name those two organizations (Trump is not a man but a marketing mechanism) because more or less in unison they raised their fares on the Washington-New York-Boston shuttle by 20 percentÛÓfrom $99 to $119. The price of hie! has gone up, they say.</br></br>I And so it has. But from the .very moment .Trump bought the old Eastern Shuttle and named itÛÓpresumably following careful market researchÛÓafter himself, he made it perfectly dear that he was willing to go mano-a-mano with Pan Am in every area but one; price. The 'planes were repainted, and those of us who travel on them were told that soon we would get new bathrooms. You cannot imagine tow thrilled I was.</br></br>did. Flight attendants would get new uniforms. They did. Departures would be made on scheduleÛÓan example of Trump bravado that showed that even he has his limitations. No one has left either La Guardia Airport in New York or National Airport here on time since 1954.</br></br>As befits the free enterprise system. Pan Am responded. Its food got better. It took out full-page ads in the newspapers to announce that anything Trump could do, it could do better. Still, like most shuttle users, I go for the first plane I canÛÓno matter what the airline. On a 45-minute flight, food is not a concernÛÓand neither, for that matter, is a bathroom. | no | 0 |
Inflation Increase Forecast | HOT SPRINGS, Va., May 28ÛÓAn Indiana University economist said today that while the American people donÛªt like inflation, they ÛÏlike it better than what we would have to do to stop it.Û</br></br>Edward E. Edwards, Fred T. j Greene Professor of Finance at Indiana, told the Metropolitan Washington Savings and Loan League Convention here, there is a 55 per cent likelihood of an early return to the rapid increase of consumer and business spending thati characterized the 1968-1969 boom. Along with the boom, will come an accelerating rate of inflation, higher interest rates and a new credit crunch several years hence, he predicted.</br></br>There is an even greater probabilityÛÓ80 per cent, he saidÛÓthat interest rates will go higher even if the economy doesnÛªt rebound so quickly and the rate of inflation is more moderate, Edwards said.</br></br>There is no more than a 20 per cent probability, Edwards predicted, that the current economic recovery will continue to be very slow or that interest rates will continue as low as they are today.</br></br>Edwards criticized the idea ÛÏgetting around in the United States now, that we can learn to live with 4-to-5 per cent inflation a year. | no | 0 |
Consumers Give Year a Robust Start; Income and Spending Gains Augur Strong GDP Growth; Lift From Medicare Benefit | Strong income gains and unseasonably warm weather prompted consumers to spend more money than usual in January. Along with data showing manufacturing activity expanded in February, that suggests the economy is on track for robust first-quarter growth.</br></br>Personal income of Americans increased 0.7% in January, the biggest jump since September, according to the Bureau of Economic Analysis. The gain amounted to roughly $75.2 billion. At the same time, consumer spending increased 0.9%, about $76.7 billion, the largest climb in six months.</br></br>The January spending jump follows a soft fourth quarter, which led economists and retailers to worry about an economic slowdown. But the latest data confirm other recent reports that show consumer spending picked up again in January, and that the broad-based gains should ripple throughout the economy.</br></br>Consumer spending is "strengthening sharply in the first quarter" said Dean Maki, chief U.S. economist at Barclays Capital. He estimates that consumer spending in the first quarter will grow at an annualized rate of 4.5% or more, compared with 1.2% in the fourth quarter. Spending is "recovering after the post-hurricane lull" and sluggish auto sales late last year, he said.</br></br>The large gain in personal income was the result mainly of rising wages and salaries, which partly reflects rising employment. The economy added 193,000 new nonfarm jobs in January. But Uncle Sam also contributed to the January income increase as the Medicare prescription-drug plan, an increase in cost-of-living adjustments for recipients of Social Security and some other federal programs boosted transfer payments. Meantime, pay raises for federal civilian and military personnel boosted government wage and salary disbursements. Excluding these special factors, personal income increased 0.4% in January, BEA says. | yes | 1 |
Lettuce Price Rise tettuce Price Rise | SALINAS, - -Calif. ÛÓ The worldÛªs largest' lettuce producer was struck by'2,600 workers, and within hours wholesale prices went up 50 cents a carton.</br></br>That rise from $3.50 to $4 a carton was expected: to be quickly reflected on market shelves around the country. .</br></br>The Bud Antle Inc. workers, members of Teamsters Union Local 890, walked off the fields after a breakdown in negotiations Thursday. The union is demanding $6.50 an hour. Antle offered $5.85. They were making S5.25 an hour.</br></br>FITCHBURG, Mass.ÛÓA tank hold-ing the highly toxic chemical vinyl chloride exploded last night, injuring at least six people and causing the evacuation of 2,000 residents as a dangerous vapor cloud spread about a mile south of downtown, authorities said.</br></br>All four employes inside the Great American Chemical Co. plant at the time suffered burns and lacerations, Fitchburg fire department officials said. | no | 0 |
EBRD Joins Calls for More ECB Action to Boost Economy; Development Bank Joins OECD in Pushing for Further Stimulus | The European Bank for Reconstruction and Development Thursday urged the European Central Bank to launch a large-scale program of asset purchases known as quantitative easing, becoming the latest international organization to signal that the package of stimulus measures announced earlier this month won't solve the eurozone's twin problems of low growth and inflation.</br></br>On Sept. 4, ECB President Mario Draghi announced new cuts to its key interest rates along with programs to buy asset-backed securities and covered bonds, having cut rates in June and announced a program of cheap loans for eurozone banks. Mr. Draghi and a majority of his colleagues on the ECB's governing council had pressed ahead with the new package despite opposition from Germany's Bundesbank.</br></br>However, the Organization for Economic Cooperation and Development Monday cut its growth forecasts for the currency area, now seeing growth of 0.8% in 2014, having projected an expansion of 1.2% in May. The Paris-based research body called on the ECB to launch a program of large-scale asset purchases, including government bonds.</br></br>The OECD was joined Thursday by the EBRD, which was established in 1991 to help countries in Eastern Europe and the former Soviet Union make the transition from centrally planned to market economies. The development bank has in recent months cut its growth forecasts for many of the 34 countries in which it invests, partly because of the conflict in Ukraine, but also because of a slower recovery in the 18 countries that share the euro.</br></br>"The case for quantitative easing has become compelling to support the still fragile recovery in the eurozone, to which much of the CEB [Central Europe and the Baltics] and SEE [Southeastern Europe] are strongly linked," the EBRD said. "An effective eurozone QE may help lessen the risk of setbacks in the recovery of those regions." | no | 0 |
A Bad Excuse for Bias | The attacks by Nation of Islam spokesman Khalid Abdul Muhammad on Jews and by local radio personality Cathy Hughes on Hispanics occurred at different times and in different places and, on the surface, are completely unrelated.</br></br>But defenders of both tirades have used similar twisted logic in justifying the attacks. Boiled down, their reasoning goes like this: Attacking an entire group of people is justified not necessarily because the targets are worthy of being excoriated but because the verbal assaults are a vehicle for inspiring blacks to help themselves.</br></br>At Kean College in New Jersey late last year, Muhammad called Jews "the bloodsuckers of the black nation," and said they control the Federal Reserve and the White House. He said Jews are known by such names as Rubenstein, Silverstein and Goldstein because they hoard rubies, silver and gold. Muhammad was later stripped of his position with the Nation of Islam by Minister Louis Farrakhan, who nonetheless said he basically agreed with what Muhammad said.</br></br>On Jan. 26, Hughes, speaking to listeners of her WOL-AM radio station, said Hispanics have "taken over" parts of Washington along 14th Street NW. She complained about Hispanic drunk drivers and overcrowded Hispanic apartments, which she said have driven some African Americans out of her neighborhood. While Hispanics without green cards stream into the country to get jobs, open businesses, and soak the welfare system, the mayor and the city council seem to "look the other way," Hughes said.</br></br>In a Feb. 6 column, my friend and colleague Courtland Milloy offered a curious defense of Muhammad and Farrakhan, who has a history of demonizing Jewish people: "I believe Farrakhan sets out to incite Jews not so much because he hates them but because Jewish reactions to attack are instructive. A minority with a history of oppression, Jews command respect," Milloy wrote. "You don't see them begging or apologizing for defending themselves." | no | 0 |
Fed Officials See Gradual Exit Strategy, Minutes Show | Federal Reserve officials laid out a broad blueprint for very gradually tightening financial conditions when the economy is healthy enough to bear it.</br></br>Minutes of the Fed's April 26-27 meeting, released Wednesday with the normal three-week lag, showed Fed officials had an extensive discussion about what is known as their exit strategy from an era of easy credit. But the Federal Open Market Committee minutes noted the discussion didn't mean that any moves "would necessarily begin soon." Many analysts believe it could take months or even years for the Fed to start raising interest rates.</br></br>In normal times this wouldn't require much debate. The Fed would simply raise its benchmark short-term interest rate, known as the federal funds rate, to tighten credit, slow growth and pull back inflation. Because of the unusual steps it took during and after the financial crisis, its exit from easy-money policies this time around will be more complicated. It must substantially reduce a $2.4 trillion portfolio of mortgage and Treasury securities.</br></br>The first step, as Fed chairman Ben Bernanke indicated in a first-ever news conference following the April meeting, will be a decision to allow the mortgage portfolio to start shrinking on its own--by allowing the securities to mature without reinvesting the proceeds in Treasurys, as it has been doing.</br></br>At the same time or shortly thereafter it will do the same thing with some of its long-term Treasury bonds. At some point, the Fed will slowly and steadily sell its mortgage holdings. Officials were inclined to hold off on active securities sales until after they had taken other steps, including raising the short-term fed funds rate, the minutes showed. | no | 0 |
ING Uses the Soft Sell for Online Banking Unit --- Customers Get Coffee, Biscotti While They Access Their Accounts | Internet banks have run into all kinds of problems in the U.S., but ING Group NV thinks it has some solutions. Part of its strategy: biscotti and comfy sofas.</br></br>Last month, the big Dutch banking and insurance concern launched its ING Direct Internet bank in the Northeastern U.S. The move was the first phase of a rollout of online banking services across the country that could take several years. In the U.S., ING will be adapting strategies that already are luring many Canadians.</br></br>Starting as a telephone operation, ING Direct in Canada didn't even have Internet service until late 1998. But the online bank already has more than 300,000 clients and over three billion Canadian dollars (US$2 billion) in deposits in the country.</br></br>Like its competitors, ING attracts deposits mainly by offering easy access to accounts and beating traditional banks on interest rates. It is offering a 6.5% rate on U.S. savings accounts, for instance. But unlike many Internet banks, ING Direct targets mainly ordinary consumers rather than computer sophisticates or affluent folk with online brokerage accounts. Then it stretches to put a human face on its machine-based business.</br></br>To help do this, it runs cafes that serve up generous helpings of banking information as well as espresso and biscotti. Among other functions, the cafes calm potential customers worried that their savings will somehow vanish into cyberspace. With its sofa, armchairs and popular music, the cafe on the ground floor of a Toronto office tower looks like any striving-to-be-hip coffeehouse. Giant wooden clogs and a model windmill attest to the bank's Dutch origins. | no | 0 |
DJIA Posts Slim Gain; Bonds Rise --- Broader Market Fares Worse as Oil Falls; Dollar Ends Mixed | NEW YORK -- A fair-sized gain in stock prices withered away to practically nothing by the close, despite a big drop in oil futures.</br></br>The Dow Jones Industrial Average eked out a 6.68-point rise in active trading to 2387.87, but broader market indexes fared worse: Standard & Poor's 500-stock index fell 0.16 to 298.76, and the New York Stock Exchange composite index dipped 0.05 to 163.59. More Big Board issues declined than rose.</br></br>Bond prices rose only slightly, as investors await the outcome of U.S. budget negotiations. The beleaguered dollar's mixed performance also weighed on the bond market.</br></br>The Dow industrials at midday were up 28 points, but the advance melted as the session wore on. "We're seeing extreme volatility because of a lack of depth to the stock market," said Barry Schrager, a money manager with Whether Partners in Eatontown, N.J. "The rallies we've seen recently are more the result of sellers stepping back. It's not buyers going in."</br></br>Ricky Harrington, investment policy director at Marion Bass Securities in Charlotte, N.C., said the rally attempt in stocks "wasn't any different from any other since July 16 and 17 when we hit the top," he said. "It's in the handful of blue chip stocks that a handful institutions continue to buy. The broad market continues to remain under pressure." | yes | 1 |
U.S. Cuts Crop Forecasts Amid Drought --- Lush Harvests in Midwest Offset Shortfall in East, Depressing Grain Prices | The Agriculture Department cut its harvest forecasts to reflect the devastating drought in the Eastern U.S., but consumers won't see much impact in their food bills.</br></br>Lush conditions in the Midwest mean farmers in the major grain states probably will harvest large enough crops over the next several weeks to keep the nation awash in a price-depressing grain glut. The two-year-old glut, combined with weak exports, has tipped the farm economy into recession.</br></br>Several economists said they continue to expect U.S. grocery prices to climb only about a moderate 2% this year. Cheap prices of raw materials such as corn are helping food manufacturers offset their rising costs of energy and labor.</br></br>"There is still plenty of everything to go around," said John M. Schnittker, a farm economist in Washington.</br></br>Based on monthly field surveys, the USDA said it expects farmers to harvest 2.78 billion bushels of soybeans, down 3% from its August forecast but still 1% larger than last year's record harvest. | no | 0 |
Wanted: Crisis Manager in Chief; A Key Challenge in Auto Bailout Is Finding 'Czar' to Oversee Change | President Richard Nixon appointed the first energy czars, John Love and later William Simon, in the wake of the 1973 gasoline shortage. Congress mandated a drug czar during the crack cocaine epidemic in 1982. And President Bill Clinton named Ira Magaziner his health czar to craft legislation in 1993.</br></br>It's hardly a record of success; problems persist in all those areas. But with the automobile companies in crisis and the public tired of providing bailouts for American corporations, Congress and the Bush administration are on the verge of creating a new czar or committee to oversee efforts to rescue Detroit's largest automakers.</br></br>"If they can no longer pay their own way, it is entirely appropriate for someone to put the hammer down and say 'That's it,' " said Richard Breeden, former chairman of the Securities and Exchange Commission and the court-appointed monitor for the scandal-ridden communications giant, WorldCom. "If taxpayers are going to support General Motors, let's turn General Motors into a company worthy of it."</br></br>The choice of a czar -- or czarina -- is the plan's first obstacle. President Bush, who would appoint the czar or overseers, and Democratic leaders in Congress have very different ideas about who would make the best choice.</br></br>House Speaker Nancy Pelosi (D-Calif.) mentioned former Federal Reserve chairman Paul Volcker as the type of person she would support. As he exited an hour-long meeting with House Democrats yesterday afternoon, Volcker waved off reporters' questions, declining to state whether he was interested in the post. Volcker has already been tapped to advise President-elect Barack Obama on economic issues. | no | 0 |
Business Now Turns to Deal With Peace --- Most Companies Are Unprepared For Veterans | After employers greet Gulf war veterans, it won't be business as usual.</br></br>Instead, companies probably will have to wrestle with a host of re-entry adjustments by returnees to the workplace. And, given the brevity of the war, many employers aren't prepared.</br></br>There is still time to get ready: Although a cease-fire has been declared, reservists may not be home for weeks, and in some cases months. But up to now, companies "haven't made adequate preparations for people coming back," says Dee Soder, president of Endymion Co., an executive-advisory firm.</br></br>For example, employers may not have adequate counseling and re-entry programs in place, or low-interest loan programs for cash-squeezed reservists who didn't get supplemental pay. And many companies haven't yet figured out what to do with replacement workers who thought they had a job for at least six months.</br></br>For the most part, employers relied on co-workers to fill in for reservists sent overseas. "A lot of companies were in a recession and felt overstaffed anyway," says Susan Koralik, a partner with Hewitt Associates, an employee-benefit consulting firm. In a Hewitt survey of large companies, 22 said they had spread work out among co-workers, while only three hired temporaries. | no | 0 |
Caught the Flu, but No Sick Leave; For the Poorest Earners, Paid Time Off Is a Crucial Missing Benefit | For many, taking a sick day requires little thought. But by most estimates, nearly half of all private-sector workers in the United States do not have a single day of paid sick leave. And more do not have a paid day off that can be used to care for a sick child.</br></br>Low-wage workers are hit the hardest, with three of every four lacking any paid sick leave. They also usually have no health-care coverage or work a full-time or more than full-time schedule of piecemeal, part-time jobs, making paid sick leave even more unlikely.</br></br>When workers without sick leave get a virus or an injury, they have to decide if they can take an unpaid day off and still make the rent. If not, they often return to their jobs as security guards, cooks, waitresses and cashiers -- decreasing their productivity and possibly getting others sick. Paid sick days can reduce turnover, cut down on health-care costs (although most companies that don't provide paid sick leave also don't provide health-care coverage), and increase productivity and morale.</br></br>There was movement on the paid-sick-day front last month. More than 60 percent of voters in San Francisco approved a ballot measure that would require all businesses with fewer than 10 workers to give employees up to 40 hours of paid sick leave a year; for larger employers, up to 72 hours. At every company, an employee will accrue one hour of paid sick leave for every 30 hours worked, so both part- time and full-time workers would be covered.</br></br>It probably won't end with San Francisco. There is a push to get similar measures in front of decision makers in other cities and states in the coming year, including in the District. | no | 0 |
Donohue Plugs Police, Fire Raises: Asks Unemployment Benefits ... | District Commissioner F. Joseph Donohue plugged for police and fire pay raises and higher unemployment payments last night on his weekly radio ÛÏReport to the PeopleÛ over Station WWDC.</br></br>Donohue said that if he has read news accounts correctly it was ÛÏquite likelyÛ his last broadcast as a Commissioner. A Democrat, he expects to be replaced at any moment by a Republican.</br></br>He said he hoped the new Commissioner would continue the 15-minute weekly discussions of District affairs so city residents may be kept ÛÏcontinuously informedÛ of local government problems.</br></br>Donohue said police and fire pay raises, which he has been pushing during his two-year stay at the District Building, are absolutely essential to prevent loss of protection by resignations and a lack of recruits in both department?.</br></br>-But, he stated, according to present budget estimates a larger Federal pavment will be needed to meet the increase. | no | 0 |
Bush Not Budging on Minimum Wage; Senate Democrats Scaling Back Plan in Attempt to Avert Veto | President Bush vowed to move "not one penny" beyond his proposal for a modest increase in the minimum wage yesterday as Senate Democrats planned to scale back their plan for a larger increase in hopes of reaching a compromise and avoiding a presidential veto.</br></br>Bush's latest veto warning came as the Senate opened debate on the minimum-wage controversy, which is emerging as the first major domestic-policy showdown between the new Republican administration and the Democratic-controlled Congress.</br></br>Bush proposes raising the hourly wage floor by 90 cents to $4.25 by Jan. 1, 1992, while letting employers pay newly hired workers the current minimum of $3.35 for six months under a new "training wage."</br></br>The bill introduced by Senate Democrats would raise the minimum by $1.30 to $4.65 by Oct. 1, 1991, without a subminimum for new workers. But Democrats agreed informally yesterday to reduce their plan in line with legislation approved last month by the House to raise the the pay floor to $4.55 over the same period, with a subminimum limited to a 60-day period for workers who have never been employed before. The Senate Democratic plan also calls for elimination of the subminimum rate a year after the final increase in the regular wage floor.</br></br>Despite the modifications, the Democratic bill appears likely to run afoul of Bush's vow to veto anything that goes beyond his initial proposal. "The president made it abundantly clear there will be absolutely no flexibility-not one penny, not one deviation-in the training period," said House Minority Leader Robert H. Michel (R-Ill.) after a meeting between Bush and GOP lawmakers. | no | 0 |
Life-Insurance Companies That Specialize In Variable Annuities May See Rough Times | What next from the folks who gave the world the morbidly named "guaranteed minimum death benefit"?</br></br>There isn't a guarantee, but analysts think life-insurance companies that specialize in selling variable annuities are facing rough times -- rough times that could lead to earnings disappointments -- in the form of slowing annuity sales and some variable-annuity policy benefits that are suddenly "in the money."</br></br>Companies such as Hartford Financial Services Group, Lincoln National and Nationwide Financial Services saw assets in variable annuities, which are essentially mutual funds in an insurance wrapper, shrink last year, due to poor stock-market performance and, for most companies, shrinking net sales figures. And unlike securities brokerage firms and mutual-fund firms with stock-market exposure, insurers have an added layer of risk. In recent years, many have essentially locked in certain levels of stock-market returns of their policyholders. Now, with the Standard & Poor's 500-stock index and the Nasdaq Composite Index 20% and 59% off their highs of last year, respectively, some of those promises are coming back to haunt the sellers.</br></br>The biggest earnings bite for variable-annuity sellers comes from the declining sales and assets under management. Variable-annuity net sales fell to $45.3 billion last year from $64 billion in 1999, according to the Vards Report, an industry newsletter. Morgan Stanley issued a report earlier this month estimating variable-annuity sales declined another 14% in the first quarter, and predicting a further 10% decline this quarter.</br></br>In the same report, Morgan Stanley analyst Nigel Dally says the sales decline would make it difficult for Lincoln National to achieve its goal of positive net cash flows in its individual variable-annuity business by year end. Failing to do that, he wrote, "could be a disappointment to the market." In recent weeks, analysts have cut Lincoln's first-quarter consensus earnings estimate to 90 cents from 94 cents, according to Zacks Investment Research. | no | 0 |
Race of the Year Hits the Ground; In Run for California, Wilson and Brown Start in a Dead Heat | Gov. Pete Wilson (R) and Kathleen Brown (D) kicked off the battle for California yesterday, with each claiming they could best lift the state out of its economic and psychological recession in what is being called the most significant political contest of 1994.</br></br>After the worst recession since the Great Depression and natural disasters that have shaken public faith in the once-eternal promise of the Golden State, voters will choose between the dogged and colorless Wilson and the telegenic but less experienced state treasurer, the daughter and sister of former governors.</br></br>Polls suggest the race begins as a dead heat and party leaders predict it will stay that way until November.</br></br>"This is not going to be a race where people care very much about personalities," Wilson said at a rally yesterday morning after he was nominated to a second term. "They shouldn't. They ought to be concerned about issues and about performance."</br></br>Brown, beginning a two-day trip around the state after her primary victory on Tuesday, told supporters, "What this race is going to be about is effectiveness, effectiveness in getting the job done for the people of California." She warned that the state could not afford another four years of a "Rip Van Wilson administration" that wakes up "just in time for the election." | no | 0 |
Nasdaq's Surge Is Fueled by a Mere Few --- Some Say Laggards Must Shine for Gains to Continue | What comes after Nasdaq 3000: Nasdaq 4000 or Nasdaq 2500?</br></br>All the hoopla surrounding Nasdaq 3000 last week masked some interesting aspects of the Nasdaq Composite Index's rise to stock-market dominance: The advance has been going on for longer than many investors realize, but of late it has been driven by a surprisingly small group of stocks.</br></br>That raises a question: When a stock index becomes so dominated by a handful of names, how long can the gains continue? "Some of those companies are going to be worth it, but I think the majority aren't going to be worth it," says David Mead, chief investment officer at Harris Bank. "Ultimately you will have more democracy in the stock market," he adds, meaning that a wider group of stocks will start to perform better. Then, investors will realize that "many of the top companies are priced too high." He still likes networking colossus Cisco Systems, for example, but he has his doubts about software mammoth Microsoft.</br></br>The antitrust ruling against Microsoft, announced after markets closed on Friday, throws an additional cloud over the stock, which as it happens was added to the Dow Jones Industrial Average just last week.</br></br>Of course, experienced investors have been warning for years now that the highfliers could fall to earth. Up to now, it hasn't happened. And certainly, no one was worrying much last week. | yes | 1 |
Inheriting Wealth | Wealth Two swallows don't make a consensus, of course, but scarcely a week after Jesse Jackson's Wall Street Project was in the news, the National Urban League launched a major push for black economic power.</br></br>Jackson's not-yet-fleshed-out idea is for black Americans to acquire stock in national and local corporations, thereby giving black America an insider's view -- and an insider's influence -- on the workings of the commercial marketplace.</br></br>The Urban League's equally inchoate notion is that it's time for black Americans to begin working at closing the wealth gap that can be expressed in this shorthand fashion: Black household income, according to one recent survey, is about 62 cents for every dollar earned by white households. When it comes to wealth, however, the black share is about 8 cents on the dollar.</br></br>"The wealth data expose far deeper inequalities {than the income gap}," Melvin L. Oliver and Thomas M. Shapiro wrote in the essay that was the basis for discussion at the Urban League's recent convention in Philadelphia. "Half of all white households have at least $6,999 in a {net financial assets (NFA)} nest egg, whereas nearly two-thirds of all black households have zero or negative NFA."</br></br>A couple of things worth noting: The essay is the lead article in the league's 1998 edition of "The State of Black America," an annual report that used to focus on how awful things were for black people and how white racism was to blame. | no | 0 |
U.S. Debt and the Greece Analogy; Don't be fooled by today's low interest rates. The government could very quickly discover the limits of its borrowing capacity. | Author: Alan Greenspan</br></br>An urgency to rein in budget deficits seems to be gaining some traction among American lawmakers. If so, it is none too soon. Perceptions of a large U.S. borrowing capacity are misleading.</br></br>Despite the surge in federal debt to the public during the past 18 months--to $8.6 trillion from $5.5 trillion--inflation and long-term interest rates, the typical symptoms of fiscal excess, have remained remarkably subdued. This is regrettable, because it is fostering a sense of complacency that can have dire consequences.</br></br>The roots of the apparent debt market calm are clear enough. The financial crisis, triggered by the unexpected default of Lehman Brothers in September 2008, created a collapse in global demand that engendered a high degree of deflationary slack in our economy. The very large contraction of private financing demand freed private saving to finance the explosion of federal debt. Although our financial institutions have recovered perceptibly and returned to a degree of solvency, banks, pending a significant increase in capital, remain reluctant to lend.</br></br>Beneath the calm, there are market signals that do not bode well for the future. For generations there had been a large buffer between the borrowing capacity of the U.S. government and the level of its debt to the public. But in the aftermath of the Lehman Brothers collapse, that gap began to narrow rapidly. Federal debt to the public rose to 59% of GDP by mid-June 2010 from 38% in September 2008. How much borrowing leeway at current interest rates remains for U.S. Treasury financing is highly uncertain. | yes | 1 |
Fannie Mae Net Rose 97% to $120.7 Million | WASHINGTON -- Federal National Mortgage Association's second-quarter profit rose 97% to $120.7 million, or $1.52 a share, primarily because of higher net interest income.</br></br>The strong results demonstrate "the company's reduced sensitivity to (fluctuations in) interest rates," said Chairman David O. Maxwell. Fannie Mae, as the company is known, has tried to protect itself against interest-rate shifts by generally matching the duration of its assets and its liabilities. "We expect the company's strong earnings to continue," Mr. Maxwell said.</br></br>Fannie Mae is a federally chartered, publicly traded concern that buys mortgages from lenders, holds some in its portfolio and packages the rest for sale as mortgage-backed securities.</br></br>The company's net interest income rose to $209.2 million in the second quarter from $111.2 million a year earlier, when net income was $61.3 million, or 74 cents a share.</br></br>Fannie Mae's mortgage portfolio stood at $99.2 billion at the end of the second quarter, compared with $90.3 billion a year earlier. The yield on the portfolio at the end of the quarter was 9.81%, compared with 10% at the end of the 1987 period. | no | 0 |
Boom Times Transforming Chinese Province | Howard Shaffer left a comfortable job with the Nike company in 1985 to start a new business here in partnership with a sleepy Chinese concern called the Long March Leather Shoe Factory. What happened over the next few years illustrates why industrial output in this region in southern China is now soaring at more than 25 percent per year.</br></br>Shaffer said he began his joint venture here by insisting on modern, capitalist management techniques and "breaking bad habits" among the Chinese workers, such as sleeping on the job. After just three months, productivity had quadrupled, to about six pairs of shoes per day for each employee from Long March's old level of 1.5 pairs.</br></br>By the end of the decade, Shaffer had expanded his operations to three factories here, and was making up to 650,000 pairs of shoes a month for such U.S. companies as Timberland, Thom McAn and Stride Rite - and for his old employer, Nike. His sales in 1990 totaled $74 million. Asked about profits, Shaffer just smiled.</br></br>Welcome to Guangdong Province, the freewheeling, free-market area along China's southern coast that, by local estimates, is currently among the fastest-growing economic regions in the world. A banner in the center of its capital, Guangzhou - formerly known as Canton - proclaims in big characters: "Unity, Progress, Friendship." But a better slogan for the new Guangdong might be: "Money, Money, Money."</br></br>Guangdong's real industrial output grew during the 1980s at an average annual rate of 19.7 percent, which analysts here said was by far the fastest of any province in China. The growth rate jumped from that already high level during the past 12 months, to 27.7 percent. The province's savings rate last year was a stupendous 32.8 percent. | no | 0 |
As Hedge Funds Go Mainstream, Risk Is Magnified | Hedge funds used to reek of exclusivity. They were run by the most cunning traders on Wall Street, who employed exotic trading techniques designed to make money regardless of whether markets rose, fell or stayed flat. Their clients included only the super- rich.</br></br>Hedge funds are now a $1 trillion industry. Millions of middle- class people invest in them through pension funds or mutual funds.</br></br>The Virginia Retirement System, for example, recently increased its investments in hedge funds to $1.6 billion, or close to 4 percent of its assets. The Baltimore City Fire & Police Employees' Retirement System put $80 million into hedge funds last year, while the City of Baltimore Employees' Retirement System invested about $55 million, or 5 percent of its assets.</br></br>Some experts say pension funds and university endowments are plowing money into the high-fee funds at the worst possible time. Investment returns have dropped, inexperienced managers are piling in and some sophisticated investors appear to be pulling money out. Hedge funds make -- and risk -- big money by making big bets, mostly with borrowed money. They bet on movements in multiple markets, whether it be in stocks, bonds, currencies, commodities, options, derivatives or any combination of the above.</br></br>Estimates suggest that hedge fund trading can account for as much as half the daily volume on the New York Stock Exchange, though as with so much else in the lightly regulated hedge fund world, reliable figures are difficult to find. | no | 0 |
IPOs Heat Up From Slow Spring Start --- Market Is Revived, But Legs Are Shaky | The market for newly public companies is off the critical list, but it isn't exactly ready to run a marathon.</br></br>Earlier this spring, the market for initial public offerings was virtually on life support. April was the slowest month for newly public companies since January 1995: Only 30 new companies issued stock to the public, raising $1.6 billion, according to Securities Data Co.</br></br>By contrast, October, the busiest month in recent history, saw 105 companies raise $6.2 billion in initial offerings. Scores of issues that had been expected to price in April or May were postponed, either officially or unofficially, as underwriters hunkered down to wait until small-stock investors' eroding portfolios turned up and they were willing to look at new deals again.</br></br>That moment seemed to have finally arrived when the small-cap market started to heat up at the tail end of April and investors made headlines again on some hot deals. Now many underwriting firms have bulging pipelines, the result of months of prospecting for IPO candidates rather than executing deals. Securities Data reports that there are 184 deals awaiting execution, for $6.5 billion, a significant increase over earlier in the quarter.</br></br>But the enthusiasm may be premature. Unlike previous IPO rallies, many of the most talked-about recent deals have been the larger names, such as Hertz, the car-rental spinoff of Ford Motor. Hertz was priced in late April at $24 a share and closed Friday at $34 on the New York Stock Exchange. | no | 0 |
U.S. Appears to Be Allowing New Rise In Federal Funds Rate to Curb Inflation | Evidence is growing that the Federal Reserve is allowing a key short-term interest rate to rise slightly further in its effort to restrain inflationary pressures.</br></br>Economists also say several foreign central banks may be tightening credit soon. West Germany is expected to nudge short-term rates higher today, and some analysts say Japan and Britain also could raise rates.</br></br>In the U.S. bond market, prices of long-term Treasury issues slumped early in yesterday's session but rebounded in the afternoon to wind up about unchanged from Friday's levels. Municipal, corporate and mortgage-backed bonds also finished little changed.</br></br>In Washington, the Fed has indicated it is making no significant changes in policy. But an increase in the federal funds rate recently is said to suggest the Fed is willing to err slightly on the side of a tighter policy.</br></br>Federal Reserve actions in the money markets yesterday and late last week apparently convinced some analysts that the central bank is trying to push the federal funds rate up to about 7 1/2%. Earlier in the month, the rate on reserves that banks lend each other overnight was averaging around 7 3/8%. | yes | 1 |
Stocks Cascade to Lowest Closing Level Since 1962: No Climax Seen | NEW YORK, May 25 ÛÓThe stock market was slugged for its biggest single-session loss in six and a half years today and prices retreated to levels not seen since the end of 1962.</br></br>In a virtually non-stop onslaught of selling, the Dow Jones industrial average tumbled 20.81 pointsÛÓthe biggest single-day loss of the current decline and within one point of the loss suffered after the assassination of President Kennedy on Nov. 23, 1963ÛÓand closed at 641.36. That was the lowest close since Dec. 18,1962, when the Dow finished at 640.14.</br></br>The trend for the day became clear right after the opening bell. In the first 30 minutes the Dow fell more than 7 points. By the end of the first hour, the loss was above 11 points. Between noon and 1 p.m., with the average down more than 12 points, the selling abated, but there was no sign of a rally. Prices turned down again in mid-afternoon and the slide continued until the closing bell.</br></br>Volume at both the opening and close was heavy enough to push the exchange's ticker tape one minute behind the floor pace, but analysts said it did not reach the dimensions required for the ÛÏselling climaxÛ that some think will end the slide. That would call for very heavy volume-20 or 25 million shares or moreÛÓalong with a steep decline. At the close, 12.66 million shares had changed hands, up from 12.17 million on Friday. The totals ran behind FridayÛªs pace until the final 30 minutes of trading.</br></br>Broader-based averages were about in line with the Dow. Standard & PoorÛªs 500-stock composite was down | yes | 1 |
Board of Contributors: Try a Little Tenderness | Riddle: What do the Pentagon and the Federal Reserve Board have in common?</br></br>Answer: Both are always prepared to fight the last war they won.</br></br>For years now, the Pentagon has concentrated its planning on a replay of World War II, with the American Navy controlling the North Atlantic, American ships ferrying troops and supplies to the European front, etc., etc. It regards military intervention in Central America, the Middle East or anywhere else as an irritating distraction from its major goal, which is to fight and defeat the Soviets in Western Europe, just as it did the Nazis. That this happens to be the conflict that, time after time, history perversely fails to place at the top of the American postwar agenda is regarded as a temporary aberration, best disregarded.</br></br>Similarly, the Fed under Paul Volcker won a great victory over inflation in the early 1980s, has been wreathed in laurels for achieving that victory and is determined to conduct that war all over again -- even if there are other, more pressing battles to be fought. In the course of mobilizing popular support for this war, the Fed has been trying its best, with considerable success, to instill a sense of panic in the business community and the media about the huge budget deficits and the inflationary danger they pose. Mr. Volcker is demanding that Congress cut spending and increase taxes. Until it does so, the Fed is keeping money and credit relatively tight and interest rates high, as its continuing contribution to the war against inflation.</br></br>Indeed, the Fed has been so successful in its propaganda that there has been little serious analysis of why we have such huge budget deficits in the first place. Which, from the Fed's point of view, is just as well, since such an analysis would reveal that in large measure the current deficit is a Volcker deficit and that the war against inflation that he won has many of the aspects of a Pyrrhic victory. | no | 0 |
McCain, Bush and the Dollar | When John McCain speaks to the Republican convention tonight, one of his priorities will be explaining his economic plans to a restive American middle class. He'll help his campaign, and the country, if his program includes separating himself from the Bush Administration's malign neglect of the dollar.</br></br>In debates over the Bush economic record, the dollar's decline and its companion rise in prices are the great missing links. Democrats don't mention it because they'd rather indict the Bush tax cuts as a way to justify a huge new tax increase. Wall Street and big business don't talk about it because they've been complicit in urging devaluation. And the media mostly ignore it because so few of them even think about monetary policy. The mystery is why more Republicans don't regret it because the political consequences have cost them dearly.</br></br>Consider the nearby chart, which chronicles the rise and fall of what the late economist Arthur Okun called the "misery index" in the late 1970s. By adding the national unemployment rate to the annual rate of inflation, the misery index offers a simple but revealing look at American economic well-being. As you can see from the chart, it's also a useful political indicator. Jimmy Carter was run out of office as the index soared above 20 in 1980, while Republicans benefited as it fell throughout the following decade. George H.W. Bush suffered as it spiked in the early 1990s, while Bill Clinton prospered through the 1990s as it fell again (See accompanying table -- WSJ September 4, 2008).</br></br>As for the political challenge that Mr. McCain faces, look no further than the "misery" spike of 2008. At 5.7% in July, the U.S. jobless rate isn't much worse than it was (5.4%) when Mr. Clinton ran for re-election in 1996. The difference is the rolling 12-month inflation rate, which at 5.6% puts the misery mark at 11.3 -- back to heights not seen since the early 1990s.</br></br>The opinion polls support what the misery index and common sense tell us. According to a Pew Research poll in July, no less than 45% of the public cited rising prices as the top economic problem. That was nearly double the 24% who cited prices in February. "Nearly two-thirds (64%) now say their incomes are not keeping up with the rising cost of living," according to Pew. By marked contrast, only 5% mentioned unemployment as the main issue. | no | 0 |
Mortgage Refinancing Up Sharply; Fixed-Rate Loans Gain Renewed Interest | A steady decline in interest rates has sparked a surge in mortgage refinancings, especially among homeowners who are trying to escape costly adjustable-rate loans for the security of single-digit fixed-rate mortgages.</br></br>In recent weeks, mortgage rates have dropped to less than 10 percent for the first time in a year. Some lenders now offer 30-year, fixed-rate mortgages for as low as 9 1/2 percent. In April, these rates were about a full percentage point higher.</br></br>The lower rates have prompted some homeowners with higher-rate loans to reduce the cost of their monthly mortgage payments by refinancing.</br></br>Although the rise in refinancings has not approached the magnitude of the activity that occurred in 1986 and early 1987, when more than half the loans made were to refinance existing mortgages, many Washington-area lenders have experienced a two- to four-fold jump in the number of borrowers refinancing their homes.</br></br>"There's been a definite increase in business and it's coming from refinances," said David Hershman, regional vice president of ICA Mortgage. "Refinancings were non- existent four months ago. Now they're making up 30 percent of our volume." | no | 0 |
Opportunity Knocks Again As Mortgage Rates Near Low: Washington Area Leads the Way on Adjustable ... | Mortgage interest rates dropped this week for the third week in a row and, at a national average of 7.77 percent, are nearing the 19-year low reached last September. Rates in the Washington area are even lower, declining to 7.58 percent.</br></br>This weekÛªs drop puts the national interest rate on a 30-year, fixed-rate home loan slightly higher than the 7.72 percent recorded four months ago and opens up new opportunities for borrowers who have been waiting to refinance their homes or to buy new dwellings, according to financial experts.</br></br>ÛÏSignificantly, of the top 10 metropolitan areas in the country, Washington has the lowest ARM," or adjustable-rate mortgage, said Robert K. Heady, publisher of Bank</br></br>Rate Monitor, a Palm Beach, Fla., newsletter that surveys interest rates nationally. ÛÏIt means that Washington area institutions are bidding for business."</br></br>Nationally, ARMs are at 4.93 percent for a 30-year loan whose rate is adjusted annually, down from 5.06 percent last week, Heady said. In the Washington area, the same loan carries a 4.33 percent rate, down from 4.52 percent last week. | no | 0 |
For U.S., Engaging China Is Delicate Dance; Mindful of Congress, yet Needing Beijing on North Korea, White House Picks Fights Carefully | AS ANTI-CHINA sentiment rises in Washington, the Bush administration is caught in a complex balancing act: bashing Beijing enough to appease critics in Congress and stir action -- without provoking a trans-Pacific backlash.</br></br>The U.S. is exerting pressure on economic issues and criticizing China's human-rights policy and belligerence toward Taiwan, just as it is begging Chinese leaders for more help in curbing nuclear weapons in North Korea and hoping China won't cozy up to anti-American governments in places such as Venezuela.</br></br>"If we push too hard, this could cool China's ardor for helping us" on a number of issues, says David M. Lampton, director of China studies at the Nixon Center in Washington. Mr. Lampton says China also could potentially retaliate, for example, by shifting investments from U.S. dollar-denominated assets.</br></br>Complicating the White House calculus is soaring hostility on Capitol Hill, which some administration officials call "off the charts." Congress has largely deferred to President Bush's foreign- policy priorities, especially since Sept. 11, 2001, but China policy is one area where legislators are demanding a change of course, particularly on trade.</br></br>Nobody has felt that more than Treasury Secretary John Snow, who recently went to the Senate to testify about his department's budget and found himself in a hearing rife with anti-China anger. "China wants us to be a sponge for all their trinkets and trousers and shirts and shoes and all the things they produce, including high-tech, and yet, they don't want to open their market to us," Democratic North Dakota Sen. Byron Dorgan lectured the cabinet member, adding: "We sit around without the will, the nerve or the backbone to say this is nonsense; we're not going to put up with this anymore." | no | 0 |
Year-End Review of Markets and Finance: What Was News | Down was the predominant direction in 1989's big news stories. The Berlin Wall and many other sections of the Iron Curtain tumbled. Down went the stock market on Friday, Oct. 13, even though stocks overall performed well for the year. And, tragically, homes, businesses and expressways collapsed as more than a hundred died in Hurricane Hugo and the Bay Area earthquake. The dates indicate when the articles appeared in The Wall Street Journal.</br></br>JANUARY</br></br>U.S. Navy fighters shoot down two Libyan MiG-23s over the Mediterranean. The incident comes as the U.S. is waging a public relations campaign against a Libyan plant that the U.S. said is about to mass produce poison gas. (1/5)</br></br>Chicago's futures pits are the target of a major federal investigation that has accumulated evidence of widespread shady dealings that cheated the public. Some Federal Bureau of Investigation agents posed as traders. (1/20)</br></br>George Bush is to be sworn in as the 41st U.S. president. Americans, according to a Wall Street Journal/NBC poll, greatly respect Mr. Bush's abilities but doubt he can deliver on many goals, such as controlling the deficit or keeping his pledge of no new taxes. (1/20) | no | 0 |
The Economy: Japanese Officials Vow to Fight Any Excessive Surge in the Yen; Nation's Manufacturers Warn Tokyo of Problems Fueled by Dollar's Plunge | TOKYO -- As Japanese manufacturers voiced concern over the dollar's plunge, government officials reiterated their resolve to fight an excessive yen surge.</br></br>The policy makers fired a round of verbal intervention after Japan's suspected direct yen-selling in foreign-exchange markets Monday failed to stop the dollar from setting a 40-month low of 106.07 yen. "There is no change to our stance in that we will take proper action when the market moves rapidly," Finance Minister Sadakazu Tanigaki said.</br></br>His top currency deputy, Vice Finance Minister for International Affairs Zembei Mizoguchi, said further yen gains against the dollar are unwarranted in light of economic fundamentals. "The U.S. economy is strong, and the foreign-exchange market, sooner or later, is going to reflect that," Mr. Mizoguchi said.</br></br>Tokyo has struggled for months to fight the dollar's decline against the yen, fearful that further falls could throw cold water on Japan's economy, which some economists say is finally emerging from a recession. A strong yen hurts exports, one of the main drivers of Japan's recovery, by making them less competitive overseas. It also hits corporate profits by reducing the yen-value of manufacturers' overseas earnings.</br></br>"We must beware of a further strengthening of the yen," Sony Corp. Chief Executive Nobuyuki Idei said at a New Year's gathering of Japanese business leaders, expressing concern that the dollar's weakness could threaten U.S. and global growth. | no | 0 |
Tracking the Economy: Week's Economic Reports Are Expected To Be Softer, Bolstering Fed's Position | NEW YORK -- Now that the Federal Reserve seems to have eased its credit clamp based on the belief the economy has slowed, we will soon see whether the latest figures agree.</br></br>Generally, expectations call for an easing in many of this week's May economic reports, including retail sales, industrial production and capacity utilization. But the consumer price index outlook is disturbing in light of last Friday's unexpected 0.9% surge in May producer prices.</br></br>Nonetheless, the consensus view calls for another impressive month of progress on the trade deficit after March's $1 billion decline, although economists have issued warnings to watch out for revisions.</br></br>Combined with April's weak employment report the forthcoming data "pretty much paint a weak picture" if on target, said Stuart G. Hoffman, senior economist at PNC Financial Corp., Pittsburgh.</br></br>That should be comforting news to the Fed, which eased credit last week after a year of tightening. The agency seems to be acting on the conviction that it has throttled the economy and sidestepped troublesome inflation. "Now," said Mr. Hoffman, "we wait for them to do it again." | no | 0 |
Witness: First American Seen as Part of BCCI; Information Was Shared With Washington Bank, Ex-Official Says | The former head of the Bank of Credit and Commerce International's American operations testified yesterday that bank officials considered First American Bankshares Inc. an integral part of BCCI's U.S. operations and regularly shared strategic, operational and marketing information with the Washington bank and its former president, Robert A. Altman.</br></br>"As far as we were concerned, inside BCC Group, this was one entity," the former executive, Abdur R. Sakhia, said of BCCI and First American at a hearing of the Senate subcommittee on terrorism, narcotics and international operations. "It was one and the same thing, because First American was owned by BCCI."</br></br>Among other things, he said, Altman participated in meetings in which BCCI proposed to secretly buy a bank in Florida through First American in 1986 using the same plans and "model agreements" it had earlier used to allegedly secretly purchase Independence Bank of Encino, Calif. The Florida transaction never took place, however.</br></br>Altman and Clifford's attorney, Robert S. Bennett, denied that a secret takeover of a Florida bank was contemplated and said Sakhia must have misunderstood the situation.</br></br>Sakhia also testified that BCCI made payoffs to foreign leaders around the world in exchange for influence, although he offered few specifics beyond a payment to officials of Zimbabwe in which he indirectly participated. He did not, however, dispute the subcommittee chairman, Sen. John Kerry (D-Mass.), when Kerry asserted that Sakhia had told the subcommittee staff that former Pakistani President Mohammed Zia ul-Hag and the family of former Indian Prime Minister Indira Gandhi received money from BCCI. | no | 0 |
Romney Takes Aim at Obama Again; Republican Candidate Steers Away From Recent Squabbles With Rivals on the Campaign Trail | HANOVER, N.H.--An increasingly confident Mitt Romney is looking beyond his Republican rivals and again focusing his attacks on President Barack Obama, using a three-day swing through New Hampshire to frame his candidacy as a choice between the president's "entitlement society" and the "merit society" Mr. Romney envisions.</br></br>In an interview late Wednesday, Mr. Romney reflected a new tone--a more biting version of his earlier rhetoric against the president--predicting Mr. Obama will resort to "a politics of envy and divisiveness and demonizing of business and business people that will shock" voters.</br></br>"A campaign of envy and class warfare, I think, will ultimately be unsuccessful, whether in the primary or in the general election," he said. "I can surely tell you that Republicans will not warm to a campaign that is attacking success."</br></br>In what amounts to his closing argument before voters decide early next month in Iowa and New Hampshire, the former Massachusetts governor is hoping to transcend the recent squabbles of the primary race and train his sights on a general election that he and his aides now believe is within reach.</br></br>Many Republicans remain ambivalent about Mr. Romney, and polls still show a tight national race. But Mr. Romney's position has improved in recent days as former House Speaker Newt Gingrich has seen his support weaken in the early-voting states of Iowa and New Hampshire. | no | 0 |
Boeing Weighs On Industrials As Stocks Fall; Blue Chips Drop 88.37, Largest Point Decline In Dow So Far This Year | The Dow Jones Industrial Average suffered its worst point drop so far in the new year, with component Boeing leading the way down after its stock was downgraded.</br></br>The blue-chip average tumbled for a fourth straight day, off 88.37 points, or 0.7%, to 12477.16, up 0.1% on the year. Boeing plunged 3.4% after Wachovia Securities bumped its rating to market perform from outperform, saying aircraft orders are due to ebb.</br></br>Dow components Honeywell and Caterpillar also were among big decliners, off 2.3% and 2%, respectively. An early jump in oil prices spooked stock investors, but those gains evaporated by day's end.</br></br>Stephen Wood, a strategist at asset-management firm Russell Investment Group, said some investors may already be looking ahead to next week's meeting of Federal Reserve policy makers, increasingly nervous that signs of economic strength will trigger the central bank's inflation-fighting instincts.</br></br>That could mean raising its interest-rate targets at some point this year, rather than cutting them as many stock investors had hoped. Higher interest rates make bonds more attractive while raising borrowing costs for businesses and consumers, and thus tend to hurt stocks. | no | 0 |
Market Closes Mixed in Slowest Day in 2 Years: Dow Falk 2 Points as ... | NEW YORK, July 5ÛÓStock prices ended mixed today after the slowest session in two years, with blue-chip issues under pressure from a sharp rise in bond market interest rates.</br></br>The Dow Jones industrial average fell 2.23 points to dose at 2932.47. The index of 30 blue-chip companies was up 25.72 points for the week.</br></br>Volume on the New York Stock Exchange was 69.8 million shares, the slowest turnover since July 3, 1989, when 68.9 million shares changed hands.</br></br>Financial markets were closed Thursday for Independence Day, and many investors turned it into a long weekend.</br></br>ÛÏItÛªs a totally incondusive day," said Edward Shopkom of Mabon Securities. ÛÏThe real test will come Monday.Û | no | 0 |
Investors Now View the Stock Market With Less Greed and Much More Fear | After five years on Easy Street, investors are in limbo, and stocks are no longer a sure thing.</br></br>Since the Oct. 19 crash, stock prices have had trouble getting above 2000 on the Dow Jones Industrial Average again. And yesterday, in response to a slide in the dollar, the Dow tumbled 56.70 points to 1942.97. The broad effect of the October market rout, like other historic bear markets, seems to be in reviving habits of viewing stocks with less greed -- and more fear.</br></br>Pre-crash talk of the Dow soaring to 3600 next year has evaporated. Instead, many money managers are hoping for a brief New Year's rally to enable them to unload money-losing debris. Even optimistic professionals see room for only modest gains in the next couple of years. Some are pulling back from stocks altogether, while others are avoiding the speculative stars of a few months ago. People still willing to buy equities are looking for export-oriented companies, battered growth stocks, or "defensive" issues that could hold up if a recession hits.</br></br>"The knowledge that stocks can fall so far, so fast" will change investment behavior for a long time, says Jeremy Siegel, a Wharton School finance professor.</br></br>In addition, many people fear that another crash could entrench a bear market for years. Historians note that it wasn't the 1929 crash that killed the market nearly 60 years ago but a second collapse in 1930 that really clobbered stocks -- and the world economy. | no | 0 |
A New Puzzle Over Changes In Productivity: A New Puzzle Over Change in Productivity | Was there a steep drop in productivity at the nationÛªs private businesses other than farms in the second quarter of this year?</br></br>A few weeks ago the Labor Department reported .that productivity, as measured by-output per hour worked, fell at an annual rate of 5.7 percent, the greatest one-quarter decline since it began keeping the numbers in 1947. Yesterday, following some revisions in GNP figures.on output, the Labor Department revised the number to a smaller 4.3 percent rate of decline.</br></br>But that revisionby no means wipes out the puzzle some economists see in the productivity estimates. They believe that further revisions are in store for the GNP. numbers, and that the reported decline in productivityÛÓ which has major implications for future rates of inflationÛÓwill be trimmed further, perhaps even erased altogether.</br></br>The Labor Department also reported a separate set of productivity estimates for manufacturing based on the output figures in the Federal Reserve BoardÛªs Index of Industrial Production rather than CommerceÛªs" GNP numbers.</br></br>Manufacturing productivity in the second quarter rose at a 2.8 percent annual rate' compared tto -the 4.3 percent rate of decline reported for all' non-farm private business. | no | 0 |
The College Charade | Here's one message that college seniors won't hear from graduation speakers: "higher education" is a mess. We have plenty of superb colleges and universities, and many students get excellent educations. But on the whole, our colleges are educationally undemanding and economically wasteful. They are a symptom of low educational standards-and a main cause.</br></br>The attrition rate among college students is enormous. Of entering freshmen at four-year colleges, only 41 percent have earned a bachelor's degree after six years. At community colleges, the dropout rate appears to be even higher.</br></br>Two-thirds of college faculty members say their schools increasingly teach what students should have learned in high school. Students don't disagree. About 40 percent of incoming freshmen say a main reason for going to college is to improve "reading and study skills." In 1971, 22 percent said so.</br></br>The value of many degrees is suspect. Nearly 30 percent of bachelors' degrees are in "business" or "communications"-double the rate of 20 years ago. In general, these degrees don't make significant intellectual demands on students or provide important technical skills (such as engineering).</br></br>Our college and university leaders are aware of their problems, but few discuss them candidly. Derek Bok, the president of Harvard, recently wrote a 15,000-word report on U.S. higher education without mentioning any of the facts listed above. College leaders see themselves as the victims of poor high schools. This rationalization is at least half backward. | no | 0 |
Postal Service Is Close to a Deal To Raise Rates as Soon as Midyear | The U.S. Postal Service and the country's largest mailers are close to agreeing on a compromise that would boost postage rates as soon as June but stave off an even bigger increase threatened by the post office in the wake of the Sept. 11 terrorist attacks and the recession.</br></br>The deal, which includes accepting the Postal Service's proposal of late September to raise the price of a first-class stamp to 37 cents from 34 cents, follows two months of negotiations aimed at avoiding skirmishes that usually cause the rate-setting process to drag on for about a year.</br></br>The settlement calls for the higher rates to take effect at least three months earlier than the October implementation the Postal Service originally projected, giving the agency a much-needed revenue infusion. The agency reported a $1.7 billion loss for the fiscal year ended Sept. 30, 2001, and it has predicted a similar result for the current fiscal year.</br></br>The compromise still must clear several hurdles and could fall apart if not enough of the 58 companies, industry groups and other parties in the pending rate-increase case support the deal. A Postal Service spokesman said about two-thirds of the parties had indicated by yesterday's deadline they would go along with the settlement; the agency's board will decide early next week whether to endorse the deal, which it is expected to do.</br></br>Jerry Cerasale, senior vice president of government affairs at the Direct Marketing Association, the largest trade group for the direct-mail industry, said there are "a significant number of major parties that have at least informally stated that they would sign the agreement . . . [or] will not oppose it." Mr. Cerasale's group agreed to the compromise after the Postal Service abandoned its push for a settlement that would have boosted postal rates June 2, instead of the current plan of no sooner than June 30, giving mailers more time to prepare for the rate increases. | no | 0 |
Humphrey Sees Negroes Nearing Economic Crisis: Job Problem Is Basic Recruiting, Training Urg | Vice President Humphrey said yesterday that Negroes are on the verge of a major economic crisis, with the gap widening between their training and job requirements. Humphrey said in a speech'</br></br>Vice President Humphrey said yesterday that Negroes are on the verge of a major economic crisis, with the gap widening between their training and job requirements. Humphrey said in a speech' for the White House Conference on Equal Employment Opportunity that nonwhite joblessness increased in July when the national unemployment rate fell to 4.5 per cent.</br></br>ÛÏLess than 4 per cent of the | white working force was out' of a job," he said. ÛÏBut for adult nonwhiI.es the uncm-</br></br>Recruiting, Training- Urged ÛÏBesides providing additional training and education,Û Humphrey said, ÛÏIf we are indeed dedicated to the proposition of ÛÏIt is no exaggeration to say that nonwhites, principally Negroes, are on the verge of a major economic crisis. For the gap is widening between Negro education and training on the one hand, and the requirements of the labor market on the other.</br></br>ÛÏThree Negro men in five are unskilled or semiskilled. And more than half the Negro men over 25 have less than a grammar school education. | no | 0 |
From Negotiating Table to Sweatshop | Oh, the glorious 1990s: communism's fall; the triumphant gospel according to Hayek, Friedman and Rand; and the promise of tranquillity and prosperity out to the far horizons. In "Misadventures of the Most Favored Nations," former Washington Post reporter Paul Blustein extols one of the dream's key tenets, free trade among nations, in this tale about the bureaucracy advancing it: the World Trade Organization. He is, however, more than a little leery of the WTO, born in 1995 at the brave new world's flood tide.</br></br>Blustein has thoroughly mastered the craft of breathing life into intrinsically dull material with compelling thematic narrative and delicious character studies. And it doesn't get much duller than meetings of the WTO and the General Agreement on Tariffs and Trade (GATT), which can include hours of dickering over the difference between "must" and "can." We learn, for example, that then-European Trade Commissioner Pascal Lamy, the closest ally of U.S. Trade Representative Robert Zoellick, believed that bananas and brown bread turbocharged his analytical skills, and subsisted on these two foodstuffs during negotiations.</br></br>Unlike many journalists, the author excels not only at the 800-word dash, but also at the long form, skillfully interweaving both his characters and engaging vignettes through the larger loom of world events. The further the author strays from the gilded, stilted venues of the trade negotiations, the more he sparkles. The few pages spent with Honduran textile worker Daunbia Rodriguez alone are worth the price of the book. Her meager pay, shantytown home and miserable working conditions must surely rouse the concern of many in the developed world, but Rodriguez doesn't see things quite this way; her hut's gas stove, indoor plumbing, television and, most miraculous of all, electricity to run them exceed her wildest dreams. She recognizes her job for what it is: the prized first rung on the ladder out of rural poverty.</br></br>The author deftly tracks the minute twists, turns and details of the latest round of negotiations, known as the Doha Round. He is scarcely enamored of the WTO's main cast of characters. For starters, there is Mike Moore, the profane, washed-up New Zealand politico who lusted after the WTO directorship to the point of expending most of his personal fortune on a shameless, and ultimately successful, globetrotting campaign for the job. Or the overachieving, overbearing Zoellick, who cynically seized on the Sept. 11 attacks as the central rationale for launching the Doha Round. Free trade, Zoellick argued, would make the world's most impoverished nations more prosperous, and thus shut off the supply of unemployed, bitter jihadist recruits. Never mind that the most successful terrorists, including the majority of the Sept. 11 hijackers, were anything but poor or uneducated.</br></br>Unfortunately, Blustein's love of detail distracts him from trade's broader historical context. The inevitability of the Doha Round's collapse cannot be fully understood without at least a dab of history. The intransigence of French and German farmers, for example, falls neatly into place when considered against the background of their impoverishment by the late 19th-century flood of far cheaper American and Australian grain. Similarly, Indian resistance to open markets becomes easily comprehensible in the context of the massive unemployment among the subcontinent's textile makers caused by cheaper and higher-quality imports from Lancashire's mills. | no | 0 |
Mexico Lines Up Loans as Vote Nears | Mexico said yesterday that it had lined up more than $20 billion in loans and lines of credit that it might tap in an effort to ensure economic stability during next year's presidential election.</br></br>The loans, which include some that were previously pledged and others that renew existing credit lines, come from the International Monetary Fund, the U.S. and Canadian governments, the World Bank, and the Inter-American Development Bank. The money is aimed at keeping President Ernesto Zedillo's six-year term from ending the way nearly all of his recent predecessors' terms have ended -- in a panicky flight by investors and lenders fearful that the country is on the verge of bankruptcy. In many past election years, the government has gone on spending binges aimed at winning support for the ruling Institutional Revolutionary Party, or PRI.</br></br>"This will provide us with the conditions necessary to have an orderly economic transition at the end of the six-year administration," Guillermo Ortiz, the governor of Mexico's central bank, said at a news conference in Mexico City.</br></br>The move comes amid nervousness in financial markets that next year's elections, which are expected to be hotly contested, could be afflicted by the sort of political instability, economic mismanagement and capital flight that caused the peso to plunge in 1994, weeks after Zedillo's electoral victory. The peso crisis rocked global markets and prompted the Clinton administration to lead a $50 billion bailout for Mexico that sparked criticism on Capitol Hill.</br></br>The administration, the IMF and their allies contend that this time around, Mexico is in much better economic shape and will use its international support to buttress sensible policies. The government has won praise from economists for keeping its budget and trade deficits under control, and Zedillo has sworn to keep from repeating the mistakes of his predecessors. The loans are designed to guard against a sudden loss of investor confidence by providing the government with extra resources if the need arises and by assuring markets the government is sticking to a sound policy path. | no | 0 |
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