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To: bambs who wrote (44053)	12/3/2000 6:35:52 PM
From: Monty Lenard	Respond to of 77400

"THE INTERNATIONAL FORECASTER DECEMBER, 2000 (1)" at The Toulouse-Lautrec Table. "The big question is will the $670 billion US junk bond market, which is more than 15% of all corporate bonds, begin a run on the financial system? For two months the market has been virtually illiquid. There have been defaults and many companies are on the edge. New financings are not to be found. The wild speculative bubble we warned of in April has burst in technology and dot com stocks. Many of these companies depended on junk bonds for financing......" "Junk bond defaults during the first nine months of the year were $24.9 billion, at that rate they’ll set a new record. As we reported before S&P estimates that, the rate of default of all junk bonds outstanding would reach 8.4% by the end of September 2001. That is up from 5.4% at the end of the third quarter of 2000." "Losses in the Nasdaq market are over 50% since the high last March or 5,123 or $1.8 trillion, which is equal to the GDP of Germany for a year." "These are savings that have been wiped out. Over 55% of US households are effected. The wealth effect is dead and Goldilocks has been devoured by the big bad wolf. As we pointed out in previous issues the Plunge Protection Team has been in the market propping it up at least four times in the last two months....." Followers of Bob Chapman are happy campers these days as he advised them to get out of the stock market near the top.

To: bambs who wrote (44053)	12/3/2000 6:39:13 PM
From: Monty Lenard	Respond to of 77400

BARRON'S December 4, 2000 Page 66 EDITORIAL COMMENTARY (Thomas G. Donlan) Following the Flag The IRS enlists foreign banks for global tax enforcement For those who believe the recent American prosperity has rested on a flow of foreign capital seeking investment opportunities on these shores, a test is under way. Acting in zealous pursuit of evildoers, the Internal Revenue Service claims a tax lien on every investment held by foreign banks and brokers whose clients might turn out to be American taxpayers. Those Americans, you see, might be trying to evade taxes on interest, dividends or capital gains. So unless the foreign financial institution happens to be located in a country the Treasury designates as cooperative, and unless the institution also pledges to investigate its own customers, there will be the IRS to pay before any money leaves the US. How much? Starting January 1st, a withholding tax of31% on interest, dividends and gross proceeds of securities sales will be levied on all securities transactions that are not carried out through "Qualified Intermediaries," unless the unqualified intermediary identifies its client so the IRS can verify the client's claim that no American tax should be due. Unidentified clients of unqualified intermediaries will be subject to the withholding, even if they are not Americans, even if they are not subject to any U.S. tax. If they won't identify themselves, the withholding will become a permanent confiscation. American taxpayers with a passion for privacy, however, will be able to keep their secrets and pay their taxes if they deal through a Qualified Intermediary. There has not yet been a rush for the exits, but imagine the coming annoyance of foreign investors who own stocks and bonds traded on U.S. markets whose bankers have neglected to become Qualified Intermediaries. Especially imagine the annoyance of those who sell their stocks or bonds at a loss, since the withholding applies to the gross proceeds, not to taxable net profit. The first obvious result of the new rules is that they will reduce the supply of foreign capital for investment in American companies. A second is that more American companies will incorporate themselves offshore and keep their securities off the U.S. markets. Neither result will be good for America. The IRS has confused the pursuit of income tax with the pursuit of happiness. The value of the damage could be far greater than any possible revenue gain.