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To: Ilaine who wrote (5806)	7/13/2001 11:22:41 AM
From: Ilaine	Read Replies (2) \| Respond to of 74559

>>Wholesale Prices Drop 0.4 Percent By THE ASSOCIATED PRESS Filed at 9:04 a.m. ET WASHINGTON (AP) -- Prices at the wholesale level plunged 0.4 percent in June as record declines in residential electricity and natural gas prices and a big drop in gasoline costs gave the country the best performance on wholesale inflation in more than two years. The Labor Department reported that the drop in its produce price index, which measures price pressures before they reach the consumer, was the first decline since last August and the biggest drop since a 0.5 percent fall in February 1999. Analysts had been expecting that inflation would moderate after steep increases earlier this year driven by a big jump in energy prices. They also said the sharp slowdown in economic activity was helping to ease inflationary pressures as wage demands soften with the rising jobless rate. Meanwhile, a second report Friday showed that retail sales rose 0.2 percent in June, pushed up by a strong 1.5 percent surge in sales of new cars. While the overall number was slightly weaker than analysts had been expecting, the government revised its estimate for May sales sharply higher to 0.4 percent, rather than the original estimate of a much smaller 0.1 percent gain. Beginning last summer, U.S. economic growth has slowed dramatically, with many analysts believing that growth in the just completed April-June quarter will come in at a weak annual rate of 0.5 percent, even worse than the 1.2 percent growth recorded in the first three months of the year. Still, economists believe consumers will keep the economy out of a full-blown recession with their spending expected to increase in coming months, reflecting the boost provided by lower interest rates and the big tax cut passed by Congress. The Federal Reserve has cut interest rates six times so far this year, its most aggressive credit easing in nearly two decades, in an effort to make sure that the U.S. economy does not tip into recession. Analysts said the good news on inflation will give the Fed room to cut interest rates further if needed to provide fuel for an economic rebound. The Fed's next meeting is Aug. 20. President Bush, who next week will attend his first economic summit of the world's seven richest countries in Genoa, Italy, is counting on the Fed's rate cuts and the stimulative effect of his $1.35 trillion tax cut, to lift the economy to a stronger growth rate later this year. The 0.4 percent drop in wholesale prices in June left inflation at this level rising at an annual rate of 2.4 percent through the first six months of this year, far better than last year's 3.6 percent. The news was just as good excluding volatile energy and food prices. The so-called core rate of inflation edged up just 0.1 percent in June, even better than the small 0.2 percent increases in April and May. So far this year, the core rate of inflation at the wholesale level is rising at an annual rate of just 1.6 percent. For June, the big drop in overall prices was led by a 2.5 percent plunge in energy costs, the biggest one-month decline since a 3.5 percent drop in April 2000. The good news on energy reflected record drops of 1.5 percent in residential energy costs and 5.8 percent in natural gas prices. Gasoline prices fell by 3.7 percent, the biggest decline since a 3.9 percent fall last August. Economists had been predicting that energy prices would retreat following a sharp run-up last winter that was caused by a shortage of supplies. Still, residents of California face difficult problems and potential power shortages this summer because of the shortage of electrical generating capacity. Motorists this summer have been getting a break at the gas pump after world crude oil prices eased and refiners rushed to fill shortages that developed during the spring.<< nytimes.com

To: Ilaine who wrote (5806)	7/13/2001 12:22:25 PM
From: TobagoJack	Read Replies (2) \| Respond to of 74559

Hi CB, Can I get you to consider visiting Beijing for the Olympics, buy some locally produced T-shirts, some commemorative gold and platinum coins with the five stars and the gate of heavenly peace motif on one side and the panda bear on the other, and some shares of Beijing Enterprise which partly owns the McDonalds, KFC and other franchises in the city? :0) No? well OK for now, I understand. <<vicissitudes of summer school>> Envy, jealousy, and more envy. <<deliberately pursuing deflationary measures in a deflationary recession ... is suicide>> Things are deflating in Tokyo, and their econ guys are warning that the prime minister's reforms must at all cost avoid causing contraction. Intuitively, I agree with the parameter, but it is not obvious how it all can work in real time/space. <<Time to think about cutting prices, cutting costs>> Hard, very hard, as you noted, very sticky, because you are talking about <<Homo Economus>> living wage as well. Governments have fallen for less. <<A strong dollar means the US consumer buys more foreign goods because they are relatively cheaper>> I believe this is the last line of defense for the world, it will prove to be not enough, and to be porous. <<If the dollar slips, you guys are going to have to cut costs to keep selling to us>> This may not be a problem, because the folks in inland provinces will pick up the textile trade, and the folks on the coast will pick up the optics trade. This is the natural consequence of globalization pursued regardless of the bumps. <<We need to figure out how to cut overhead. Taking out a few layers between the producer and the consumer is a good idea - but those guys in the middle are going to have to find new jobs>> I think, with the advent of WTO, Hong Kong's traditional role as intermediary between China and the world will be no more, and like the middle managers, will have to find new jobs. Hard to do. I am afraid that no one has the script for what we are about to collectively experience, and no one is in charge. Chugs, Jay

To: Ilaine who wrote (5806)	7/14/2001 12:43:30 AM
From: TobagoJack	Respond to of 74559

Hi CB, I will go along with this editorial piece: QUOTE Beijing gets the gold economist.com Jul 13th 2001 From The Economist Global Agenda After mounting a massive campaign, China has won the right to stage the Olympic Games in 2008. This will transform Beijing, and maybe China WINNING may have been the easy part. With the International Olympic Committee (IOC) awarding the right to stage the Olympics in 2008 to China on July 13th, the country’s leaders now have a colossal task ahead of them. After the celebrations, they will have to transform their polluted, traffic-congested capital into something altogether more inviting. They will need to maintain political and social stability without being dogged by allegations that they are abusing human rights. And they will want to avoid embarrassing boycotts that might disturb their long cherished dream of showing off China’s sporting and organisational prowess to the rest of the world. China, which won outright on the second round of voting, was the favourite, although Paris and Toronto provided tough competition. It was an historic moment for Juan Antonio Samaranch, who now retires after 21 years as president of the IOC following its meeting in Moscow. No leader must be more relieved by Beijing’s victory than China’s president, Jiang Zemin. The decision to make the bid was his after all, and it was a risky one. In 1993, Beijing’s loss to Sydney by just two votes in the race to hold the 2000 Olympics was deeply upsetting to China’s leaders and the general public. Many Chinese felt they had been slapped in the face by the Western world. Losing again would have cast a dark shadow over the Communist Party’s 80th anniversary celebrations this month, as well as over Mr Jiang’s preparations to step into semi-retirement next year. China’s neighbours will also be pleased. Even though the Japanese city of Osaka was also competing against Beijing, some Japanese officials suggested privately that victory for Beijing might help preserve stability in the region. Taiwan’s president, Chen Shui-bian, openly expressed support for Beijing’s bid. No one wanted to deal with a sullen China, bent on finding scapegoats for its defeat. Many in Taiwan believe that China would be particularly unlikely to attack the island if it felt that doing so would disrupt the games. They may well be right. Staging the games is highly important to China’s leaders, and not just as a chance to put on display the country’s sporting brawn. It is also of huge symbolic importance. Official rhetoric in China often dwells on the “humiliation” suffered at the hands of foreign powers from the mid-19th century until the communist takeover in 1949. “China was once the sick man of East Asia,” is an oft-heard phrase. With the games, China hopes to emphasise its return to the world stage as a great and vigorous nation. But will it change China? China mounted a huge campaign for its bid for the Olympics. Beijing officials sought to allay Western concerns about the country’s human rights record by saying the games would help to open China up. The country has promised to give the media a free hand in reporting the games. But there is little likelihood that Beijing’s victory will have any immediate impact on human rights in China. Indeed, in the build-up to the IOC vote, China applied unremitting pressure on the outlawed Falun Gong sect, and launched a crackdown on newspapers deemed to be straying from the party line. It did not, as it did in 1993, try to sweeten the bid by releasing high-profile political prisoners. In the next few years, China will become an increasingly unsettled country as it implements sweeping economic changes. These changes will be accelerated by China’s accession to the World Trade Organisation, which is likely to happen in the coming months. Unemployment will grow. Corruption will worsen. Job seekers will pour into the cities from the countryside. Chinese officials admit that increasing numbers of disaffected citizens are likely to express their grievances by staging protests. The government will try to contain these, forcefully if necessary, regardless of foreign opinion. “Stability is paramount” is one of the party’s favourite catch phrases. By 2008, President Jiang will have faded entirely from the political scene. In 2007, the party’s 17th congress will consolidate the power of younger leaders with no personal experience of the party’s revolutionary origins. It is possible that these leaders will dare to take more risks, but no-one should count on it. If China feels more open in 2008, it is more likely to be because economic change has eroded the party’s ability to maintain a vice-like grip. Over the next few years, Beijing has pledged to spend billions of dollars on building new roads, extending its underground railway system and erecting stadiums and other sporting facilities. Fred Hu, an economist with the Hong Kong office of Goldman Sachs, an investment bank, estimates that China’s successful bid will boost the country’s GDP growth by 0.3% per year to 2008. This could improve the lives of many. Pollution, for instance, which shrouds Beijing in haze for many days of the year, is to be controlled by moving factories away from the city and using environmentally-friendly fuels. Given the enormous political will to make the games succeed, it is likely that Beijing will fulfil its targets (despite grumbling by those whose homes are knocked down to make way for construction). It could well be a glittering games in 2008. Being given the chance to stage them, at least, should make China feel somewhat more at ease with the outside world. UNQUOTE