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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: calgal who wrote (162260)	7/18/2001 6:25:53 PM
From: calgal	Read Replies (1) \| Respond to of 769670

Bush pressured again on dollar Greenback weakens against major currencies By Rex Nutting, CBS.MarketWatch.com Last Update: 3:41 PM ET July 18, 2001 WASHINGTON (CBS.MW) -- The dollar weakened against major currencies Wednesday as traders re-evaluated the relative strengths of economies and currencies. FRONT PAGE NEWS IBM second quarter profit up 5 percent Tech shares mixed amid earnings barrage U.S. techs clobbered; Nasdaq bleeds Greenspan: Slowdown not over yet Market news and more! Sign up to receive FREE email newsletters Get the latest news 24 hours a day from our 100-person news team. Meanwhile, American businesses and workers appealed again to the Bush administration to reach a deal with its allies at the upcoming Group of Seven summit in Genoa, Italy, to weaken the dollar. A strong dollar hurts U.S. producers at home and abroad, but it benefits consumers with lower prices. Despite the pleas from manufacturers, farmers and workers, the White House, Treasury and Federal Reserve all issued separate statements backing the current "strong dollar" policy on Wednesday. In North American currency markets, the dollar fell 1.5 percent against the euro, 1.2 percent against the British pound and 0.7 percent against the yen. The euro (C_EUR: news, chart, profile) strengthened to 87.20 cents, up more than a penny for the day and up 3 cents in the past 10 days. At the same time, the dollar fell to 123.95 yen (C_JPY: news, chart, profile) , off nearly 1.5 yen from its intraday highs. The pound (C_GBP: news, chart, profile) rose to $1.4177, up more than one and a half cents. See our complete currency data. "It's all about Greenspan," said Astrid Adolfson, currency market analyst at MCM MoneyWatch. Federal Reserve chief Alan Greenspan testified earlier before a congressional panel that the U.S. economic slowdown isn't over yet, and he suggested that even lower rates might be needed to restore growth. See full story. A weak U.S. economy would depress the value of U.S. assets, particularly stocks. If Europeans sold their U.S. assets and shifted back into European ones, the dollar would naturally weaken. Meanwhile, reports on inflation, growth and employment from Europe were mixed. Some concluded that relatively speaking, Europe is stronger than the United States. "Trading is thin," said Carl Weinberg, chief international economist at High Frequency Economics. Low volumes magnify the apparent effect of small concerns, he said. Weinberg said worries about Argentina and Latin America were hurting the dollar, because weakness on the continent would hurt the American economy more than Europe. The National Association of Manufacturers and the American Farm Bureau released a joint letter they wrote to President Bush, asking him to "make currency realignment a top economic priority" at the summit. Read their press release. John Sweeney, president of the AFL-CIO, the nation's largest labor organization, wrote his own letter to Bush, saying the overvalued dollar has contributed to job losses and has stymied the Fed's efforts to prop up demand. "There is a very real danger than the induced contraction in manufacturing will tip our country into recession," Sweeney wrote. The Treasury issued a boilerplate statement, reaffirming its support for a "strong" dollar. Bush, questioned by foreign journalists as he heads for this weekend's summit, said the value of the dollar is determined by market fundamentals, not government interventions or talk. "Our government will not artificially enter markets," Bush said. "The market decides the strength of the dollar." "A strong dollar has got, obviously, benefits and problems for us," Bush said. "One, it's harder to export, but it also helps attract capital. And much of our economy relies upon investors investing in the U.S. because of the dollar. And so we understand the pluses and minuses and, therefore, let the market determine the float of the dollar." Although he emphasized the weakness in manufacturing as a prime cause of the U.S. slowdown and mentioned weak foreign economies in his testimony, Greenspan barely mentioned the value of the dollar on Wednesday. Pressed by questioners, Greenspan said he wouldn't talk about the dollar because that's Treasury Secretary Paul O'Neill's turf. But Greenspan explicitly answered the arguments of the manufacturers, farmers and workers: "It's far more important to our exporters what's happening in the markets overseas than what's happening to the exchange rate per se." In other words, blame European consumers, not the dollar. "We were disappointed by the chairman's refusal to address Corporate Enemy # 1, the strong U.S. dollar," said Rich Yamarone, economist at Argus Research. Yamarone said dozens of U.S. companies have specifically mentioned the strong dollar as contributing to their poor earnings and weak sales. Adolfson said the pressure on Bush to weaken the dollar is having some impact in the market. Some traders apparently believe Bush and Co. don't have the commitment to the strong dollar that Clinton Treasury Secretary Robert Rubin had. "They aren't market people like Rubin was," she said. "They are more likely to listen to manufacturers and corporations." Indeed, O'Neill was CEO of Alcoa, a major aluminum producer, and was president of International Paper, which has already closed one facility because of the dollar. Bush, Vice President Cheney, Chief of State Andy Card and Budget Director Mitch Daniels all have corporate backgrounds. So far, however, O'Neill has maintained the policy expounded by Rubin that economic fundamentals determine the long-term value of any currency. Bush and O'Neill are unlikely to do anything to weaken the dollar, analysts said. For one thing, it's questionable they could do anything to change the relative values investors put on currencies. The Group of Seven isn't likely to take up the cause, either. While the strong dollar has contributed to higher-than-desired levels of inflation in Europe, it has helped European producers compete against the Americans. "There's little chance they'll even talk about currencies in the communiqué," Weinberg said. American companies battered by the dollar would be well advised to seek growth in China, which has a fixed exchange rate, Weinberg said. Rex Nutting is Washington bureau chief of CBS.MarketWatch.com. cbs.marketwatch.com

To: calgal who wrote (162260)	7/18/2001 6:34:17 PM
From: calgal	Respond to of 769670

Blair Offers to Be 'Bridge' Between U.S., Europe By T.R. Reid Washington Post Foreign Service Wednesday, July 18, 2001; Page A21 LONDON, July 17 -- Britain's Tony Blair will serve as a friend in need to President Bush in Europe this week, the prime minister made clear today, emphasizing his desire to "build bridges of understanding between the U.S. and Europe" at a time when the U.S. president faces harsh opposition on this side of the Atlantic. Blair said he recognizes that Bush "is being trashed" by pundits and interest groups in Europe, "but then I think that happens to a lot of U.S. presidents." For his own part, the prime minister had nothing but praise for the new president. "There will always be people who will attack the U.S.," Blair said, "but I don't think we should pay a very great deal of attention to that." Speaking to a group of reporters at No. 10 Downing Street, the prime minister's residence, Blair offered an upbeat assessment of Bush's performance at the European Union summit in Sweden last month: "I think that people were very impressed by his presentation . . . where he explained his thinking on issues like Kyoto and missile defense." Bush has come under attack in Europe for his decision to pull the United States out of the 1997 Kyoto Protocol on global warming and for his determination to push ahead with a missile defense system that most European leaders oppose. Bush and members of his cabinet have failed repeatedly to win backing in Europe on these issues. The disagreements are likely to be highlighted later this week when Bush joins other leaders of the world's leading industrial democracies and Russia at the Group of Eight summit in Genoa, Italy. Blair, too, has policy differences with the president. He said today that Britain supports the Kyoto accord, despite Bush's position. He remained noncommittal on the missile defense project, noting that "we haven't received . . . a proposal yet from the U.S. government" on the design or purpose of the system. But the prime minister, whose center-left Labor Party recently won a huge reelection victory here, said he is determined to focus on areas of European agreement with the American president. "This strict division that is played by a lot of people . . . between the Anglo-Saxon model and the European model, I think you can overdo hugely," he said. As post-imperial Britain searches for a global role commensurate with its wealth, Blair has postulated that Britain should serve as a "bridge nation" between Europe and the United States. As prime minister of the "bridge," he has said, "it is crucially important that I have a good personal relationship" with the U.S. president. Blair has strongly championed the European Union's moves to form a new 60,000-member "European army" -- officially known as the European Rapid Reaction Force. The EU military unit has been criticized by politicians in the United States and Britain as a threat to the countries' relations. But as Blair pointed out today, "at the Camp David summit that I had with President Bush [in February], he specifically endorsed European defense, provided that it is done consistently with NATO." In addition to the Genoa summit, Bush this week is to meet Pope John Paul II in Rome and visit U.S. soldiers in Kosovo. Before the business part of the president's trip begins, Blair has invited him to stop off in London. The 55-year-old president has never been to the British capital. Like many first-time visitors, he plans to see the Rosetta Stone at the British Museum and the Cabinet War Rooms, the underground bunker in Whitehall where Winston Churchill ran Britain's battle against Nazi Germany. And he will stop by Buckingham Palace just in time for the changing of the guard. Unlike other tourists, though, Bush and his wife, Laura, will continue inside for lunch with Queen Elizabeth II. Last month, on his first presidential trip to Europe, Bush was criticized because he spent all his time at official meetings and never met with citizens. That gap will be filled Thursday morning. The president is scheduled to visit the reading room of the British Library to read to schoolchildren. © 2001 The Washington Post Compa washingtonpost.com