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To: Jim Willie CB who wrote (2702)	7/20/2002 5:50:25 AM
From: stockman_scott	Respond to of 89467

Major downshift phase seen for dollar japantimes.co.jp

To: Jim Willie CB who wrote (2702)	7/20/2002 6:17:12 AM
From: stockman_scott	Read Replies (1) \| Respond to of 89467

How Long a Slump? By David Ignatius Columnist The Washington Post Friday, July 19, 2002 After the "long boom" of the 1990s, what's the chance that we are now facing the prospect of a long slump in this decade -- a Japan-like malaise that may last years before investors recover their fractured confidence? Unfortunately, some of Wall Street's most seasoned players fear we may have entered just such a period of prolonged decline. And because their confidence about the future is crucial in priming the pump, their prophecies tend to be self-fulfilling. "In my opinion, the market is headed lower and will not start any serious recovery for some time," cautions James A. Harmon, former chairman of the investment bank Schroder Wertheim & Co. and former head of the U.S. Export-Import Bank. "This market will not boomerang," Harmon said during a telephone interview yesterday, "and the earnings of most of the large public companies probably will not keep pace with the growth of GDP over the next few years." Is he right? There's obviously no way to know. But the fact that growing numbers of Wall Street insiders agree with him is important in itself. "We have nothing to fear but fear itself," said Franklin D. Roosevelt in his 1933 inaugural address, describing the long slump that had followed the stock market crash of October 1929. The same words apply today: If investors regained their confidence and put their money to work, the slump would end quickly. But will they? The "infectious greed" of the 1990s, to use Alan Greenspan's memorable phrase in his testimony this week, has given way to an infectious anxiety about the future. As in the 1930s, we're living in a Keynesian world where monetary policy alone can't shake investors from their "liquidity preference" -- and the corresponding reluctance to invest for the long term in productive assets. Where investors once bragged about all the high-tech companies they owned, they now boast about their cash positions -- the lucky investors, that is. They are husbanding that cash for the moment when stocks finally hit bottom. "I am almost 100 percent liquid," one investment banker confided this week. "I have been waiting for this unique opportunity for some years. It will be comparable to the '70s." Steven Rattner, who heads a New York private equity firm called Quadrangle Group, noted that one feature of this market is the continuing mismatch between what sellers think their companies are worth and what buyers are willing to pay. Recent experience has taught that if you wait, the price will decline -- and nobody wants to feel like a sucker who paid too much. So potential buyers sit on the sidelines, waiting. "It's certainly plausible that the financial markets could remain in disarray and even move downward for some protracted period of time, but who knows?" says Rattner. "This is an exceptionally difficult period to make predictions with any degree of confidence." Even the financial reforms that investors have been clamoring for may actually make the situation worse in the short run. Rattner notes that if companies follow Greenspan's advice and record stock options as an expense, that could cut the earnings of the average company in the Standard & Poor's 500 by 20 to 30 percent. And the earnings of high-tech giants such as Microsoft and Cisco Systems, which have granted billions of dollars in options, could suffer even more. One of the few positives these days is that the world's financial architecture still looks solid amid the howling winds. Unlike the financial crises of 1997 and 1998, this time major financial institutions appear to have hedged their risks fairly well. Investors' losses of trillions of dollars in debt and equity markets haven't led to systemic failures by big banks or investment houses. How could things get worse? For an answer, consult the annual report of the Bank for International Settlements, issued this month. Under a section entitled "Seeds of Concern," the BIS notes that financial consolidation has meant that just a few giant banks now control the unregulated market for financial derivatives. The top three banks controlled 89 percent of foreign-exchange derivatives booked by U.S. banks in 2001, up from 59 percent in 1995; the top three banks' share of U.S. interest-rate derivatives rose to 86 percent in 2001 from 56 percent in 1995; the top three's share of credit derivatives rose to 94 percent in 2001 from 79 percent in 1998. In laymen's language, that means that, with fewer and fewer big banks, a failure by any one of them could be disastrous. That's one of the problems with globalization -- it puts everyone's eggs in the same few baskets. Greenspan expressed this summer's rueful financial lessons eloquently in his congressional testimony this week. "It is not that humans have become any more greedy than in generations past," he observed. "It is that the avenues to express greed [have] grown so enormously." And now we are paying the price, saints and sinners alike. © 2002 The Washington Post Company washingtonpost.com

To: Jim Willie CB who wrote (2702)	7/20/2002 12:25:00 PM
From: abuelita	Respond to of 89467

'I'm pulling my money out' Dow plunges 400 points to close at 4-year low as investors around the world 'throw in the towel' canada.com{C8BFF633-930D-4B35-8C61-16C222540C2D}

To: Jim Willie CB who wrote (2702)	7/20/2002 12:51:13 PM
From: abuelita	Respond to of 89467

Gold regaining former glory as a safe haven Rockets us$6.90 an ounce Drew Hasselback National Post Saturday, July 20, 2002 Gold soared US$6.90 to US$323.90 an ounce yesterday as investors dumped stocks in favour of bullion, a commodity favoured as a safer bet than the weakening U.S. dollar or sinking global equities. The prime driver was news of a record U.S. trade deficit. The trade gap for May was US$37.64-billion, a 4% jump from April. That points to a further weakening of the U.S. dollar because it shows that money is flowing out of the U.S. at an increasing rate. The dollar is at a 30-month low against the euro. Then there was the ongoing meltdown of global capital markets. Falling stock prices have sent investors searching for alternatives. The S&P 500 composite index his down 25% this year. "Gold did not do well in the stock market bubble. But now that it has deflated, gold has returned as an asset class and as a reserve," said John Ing, president of Maison Placements Canada in Toronto. Mr. Ing believes gold is on track to rise to US$375 an ounce by the end of the year, and continue to climb to US$510 in 2003. Indeed, gold futures are indeed pointing to a higher price in the short term. Gold for August delivery rose US$6.80 to US$323.90 on the Comex division of the New York Mercantile Exchange. The 2.1% hike was the biggest gain since Feb. 5. The gold bug has even begun to nip at market watchers who have previously favoured stocks. "I am changing what's left of my mind," said Barton Biggs, chief global strategist with Morgan Stanley. "This is a plausible case that a professionally managed portfolio consisting of the metal itself and gold shares could realize returns of 15% real per annum in the difficult environment ahead." Accounting worries continue to cast a pall over equities. The Dow Jones Industrial average plunged to its lowest level since October, 1998, yesterday. The Standard & Poors/TSX Composite Index has lost ground in eight of the last nine weeks. Investors turn to gold in times of economic panic because gold, and to some extent the companies that produce it, is generally seen as a store of value and a stable alternative to dropping currencies. So, while stocks in other sectors were falling yesterday, gold producers gained ground in Toronto. Barrick Gold Corp. rose 58¢ to $27.05. Placer Dome Inc. gained 39¢ to $16.60. The TSX sub-index of gold stocks was up 1% overall. Yesterday's growth came despite the fact it was Barrick's and Placer's last day in the benchmark S&P500 index. The two largest gold producers are among the five Canadian companies dropped from the index to make it exclusively American. "Gold is becoming a more viable alternative, especially considering low interest rates and falling stock markets around the world," said Mark Rzepczynski, president of John W. Henry in Boca Raton, Fla. Placer needs every boost to its share price it can get as it forges ahead with its hostile, all-stock takeover bid for Australia's largest gold producer, AurionGold Ltd. Aurion has attacked Placer's offer because it contains no cash component and because Placer's shares has fallen about 30% since the bid was made May 27. © Copyright 2002 National Post nationalpost.com{25D4F9A9-7139-48ED-A01A-EDFB43B20C14}