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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (6907)	9/20/2002 5:00:39 PM
From: stockman_scott	Read Replies (2) \| Respond to of 89467

Is Washington Listening? By Donald Luskin SmartMoney.com Friday September 20, 3:33 pm ET biz.yahoo.com THE DAY AFTER the terrorist attacks of Sept. 11, 2001, I posted a column called "Rising From the Ashes." It was an optimistic look at the potential for the stock market to spring back from what seemed like a deathblow. I wrote, "...if America's leadership and the American people respond constructively — as they always have in the past — then from this crisis could emerge significant opportunities that could propel the economy and the markets into an important new growth phase." Now, a year later, the markets are lower than they were in the panic following the New York Stock Exchange's reopening after Sept. 11. And it's not because the American people didn't respond constructively — they did. It's because, on the economic front, America's leadership did not respond constructively. At first the market adopted my highest hopes for rising from the ashes of Sept. 11 — and by the end of 2001 it had gotten out of hand. The mania among Wall Street economists from November 2001 to April 2002 for a "V-shaped economic recovery" may have been, in fact, something between wishful thinking and patriotic fervor in the wake of a national tragedy. Investors played along last December and January when equity valuations were driven back up to levels not seen since the top of the bull market in March 2000. It's almost as though they were responding to the public-relations campaign carried out in New York City with the slogan "Bring Back the Bull," urging investors to conquer terrorism by bidding up stocks. Of course it had to end in tears. To be fair, in the first few months following Sept. 11 there were hopeful signs that the tragedy would inspire pro-growth economic policies. Most important, within hours of the attacks the Federal Reserve announced that it would supply all the monetary liquidity the banking system demanded during the crisis — and it followed through, big time. Initially, the Fed even abandoned its inefficient operating mechanism based on interest-rate targeting, letting the fed funds rate float as a byproduct of liquidity supply and demand. The Fed reverted to it traditional rate-targeting operations in a couple of weeks, but rates have stayed at constructively accommodative levels. The Fed has yet to take back any of the 1.75% in rapid-fire rate cuts made after Sept. 11, even though the economy shows signs of recovery, and even though those cuts were deemed at the time to be only a temporary response to an emergency. Would the Fed have gotten the funds rate down to 1.75% eventually with or without Sept. 11? Perhaps the economy was already in recession before then (although almost all Wall Street economists were denying it at the time), so a gradual series of rate cuts may have been in the cards all along. But surely Sept. 11 motivated the Fed to ratchet rates down far more aggressively than it would have otherwise. Sadly, other than the Fed's decisive and persistent action, our economic leadership has done everything wrong. Proposals for pro-growth tax cuts that dominated the post-Sept. 11 debate on economic stimulus were quickly forgotten, to be replaced with an orgy of pork-barrel government spending. There were some initial signs that regulatory shackles on American business growth would be loosened, but the Bush administration has ended up doing nothing to alter Clinton-era antitrust and telecommunications policy. Protectionist trade barriers against foreign steel were arbitrarily imposed, reversing two decades of bipartisan pro-growth global trade policies. And then came the WorldCom (Other:WCOEQ - News) accounting scandal. It was inevitable that the Democrats would eventually find an issue with which to compete against President Bush's sky-high approval ratings in the wake of Sept. 11, and this turned out to be it. They turned it into a legislative assault against CEOs, auditors, and other putative corporate crooks that culminated in the Sarbanes Oxley Act, the most sweeping economic regulatory initiative in two generations. And President Bush — ostensibly a free-markets Republican — stood by and let it happen. And from a pure game-theory perspective, why should he have done anything else? His popularity is based on a signature foreign-policy issue — to venture into a controversial domestic economy issue is a no-win proposition, in which he has lots to lose and nothing to gain. So the Republicans in Congress who've to stand for reelection in November — when George Bush does not — had no choice but to go along with the Democrats' frenzy of reform, even trying to one-up their rivals in how tough they could appear to be on corporate corruption. Thanks to this dynamic, free-market capitalism has been a victim of Sept. 11. Now, as the economy struggles to pull out of recession with the shadow of Sept. 11 still cast across all our lives, the Bush administration has no intention of spearheading the kinds of pro-growth policy initiatives that we might normally have expected. Yes, there was a big show put on at the Waco economic forum, with a few suggestions for tax cuts aimed at relief for beleaguered stock-market investors. But those suggestions had now simply been forgotten, leaving the impression that Waco was staged primarily as a sop for the pro-growth wing of the Republican party, and to throw a bone to critics of the administration in the financial community — people just like me. The sad fact is that President Bush's political priorities are focused exclusively on the war on terrorism, and possible military action against Iraq dominates the headlines. We trust that Bush's decisions will be taken in light of the facts and the national interest. But there's an intense risk that he'll be tempted to "wag the dog" in order to boost his popularity and help his fellow Republicans in the November elections. So in two senses the consequences of Sept. 11 are swords of Damocles hanging over the economy. If we go to war with Iraq, the economic impacts will be unpredictable and chaotic. And whether or not we do, the economy will be left to sink or swim on its own. The eyes of the administration are elsewhere. We remain in the ashes. ________________________________________________ Donald Luskin is chief investment officer of Trend Macrolytics, an economics consulting firm serving institutional investors. You may contact him at don@trendmacro.com.

To: Jim Willie CB who wrote (6907)	9/20/2002 6:21:13 PM
From: surfbaron	Read Replies (1) \| Respond to of 89467

JW: wasn't Jude one of Kemps advisors, maybe another conservative, can't recall.

To: Jim Willie CB who wrote (6907)	9/21/2002 8:09:33 AM
From: stockman_scott	Respond to of 89467

Atonement in the Boardroom Editorial / Op-Ed The New York Times September 21, 2002 Jack Welch's gut told him it was time to give up his lavish retirement perks, and investors can only hope that his decision is contagious. Mr. Welch insisted there was nothing improper about his retirement deal in a Wall Street Journal op-ed article last Monday, but nevertheless announced he would start paying General Electric an estimated $2 million a year for the use of the company jet, Manhattan apartment and other perks that were part of a 1996 agreement to keep him on the job for another few years. September is turning out to be a moment of reckoning for extravagant executive compensation packages. William McDonough, president of the Federal Reserve Bank of New York, recently attacked excessive C.E.O. pay as a moral failure. He noted that chief executives earn on average 400 times their average employee's income, up from 42 times in 1980. Stories of greed in the executive suite being taken to criminal extremes have also dominated the headlines. Dennis Kozlowski and other former Tyco officers have been indicted by the Manhattan district attorney, Robert Morgenthau, accused of systematically looting company coffers. The Tyco case, at least for the moment, seems to set the gold standard for misconduct by a management team intent on seeing just how far it can go, absent any meaningful corporate governance. The result was a surreal world of $6,000 shower curtains, $15,000 poodle-shaped umbrella holders and $2 million Sardinian birthday parties for the boss's second wife. This week the Conference Board, a business-backed research group, issued a report acknowledging that executive compensation has become excessive in many instances, bearing no relationship to a company's long-term performance. The group calls on companies to treat stock options as expenses affecting their bottom line, and to strengthen the independence of compensation committees. The Securities and Exchange Commission has begun an informal inquiry into Mr. Welch's package, and whether it was properly disclosed by the company. The S.E.C. will have to tighten comparatively lax disclosure rules involving the goodies offered by companies to their former officers, and demand more realistic rules for determining the cost to shareholders. Also, the commission wants to require mutual funds to report how they vote their shares on compensation and other corporate governance matters. This is an important step toward increased shareholder vigilance. Congress, for its part, must adjust a number of tax rules that encourage abuses. It is inexcusable that a retired C.E.O. flying on the company jet for personal business can claim for income-tax purposes that the free trip is worth about the amount of the lowest coach fare available on the same route. The trip may actually cost the company tens of thousands of dollars. Investors were often willing to overlook the excesses of management teams during the recent bull market, because the dollar amounts seemed paltry compared with a company's overall revenues, and because share prices were rising. Now that the boom is over, the idea that imperial C.E.O.'s can help themselves to corporate assets looks more like the reckless conduct it always was. nytimes.com

To: Jim Willie CB who wrote (6907)	9/21/2002 8:20:45 AM
From: stockman_scott	Read Replies (1) \| Respond to of 89467

Oil Security Sham: New Energy Bill Changes Will Increase Oil Demand t r u t h o u t \| Statement Robert Perks Natural Resources Defense Council (NRDC) truthout.org WASHINGTON (September 19, 2002) -- As Congress and the White House tout the need for increased energy security, members of the House-Senate conference committee consolidating the energy bill today further weakened the already minuscule effort to reduce oil imports. Instead of saving fuel, changes approved by negotiators today will actually increase gasoline consumption by millions of gallons. The move comes amid rising oil prices, falling inventories and growing concern over price and supply disruptions in the Middle East. "The energy bill now does less than nothing to reduce our dependence on foreign oil. Congress undermined even the symbolic fuel economy gestures," said Daniel Lashof, a senior scientist at NRDC (the Natural Resources Defense Council). "Better technology in our cars and trucks could save 2 million barrels of oil every day, more oil than we import from Saudi Arabia. But instead Congress caved in to Detroit and the big oil companies." Led by Reps. Billy Tauzin (R-LA) and John Dingell (D-MI), committee members voted to delay until 2012 a provision in the House bill ordering fuel economy increases that would save 5 billion gallons of gasoline by 2010. That's just six days worth of U.S. consumption. Today's move will cut the 2010 savings nearly in half. Members also extended a loophole allowing automakers to build less efficient trucks and SUVs in return for minor modifications that let a handful of vehicle models run on corn-based ethanol as well as gasoline. The problem, according to the Department of Transportation, is that just 1 percent of the vehicles would actually use ethanol. This loophole will allow gasoline consumption to increase by as much as 9 billion gallons by 2012. "We cannot drill our way out of this predicament," Lashof said. The United States imports more than half its oil, but has just 3 percent of known reserves. Sixty-five percent of the world's known reserves lie beneath the Persian Gulf states. Drilling in the Arctic National Wildlife Refuge would increase world reserves by less than one-third of 1 percent. The only way to end the economic and security risks is with better cars and better fuels, Lashof said. Earlier this year, NRDC and the Union of Concerned Scientists released "Dangerous Addiction: Ending America's Oil Dependence," detailing the security threat and offers a practical simple, five-step plan to cut the oil needed for our cars and light trucks in half, saving 5 million barrels per day by 2020. The Natural Resources Defense Council is a national, non-profit organization of scientists, lawyers and environmental specialists dedicated to protecting public health and the environment. Founded in 1970, NRDC has more than 500,000 members nationwide, served from offices in New York, Washington, Los Angeles and San Francisco. Related NRDC Pages: Dangerous Addiction: Ending America's Oil Dependence: nrdc.org F.A.Q.: Energy and National Security: nrdc.org

To: Jim Willie CB who wrote (6907)	9/21/2002 8:58:42 AM
From: stockman_scott	Respond to of 89467

Energy danger as reliance on Middle East grows-IEA By Richard Mably OSAKA, Japan, Sept 21 (Reuters) - Major oil importing nations cannot avoid becoming ever more reliant on the volatile Middle East for fuel supplies, increasing their vulnerability to an oil crisis, energy watchdog the International Energy Agency said on Saturday. Growing dependence on a region now the focus of war fears, as the United States considers an attack on Iraq, makes energy security a major concern again for the first time since the 1990 Gulf crisis. "Security of supply has moved to the top of the energy policy agenda," said the IEA, the Paris-based agency that advises on energy for 26 industrialised nations. The report, a World Energy Outlook to 2030, was released here on Saturday at the International Energy Forum of some 60 oil producing and consuming nations. "Growing trade, almost entirely in fossil fuels, will have major geopolitical implications," the report said. "This ... will intensify concerns about the world's vulnerability to energy supply disruptions as production is increasingly concentrated in a small number of producing countries." The agency, set up in 1974 after the Arab oil embargo to protect the West's energy interests, said importing nations could still do more to protect against the threat of another oil shock. "Maintaining the security of international sea-lanes and pipelines will become more important as oil supply chains lengthen," the report said. "(Governments) will also step up measures to deal with short-term supply emergencies or price shocks, bolstering the IEA's standard requirement now for its member countries to hold 90 days worth of oil stocks. The report projects global energy demand growing by 1.7 percent a year to 2030 from 9.2 billion tonnes of oil equivalent a year to 15.3 billion toe, a two-thirds increase on current demand. Fossil fuels -- oil, gas and coal -- are expected to account for 90 percent of the projected increase and their share in demand will rise two percent to 89 percent, it said. Oil will continue to provide more than a third of world energy supplies, the single largest fuel in the global energy mix. GLOBAL WARMING That's not good news for the campaign to reduce fossil fuel greenhouse gases that cause global warming. Carbon-dioxide emissions are forecast rising steadily by 1.8 percent a year, or a 70 percent cumulative increase to 38 billion tonnes by 2030. By that time, developing nations are thought likely to be outstripping the industrialised world as the planet's biggest producers of greenhouse gases. Fast growth in natural gas demand, 2.4 percent a year, is expected to take it above coal by 2010 as the world's second-largest energy source. Nuclear's role will fade. Its share of demand is projected falling two percent to just five percent by 2030. "It is assumed that few new reactors will be built and several will be retired," said the IEA. Developing Asian nations, China in particular, will account for the largest share of demand growth and the most striking increase in dependence on the Middle East. China's oil demand will more than double, from five million bpd now to 12 million bpd in 2030. "By 2030 Chinese net oil imports are projected to reach more than 10 million barrels per day (bpd) -- more than eight percent of world demand. These trends will make China a strategic buyer on world markets," the report said. Gas consumers will also become much more dependent on imports -- especially in Europe. "Cross-border gas pipeline projects will multiply and trade in liquefied natural gas will surge," the report said. While industrialised nations' need for foreign oil and gas will steadily grow, stronger government policies and international co-ordination is needed to give the 'energy poor' more access to modern energy. More than a quarter of the world's population now has no access to electricity. "Although the number of people without power supplies will fall in coming decades a projected 1.4 billion people will still be without electricity in 2030," the report said. "And the number of people using wood, crop residues and animal waste as their main cooking and heating fuels will actually grow." Copyright 2002, Reuters News Service forbes.com

To: Jim Willie CB who wrote (6907)	9/21/2002 10:10:09 AM
From: stockman_scott	Read Replies (1) \| Respond to of 89467

09/20/2002: "Market Monitor"-John Murphy, President of MurphyMorris.com PAUL KANGAS: My guest Market Monitor this week is John Murphy, president of MurphyMorris.com. And welcome back to NIGHTLY BUSINESS REPORT, John JOHN MURPHY, PRESIDENT, MURPHYMORRIS.COM: Good to be back, Paul. KANGAS: As an expert technical analyst give us your opinion of the stock market's current overall condition. MURPHY: Well, Paul, we're still in the midst of a bear market that's been going on for two to three years, we had a nice bounce off the July bottom, not a very impressive one, very light volume, in fact. And over the last week or two that has been rolling over to the downside. Yesterday, for example, the Dow broke some support at 8,000, which was not good. What we're looking for now is for the major averages to come back, retest those summer lows and we think there's a pretty good chance they're going to be broken. KANGAS: Give us the levels that we should be looking at that could be critical for the major stock indices. Let's start with the Dow. MURPHY: Well, the Dow, 7,700 is a level that a lot of technicians are looking at. That was the closing low back right at the end of July. I'm actually widening that a little bit, 7,500 to 7,700. The reason for that is 7,500 is also the low that was set at the end of 1998. and right now the Dow is the only major average that's still holding above that level. So 7,700 is important. But to me 7,500 is more important. The S&P, the 800 level. And the real critical one right now is the NASDAQ, 1,200. That is, we're very, very close to that and I suspect that will be the first average to broke down here. KANGAS: OK. Now, your last visit was March 8 of this year, and you felt the market, after a nice rally, was overextended but it might be telling us the recession was over. Have you changed your mind since? MURPHY: Well, in fact, I think it did tell us that. That recession was over. But shortly after that, Paul, the market did start to rollover. In fact, it took us till about the end of April, April 29, to be exact, when we mentioned on our site that we had gotten the first major "sell" signal in six months and we started talking about the possibility of a retest of last September's lows. So, since the end of April, beginning of May we've been somewhat negative on the market and, of course, more positive on bonds. KANGAS: Well, back in March when you were with us you liked some cyclical stocks, like Phelps Dodge (PD), Louisiana-Pacific (LPX), General Motors (GM), Caterpillar (CAT), KLA-Tencor (KLAC). But according to your Web site, you got out of all of those. They broke support and you were gone. MURPHY: Yes. At that particular, during that six month run-up, the cyclical stocks, the economic were the leaders, and that's what we like to participate in. But as you know, we're chart readers, Paul. As soon as they started to break down we moved out very quickly. KANGAS: Is there anything right now that you do like that you would actually buy at this level? MURPHY: About the only group we like now, Paul, and we've liked them for most of this year, and that are the gold stocks. Normally in a low interest rate environment with the dollar weak and the stock market weak, that's about the only group that has held up. They normally do well in this environment. So we've been suggesting to people that, we've been saying this all year, basically, that right now about the only safe haven left are the gold stocks. KANGAS: So you're really saying that we're going to have a double dip recession? MURPHY: It looks that way to me, Paul. And, also, another thing, housing stocks broke down this week. That's been the last bubble and I think they're beginning to roll over, as well. So we believe that the markets leads the economy. And it does suggest to us that we are heading into a double dip. KANGAS: Well, let's get more specific about these safe haven gold stocks. Which ones in particular are your favorites? MURPHY: Well, our favorite is Newmont Mining (NEM). That is the biggest gold stock, kind of the standard bearer of the group. That is probably the most liquid of the group. But also Anglo Gold or Gold Field (GFI), to name just a couple. But for people, I think they can just put their money into a gold mutual fund. KANGAS: Do you or your interests own any of the specific stocks you just recommended? MURPHY: No, we do not. KANGAS: One last question, John. We just have about 40 seconds left. But when you see a stock like EDS (EDS) lose 50 percent of its value in one day, does that tempt you to jump in for a quick trade on the "buy" side? MURPHY: No, not really. I know a lot of people like to do that, but, no. When a stock break downs like that, very often you do get a little bounce, but it takes, but normally that bounce doesn't last all that long. So we're not tempted to do that. We don't like to buy into down trends. KANGAS: OK. And, so stay away from inviting situations like that. MURPHY: Well, that's not that inviting. An 11 year low, Paul, on massive volume. That's not that inviting. KANGAS: OK. All right, John, thanks very much, as always, for your expertise. MURPHY: Thank you, Paul. KANGAS: My guest, John Murphy, president of MurphyMorris.com.