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

To: lurqer who wrote (9575)	11/18/2002 7:36:27 PM
From: stockman_scott	Respond to of 89467

War or peace? From The Economist Global Agenda Nov 18th 2002 As UN weapons inspectors arrive in Baghdad, Saddam Hussein is told to choose between war and peace. But even if he co-operates in the hunt for evidence of Iraq’s weapons of mass destruction, America will remain deeply suspicious IT IS now up to Iraq to decide between war and peace. That was the blunt message from Hans Blix, the chief of the United Nations’ weapons inspectors, who returned to Baghdad on Monday. His advance party, which also includes a team from the International Atomic Energy Agency (IAEA), plans to resume its search for any evidence of weapons of mass destruction on November 27th. By the end of the year, Mr Blix expects to have around 100 inspectors from more than 40 countries combing Iraq. They will be given immediate and unrestricted access to any sites they wish to see, Iraq’s deputy prime minister, Tariq Aziz, promised at the weekend. But once again, he repeated Iraq’s claim that the inspectors will not find anything because the country no longer has any programmes to make chemical, biological or nuclear weapons. Fruitless searches would, claimed Mr Aziz, expose as lies America’s assertions that Iraq has continued to violate UN arms resolutions imposed since the Gulf war a decade ago. The first big test will come within weeks. By December 8th, Iraq has to submit to the UN a full list of any activities which could be linked to making weapons of mass destruction. The administration of President George Bush remains deeply sceptical of Saddam Hussein’s true intentions despite the Iraqi dictator’s agreement to go along with a new resolution passed unanimously by the 15 members of the UN Security Council. Mr Bush wants the terms of the resolution to be imposed strictly and has given warning of a “zero tolerance” policy. America’s intelligence officials will look carefully at Iraq’s list of weapons activity and if it does not address their suspicions, Mr Bush could declare Iraq to be in “further material breach” of its obligations. That is likely to mean war. If Iraq co-operates, however, Mr Blix holds out the possibility of the country rejoining the international community and, eventually, having sanctions lifted. “This is an opportunity for peace. I hope Iraq will make full use of it,” Mr Blix added. He is accompanied by Mohamed ElBaradei, the head of the IAEA, who said that even if Iraq says it has no concealed weapons programmes, it will be expected to verify that. America has been urged by Kofi Annan, the UN’s secretary-general, to show patience. But tensions continue to rise. At the weekend, American and British jets attacked an air-defence system in northern Iraq after Iraqi forces fired at the aircraft. There has been a recent increase in the number of incidents involving the patrols flown over “no-fly” zones imposed in northern and southern Iraq. These were set up after the Gulf war to protect the Kurds in the north and Shi’ite Muslims in the south from being attacked from the air by the Iraqi regime. In Washington, American officials have also revealed that the activities of several thousand Iraqis living in the United States are being monitored in order to identify anyone who might be a sympathiser of Mr Hussein. There is concern that any such people could pose a threat in the event of a war. If there is war, America would move to “finish it fast”, Donald Rumsfeld, the defence secretary, has stated. Mr Annan is concerned that America seems to have a lower threshold for going to war than other members of the Security Council. The council is supposed to have a role in deciding what should be done about any serious Iraqi violations, although America continues to reserve the right to use force without the UN’s approval. A number of countries believe that only the Security Council can decide what punishment should to be meted out to Iraq if it fails to comply. If Iraq does manage to come up with a list of weapons that does not provoke American military action, then the next trial will come on January 27th. This is when the weapons inspectors will report back to the UN on what, if anything, they have found. It is possible that America could present its own report to the Security Council at that time. Despite their four-year absence, the inspectors are confident they will not be hoodwinked. They have new powers, including the right to search Mr Hussein’s vast presidential-palace complexes and the power to “freeze” any suspicious sites by declaring an exclusion area around them. They could also set up surveillance cameras and other monitoring equipment. Soil, water and air samples will be tested. “The tiniest little thing can be detected,” said Mr Blix. The Bush administration will expect nothing less. economist.com

To: lurqer who wrote (9575)	11/18/2002 7:52:53 PM
From: stockman_scott	Read Replies (1) \| Respond to of 89467

Decision Point Alert By Carl Swenlin November 16, 2002 decisionpoint.com ************************ LONG-TERM MARKET ENVIRONMENT This section articulates our view of the long-term structural elements affecting the economy and stock market. It is included in each issue of our weekly commentary, although it is only changed or adjusted infrequently as our opinion changes. Secular Bear: We are in a secular bear market unlike any seen in the last 70 years. Even the most experienced professionals will find that much of what they thought they knew is wrong and does not apply to the current environment. So-called valuation models have been rendered useless because interest rates are so grotesquely low, not because stocks have become attractive values. Beware of the universal reference to "operating earnings". They are artificially enhanced, deceptive, and do not reflect the true financial condition of any company. Investor Psychology: There has been a major reversal of investor psychology. During the bull market, investors were ignorant of risk and thought they were invincible. That innocence is gone forever, replaced by fear, pessimism, and despair. This generation of investors will never again be capable of another extended round of irrational exuberance. Never. Bearish Technicals: Because the long-term trend is down, technical analysis rules now favor bearish resolutions of chart patterns over bullish resolutions by roughly 70%. Bullish setups are more likely to fail, and bearish setups are more likely to execute as expected. More often than not resistance will turn back rallies, and support will fail. High Valuations: The bear market should last until current extremely high valuations have been corrected, probably to an undervalued extreme of S&P 500 P/E of around 10. Historically such corrections have been accomplished by price declines, not an earnings recovery. Housing Bubble: After stocks, the second area in the economy where valuations have reached irrational levels is housing. Whether there is a bubble is not determined by the fact that people are still buying, rather it is determined by a sensible assessment of value. In many areas one can rent a house for half of what it costs to buy one. Does this sound remotely like buying stocks that have no earnings? As with all bubbles, the breaking point is hard to predict, but the danger signs are there. A factor that heightens the danger is that many people have borrowed to close to the limit of their equity. A modest pullback in housing prices would put these homeowners under water, unable to sell the home for as much as is owed on the mortgage. High Debt: Another fundamental element with disastrous implications is the potential unwinding (collapse) of high levels of corporate and consumer debt. Debt expands in a bull market, and bear markets punish those who borrowed stupidly. Bankruptcies do not occur in a vacuum, they seriously affect creditors and ultimately cause more bankruptcies. As companies fail or cut back, the job market suffers, which in turn puts pressure on consumers, who are not be able to service their debt. As personal bankruptcies increase, mortgage defaults create an oversupply in housing and force prices down to the point that mortgages exceed the value of the homes that secure them, which sets the scene for more personal bankruptcies. Once the process gets started, it can send the economy into a death spiral. Higher Taxes: All levels of government are experiencing enormous tax revenue shortfalls, and politicians and bureaucrats always respond by raising taxes. Taxes kill economic growth. Terrorism: If terrorists are able to acquire weapons of mass destruction, they will use them. If they are successful just once, 9/11 will pale in comparison. The war on terrorism, assuming we are going to pursue actions such as the invasion of Iraq, will be expensive and protracted. The whole process will be a continuous psychological and monetary drain. Downside Targets: My current downside projection is for 350 on the S&P 500 (plus or minus about 100 points) with the final low arriving around December 2003 (plus or minus a couple of months). I expect comparable declines for the Dow (3700) and Nasdaq (500). These projections are supported by very simple, basic technical projections (trend lines and cycles) and fundamental valuation measures. For now I am using as a model the type of decline experienced during the 1929-1932 Bear Market. This is a treacherous environment, suitable only for trading. ********************