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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (206023)	11/21/2002 11:45:19 AM
From: yard_man	Respond to of 436258

dumb turkeys don't want dividends -- long term holders of the stock will regret it at some pt

To: Les H who wrote (206023)	11/21/2002 11:54:07 AM
From: yard_man	Read Replies (3) \| Respond to of 436258

nice thing about blow-off rallies like this -- if something ain't goin' up 5-10% a day the monkeys lose interest -- guess it's that oppty cost thang <vbg>

To: Les H who wrote (206023)	11/21/2002 12:07:52 PM
From: Les H	Respond to of 436258

Dollar Strength Still Obligatory for Global Recovery...Again by Ashraf Laidi Several observers are increasingly suggesting that further moderate decline in the US dollar is necessary to ensure a pick up in global economy, on the pretext that stronger currencies abroad will prompt necessary economic restructuring required in those economies. Ambivalence on the sustainability of foreign financing of the swelling US current account deficit also comprised the most popular explanations for this year's 12% decline in the dollar's trade weighted index from its year highs. Predictably, the US administration stepped up its concerns of a rising deficit during a mid-term election year, via a 2-punch blow to the dollar starting with steel tariffs, and discontinuing the 7-year old practice of voicing a strong dollar policy But similar to the mid and late 1990s, a strong dollar shall prove to be the backbone of the economic recoveries from Asia to Latin America. The practice of predicting and urging a decline in the dollar, reemerged in mid 1997, when many forecasts anticipated that the euro would promptly destabilize the US dollar from its pedestal as global investments are channeled into the new currency area. Instead, foreign investors showed little hesitance in financing the rising current account deficit, which rose from -2.5% of GDP in 1998 to nearly -4.5% of GDP in 2001. All the while, the dollar ascended to 15-year highs. About 4 years after the US economy recovered from its 1990-91 recession, the US administration engaged on a strong-dollar policy inaugurated by Robert Rubin, aiding Japan to defeat a soaring currency following the tidal wave of repatriated yen by Japanese investors in the aftermath of the burst of the bubble. As the dollar soared more than 60% in the 3 years from April 1994, Japanese growth awoke from stagnation to a respectable 1.4% in 1995 and 3.6% in 1996. The 40% appreciation in the dollar versus the Deutsche mark from early 1995 to mid 1997 was also instrumental in landing the Old Continent safely into recovery mode as EU growth rose from 1.7% in 1996 to 2.9% in 1998. A strong dollar once again proved essential in establishing the building blocks for the 1999-2000 recovery following the 1997-98 crisis, restoring confidence on the platform of a strong importing US currency and competitively priced exporting currencies in Asia and Europe. The export-led recovery was most ebullient in East Asia, following the collapse of regional currencies from their unsustainably overvalued dollar pegs. Exports of East Asian economies accounted for an average of 66% of GDP in 1995, before shooting up to nearly 80% of GDP in 2000. Today, the region is once again faced with the reality of eroding exports from stalling global demand. The current administration has already discontinued the 7-year old practice of trumpeting the strong dollar policy once it became safe enough to hold the overvalued currency as the chief scapegoat for the route in US manufacturing. But now that the dollar has dropped more than 12% from its year's high, it remains unclear how long will pundits expect and require such a decline to take place in the misbegotten hope that a dollar devaluation would improve US competitiveness and eliminate the trade deficit. While this economic mechanism applies in the export-dependent economies of Asia, Europe and Latin America, such export dependence is not as palpable as it is in the US for the economy to reap the benefits of currency devaluations. Foreign trade accounted for 12% of US GDP in 2001 (using the average of exports and imports) while it accounted for 19% of GDP in the Eurozone (excluding intra-region trade), 28% in the UK and 44% in Switzerland. Some may argue that Eurozone exports to the US are minor and render Europe relatively shielded from a US slowdown. But Europe's relatively large share of exports from Asia (Asia accounts for 20% of the European Union's external exports) makes Europe vulnerable to catching a cold from a US-caused sneeze in Asia. There were even suggestions by prominent economists recommending the US administration explicitly shift towards a weak dollar policy, thereby enabling the European Central Bank to engage in a strong currency-easy monetary policy mix aimed at generating world growth without stoking inflation in the region. Such a notion is flawed as it ignores the Eurozone's dependence on exports and reliance on a competitive currency to survive in the global economic theatre, which is nearly double that of the US alleged dependence on exports. The soundness of US economic policies, the transparency of regulatory environment and the free functioning of US financial markets have all paved the way for free allocation of resources, prolonged mobility of labor and a continued flow of foreign investment, all of which are harbingers of rising productivity and long-term competitiveness. These characteristics have helped maintain the influx of vital foreign capital, preserving the balance in the much-touted US external imbalance. The US, importer of nearly a fifth of the world's exports, can afford to maintain a strong currency just as much as the rest of the world requires it at these dire times. At home, a strong dollar elevates the US back to non-inflationary trend growth of 3%-3.5%, containing any potential rise in inflation, especially if the effect of a war-induced oil jump is combined with a late coming tax cut. Abroad, as in the mid and late 1990s, the strong dollar is needed to help stimulate output in the still export-dependent economies of continental Europe and Japan, whose flagging economies are falling behind in the race to the bottom. forexnews.com