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To: Jim Willie CB who wrote (2612)	1/13/2003 10:10:37 AM
From: 4figureau	Respond to of 5423

Bear Roundup: Policy Traction - Roach, Morgan Stanley (1/13/2003 7:05 AM) morganstanley.com The cash-out crunch Many refinancers are unwisely draining their home's equity January 12, 2003 BY DANIELLE DIMARTINO DALLAS MORNING NEWS Is the equity in your home going up in smoke? A growing number of experts worry that the record rush of mortgage refinancings, spurred by home owners seeking savings with lower interest rates, actually left many in worse shape financially. freep.com U.S. Economy: Fired Workers Exhaust Benefits at Record Rate By Carlos Torres New York, Jan. 13 (Bloomberg) -- It's fortunate that Miguel Lopez has enjoyed being a stay-at-home dad. It's the only work he can find these days. ``There's been nothing,'' said the 38-year-old Staten Island man, who lost his job as a contract worker on the Merrill Lynch & Co. trading floor after the Sept. 11 attacks and ran out of unemployment benefits in July. ``It's like I've hit a brick wall.'' The percentage of unemployed workers who can't find a job before drawing their last benefit check is the highest in at least three decades, Labor Department figures show. The jump in this so- called exhaustion rate is fueled by the despair of job-seekers like Lopez and may further retard an economy that likely grew at a 1.4 percent annual rate last quarter, economists said quote.bloomberg.com - Job Market Slump Is Longest in Decades - WSJ - Goldman Sachs Sees $300 Billion FYO3 Deficit,$375 Billion In FY04 - DowJones HEDGE FUND FAILURES SEND INVESTORS SHOPPING By ERIC MOSKOWITZ -------------------------------------------------------------------------------- January 12, 2003 -- Hedge funds may sound sexier than your average mutual fund, but that hasn't saved them from feeling the brunt of this bear market. But while mutual funds - especially technology and telecom-focused ones - are seeing significant investor outflows in the past year, hedge funds continue to see net inflows, even as Harper's magazine estimated that 1,000 hedge funds will close in 2003 due to poor returns in its year-end numbers index. nypost.com Bank warns over negative equity Thousands of homeowners could soon be facing the prospect of negative equity, the Halifax is warning. The bank, with two and a half million customers the largest mortgage lender in Britain, said a cooling housing market will soon see many with homes worth less than the value of their loans, the Sunday Telegraph reported. news.bbc.co.uk

To: Jim Willie CB who wrote (2612)	1/13/2003 10:34:28 AM
From: Mannie	Read Replies (1) \| Respond to of 5423

Monday, January 13, 2003 Pacific Currents: China's risk may build Great Wall -- of debt By JOSEPH KAHN THE NEW YORK TIMES CHONGQING, China -- The engineers who run China have designated this congested southwestern city, cupped by the Zhongliang Mountains and divided by flood-prone rivers, as their nation's new Chicago. Construction crews have carved a small canyon i n the center of town, where they are burrowing through mountains to create 600 miles of superhighways, four new railway lines, an urban light rail system and a new airport. Chinese officials are also promising parks, drinkable tap water and riverside promenades for the city's 30 million residents. The cost of remaking Chongqing into a metropolis and a transportation hub in China's heartland is estimated at $200 billion over the next decade -- most of it shouldered by the government and state-owned banks. It's a bit more than the U.S. Congress spent, in adjusted dollars, to build the U.S. interstate highway system in the 1950s. China's top leaders, many of them trained in the mechanical sciences, are not just making mountain cities into transportation hubs. They also want to pump 48 billion cubic meters of water each year from south to north, transport natural gas from Central Asia to China's southeast coast, and construct the world's largest dam, longest bridge, fastest train and highest railroad. Even more than modernizing its infrastructure -- or, as some critics see it, erecting monuments to its emerging might -- China is desperate to keep the economy growing quickly. Over the past few years, it has reached deep into the national treasury to finance projects that it hopes will create jobs and stimulate enough growth to ensure social stability and keep the Communist Party in power. As a new generation of leaders takes control, China is using heavy government investment to escape the worldwide slowdown and maintain growth above the 7 percent level that the government deems crucial to avoiding mass unemployment and urban unrest. The plan has worked, so far. China last year reported defiantly robust growth of 8 percent, attributed to surging exports and a nearly 25 percent increase in state-directed investment. But the strategy is risky. The once fiscally prudent central government is now running hefty budget deficits. State banks, told a few years ago to clean up bad loans and begin acting like capitalist lenders, are pumping tens of billions of dollars into officially sponsored projects that have sometimes failed to produce real returns. The Communist Party has pledged to support private companies and allow the market to flourish. Financially, though, the authorities are monopolizing the country's private savings for a building boom that dwarfs the U.S. New Deal and the Marshall Plan. "The country has relied very heavily on government investment to lead the economy," said Shen Lishen, a top economist at the Chinese Academy of Social Sciences. "It really should begin to fade out, not become part of the long-term economic plan." Beijing opened its coffers to stimulate growth in 1998, when it feared that the financial contagion spreading around Asia would infect China. Instead of fading out, the spending is getting more ambitious. The government, state banks, and companies and foreign investors collectively spent $200 billion in the first 11 months of last year on basic infrastructure projects, one quarter more than they spent in 2001, according to the State Statistics Bureau. That represents about 15 percent of China's gross domestic product, or about the proportion that the United States spends on health care. Even for the nation that built the Great Wall, the scale of construction is extraordinary. "The government is sucking up savings and investing in the future," said Andy Xie, a regional economist for Morgan Stanley. "The financial returns on these kinds of investments are low. But the payoff for the economy is high." Fred Hu, chief China economist for Goldman Sachs, agrees. He argues that as China suffers through a period of falling prices and low consumer spending, Beijing is right to inject money into the economy. "This is China's New Deal," Hu said. "Every problem is easier to solve when growth is faster."