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

To: Jim Willie CB who wrote (13549)	2/26/2003 2:04:56 PM
From: stockman_scott	Read Replies (1) \| Respond to of 89467

Global: Rethinking the World By Stephen Roach Morgan Stanley - New York With war looming, oil prices surging, and confidence sagging, a rethinking of our view of the world economy is in order. We are mindful, of course, that the circumstances are very fluid. But the collective judgment of Morgan Stanley's global economics team is that damage has already been done by the confluence of recent geopolitical developments -- damage that we believe will endure even after a likely war ends. Should these critical assumptions turn out to be incorrect, we will reconsider this assessment. At this point in time, however, it seems prudent to subject our view of the global economy to a much tougher reality check... morganstanley.com

To: Jim Willie CB who wrote (13549)	2/26/2003 2:08:55 PM
From: stockman_scott	Read Replies (2) \| Respond to of 89467

Greenspan Discusses Consumer Confidence By MARCY GORDON AP FINANCE NEWS 02/26/2003 13:10:19 EST Federal Reserve Chairman Alan Greenspan on Wednesday said this month's drop in consumer confidence to the lowest level in nearly a decade was "a very significant decline" but not a surprise. Indicators of consumer confidence tend to be affected by events which consumers are deeply aware of, such as the recent sharp rise in gasoline prices and prospects of a war with Iraq, Greenspan told the Senate Banking Committee at a hearing. The Consumer Confidence Index fell to 64.0 - its lowest reading since October 1993 - from 78.8 in January as Americans grew increasingly worried about the effects of a possible war on jobs and oil prices, the Conference Board business group reported Tuesday. Analysts were predicting a reading of 77.0. Treasury Undersecretary Peter Fisher, testifying at the hearing with Greenspan, said the report underscored the need for policy-makers to work to enhance economic growth. Fisher also cited several bright spots in the economic picture, such as continued strong consumer spending on big-ticket items and recent company earnings reports that are somewhat better than expected. The Bush administration is trying to persuade Congress to approve its $670 billion tax-cut plan, including a centerpiece proposal to slash the tax on investor dividends. President Bush predicted Tuesday that Congress would enact the plan and bolster the faltering U.S. economy, which White House advisers said was being slowed by the threat of war in Iraq. Greenspan said the plunge in consumer confidence was significant in terms of its magnitude but that it wasn't surprising that it declined. He spoke about the new confidence report at a hearing Wednesday devoted to proposals to overhaul the deposit insurance system. Greenspan did not comment on the future direction of interest rates in his appearance before the panel. Greenspan reiterated the central bank's opposition to raising the $100,000 limit on deposit insurance coverage, saying there would be no "clear public benefit" to the move. The Federal Deposit Insurance Corp. and several lawmakers in Congress have proposed pegging the limit to inflation as part of an overhaul plan. The FDIC says the $100,000 limit on insurance coverage has been eroded by inflation to only half of what it was worth in 1980 and should be pegged to the Consumer Price Index. Greenspan, however, has said that doing so would provide a subsidy for wealthy people. Speaking for the Federal Reserve, Greenspan told the Senate Banking Committee: "... In our judgment, neither financial stability, nor depositors ... are being disadvantaged by the current ceiling." Raising the limit would extend the government's subsidy to banks and "reduce the incentive for market discipline without providing any clear public benefit," Greenspan said in testimony prepared for a hearing. The $100,000 limit applies to each account of a different type, such as regular deposit or retirement, that a customer has at a financial institution. Officials of smaller banks, especially, have pushed for an increase in the ceiling, which they say would help them attract deposits and compete with larger institutions. Greenspan also noted that the Fed supports most of the other proposals in the FDIC's plan, which includes requiring all banks to pay for deposit insurance according to their risk of failure and merging the bank insurance fund with the fund for savings and loans. The law currently prohibits the FDIC from collecting premiums from most institutions that have adequate capital and receive strong ratings from examiners.