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Politics : Attack Iraq? -- Ignore unavailable to you. Want to Upgrade?

To: calgal who wrote (4751)	3/18/2003 1:02:30 AM
From: calgal	Respond to of 8683

March 18, 2003 French global goals imperiled by stance By David R. Sands THE WASHINGTON TIMES URL:http://www.washingtontimes.com/world/20030318-28146250.htm France has put at risk a broad range of foreign policy and economic interests with its opposition to the U.S. campaign against the Iraqi regime of Saddam Hussein. Top Stories • S. Korea's Kim faces criminal investigation • Market rallies amid hopes of 'easy war' • Kurds flee cities in north • Democrats rally behind U.S. troops • Homeless population poses criminal risks The Bush administration has limited tools to express its displeasure with France directly. But Washington is in a prime position to frustrate long-term French interests to be a player in the Middle East, in Europe and on the world stage. Bilateral trade in goods and services amounted to $50.2 billion in 2001 and $49 billion last year, but the vast bulk of the trade is regulated by rules set through the European Union and the World Trade Organization. A U.S. challenge over EU policies on bio-engineered foods, for example, could wind up hurting close allies Britain and Spain as much as France. But France's veto right in the U.N. Security Council, its ambitions for a leading role in the expanding European Union, its lucrative rights to Iraqi oil fields and prospective postwar reconstruction contracts could all be in jeopardy if Washington and its allies decide to retaliate. Secretary of State Colin L. Powell, speaking Sunday on CBS's "Face the Nation," said the Iraq showdown has created "some issues here we are going to have to work out" with France. "I think, in the short term, we have damaged our relationship with France," Mr. Powell said. Lawmakers in Congress have floated dozens of ideas for retaliating against France, and not just by re-christening French fries as freedom fries at Capitol cafeterias. French wine, French bottled water and French cheese have all been raised as possible targets for sanctions, but such measures would almost certainly run afoul of existing agreements with the EU and the WTO. The House Armed Services Committee has scheduled a hearing tomorrow on a bill by Rep. James H. Saxton, New Jersey Republican, to bar the Pentagon from participating in the prestigious Paris Air Show through 2008. Mr. Saxton, who has also introduced a bill to block any French company from U.S. grants or aid in the rebuilding of postwar Iraq, said the French "can't have their cake and eat it, too." While official U.S. action may be limited, French officials in recent days have aired fears that the harsh words across the Atlantic may inspire U.S. consumer boycotts of French goods, hesitation among U.S. firms to invest in France and, most worrisome, a drop in the roughly 2 million U.S. tourists who visit France each year — the top destination for American vacationers abroad. But France still hopes to play a major economic and political role in a postwar Iraq, a role looking increasingly problematic as the Iraq confrontation and France's resistance of the U.S. initiative drag on. Barhim Salih, a top Kurdish Iraqi official and a key member of the U.S.-backed exile opposition group, said Friday that both French and Russian oil deals with Saddam "will not be honored" after he is gone. "The new Iraqi government should respect those who stood by us, and not those who stood beside the dictator," said Mr. Salih. More generally, analysts say, the United States has the power to undermine many of France's most cherished foreign policy assets, from its position of influence inside the EU to its veto power as one of the five permanent members of the Security Council. France's hope of having the dominant say in the re-shaping of European institutions will be sorely challenged as a number of eastern and central European states are poised to join both the EU and NATO over the next few years. Many of these states are suspicious of French and German ambitions to dominate the continent, and they favor far closer ties to Washington. "These countries' entry into the EU and NATO would ... conclusively frustrate French and French-German ambitions to develop and lead a 'European' foreign and defense policy in competition with the U.S.," said Vladimir Socor, a senior fellow at the Jamestown Foundation. France's major-power status is crucially linked to its Security Council veto. U.S. officials say they have not considered any formal proposal to remove or dilute France's veto, but a future U.S. foreign policy that bypasses the United Nations in major conflicts, as hinted at by Mr. Powell yesterday, could have the same effect.

To: calgal who wrote (4751)	3/18/2003 1:02:40 AM
From: calgal	Respond to of 8683

March 16, 2003 Boost for technology E. Floyd Kvamme President Bush has proposed that once a corporation has paid the tax due on its profits, those "after tax" profits should not be taxed again when distributed to the corporation's owners — the shareholders — as a dividend. Some have suggested this proposal is of little interest in the technology community since very few technology companies pay any dividend. This suggestion misses the point on three important grounds. Most technology companies depend for a sizable portion of their revenue on the capital goods purchases of their customers in the manufacturing, banking, insurance, transportation, communications and other sectors. These are also the sectors most likely to pay dividends. The strength of these capital purchases depends in significant part on the cost of capital these companies enjoy. With the elimination of the double taxation on dividends, it is natural to expect this cost of capital to decline, making capital purchases more attractive. And these effects are large. The administration's economists estimate an investment stimulus from the president's plan equivalent to an investment tax credit of between 4 percent and 7 percent. So, for the technology sector, elimination of the double taxation of dividends is a welcome stimulus in that their customers will enjoy an improved economic incentive to purchase technology products. Secondly, and of greater importance, the elimination of double taxation would encourage citizens back into the equity markets. The technology sector depends on equity for its lifeblood. Most technology companies find much of their value in the intellectual property they have developed. The value of these assets is not on their balance sheet and, thus, is rarely acceptable as collateral for any lending activity. Loans in the technology sector are virtually only available for the financing of laboratory and manufacturing equipment and, later, in the form of receivables financing. In companies such as software companies or fab-less semiconductor companies where intellectual property represents virtually all of the value of a company, these assets are not sufficient to supply the capital needed for growth of the enterprise. Equity investors are required. The recent post-bubble period has caused many investors to remove their funds from equity markets — a move that is very negative for technology companies. Any stimulus that would encourage investors back into the equity markets is a good, strong move for the technology sector. Lastly, as technology companies mature, particularly those where intellectual property is their principal asset, many will have little need for large capital expenditures and can become very cash-flow positive. Traditionally, these excess cash balances have been used in stock buy-back programs rather than in dividend declarations, since the tax consequences of dividend payments were so negative. This "buy back" trend could be significantly altered with the passage of the president's proposal. But, where cash is required for corporate growth, another feature of the president's pro-growth proposal would eliminate the double taxation of retained earnings as well. When growing companies retain earnings for expansion and new investment, shareholders get an increase in the basis of their shares, so that retained earnings are not taxed twice either. Thus, there is no taxation of the capital gain from accumulated retained earnings. This little noticed feature of the president's proposal is particularly important for two reasons — it makes sure that all corporate income is taxed only once and that business executives make decisions based on their business judgment, not the tax code. Technology companies will benefit from an elimination of the double taxation of dividends and retained earnings for each of these reasons — their customers will enjoy a lower cost of capital, investors will return to the equity markets and technology companies will begin either distributing excess cash instead of resorting to stock buy-backs or using their retained earnings for expansion. Each of these factors will encourage investment in technology companies. E. Floyd Kvamme is a partner emeritus at the venture capital firm of Kleiner Perkins Caufield & Byers, chairman of Empower America and serves as co-chair of the President's Council of Advisers on Science and Technology. URL:http://www.washingtontimes.com/commentary/20030316-13706236.htm

To: calgal who wrote (4751)	3/18/2003 1:14:12 AM
From: calgal	Read Replies (1) \| Respond to of 8683

Stocks Soar as War Appears Imminent URL:http://www.foxnews.com/story/0,2933,81250,00.html Monday, March 17, 2003 NEW YORK — Stocks surged more than 3 percent Monday as investors, betting a swift and decisive U.S.-led military strike on Iraq will start within days, snatched up beaten-down shares. The blue-chip Dow Jones industrial average jumped 282.21 points or 3.59 percent to 8,141.92 and the broad Standard and Poor's 500 climbed 29.52 points, or 3.54 percent, to 862.79 -- both logging their fourth up days in a row. The tech-laced Nasdaq Composite Index rallied 51.93 points, or 3.87 percent, to 1,392.26. "It looks like we'll be going to war in two to three days and the war premium is being priced into the market," said James Park, senior vice president at Brean Murray. President Bush will issue an ultimatum to Saddam Hussein Monday night that the Iraqi president step down or face war, the White House said. Bush will address the American people at 8 p.m., in the wake of the failure by the U.N. Security Council to reach a consensus on how to deal with Iraq. Short covering continued to fuel the market's advance since the middle of last week, traders noted. Short sellers -- investors who sell borrowed stock and hope to buy it back later at a lower price -- covered their bets that the market would head south by buying shares as the market climbed. "There's a lot of short covering. People think war is a lot closer," said Bob Basel, senior trader at Salomon Smith Barney. War was perceived as a market positive "only because it takes an indecisive situation and turns it into a more decisive ending." Stocks erased opening losses and climbed as all signs pointed to imminent war, lifting the uncertainty plaguing the markets and boosting shares of a broad range of companies. Among the Dow industrials, financial services giant J.P. Morgan Chase & Co. (JPM) and computer maker Hewlett-Packard Co. (HPQ) jumped 6 percent and 5.3 percent, respectively. Retailer Wal-Mart Stores Inc. (WMT) climbed 5.3 percent. Safe havens like gold and government bonds fell and oil prices dropped for a third session, while the dollar strengthened against the euro as investors bet a U.S.-led war against Iraq would be a short one. The blue-chip Dow is up 8 percent since the close on Wednesday when the gauge came close to touching multiyear lows. Last week's rise in the markets pushed the Nasdaq into positive ground for the year. From the launch of the air campaign during the first Gulf war on Jan. 16, 1991, through the end of that year, the Wilshire 5000 , the broadest measure of U.S. stock market performance, gained 37 percent. Some market watchers warn any rally may be fleeting since underlying worries remain over the the health of the nation's economy and the long-term impact of a war that has divided world powers. "There have been and may continue to be significant short-term rallies," said Richard Bernstein, a chief strategist at Merrill Lynch. "However, we continue to suggest that investors sell into those rallies because of the many risks we think investors are ignoring." Among underestimated risks, he said in a note, stock prices remain extremely high, given the historical unpredictability of earnings growth, and there was a 50/50 chance of a double-dip recession in the world's No. 1 economy. He also pointed out that any more interest-rate cuts by the Federal Reserve would send a bearish signal that the economy is not recovering. The U.S. central bank may open the door at Tuesday's policy meeting to a future interest-rate cut, but it is unlikely to change rates until the economic impact of any war with Iraq becomes more clear. Seventeen of the 22 top bond dealers expect the Fed will leave the federal funds rate target steady at 1.25 percent this month, while five expect a rate cut Tuesday. Big gainers included Lockheed Martin Corp. (LMT), which advanced $1.76, or 3.89 percent, to $46.95. The Pentagon awarded the U.S. defense contractor a six-year, $4.05 billion contract for 60 C-130J aircraft. J.P. Morgan led the Dow higher with a $1.30 jump to $22.56. Hewlett-Packard, another Dow member, surged 82 cents to $16.40, while Wal-Mart tacked on $2.61 to $51.97. Discount retailer Dollar General Corp. (DG) rose $1.71 or 15.9 percent, to $12.48. The company said quarterly earnings rose on higher sales, and it issued a fairly upbeat forecast, sending its shares 20 percent higher earlier in the day. Ford Motor Co. (F) climbed 43 cents to $7.19, erasing earlier losses to track the market higher. JP Morgan said it had cut its earnings forecasts for Ford, based on an outlook for lower-than-expected sales and production in North America. Sun Microsystems Inc. (SUNW) rose 29 cents, or almost 9 percent, to $3.53. Shares of the computer maker may be due for a lift once spending on information technology picks up, according to a Barron's article on Sunday. The Federal Reserve's policy-setting meeting on Tuesday is expected to take a back seat as the threat of war consumes Wall Street. The U.S. central bank is widely expected to keep interest rates steady but leave the door open for monetary easing down the road. Eli Lilly & CO. (LLY) added 11 cents to $54.09, reversing earlier losses. The drug company said an experimental lung cancer drug, being developed in partnership with Isis Pharmaceuticals Inc., failed to show significant benefit when used in combination with chemotherapy. Isis tumbled $1.32, or almost 32 percent, to $2.84. PEC Solutions Inc. (PECS), a provider of software systems for the U.S. government, plunged $5.61, or almost 36 percent, to $10.19. The company said its first-quarter earnings per share are expected to decline from a year ago due to late contract awards and late approvals of 2003 federal civilian agency budgets. Gainers beat losers by a ratio of more than 2 to 1 on the New York Stock Exchange and on Nasdaq. Trading was heavy, with more than 1.6 billion shares traded on the New York Stock Exchange, and about 1.9 billion on Nasdaq. In February, daily average volume was 1.34 billion shares. The Russell 2000 index, the barometer smaller company stocks, rose 11.01, or 3.1 percent, to 365.40. Overseas, Japan's Nikkei stock average finished Monday down 1.6 percent. In Europe, stocks shrugged off earlier losses to advance on the U.S. market's lead. France's CAC-40 and Britain's FTSE 100 each gained 3.4 percent and Germany's DAX index climbed 3.5 percent. Reuters and the Associated Press contributed to this report.