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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (33268)	5/8/2003 1:21:23 AM
From: elmatador	Respond to of 74559

The US wants a weak dollar to get out of the nosedive. This time Greenspan didn't turn himself inside his and made clear the US wants a weak dollar to grow out of the Bust. He communicated that the consumer are not reacting to the negative interest rates neither started consuming as expected and alerted for an inopportune drop in inflation. Which in Greenspeak means deflation. Deflation hurts since when prices go down the consumer expects to drop and feeds it back into the system and spirals down. Greenspan doesn't point to a way out, but it is understood form between the lines in his speech that a weak dollar vis a vis Yen and Euro can help exports, generate jobs, stimulate demand and give a push into the restrained consumer. Since May last year USD weakened by 21.1% vis the Euro. It is not the best solution for all but Greenspan already made public he worries about US being alone in the effort to make the world return to a growth path. And that can't be done internally only with taxes' incentive (less taxes) that increases fiscal deficit, but through increased exports that could reduce commercial deficit now at USD half trillion. How about capital flight with dollar's weakness? That's less urgent than the risk of deflation when interests rates are at 1.25% says Ashraf Laidi, of NY's MG Financial Group When the word 'deflation' entered US's vocabulary, Milton Friedman replied: "That's easy to solve. Infect money into the economy" Greenspan expects that internal demand and exports kick starts. The Dept. of Commerce, however, cooled this down publishing in March that internal consume increased by 1%, but inventory grew as well by 0.5%. There was no new production but consuming of old inventory. Does a lower dollar do the trick?... Yesterday as a result of Greenspan speech, which was considered "strong" by the market, USD fell against the currency basket and mainly against the Euro reaching USD1.340/Euro. In six weeks the dollar few by 8.7% and by 19% in 12 months. It was result of Greenspan alone who caused that. It was helped by the nosedive in Europe too. German unemployment reached 10.7% and 9.2% in France. The highest level in 31 months. Profit margins in the US went to hell, falling from 8.5% to 1.75%. That's what the devaluation of the USD is causing, says Harald Hendrikse of CSFB, referring to Volkswagen whose revenue dropped 68% in the first trimester. But that's not that bad: We expected worse that, he adds. How about the internal German market? Volkswagen's sales dropped 5.6% in German in the same prriod. VW is not alone. Practically, all the industrial sector in Europe shrunk. In France, companies like Alcatel, Lafarge and Assault -just to mention a few- are suffering with the strong Euro, since they don't have an alternative because the internal market shrunk too. France's exports are 30% of the GNP and internal consumption about 54% In Germany exports are even heavier at 36% and internal consumption at 50%. Yes, to the US, a lower dollar does the trick, but to the US... The question yesterday was to discover is the FED intentionally ignoring USD devaluation to kick start growth out of the Bust. "That wouldn't be bad to US economy. A weaker USD would keep internal prices high, would increase companies' profits and would make exports more competitive (mainly vis a vis the Euro area) says CNN, Mark Gondolf, conveying the feeling of the main market analysts. In fact it would be the most appropriated mechanism (for the US of course!) to blow prices a bit and give a little kick in consumers on USD8trillion presently cold market. That's exactly what US trade partners in Asia and Europe are seeing and fearing right now., because this policy represents a serious risk for them and their main trade partners. Perhaps, no, but... And has the White House to say about all that? Asked about a weak dollar helping diminish the risk of deflation, the spokesman Ari Fleischer was enigmatic. "There are no changes on the dollar policy" But what this policy is? From then on things get really complicated. Secretary of Treasury Snow, says: "The Bush administration defends a strong dollar." Well, how to apply it then? "The best way is to keep the dollar strong to stimulate economic growth." So far only words. The USD is simply plummeting under the complacent eyes of the US monetary authorities. In the end they are using the dollar as fertilizer for an economy that refuses to grow. Alberto Tamer (Translated by Elmat)

To: TobagoJack who wrote (33268)	5/8/2003 2:05:51 AM
From: energyplay	Read Replies (2) \| Respond to of 74559

MIR - I' m waiting too...meantime, up-and-down. Having gone through this game with RRI makes me feel better. I have also learned from Ray's viewpoint, that Wall Street and their friends will try to buy very low when success is almost certain, and try to shake other investors out with erratic price action. Cynicism = Insight ? I intend to stay on Mirant until it's well past $5.00. maybe even $10.00.

To: TobagoJack who wrote (33268)	5/8/2003 2:45:28 AM
From: elmatador	Respond to of 74559

Argentina draws praise from IMF By Richard Lapper, Latin America Editor, in Miami Published: May 5 2003 5:00 \| Last Updated: May 5 2003 5:00 Two weeks ahead of Argentina's presidential elections, the International Monetary Fund has praised the government's recent economic performance, opening the way for a further improvement in its relations with the country. <<I hope Kirchner does a Lula and revert the situation.>> Anoop Singh, the official in charge of the fund's Latin American operations, said on Friday that he saw "a much stronger consensus for the kind of fiscal framework, banking reforms and institutional changes that can spur sustained growth". Mr Singh, who after his appointment last year was involved in drawn-out negotiations with Argentina, said that "substantial" improvements in the economic outlook provided a good basis for the incoming government to adopt "enduring structural reforms". Argentina's economy is poised to grow by 4 per cent this year after last year's 11 per cent decline, a performance that should help Néstor Kirchner, the candidate who enjoys the support of both Eduardo Duhalde, the president, and Roberto Lavagna, the economy minister, in this month's second round run-off against former president Carlos Menem. Mr Lavagna has improved the country's fiscal performance and kept inflation under control but he has taken an aggressive approach towards the IMF. Argentina agreed a short-term deal with the fund in January to roll over $6.8bn (€6.2bn, £4.3bn) of debts only after several months of tough talks. But this expires in August and the new government will need to reach an agreement with the fund quickly. A deal would help the country begin to restructure commercial debts after the default of December 2001. But Mr Singh said the negotiations that preceded the IMF deal had helped "thrash out a lot of issues. At the end of it a strong understanding between ourselves and the economic team has been realised". He said that controversial increases in social spending that have seen a huge increase in the number of people receiving government hand-outs had helped "contain social instability". Mr Singh was also upbeat about wider regional prospects, pointing to a sharp improvement in export performance after last year's currency devaluations. Mr Singh argued that the region needed to open further its economies in order to consolidate gains. The region had suffered as a result of the imbalance between its integration into international financial markets and its relatively low share of world trade. The imbalance had hampered potential growth and increased vulnerability to recurrent financial and current account crises. Mr Singh said, however, that bilateral agreements of the kind being negotiated by Chile and the five Central American republics with the US should not be the overriding focus of trade policy. * Carlos Menem's presidential ambitions suffered a setback at the weekend after he failed to secure the support of one of the candidates who lost last month's first-round vote, writes Adam Thomson in Buenos Aires. Mr Menem offered Adolfo Rodríguez Saá, a populist member of the Peronist party, a ministerial position last week in return for his backing in a second and definitive round of voting on May 18. Mr Rodríguez Saá obtained 14 per cent of the vote in the first round - votes Mr Menem needs to keep his hopes alive. However, on Saturday, Mr Rodríguez Saá said he would delay his decision on whether to support Mr Menem or Néstor Kirchner, his left-of-centre presidential rival, until May 15.