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To: TobagoJack who wrote (10072)	3/13/2004 5:27:08 AM
From: stan_hughes	Respond to of 110194

Jay -- "What will trigger the killing? I don't know.....I just know there is something out there we do not know, and it will fcuk us" Maybe a larger scale version of this kind of stuff, a la Barings? No doubt there are more than a few loose cannons out there in the current environment -- NAB Sacks FX Traders, Executives Amid Scandal sg.biz.yahoo.com Rogue Forex Options Trades At NAB Began In 2001 (update) sg.biz.yahoo.com

To: TobagoJack who wrote (10072)	3/13/2004 7:31:25 AM
From: Condor	Respond to of 110194

LOLOL My favourite. "I just know there is something out there we do not know, and it will fcuk us" :o) That is not an opinion, it is a law of the universe. <gg> Great list. C

To: TobagoJack who wrote (10072)	3/13/2004 10:00:27 AM
From: BubbaFred	Respond to of 110194

Why We Ought To Be Thanking the Chinese Stephen Roach (New York) Morgan Stanley Mar 12, 2004 [Note: This essay was originally published in the March 22, 2004 edition of Fortune magazine]. A fickle world has changed its mind about China again. A year ago, the miracle of Chinese growth was widely seen as a bonanza for an otherwise sluggish global economy. Today China is being cast as a threat - in effect, it has become a scapegoat for many of the more intractable problems that a dysfunctional world has been unable to solve. This role reversal is both disturbing and ill founded. It probably says a good deal more about the West than it says about China. The case for China-bashing stems largely from the angst about jobless recoveries in the world's wealthy industrial nations. In particular, U.S. jobs are increasingly perceived as being exported to China - an erroneous perception that has tempted politicians to flirt with dangerous protectionist "remedies." China's currency peg - a fixed arrangement between the renminbi (RMB) and the dollar - has become a lightning rod in this debate. In the eyes of many, it underscores the unfair competitive advantage that China enjoys in an otherwise tough global marketplace. Pressure is being put on China to rework the peg. Federal Reserve Chairman Alan Greenspan recently noted that such a chance is a "fairly reasonable expectation." A rumored 5% revaluation of the RMB is being hailed as a first step in taming the so-called China threat - as if that would actually temper the world's imbalances. Nothing could be further from the truth. Lost in the handwringing are the extraordinary benefits that a rapidly changing Chinese economy is bringing to the world - benefits that an ungrateful world should give thanks for. That's especially the case for the U.S. Yes, China accounted for the largest portion of America's record $540 billion trade deficit in 2003. But this deficit was not made in Beijing - it was made in Washington. That's right - courtesy of a runaway federal budget deficit, America has all but depleted its national savings. In order to fund the investment necessary for economic growth, that shortfall of domestic savings must be offset by surplus savings from abroad. The U.S. has no choice other than to run massive balance-of-payments and trade deficits in order to attract foreign capital. For that reason alone, China plays an important role in plugging a hole in the American economy. Just as Japan filled the void created by the Reagan budget deficits of the 1980s, China is playing a similar role in an era of Bush budget deficits. Given our savings shortfall, we have to run trade deficits with someone. If it wasn't China, it could be Mexico, Canada, or even Europe. The result would be higher-cost imports that would represent a tax on the American consumer - a tax that would squeeze purchasing power and would undoubtedly constrain U.S. economic growth. In fact, it's the consumer who benefits the most from America's trade with China. The U.S. purchased more than $150 billion of cheap, high-quality Chinese products last year. That helped hold down the inflation rate. U.S. import prices for items other than petroleum rose by only 1% in the 12 months ended in December - a minuscule increase for a now rapidly growing economy with a weakening dollar. Low inflation provides a windfall of purchasing power to job-short and income-constrained U.S. consumers. America has China to thank for it. But that's not all. It turns out that China is plowing back a large portion of its export earnings into dollar-based financial assets. As of last November, China held $144 billion in Treasury securities; that's 9.6% of total foreign holdings of such government paper - triple China's share in 1994. Among foreign holders of U.S. Treasuries, China is now second only to Japan and well ahead of Britain, which is in third place. This is hardly a trivial matter. Normally, outsized government borrowing would drive financing costs up. But eager Chinese buying of U.S. paper prevents that from happening. By helping keep interest rates low, China is lending even more support to U.S. economic growth. It's not just America that should be grateful for China's dramatic emergence. Multinational corporations have moved rapidly to integrate China into the global supply chain. More than $50 billion in foreign direct investment went to China in each of the past two years, making it the world's largest recipient of such flows. Chinese subsidiaries of multinationals and joint venture partners from Japan, the U.S., and Europe have accounted for 65% of the cumulative increase in total Chinese export growth over the past decade. Outsourcing has become an increasingly important element of corporate efficiency strategies around the world, allowing high-cost operations in developed countries to be replaced by low-cost production in developing countries such as China. Ultimately, these benefits are also passed on to consumers around the world. At the same time, China has become an important source of growth for its neighbors in Asia and other countries. You'd never know that from all the clamor over China's export prowess. But the big secret is surging Chinese import demand - up some 40% last year. As China erects the infrastructure of a modern economy, it does so with capital equipment and technologies it purchases from countries such as Japan, South Korea, Taiwan, and Germany. Inasmuch as these same nations suffer from deficiencies of internal demand, their China export businesses have become important sources of growth. The bottom line is that the so-called China threat rings hollow in an era of globalization. China is not stealing jobs from rich, developed countries. Employment is growing in China's export sector because multinational corporations are expanding their Chinese subsidiaries. And China's demand for foreign-made goods is supporting employment elsewhere in the world. Nor should China be accused of having an undervalued currency that gives it an unfair advantage in the battle for market share. Xenophobic American Congressmen believe that the country's bilateral trade surplus with the U.S. is the smoking gun of a manipulated currency. Never mind that the RMB peg to the dollar hasn't changed since 1994; the more important point is that China runs large deficits with most of its other trading partners. As a consequence, its overall trade position is only slightly in surplus - 0.3% of Chinese gross domestic product in 2003. If anything, this suggests that the Chinese currency may be fairly valued - at odds with those clamoring for a quick revaluation. Most of all, the world owes a debt of gratitude to China for its commitment to dismantling its state-owned economy. For China, this is the only avenue to sustained prosperity. For other nations, it is an opportunity to tap an enormous market. Nor do we in the West have to worry that China will play unfairly on the road to reform. China's willing accession to the World Trade Organization guarantees that it will be held accountable to a system based on Western rules. By committing to such an extraordinary transformation, China has thrown down the gauntlet to the rest of the world. Yes, China's success is also a challenge: It puts the rigid and outdated economies in Europe and Japan on notice that they must also change, or risk being left behind in an increasingly fast-moving time. Far from being a threat, China is an important example for others to emulate. No one said globalization would be easy. But in the end, it sure beats the alternatives. Thank you, China, for showing the way. morganstanley.com

To: TobagoJack who wrote (10072)	3/13/2004 10:46:10 AM
From: BubbaFred	Read Replies (2) \| Respond to of 110194

MARKET REVIEW: BEWARE THE IDES OF MARCH The Daily Reckoning - Weekend Edition - March 13-14, 2004 Paris, France By Eric Fry March is a funny month; it's a wonderful time of year to be a daisy, or an amorous sparrow. But not a great month to be a dictator, as Julius Caesar and Saddam Hussein both discovered. March is also a funny month for the stock market... sometimes wonderful, sometimes awful. Interestingly, mid-March has witnessed very important trend changes in each of the last four years. In mid-March 2000, the Nasdaq reached a record 5,132... before plummeting 65% to 1,794 by mid-March 2001. Then, the post 9/11 rally took the index to an important peak of 1,942 in mid-March 2002, representing the start of 2002's long decline. Most recently, mid-March 2003 provided an excellent entry point to a year-long rally. Is March 2004 another critical turning point in the stock market? Despite the market's strong showing on Friday, when the Dow bounced 112 points and the Nasdaq surged 2%, the major averages still limped into the weekend with large losses. The Dow slumped 4.4% during the week to 10,240, while the Nasdaq fell 5.1% to 1,985. Both averages are in the red for 2004. Perversely, the dollar rallied while stocks tumbled. The greenback gained more than 1% against the euro to $1.221. As the dollar strengthened, gold slipped back below $400 an ounce. For the week, the semi-precious metal fell $6.00 to $395.25 an ounce. Weighing on stocks this week was the now-familiar news of an ever-widening trade gap. The U.S. trade deficit widened in January to a staggering $43 billion. The inflating oil price, which closed the week over $37, added $200 million to the tab... despite the fact that the U.S. imported 8 million barrels less than the previous month. Exports were hit by a sharp drop in beef sales - the result of another mad cow on the rampage. Beef sales are expected to decline further in February. But shouldn't the declining dollar be soothing this giant deficit? Not necessarily. The trade balance with China, by far the largest source of imported goods, is independent of currency movements because the Chinese yuan is pegged to the dollar at a fixed exchange rate. The dollar and the yuan, therefore, are monetary conjoined twins. In January, the closely watched deficit with China rose from $9.9bn to $11.5bn - a 22% jump over the same month last year. "The dollar devaluation campaign is twice a failure," we noted earlier this week. "Isn't the weak dollar supposed to boost job growth here at home, while narrowing our trade deficit overseas? But neither one is happening. In February, the average length of joblessness rose to 20.3 weeks, the longest since January 1984." Evidently, investors don't care much about jobs... as long as stocks are going up. For the last 12 months, Wall Street has been gripped by "irrational exuberance - part deux." But there's a new twist this time around: In 1994, when Greenspan coined his famously ill-time phrase, he was trying to dampen excessive investor optimism. But today, he's encouraging it... which is one more reason why the stock market is probably much closer to a major top than a major bottom. One year ago, the U.S. was about to blitz Iraq, determined to topple a crazed dictator who had amassed - we believed - a massive cache of highly destructive weapons. Investors were nervous. Who knew that the perceived threat would be a chimera? Who knew that instead of finding and destroying Saddam's weapons of mass destruction, we would instead pummel the "rogue nation" with our own WMDs, while finding little more than firecrackers buried in the sands of Iraq? One year ago, the U.S. economy was muddling along, unemployment was rising, and corporate earnings growth was non-existent. Buying stocks back then seemed like a risky proposition. But the stock market soared anyway. Today, the economy is humming, investors are confident and the chairman of the Federal Reserve throws caution - and billions of newly minted dollar bills - to the wind. These are the good old days, revisited. Unfortunately, our national debt is now larger, our trade deficit is breaking records, the consumer is more "upside down" than ever before and the world's growing ranks of terrorist organizations continue to amuse themselves by blowing up people they've never met. And one more thing: the economy is adding jobs at an abysmally slow pace. In fact, U.S. payrolls have increased by only 122,000 jobs since March of 2003. No doubt, this week's sharp selloff will be seen as another great buying opportunity by the lumpeninvestoriat. Most likely, it isn't... If March 2004 continues the pattern of the previous Marches of this Millennium, the stock market is on the verge of a major trend change... Et tu, Mr. Market? Regards, Eric Fry The Daily Reckoning THIS WEEK in THE DAILY RECKONING DEBT AND DYING (3/12/04) by Bill Bonner "... So far debt is probably brightening more lives than it darkens. As long as interest rates are low and falling... and asset values do not fall... the lights should remain on for most people. It's when the juice stops flowing that the trouble begins. That's when you wish you hadn't borrowed so much... and feel faintly like blowing your brains out... " dailyreckoning.com THE VALUE OF GARBAGE (3/11/04) by Dan Ferris "... The worst failures, the companies run by the most devious managers, made investors twice as much money in 2003 as the most successful businesses, run by the most capable managers. The reason why lousy companies bring you great returns is simple. Since nobody wants to own them, their share prices get far cheaper than those of the popular, successful companies most investors want to buy. Right now is an especially good time to focus on the losers... " dailyreckoning.com MAKE IT STOP! (3/10/04) by John Myers "... As strong as America's economy is right now, the question remains - is it sturdy enough to handle the massive debt load it is towing? If America is NOT strong enough, then the economy could be whipsawed, facing inflation on one side, deflation on the other. If that happens, I can picture President George W. Bush screaming, 'Make it stop!' and Fed Chairman Alan Greenspan yelling back, 'I can't!'... " dailyreckoning.com PULLING OUT THE RUG (3/9/04) by Kurt Richebächer "... The Greenspan Fed has discovered a new, amazingly easy and quick way to create higher consumer spending virtually from thin air - by way of so-called wealth creation through asset bubbles. Measured by real GDP growth, it seems a successful policy. But measured by employment and income growth, it is an outright disaster. There is now quite a variety of accidents waiting to happen in the markets, but the most predictable and biggest risk is a dollar crisis... " dailyreckoning.com THE PEOPLE'S BUSINESS (3/8/04) by The Mogambo Guru "... It's not just the money [that Greenspan prints up]! Think of the U.S.'s veritable army of faceless government employees. And there is a large spillover into the private sector, as all that money from the programs and the salaries of the government employees gets spent and reverberates throughout the economy. And I will go farther than that and say that the combined local, state and federal governments ARE the damned U.S. economy. And Greenspan wants to rein in THAT ravenous beast? Hahahaha! The man IS a fool! Hahahaha!... " dailyreckoning.com ---------------------- HEADLINE, NEWS And INSIGHT: Record Trade Deficit; 'Blah blah blah' Says The Market by Dan Denning "... The [recent Dept. of Commerce international trade] report shows a country that continues to consume more than it produces, yet whose currency rises on the news. Go figure. Why did the dollar go up when the fundamental numbers show the balance sheet of America getting worse? Who knows. The easy explanation - the one you'll read in the mainstream press - is that the U.S. is a bigger "growth" story than Europe. If you're talking about growing deficits, that's surely true... " dailyreckoning.com Signs The Housing Economy Is About To Crash: A Satire by Robert Blumen As the baby boomers have remade the economy in their own image, they've increasingly relied on their homes as a source of 'wealth'. Soon the entire economy will hinge on the rising price of the single family home. Satire? Or reality, you decide. dailyreckoning.com The Bureau of Labor Statistics Magic by John Mauldin "... Current headline Bureau of Labor Statistics unemployment rates are not the whole story. The magic of statistics is that if you get to define the terms, you can make the numbers say what you want them to say. No great conspiracy here, but the unemployment numbers are developed in such a way that unemployment is understated. Let me throw you some odd statistics... " dailyreckoning.com