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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: kailuabruddah who wrote (23693)	2/16/2005 11:49:49 AM
From: mishedlo	Respond to of 116555

Low interest rates a conundrum, Greenspan says - Wednesday, February 16, 2005 3:39:01 PM afxpress.com WASHINGTON (AFX) - The decline in long-term interest rates in the past few months is a "conundrum" that defies easy explanation, Federal Reserve Chairman Alan Greenspan said Wednesday After trying on and discarding several possible explanations as incomplete or inadequate, Greenspan concluded: "For the moment, the broadly unanticipated behavior of world bond markets remains a conundrum." The narrowing in the yield spread between short-term rates and long-terms rates cannot be interpreted as a warning that economic growth will slow, Greenspan said. "This interpretation does not mesh seamlessly with the rise in stock prices and the narrowing of credit spreads observed over the same interval," Greenspan said in his prepared testimony to the Senate Banking Committee. Typically, long-term interest rates would rise in conjunction with increases in the Fed's target rate for short-term loans. The central bank's Federal Open Market Committee has raised the federal funds target from 1 percent to 2.5 percent. Yet at the same time, long-term rates, such as the 10-year Treasury note or 30-year mortgages, have declined Some people have argued that long-term rates have been pushed lower by "subdued overall business demand for credit in the United States and the apparent eagerness of lenders, including foreign investors, to provide financing," Greenspan said It's also possible, he said, that mortgage investors have been hedging duration risks by buying longer-term notes But technical factors in the U.S. market cannot account for the full decline, he said, because long-term rates have been falling worldwide Finally, he said, such "bond price movements may be a short-term aberration."

To: kailuabruddah who wrote (23693)	2/16/2005 12:48:30 PM
From: mishedlo	Respond to of 116555

A month after Europe unveiled the world's biggest airliner, America yesterday came up with one that could fly the farthest. The roll-out in Seattle of the Boeing 777-200LR (for "long range") was portrayed as the joining of a mighty aerospace battle, pitting size against staying power, with the ultimate spoils being billions in orders from the world's airlines.... On one hand, there is the Airbus behemoth, the A380 with its twin decks, 261ft wingspan and, theoretically, the ability to seat 740 economy passengers, even though, in reality, it will "only" accommodate between 500 and 550 in three classes when it enters service next year. It might not be the fastest aircraft in the world or have the longest range (but still a respectable 8,000 nautical miles) but it will get you to Australia with only a stop or two. And, if Sir Richard Branson's dreams are realised, you will be able to wile away the time in the bar, gym or casino. The aircraft is so wide and heavy that many airports will not be able to accommodate it. However, it will not be going to that many airports: just the main hubs. By contrast, the Boeing 777-200LR, with a range of about 9,400 nautical miles, will be capable of connecting "virtually any two cities in the world, non-stop". You could, for instance, fly non-stop from London to Sydney but not, unfortunately, the other way round because of prevailing head winds. Carrying about 300 passengers, the new offering from Boeing – a company still smarting after being overtaken by Airbus last year as the world's leading supplier of airliners – will be more expensive to operate and, hence, cost more to fly than the giant Airbus. But it will get passengers there and back quicker, which has obvious appeal to business travellers who do not mind the prospect of spending up to 20 hours in the air to save an hour or two...... The new Boeing is merely a derivative of the Boeing 777 that many of us have flown across the Atlantic," said Mr Kingsley-Jones. "They have taken that plane, taken out some of the fuselage and increased the size of the wings and the engines to get another 1,000 miles or so out it. "They have gained range by losing payload – normally, you do it the other way round. It means it has high operating costs and, I would expect, only a niche market to be filled." telegraph.co.uk

To: kailuabruddah who wrote (23693)	2/16/2005 1:02:47 PM
From: mishedlo	Read Replies (3) \| Respond to of 116555

Greenspan urges "cautious" move to Soc. Sec. accounts - Wednesday, February 16, 2005 5:34:26 PM WASHINGTON (AFX) -- U.S. lawmakers must address Social Security by 2008, and President Bush's general plan to introduce personal savings accounts into the system is a good idea, said Federal Reserve Chairman Alan Greenspan Wednesday. But Greenspan urged caution in moving to personal retirement accounts, saying the impacts on financial markets from the trillions of dollars of borrowing necessary to change to such a system are unknown and potentially disruptive to the economy "If you are going to move to private accounts, which I approve of, I think you have to do it in a cautious and gradual way," Greenspan said The Fed chairman urged the Congress to move slowly on Social Security reform Greenspan said he did not know if the bond market would view the increased borrowing as new debt or just replacing an implicit debt with an explicit debt "How the markets interpret it is really the important issue," and could move interest rates higher or lower depending on their reaction to any new plan "My caution here is based on not knowing, and not knowing how to know, in advance, how markets will respond," Greenspan said "If we were to go forward in a large way, and we were wrong, it would be creating more difficulties than I would imagine," Greenspan said System needs to be changed soon Greenspan told member of the Senate Banking Committee that time is running short to revamp the nation's retirement system "Real progress on these issues will unavoidably entail many difficult choices," he said. "But the demographics are inexorable, and call for action before the leading edge of baby boomer retirement becomes evident in 2008," Greenspan said Under questioning by members of the panel, Greenspan says he has "always supported moves" toward the creation of personal accounts to help make the Social Security system sustainable over the long-term There is a far greater probability that the personal accounts would fully fund Social Security, Greenspan said. The current pay-as-you-go system was only viable because of favorable demographic trends. The ratio of worker for retirees was quite high "The current system is ill-suited to the demographics that we are expecting to evolve in the future," he said Greenspan also said creating private accounts could benefit ordinary Americans "You give wealth to people in the lower and middle incomes who didn't have it before," he said forexstreet.com