Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: CIMA who wrote (17123)	9/1/1998 9:35:00 AM
From: Alex	Respond to of 116770

Fed must cut for America's sake, not the world's <Picture> by JOANNE HART Deputy City Editor <Picture><Picture><Picture><Picture>CALLS for the US Federal Reserve to cut interest rates to reverse the worsening global financial crisis are sure to increase after yesterday's Wall Street losses - but for the wrong reasons. The Fed is not central banker to the world and any move to act as such would only deepen the sense of panic, not halt it. The Federal Reserve should cut rates, and soon, but it must make it very clear that the reason for doing so is domestic, not international. Only then will such a move have a prayer of stemming some of the capital flight from emerging nations and allow those in trouble to ease their own interest rates, now kept high to support their currencies. The Fed should act because America's economy is slowing, dangerously. It has come down from a 5.4% pace to an anaemic 1.4% and all the signs are that consumers - the engine behind most of the growth - continue to pull back. Consumer spending fell last month for the first time in two years and confidence in the economy is waning. Wall Street has now wiped out all of its gains for the year, partially erasing the feeling of financial comfort that encouraged America's 60 million shareholders to spend so freely in the recent past. Some economists say the threat of an American recession by next year, once almost unthinkable, is now very real. There is virtually no inflation in America and the "core" rate is unlikely to rise much above 21/2% - not while commodity prices are slumping. The key unemployment report for August, due to be published on Friday, may be skewed by the ending of the General Motors strike but should otherwise show that there is a less vigorous job market, which means less wage pressure in coming months. Meanwhile, Fed chairman Alan Greenspan's public hand-wringing over asset-based inflation has been largely answered by the falling stock market. The Federal Reserve has already carried out some de facto tightening by letting inflation go so low without adjusting short-term interest rates. America's real interest rates are now at the highest they have been this decade, which has contributed to the overvalued dollar. There is plenty of room, and justification, for the Federal Reserve to slice rates. If the monetary authorities do it for the right reason - to ensure that the US economy does not tip into recession - the rest of the world will be more likely to respond positively. One to watch BUNZL has quietly but conscientiously transformed itself since it acquired the nickname "Bungle" in the 1980s. Now it is the biggest company in the paper and packaging sector, achieving consistent annual earnings growth of 10% to 15%. The group has done all those things beloved of management consultants - strategically reviewed its business, slimmed down its operations and steered itself towards the value-added side of the paper and packaging industry. As a result the company bears little resemblance to its commodity-orientated peer group. In the US, Bunzl provides packaging for supermarket products - a relatively recession-free activity - and in Britain and Europe it acts principally as a distributor for the hotel and catering trade. There is also a highly-lucrative cigarette filters business. Bunzl has become a favoured child in its sector but has still underperformed the FT-SE 100 index this year. Today's half-year figures could help improve its rating, notwithstanding the tumultuous condition of the market. Anthony Habgood, Bunzl's head since 1991, has been largely responsible for the turnaround in the company's fortunes. He has also recently become a non-executive director at NatWest. News of his appointment was greeted with apathy by bank analysts, who focused their interest on Lord Blyth and Sir David Rowland. Perhaps he deserves more attention as the NatWest board mulls over the question of a successor to chairman Lord Alexander. c Associated Newspapers Ltd., 01 September 1998 This Is London <Picture: IBM> <Picture: Go Back> ÿ thisislondon.co.uk