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Microcap & Penny Stocks : Tokyo Joe's Cafe / Societe Anonyme/No Pennies -- Ignore unavailable to you. Want to Upgrade?

To: chirodoc who wrote (3229)	9/5/1998 11:39:00 AM
From: TokyoMex	Read Replies (1) \| Respond to of 119973

Greenspan Hints That a Rate Cut Isn't Unthinkable By DAVID E. SANGER with RICHARD W. STEVENSON SAN FRANCISCO -- Alan Greenspan, the Federal Reserve chairman, signaled Friday that the central bank is now less concerned about inflation as a threat to the U.S. economy but is increasingly wary that the spreading global financial crisis could harm the United States. Greenspan's comments at the University of California at Berkeley came just minutes before Treasury Secretary Robert Rubin met here with Japan's new finance minister, Kiichi Miyazawa, to hammer home the message that the best hope of halting the international crisis lies in quick action by Tokyo to stimulate its economy and shore up its financial system. But with market volatility having spread to Latin America and with Russia veering toward economic collapse, U.S. officials said they feared that it would be increasingly difficult to contain the turmoil. At the end of a week in which Wall Street experienced a sharp sell off, Greenspan said that even the United States was increasingly vulnerable. "It is just not credible that the United States can remain an oasis of prosperity unaffected by a world that is experiencing greatly increased stress," he said. Greenspan stopped well short of suggesting that the Federal Reserve will cut interest rates, a step being urged on him by a growing chorus of economists and officials in other countries. An interest-rate reduction in the United States would help reduce borrowing costs around the world and could be a powerful psychological boost to embattled investors at home and abroad. But Greenspan's comments were a marked departure from his last major policy statement, in July, when he told Congress that the risks of inflation outweighed the possibility that the global financial turmoil could push the otherwise strong U.S. economy into recession. And in explaining the change in his speech on Friday, Greenspan seemed to open the door to consideration of an interest rate cut if the global financial situation continues to deteriorate or if the U.S. economy shows signs of stalling. The global turmoil that has robbed countries of prosperity and growth has benefited the United States so far by helping to dampen inflation and slow down an economy that was at risk of overheating, Greenspan said in his speech Friday night. The downward pressure on inflation is likely to intensify as the turmoil in other nations mounts, a development that he said led Federal Reserve policy-makers to rethink their strategy at their last meeting on Aug. 18. "In the spring and early summer, the Federal Open Market Committee was concerned that a rise in inflation was the primary threat to the continued expansion of the economy," Greenspan said. "By the time of the committee's August meeting, the risks had become balanced, and the committee will need to consider carefully the potential ramifications of ongoing developments since that meeting." Greenspan, who always leaves himself an out when he makes public pronouncements, went on to indicate that the central bank will not rush into a decision about reducing rates just because of the sharp fall in stock prices this week. "We have relearned in recent weeks that just as a bull stock market feels unending and secure as an economy and stock market move forward, so it can feel when markets contract that recovery is inconceivable," he said. "Both, of course, are wrong. But because of the difficulty imagining a turnabout when such emotions take hold, periods of euphoria or distress tend to feed on themselves." Greenspan was to join Rubin after his speech in meeting with Miyazawa. Earlier this week in Moscow, President Clinton termed Friday's meeting with Miyazawa, who served as Japan's prime minister for two years until a surprise fracturing of the ruling Liberal Democratic Party in 1993, as "profoundly important." That statement reflected a growing view in the administration that the best hope of choking off the 14-month old Asian crisis is to bring about a long-overdue turnaround in Japan. But Treasury officials winced at Clinton's characterization because they fear that Japan is still weeks or months away from decisive action, at a time that markets are fraying around the world. All the early indications from Tokyo were that Miyazawa was arriving in San Francisco with few new ideas, no new plans and only vague promises. "This meeting was never designed or intended to address the question of a plan," Rubin said Friday on a flight to San Francisco. "We'll be extremely interested in Miyazawa's discussion of the banking system and fiscal policy." The main reason Rubin and his aides were seeking to play down expectations was their fear that the world's jittery markets could react badly to news of little progress from the meeting. But it is also in part because Rubin and Summers have relatively little leverage: Their explicit criticisms of Japan in recent months have created a backlash in Tokyo, and the Japanese Parliament is spinning its wheels as the ruling and opposition parties argue with each other over what to do about the insolvency of some of the world's largest banks. "I don't think we will propose anything new," a senior Japanese official said before the meeting. "It is just that for the first time we have a finance minister who can explain what our government is doing." The official was referring to Miyazawa's greatest attribute as an international diplomat: He speaks fluent English, learned during extensive travels in the United States before World War II, and for half a century he has been cast into crisis situations and negotiations with the United States. But in this case, he has relatively little to work with. Japan's Parliament has been talking for months about passing legislation that would address the country's deepening banking crisis. But the debate has just begun, and it has been bogged down by the question of whether billions of dollars in public funds should be used to bail out banks that were so wildly mismanaged that they now have upwards of a trillion dollars in bad loans on their books. The test case is how the government deals with the Long-Term Credit Bank of Japan, or LTCB, one of the country's largest financial institutions. There is movement in Tokyo toward steps that would essentially nationalize the bank, using taxpayer dollars to rebuild its capital. U.S. officials clearly fear, however, that Japan is not ready to accept the pain of closing the weakest institutions -- and will further delay resolving the bad debts that are freezing the Japanese economy. Saturday, September 5, 1998 Copyright 1998 The New York Times

To: chirodoc who wrote (3229)	9/5/1998 11:41:00 AM
From: TokyoMex	Respond to of 119973

Some hope for Yeltsin ? Russians Defer Vote, Buying Time for Talks By CELESTINE BOHLEN MOSCOW -- Hours after Russia's acting prime minister finally laid out his program to pull the country out of its economic crisis, Parliament Friday put off a crucial vote on the new government until Monday, buying more time for political negotiations. "I am sure that this may be the last chance to build a normal economy in Russia," he told members of Parliament's upper house Friday. "Yes, our actions will not be popular ones. Yes, the authorities will be cursed from bottom to top." Chernomyrdin's program, presented before he has the mandate to carry it out, would satisfy those who want to see the government do something to reverse the country's painful shortage of cash with a new infusion of rubles. But it is likely to anger lenders like the International Monetary Fund, which wants to see budget cuts and a tight money policy. The hard part -- which might reassure the fund and other international creditors -- comes only in January 1999, with a harsh regime that would tie the supply of rubles to Russia's foreign currency reserves. The economic plan was announced as Parliament's lower house Friday accepted President Boris Yeltsin's last-minute offer to reopen talks on a power-sharing agreement, and delay its second vote on Chernomyrdin's confirmation until Monday. Chernomyrdin was rejected in a first vote last Monday. Outside Russia Friday, his plan drew a frosty reception. A senior Clinton administration official expressed frustration with the outlines of the plan, and at the IMF, Michel Camdessus, the managing director, implored Russia to "stop printing money for the wrong purposes and put the budget in order." Even after Yeltsin's peace offering and the description of the economic plan, hopes for an easy breakthrough in Russia's 12-day-long political deadlock flickered when the leader of the Communist Party -- which holds the biggest bloc of votes in the lower house -- said he would refuse to sign any political agreement and would continue to oppose Chernomyrdin's nomination. "We are not going to consider any agreement on Monday," Gennadi Zyuganov, the Communist leader, said. "We won't sign anything. It's pointless." Although opposition leaders have said they will present Yeltsin on Monday with their own list of prime minister candidates, the president -- as yet -- has shown no signs of backing off Chernomyrdin's nomination. A third rejection of his nominee by Parliament would require Yeltsin to disband Parliament and call for new elections. Meanwhile, the bad economic news kept piling up. With the Central Bank unable to summon up the foreign currency reserves to defend it, the value of the Russian ruble -- set at 6.2 to the dollar three weeks ago -- again fell sharply, to 16.9, and stores and currency offices around the city were trading at even weaker rates. In another sign of the widening crack in Russia's financial system, another major bank, Inkombank, was taken under the temporary supervision of the Central Bank, following similar orders imposed last week on SBS-Agro, the country's second-largest bank. Inflation for the month of August was reported at 15 percent, an official figure that paled next to the spiraling price rises Russian citizens saw this week as they scoured stores for vanishing supplies of domestic staples and imported goods. The country's mounting frustration and impatience with its dawdling political leaders Friday finally penetrated the halls of the giant building where the Duma, the lower house of Parliament, meets. A delegation of striking miners, who have been camped for several months outside the Russian government building in a nonstop protest against unpaid wages, flashed guest passes at the security guards at the Duma building and briefly occupied its grand staircase, rhythmically banging their miners' helmets against the steps. Vladimir Zhirinovsky, the flamboyant ultranationalist leader who announced on Thursday that he would swing his 51 parliamentary deputies behind Chernomyrdin's candidacy, also staged an eruption from the floor of the lower house. "The dollar rate is already almost 20 rubles and there are lines at food stores even in Moscow," he shouted into the microphone. "Everything is being swept away, and then we will be blamed. Either we will be disbanded, or we approve Chernomyrdin, but we will be accused of exploding the ruble." In his address Friday, Chernomyrdin urged legislators to end the political name-calling and come to grips with the crisis. "This is no joke," he said. "A couple of weeks from now rivers will begin to freeze in Siberia. The delivery of supplies there will be paralyzed or has already been paralyzed. Even in prosperous Moscow, consumers are clearing out store shelves. Are you treating this as a joking matter?" The lineup against Chernomyrdin in the lower house did not change Friday, even after he picked up an endorsement from a majority in Parliament's upper house, which is made up of leaders from Russia's 89 regions. But the upper house does not have a vote on the matter. Nor did Chernomyrdin's speech, outlining the economic measures to bring Russia out of its crisis, seem to sway anyone. If anything, the program was largely ignored Friday as the debate focused on the search for a political compromise. Still, both Chernomyrdin and his supporters said Friday that they thought his chances for confirmation on Monday had improved. As the days go by, deputies from small left-wing parties, pressed by an increasingly unhappy electorate and by regional bosses who want to see a government move into the widening political void, may choose a face-saving way out. They could also be swayed by promises of ministerial portfolios, although such offers have less value than usual, given the difficulties any government would face. Yeltsin's offer to restart talks that had collapsed last weekend signaled that he is still looking for ways to avoid the kind of confrontation that could come with a disbanding of the lower house. In 1993, such a confrontation led to an aborted mutiny and Yeltsin's order to shell the Parliament building. On the table on Monday, when Yeltsin meets with leaders from both houses of Parliament, will be a political agreement that calls for a redistribution of the considerable powers conferred on the president under the 1993 constitution, which he himself drew up. The agreement would also impose a political cease-fire on both Parliament and the president, designed to stop the brinkmanship that has brought Russia to a crisis point so many times in recent years. To back up his peace offer, the president Friday submitted a law that would give Parliament more say in the appointment of cabinets -- a point that the Communists had pressed in negotiations last weekend. Other parts of the political agreement call for a moratorium on no-confidence votes against the government and a halt to impeachment proceedings against Yeltsin. The Communist Party backed out of a similar agreement last Sunday, preparing the ground for the rejection of Chernomyrdin the next day. Their reasons for backtracking remain unclear, but most experts say they probably see greater advantage in staying clear of an unpopular government and an increasingly unpopular president. In a recent poll of 1,500 citizens taken by the Social Opinion research group, 66 percent said Yeltsin should resign. If impeachment proceedings are begun next week in the lower house, as the Communists have threatened, another confrontation could explode. The constitution does not allow a president to disband the lower house once it has begun impeachment proceedings, while it compels the president to disband the lower house if it rejects his choice for prime minister three times. If both events happen at once, the issue is referred to the courts -- a recipe for either more paralysis or more conflict. Had the lower house held its second vote on Chernomyrdin's candidacy Friday, as was planned, he would have surely been defeated, setting the stage for a third vote in another week. Given the urgency of the economic crisis, Yeltsin and Chernomyrdin have tried to raise the stakes for the second vote, in order to avoiding dragging the political battle on for another week. Saturday, September 5, 1998 Copyright 1998 The New York Times