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Pastimes : Ask Mohan about the Market -- Ignore unavailable to you. Want to Upgrade?

To: John Hunt who wrote (17550)	1/15/1999 5:34:00 AM
From: geewiz	Read Replies (1) \| Respond to of 18056

Hi John, are you all snowed in up there?? If I remember from previous links you couldn't retrieve the NYT's. Interesting article on deflation in Europe: For Private Use: Despite Slowdown, Euro Economies Divided Over Interest Rate Cut By EDMUND L. ANDREWS FRANKFURT, Germany -- Two weeks after 11 countries successfully began using a single currency, the euro, a raft of recent evidence indicates that their economies are stalling faster than experts had expected a few months ago. In Germany, which accounts for a quarter of the euro zone's economic output, industrial production has declined and the double-digit rate of joblessness has begun to climb again. The government reported Thursday that the economy expanded by 2.8 percent in 1998, its best result in four years, and higher than the 2.2 percent in 1997. But most economists think that growth nearly stopped in the last few months and will be well below 2 percent this year. In France, the government said Thursday that growth in the third quarter of 1998 slowed to half a percent, the least in a year and a half. In Italy, which has been lagging behind its neighbors for the last year, economists are saying industrial production began to decline in November. All this comes after the first year of strong economic growth by all 11 euro nations since 1994. It is also occurring as Europe's average unemployment rate remains above 10 percent and political leaders had been counting on economic revival for some relief. The slowdown is putting pressure on the new European Central Bank, which oversees the single currency, to relax monetary policy and reduce interest rates. But European countries remain sharply divided. Ireland expanded at the spectacular rate of 7 percent last year and is still growing rapidly. Spain, Portugal and Finland are growing at nearly 4 percent, and creating jobs as well. Many if not most economists are convinced that the European Central Bank will soon have to lower rates, probably to 2.8 percent from the current base-line rate of 3 percent. The individual central banks of the 11 euro countries cut their rates to 3 percent in December, just before the currency's introduction. At least in public, though, central bankers continue to discourage speculation about the easing of monetary policy. "Unemployment in the euro area is largely structural in origin," the president of the central bank, Wim Duisenberg, said in a speech Thursday in Amsterdam. "Implementing an inflationary monetary policy will not solve this problem." His hawkish view was reinforced by Hans Tietmeyer, president of Germany's central bank. Arguing that the December rate cut was appropriate, Tietmeyer told a meeting of bankers here Thursday that the last decision had "clarified the horizon for rates for the foreseeable future." By any measure, signs of economic trouble are accumulating. The turmoil in Brazil, and continuing problems in Russia and much of Asia, have hit European companies in several ways. Most economists predict that growth across the 11 euro nations will slip to about 2 percent this year, with many saying it could be lower than that. Copywrite NYT January 15, l999 For US readers; nyt.com later, art