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To: NickSE who wrote (41340)	5/17/1999 12:12:00 PM
From: NickSE	Read Replies (1) \| Respond to of 86076

S&P OFFL: MAY BE 'SEVERE FIN'L DISRUPTION' IN US NEXT 2-5 YRS economeister.com HONG KONG (MktNews) - Inflated asset markets and growing financial leverage in the U.S. mean a correction is likely coming and there could be "severe financial disruption" within the next two to five years, according to David Beers, managing director for sovereign ratings at Standard and Poors rating service. Speaking Monday to a CLSA Global Emerging Markets conference, Beers said Federal Reserve rate cuts in 1998 gave impetus to the trend toward increased financial leverage. "Financial leverage has been growing for a few years," he said. "The asset bubble in the U.S. is showing some disturbing symptoms....It's still hard to believe there won't be some kind of correction." "Looking ahead, two years or five years, there could be some severe financial disruption that requires government intervention." However, he stressed this would be unlikely to impact the U.S.'s AAA sovereign standing, and would more likely hit corporate ratings. From a sovereign perspective, "it's fortunate this is happening at a time when government finances have so substantially improved," Beers said.

To: NickSE who wrote (41340)	5/17/1999 12:27:00 PM
From: NickSE	Respond to of 86076

STREET SHOULD LEARN THAT IN WASHINGTON, THE NUMBERS DO LIE nypostonline.com [...] The government recently changed the way it calculates the inflation rate, and these alterations understate the true rate of inflation. So, as bad as the 0.7 percent jump in the CPI was, inflation is worse in real life. Goldman Sachs recently caught up with the issue, which prompted a Wall Street Journal story that said the drop in inflation isn't as big as it seems. In fact, a 1.7 percent jump in consumer inflation reported over the past 12 months would really have been 2.0 percent without the government changes. Washington may be saying it changed the inflation calculations because it believed there was a change in the economy that made the old way of doing things obsolete. But, in fact, by pulling down the inflation numbers, Washington saved itself from paying a lot more in Social Security and other fixed payments. So Wall Street benefited and old folks lost. [...]