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Ministers to Meet On Interest Rates | The Cabinet level meeting today and Sunday of five major free world finance ministers is regarded here as a unique, and perhaps historic attempt to co-ordinate the trend of interest rates. f</br></br>H. Fowler will meet at ChequersÛÓthe British Prime MinisterÛªs country homeÛÓwith his British, French, German, and Italian opposite numbers.</br></br>Each minister, by agreement, will have but two colleagues. FowlerÛªs will be Under Secretary Frederick L. Deming and White House aide Francis Bator.</br></br>is to be a success (in the view of informed officials here) it will agree that any competitive hiking of interest rates to protect the balance of payments of each should be avoided.</br></br>Perhaps the underlying assumption of the meeting (and it couldnÛªt have become a fact without it) is that the major powers are running a somewhat tighter interest rate pol- | no | 0 |
An Old Idea on U.S. Aid to States Is Floated, but Isn't Likely to Swim | The latest idea to help cash-strapped state governments and resuscitate the U.S. economy: Revive former President Richard Nixon's plan for sharing federal revenues with the states.</br></br>Alice Rivlin, a senior fellow at the Brookings Institution and former Clinton administration budget director, floated the idea this week, with a twist. From 1972 to 1980, the federal government sent unrestricted cash to the states regardless of the economic climate. Ms. Rivlin proposes creating a trigger to automatically start the payments when the economy enters a recession. This way, the federal government could come to the aid of states, helping them avoid poorly timed tax increases and social-service spending cuts.</br></br>But Mr. Nixon's fellow Republicans long ago disowned his idea, and Congress is unlikely to embrace it. Indeed, for nearly a year, states have lobbied Congress for aid only to come away empty-handed. There was bipartisan support in the Senate for a plan to temporarily raise the federal share of funding for Medicaid, a health plan for low-income and disabled people jointly paid for by the states and federal government. The idea has slowly died in the Republican-controlled House. More recently, states have failed so far to get an agreement to increase funding for cash assistance and welfare-to-work programs.</br></br>Why can't the states get any help from Washington? A majority in Congress, mainly Republicans, don't want to approve new spending because of the growing federal deficit -- exactly what killed general revenue sharing 20 years ago. They would rather approve spending for which they can take credit.</br></br>Some argue that states helped to create their own crisis by unrealistically relying on uninterrupted tax revenue fattened by '90s personal income-tax and other gains while also enacting spending programs and reducing taxes. | no | 0 |
Most of Ground Lost In National Income Reported Regained | Most of the recessionÛªs decline in national income has been recovered, the Commerce 'Department reported yesterday.</br></br>National income rose $1.8 billion in the second quarter, to an annual rate of $352.5 billion, the Department said. It added that a more substantial increase was registered in the third quarter.</br></br>The third quarter figure isnÛªt available yet because July-September corporate profits havenÛªt been computed. Profits are known to have improved significantly, however.</br></br>In the April-June quarter, the report said, corporate profits rose $1.2 billion to an annual rate of $32.5 billion. This, was still $11 billion below thei pre-recession peak. j</br></br>National income hit a record ! rate of nearly $369 billion in! the summer of 1957. It; dropped to a low of $350.6 billion early this year. | no | 0 |
6.9% Jobless, But More Are Working: November Joblessness 6.9%, Number of Jobholders Rises | The unemployment rate remained virtually unchanged last month, even though the Labor Department reported a big increase in the number of Americans with jobs.</br></br>The department said joblessness fell slightly from 7 per cent to 6.9 per cent of the work force. It was the eighth month in a row that the rate has been stuck between 6.9 and 7.1 per cent, and White House press secretary Jody Powell acknowledged that the administration has little chance to reach its goal of driving unemployment down to 6.5 per cent by the end</br></br>According to the less reliable of the two employment surveys the department makes each month, the number of persons with jobs rose a phenomenal 950,000 in November, but this had only a marginal impact on the unemployment rate because the number looking for jobs also rose sharply, by 900,000.</br></br>According to the other, more dependable job surveyÛÓwhich is based on actual payrolls rather than a sampling of householdsÛÓthe number of people with jobs rose 310,000, Even that is a large increase by normal standards, and a sign the economy</br></br>Julius Shiskin, commissioner of labor statistics, told CongressÛª Joint Economic Committee he could not account for the unusual discrepancy between the two surveys. He said the 950,000 number from the household survey was probably inflated. Other federal analysts suggested that part of the problem may have been a faulty system of adjustment for normal seasonal job fluctuations. | no | 0 |
BASF Hopes U.S. Listing Will Lift Stock --- German Chemicals Group Reflects Old Economy; Trading Begins Today | LUDWIGSHAFEN, Germany -- During a decade as chief executive of BASF AG, Juergen Strube has bucked business cycles and prevailing political winds to transform a provincial German company into the world's biggest integrated chemicals group.</br></br>After the collapse of communism in the early 1990s, BASF forged a controversial alliance with Russian natural-gas producer RAO Gazprom and spent billions of dollars building pipelines across Germany; today, oil and gas is the company's most profitable division. During the 1998 Asian economic crisis, BASF snapped up chemical producers in Korea and speeded up construction of huge chemical complexes in Malaysia and China. Earlier this year, Mr. Strube flouted the furor in Europe over genetically modified crops by launching a 700 million euro ($664 million) research blitz in plant biotechnology. Then, raising the ante, BASF shelled out $3.8 billion for the agrochemical division of American Home Products Corp.</br></br>This week, Mr. Strube is pitching an Old Economy story to investors besotted with the New Economy. BASF stock begins trading on the New York Stock Exchange today.</br></br>It's the kind of challenge Mr. Strube savors. For all its global clout, BASF remains a relative unknown in U.S. financial markets. American investors currently hold a meager 8.5% of the German company's shares outstanding.</br></br>BASF isn't issuing any new stock in conjunction with the New York listing. But Mr. Strube hopes the U.S. stock market debut will boost the company's valuation and enable BASF to use its shares to finance future U.S. acquisitions. Despite spending 243 million euros so far on a two billion euro share-buyback program, BASF stock is down more than 10% so far this year at yesterday's closing price of 44.75 euros. | no | 0 |
U.S. Posts Budget Surplus for January | The federal government posted a rare surplus of $16.09 billion last month, primarily because Social Security checks for January were mailed early, the Treasury Department said yesterday.</br></br>The January surplus, the first since September, occurred because Social Security checks, which normally go out on the third day of the month, were mailed Dec. 31 because of New Year's holiday. The early payment inflated spending in December and lowered spending in January.</br></br>For the first four months of the fiscal year, which began Oct. 1, the monthly deficits have totaled $65.81 billion, down 0.7 percent from the same period in the 1987 fiscal year.</br></br>For all of 1988, the Reagan administration is projecting that the budget deficit will fall to $146.74 billion, down 2.5 percent from last year's deficit of $150.4 billion.</br></br>However, the Congressional Budget Office, using less optimistic assumptions about economic growth this year, projects a 1988 deficit of $157 billion, well above the target of $144 billion set in the Gramm-Rudman deficit reduction law. | no | 0 |
America's Assimilating Hispanics; The evidence shows they are following the path of earlier immigrants. | As immigration reform moves through Congress, one claim by opponents is that this time immigration is different because the country's latest arrivals aren't assimilating. On the contrary, however, the evidence overwhelmingly shows that today's immigrants are acculturating and moving up the economic ladder like previous generations.</br></br>The media's tendency to report "averages" in educational attainment, English-language skills, income and other traditional measures of assimilation can make it difficult to determine whether immigrants are making gains. Since Latino immigration continues, averaging together the poverty rates or homeownership levels of large numbers of people who arrived recently with those who have been here for decades can provide a skewed view of progress.</br></br>Measuring assimilation properly requires following the same immigrants over generations. And the good news is that longitudinal studies that take this approach show that Latino immigrants have made gains similar to other groups who preceded them.</br></br>Consider the claim that Hispanic immigrants are rejecting English in favor of a separate Spanish-speaking culture. Census data from 2005 show that only one-third of immigrants in the country for less than a decade speak English well, but that number climbs to nearly three-quarters for those here for 30 years or more.</br></br>A 2007 Pew study of 14,000 Latino adults showed that while just 23% of immigrants report being able to speak English very well, "fully 88% of their U.S.-born adult children report that they speak English very well. Among later generations of Hispanic adults, the figure rises to 94%." | no | 0 |
BancOklahoma Units' Fed Loans Are $150 Million | TULSA, Okla. -- BancOklahoma Corp.'s subsidiary banks have been forced to borrow at least $150 million from the Kansas City Federal Reserve Bank because of a recent shortage of funds.</br></br>The bank holding company, in response to questions yesterday, acknowledged that it recently initiated the borrowings, but it refused to say how much money it has taken from the Fed's discount window. But it is understood that total borrowings for the 11-bank company exceed $150 million, mostly borrowings made by its Bank of Oklahoma unit in Oklahoma City.</br></br>Although the banking concern argued that it hasn't had a major loss of deposits, the Fed borrowings indicate that the banking company is having problems raising funds and maintaining its liquidity. Questioned about its ability to raise funds, a spokesman for the bank said, "We have plenty of borrowing capacity left at the discount window." He declined to say if the banks are having trouble raising money from other sources, but he added, "Just because you tap the discount window, doesn't mean you are in dire need."</br></br>The Fed's discount window borrowings are a privilege extended to banks as a short-term source of cash when more conventional sources are unavailable.</br></br>BancOklahoma's Fed borrowings came after it announced a $50.3 million second-quarter loss on July 18, bringing its total loss for the first half to $94.4 million. For a bank company with $2.7 billion in assets, the loss put several important operating ratios below levels acceptable to regulators. It also forced BancOklahoma to request a rare form of assistance from the Federal Deposit Insurance Corp. | no | 0 |
Debt Talks Are Stalling, Fed Chairman Warns: Slowing Seen in Debt Talks | Federal Reserve Board Chairman Paul A. Volcker yesterday warned that progress on the international debt problem is becoming ÛÏbogged downÛ and that Brazil is "in a grave economic crisis.Û</br></br>Volcker, in his annual testimony before the Senate Banking Comm-mittee, also warned that the rapidly growing debt of U.S. corporations and households is making the economy more vulnerable.</br></br>VolckersÛªs remarks came as speculation increased in Brazil that the developing worldÛªs largest debtor could stop paying the interest on its foreign debt. President Jose Sar- ney will announce today a 90-day suspension on interest payments to some private creditors if Brazil does not get emergency loans, United Press International quoted a presidential palace source as saying yesterday.</br></br>Volcker also testified that the recent increase in the federal funds rate above 6 percent was not a result of a change in Fed monetary policy.</br></br>The federal funds rate is the rate institutions charge each other for overnight loans and it is sensitive to the amount of reserves the Fed supplies to the banking system. Many market analysts look to that rate to try to determine whether the Fed is pursuing a tight or loose See VOLCKER, F3, Col. 3 | no | 0 |
Panel Urges More Funds For U-Md. Flagship; College Park Would Get $22 Million Over 2 Years | A Maryland governor's task force will recommend that the state give an extra $22 million to the University of Maryland at College Park over the next two years and guarantee at least $5,000 in funds per student to each of the University of Maryland system's 13 campuses.</br></br>In a report to be delivered to Gov. Parris N. Glendening (D) next month, the panel will urge the Maryland Higher Education Commission and the University System of Maryland to create a statewide funding strategy for higher education that will help College Park realize its intended status as flagship and set mandatory minimum funding levels for the system's colleges and universities, which saw state funding stagnate during the recession of the early 1990s.</br></br>The funding guarantees will "give university presidents a built- in, reliable component to their budgets . . . so they can project what {programs} they can take care of," said Del. Nancy K. Kopp (D- Montgomery), the task force co-chairman.</br></br>The task force's recommendations recognize College Park's need for additional funds to compete for staff and students with top-ranked public universities elsewhere.</br></br>When the University System of Maryland was created in 1988, lawmakers called for an increase of $20 million a year for College Park from 1990 to 1995 to put it on par with top public universities in California, North Carolina, Michigan and Illinois. | no | 0 |
Wealth Adviser (A Special Report) --- The Game Plan: How some people are saving for retirement̢ and what financial advisers think of those strategies | The Game Plan takes a look at how individuals and families are saving for retirement -- and then asks financial advisers to comment on those strategies. You're invited to share your own retirement-savings plans by sending an email to reports@wsj.com.</br></br>Enough for Fun and More</br></br>Josh Vogel isn't willing to sacrifice his social life just to stick a few extra dollars into his bank account. But that doesn't mean the 27-year-old from Brookline, Mass., has no long-term savings plan.</br></br>Mr. Vogel, who does internal reporting and applications development at Children's Hospital Boston, brings his lunch to work and cooks dinner in order to offset weekend entertainment expenses. He buys frequent-skier cards at several ski resorts within a few hours of where he lives. And the avid sailor often rides as a crew member on yachts for which, as he says, his only financial outlay is the cost of a few beers.</br></br>"I have plenty of funds to have plenty of fun," says Mr. Vogel. | no | 0 |
A Special Background Report On Trends in Industry And Finance | BISTROS BECKON reluctant revelers to toast the new year with flat prices. Hotels, clubs and restaurants hold the line on New Year's Eve tabs in an appeal to recession-weary consumers. Some add perks such as free parking and late checkout. The Hotel del Coronado, San Diego, eyes about the same volume as last year at a $175-per-person dinner show but offers a discount room rate well into January. New York's Waldorf-Astoria drops the hefty tab on its main ballroom gala to $350 from $375, as the event won't be televised this year.</br></br>Just how much partying actually occurs remains to be seen. Wary that people "may chintz out on me this year," Paul Jaffe limits dinner at his Le Cafe Restaurant and Jazz Club, Los Angeles, to a prix fixe menu of $75 for dinner plus show. He and others aim to fill the house rather than provide a lot of unwanted costly courses. Deposits become de rigueur.</br></br>Themed events win favor. The Flamingo Resort Hotel in Santa Rosa, Calif., emulates an evening in Paris.</br></br>PETS SPAWN niche businesses, but firms must claw their way to consumers.</br></br>"City Dog," a New York newsletter about urban canines, finds the going tough in a down economy. "I was counting on giving it out for free and getting advertisers," says publisher Hilory Wagner. Instead, Ms. Wagner cut classified ad rates and sells subscriptions ($3.50 for six issues) to maintain a reader base. In Narragansett, R.I., Reggie Baker licenses rights for his Kat Kastle to nearby Natco after nearly a year of futile marketing to chain stores. | no | 0 |
W. German Labor Backs Easterners; Thousands Support Walkouts Over Wages | More than 300,000 workers throughout Germany took to the streets today in an escalating showdown between unions determined to protect postwar gains and employers eager to halt a deepening recession.</br></br>Ten days into eastern Germany's first strike in more than half a century, workers in three states in the formerly communist east voted overwhelmingly to join the job action, while western German workers staged demonstrations and brief walkouts in sympathy.</br></br>About 40,000 metalworkers and workers in related industries in the eastern part of the country have joined the stoppages.</br></br>The strike started May 3 after employers unilaterally canceled a two-year-old contract that promised eastern workers a 26 percent pay raise this spring and parity with western wages by 1994. The strike - a potentially fatal blow to many eastern firms that have been unable to compete in the new western economy - is a watershed in German labor relations, a level of confrontation not seen since the 1920s.</br></br>"In 1928, we suffered the same conditions as now," Manfred Foede, a leader of IG Metall, Germany's largest union, told a rally here today. "Mass unemployment, a trend toward right-wing radicalism and broken union contracts. The unions did not protect themselves enough then, and we all know what happened. This time, we will protect ourselves." | no | 0 |
Bond Prices Fall On Nervousness Over Refunding --- Traders Fret That Japanese Won't Buy U.S. Issues; Dollar Also Takes Toll | NEW YORK -- A falling dollar and increasing nervousness about how much Japanese investors will buy in this week's Treasury refunding pushed bond prices lower in light trading.</br></br>Prices of some actively traded 30-year Treasury bonds fell almost 1 1/4 points, or nearly $12.50 for each $1,000 face amount, after falling about 1 1/2 points Friday. The two-day loss erased all the gains made last Thursday when Federal Reserve Board Chairman Paul Volcker confirmed that the Fed was pushing up short-term interest rates to help stabilize the dollar.</br></br>Traders said the bond market was rife with rumors about how active Japanese investors would be in the government's quarterly refunding operation, which begins today. As the dollar continued to fall against the yen yesterday, some analysts speculated about whether Japanese investors would participate in the refunding auctions at all.</br></br>"There's no reason for anyone, American or Japanese, to buy bonds right now," said Lawrence A. Kudlow, chief economist at Bear, Stearns & Co. "Economic activity is picking up, the inflation rate is rising, and there's no clear evidence that the U.S. is prepared to defend the dollar at its current level. For a foreign investor, there's a currency risk as well as an inflation risk in buying bonds."</br></br>But another analyst, who requested anonymity, said he believes Japanese will be buyers in the refunding. "It makes a lot of sense for them to be in it, and it also makes sense for them to pooh-pooh it beforehand," he said. "It's to their advantage to do the most surprising thing. So if the market has been beat up, and everyone's pessimistic, then they collectively have enough size to buy a lot of bonds, cause a short-covering rally and make some nice profits." | yes | 1 |
The `Reagan Revolution' | The Reagan Revolution isn't and never was. Yet it remains a standard reference point in Washington political analysis and reporting. Its invention and survival illustrate just how mediocre much political journalism is: simplistic, lacking in historical perspective and often wrong. The first job of journalism is to "get it right" - to be accurate. All too often, political reporting doesn't. It amounts to mythmaking.</br></br>I take as my text for this grumpy thesis two recent articles in powerful publications. Both try to explain President Clinton's troubles and successes in terms of the alleged Reagan Revolution. Both exemplify persisting sins of political journalism, which is often a triumph of slogans over facts. Politics is viewed, as James Reston often wrote, as sport. The object of reporting is to explain who wins, who loses, why and what it means.</br></br>The trouble is that politics is not just a game - a series of electoral and legislative contests - but also an expression of national habits and values. Unless these are understood, politics can't be adequately reported. Much political commentary ignores this larger context. Consider a front-page "news analysis" in the New York Times on Aug. 1. Titled "Reagan's Curse on Clinton," it attributed Clinton's difficulty in passing his budget to "the Presidency of Ronald Reagan and the political climate he created."</br></br>Wrote R. W. Apple Jr., the Times' Washington bureau chief: "Mr. Reagan successfully argued that government itself was the problem. Most federal programs were bad; taxes were bad; spending was bad... . {The result is that} politicians are terrified to wear that awful label, `tax and spend,' however much their constituents need government money for health care or roads."</br></br>Every trend or change must be credited to or blamed on somebody. What's missed are deeper currents in American thinking and society. Reagan didn't create the mood that Apple describes. Americans have always been suspicious of concentrated power, and national government is - for better or worse - now our most powerful institution. Even in 1958, 43 percent of Americans felt that the federal government "wasted a lot" of money. | yes | 1 |
Roemer: India Must Reform or Risks Slowdown | NEW DELHI--The U.S. ambassador to New Delhi said Tuesday that India needs to consider whether it is delivering on its side of the new close alliance with the U.S. and do more to tackle graft and encourage foreign investment or the nation's economic expansion risks losing steam.</br></br>"India needs to be asking itself: Is it delivering on the global partnership?" Timothy Roemer said in an interview with The Wall Street Journal as he prepares to leave the post next month and return to the U.S. "The international business community that was pouring money and investment potential into India last year and the year before is now pausing and saying: 'Where is India heading in terms of investment opportunities, the corruption challenge and inflation?'"</br></br>If this perception doesn't change, he added, India could see downward revisions of as much as two percentage points to estimates for growth this year, considering the impact of higher oil prices and high inflation. Earlier this month, C. Rangarajan, chairman of the Prime Minister's Economic Advisory Council, forecast Gross Domestic Product growth in the year ending March 31, 2012, of 8.5%, below the government's forecast of 9%, as a series of interest rate rises to combat high inflation crimps growth. A spokesman for the Prime Minister's Office had no immediate comment.</br></br>Foreign direct investment in India, after rising steadily for years, totaled $18.4 billion from April 2010 to February, down 25% from a year earlier, according to Indian government data, amid a series of corruption scandals that have paralyzed the government and a lack of progress on economic reforms that would make the market more attractive for foreign firms.</br></br>Mr. Roemer's warning comes after two years - his tenure in New Delhi -- in which the U.S. and India have, in many respects, dramatically expanded their cooperation and partnership on issues ranging from counter-terrorism to environmentally-friendly technology to coordination over regional policy in Afghanistan. | no | 0 |
Pimco Managers Plan to Dial Back on Risk | NEW YORK--Reflecting its growing concerns about the global economic outlook, Pacific Investment Management Co., which runs the world's biggest bond fund, is dialing back exposure to riskier assets and moving to relatively high-quality investments.</br></br>In the company's latest quarterly outlook, Saumil Parikh, a senior portfolio manager at Pimco and a member of the company's Investment Committee, said Pimco has been focused on cutting exposure to bonds sold by financial institutions in Europe, staying underweight in stocks in developed markets and reducing exposure to the foreign-exchange markets that have been whacked by heightened volatility this month.</br></br>A main strategy over the next six to 12 months is to favor high-quality assets. Mr. Parikh said the company favors strong emerging-market debt, both corporates and sovereigns, as well as U.S. municipal bonds and U.S. agency and nonagency mortgages.</br></br>"Given our outlook for slow growth globally and recession in Europe, we are focusing on protecting portfolios against downside risk," Mr. Parikh said.</br></br>Pimco investment professionals from around the world gather every quarter in Newport Beach, Calif., at the firm's headquarters to discuss the outlook for the global economy and financial markets. A copy of Mr. Parikh's comments was reviewed by Dow Jones Newswires. | no | 0 |
Greenspan Sends Prices Into Tailspin --- Dow Plunges 47.18, Bonds Fall on Hint Of Inaction at Fed | NEW YORK -- Stock and bond prices plunged after Federal Reserve Chairman Alan Greenspan indicated the central bank probably won't lower interest rates further anytime soon. The dollar was mixed.</br></br>Long-term Treasury bond prices fell about $11.25 for each $1,000 face amount, pushing some long-term interest rates above 7.7%. The Dow Jones Industrial Average slumped 47.18 to 3224.96 in heavy trading. Standard & Poor's 500-stock index was off 4.62 to 410.34, and the Nasdaq Composite Index fell 4.98 to 616.31.</br></br>Both the stock and bond markets opened on a stable footing after President Bush's State of the Union address Tuesday night, in which he laid out a package of proposals aimed at stimulating economic growth. But later, Mr. Greenspan told a congressional committee that he thinks interest rates are already low enough to spark an economic recovery and that the Fed probably won't hurry to push them lower.</br></br>That upset bond investors, who had been counting on another reduction by the Fed. And as long-term interest rates headed higher, nervous stock investors grew fearful that the higher rates could choke off an economic recovery even before it begins.</br></br>The sharp retreat came on the heels of the Dow industrials' rise to a record Tuesday. If investors become convinced that the Fed isn't going to help the economy, a full-blown correction could materialize, some analysts suggested. | no | 0 |
Lawyers, Financial Advisers Only Winners in LTV's Endless Bankruptcy | Once upon a time, the LTV Corp. bankruptcy was high drama. Now, the case has degenerated into the Full Employment Act for bankruptcy lawyers and advisers, who have knocked down some $150 million in fees from LTV since the case started in July</br></br>Once upon a time, the LTV Corp. bankruptcy was high drama. Now, the case has degenerated into the Full Employment Act for bankruptcy lawyers and advisers, who have knocked down some $150 million in fees from LTV since the case started in July 1986. But itÛªs the deal from hell for bankruptcy investors, who have lost at least $1 billion speculating in LTV securities.</br></br>For a while, it looked as if this case might actually get finished in our lifetime. In March, the company came to tentative terms with the federal agency that is its most important creditor, and it even managed to get its act together long enough to file a proposed reorganization plan in May.</br></br>But despite the support of the company's management and the federal Pension Benefit Guaranty Corp., the reorganization plan appears doomed because other LTV creditors vow to kill it. "Tlicy led with their chinsÛÓthey had no one signed up but the PBGC," said Robert Miller, who represents an unofficial committee of creditors with claims on LTVÛªs aerospace subsidiary.</br></br>ItÛªs a sign of the endless nature of this case that Miller's client is the case's second unofficial aerospace committee. Most members of the first unofficial aerospace committee have sold their claims, but the committee still exists. | no | 0 |
As U.S.-Japan Talks Begin, Hopes Fade For a Narrowing of America's Trade Gap | TOKYO -- Despite a new round of trade talks beginning here Friday, U.S. and Japanese officials say they don't see any way to significantly narrow the record U.S. trade deficit with Japan any time soon.</br></br>Japanese officials and business executives already are worrying about a backlash of anti-Japanese trade restrictions next year, sparked by congressional, business and labor pressure in the U.S.</br></br>Economists forecast that the U.S. trade deficit with Japan could exceed $35 billion this year, as much as 75% wider than last year. U.S. trade representative William Brock reportedly told a business group in Los Angeles this week that, unless something is done, the deficit could surpass $40 billion in 1985.</br></br>But Japanese and U.S. trade officials who will take part in the meetings here say they haven't any new ideas for narrowing the deficit.</br></br>"Whatever Japan does, it will be limited," said a Japanese Foreign Ministry official. U.S. trade officials concurred. | no | 0 |
We Forgot Everything Keynes Taught Us | No one can complain of a shortage of information about the Great Financial Meltdown. The biggest growth industry today is words: A whole new vocabulary has spread from board tables to kitchen tables. Superannuated whiz kids planting cabbages to offset their newly straitened means can blame their troubles on collateralized debt obligations, special investment vehicles, credit default swaps. Subprime mortgage holders find themselves censured for a new and virulent disease called toxic debt.</br></br>But what is in even shorter supply than credit is an economic theory to explain why this financial tsunami occurred, and what its consequences might be. Over the past 30 years, economists have devoted great intellectual energy to proving that such disasters cannot happen. The market system accurately prices all trades at each moment in time. Greed, ignorance, euphoria, panic, herd behavior, predation, financial skulduggery and politics -- the forces that drive boom-bust cycles -- only exist offstage in their models.</br></br>The Great Financial Meltdown would not have surprised the British economist John Maynard Keynes, who died in 1946, for he thought that this was exactly how unregulated markets would behave. The New Economics, as Keynesian economics was known in the United States until it became the Obsolete Economics, was designed to prevent such turbulence. It held that governments should vary taxes and spending to offset any tendency for inflation to rise or output to fall.</br></br>The New Economics generated its own problems, causing it to collapse into stagflation in the 1970s. But for most Americans and Europeans, the years from 1950 to 1975 were a golden age. The developed world grew at an average annual rate of 3.2 percent with very moderate inflation, and without the benefit of the huge rewards now deemed necessary to keep executives properly incentivized. Above all, growth was stable. The business cycle was severely dampened.</br></br>Keynes first became convinced of the instability of unregulated economies in the boom years of the "Roaring '20s." In many ways, the 1920s were like the last 15 years in their technological dynamism, the extravagant lifestyles of the very rich and in their "irrational exuberance." But they were especially like the recent past in their belief that prosperity would continue without interruption. | no | 0 |
Advance Seen in Labor Market in August: Unemployment Continues At 9 1/2% During August | The nationÛªs unemployment rate held at 9 Vi percent in August, as the number of people looking for work increased by more than the number of new jobs, the government reported yesterday.</br></br>Despite the levelling off in the unemployment rate, the new figures showed that the ÛÏlabor market continued to improve in August,Û according to Bureau of Labor Statistics Commissioner Janet L. Norwood. Almost 300,000 jobs were created last month, and factory overtime increased, she said.</br></br>The rise in jobs did not show up in an improvement in the unemployment rate, because it was more than matched by an increase in the number of people looking for work, the Labor report said. The civilian labor force climbed by 404,000 in August after a slight decline in July. Adult</br></br>Black unemployment, meanwhile, jumped from 19 Vz percent in July to 20 percent in August, as the number of black teenage boys looking for Work soared to a record 56.8 percent, the Labor Department said. ÛÏWe find there is a large disparity ... between the whites and blacks,Û said Norwood. ÛÏI think the problem of jobs for our black teenagers is a serious one.Û</br></br>Several analysts had expected unemployment to hold steady or decline only slightly in August after rapid declines in the early months of the recovery. ÛÏThe general trend is downward, but slowly downward. YouÛªve got a combination of growth in the labor force and slower growth in the economy,Û said Nariman Beh-ravesh of Wharton Econometrics in Philadelphia. | no | 0 |
U.S. News: Panel Decides It's Too Soon To Pinpoint Recession's End | The committee of academic economists that dates the beginning and end of U.S. recessions stopped short of calling an end to the downturn that started in December 2007, drawing public criticism from a committee member.</br></br>Most members of the National Bureau of Economic Research's Business Cycle Dating Committee have said the recession probably ended in mid-2009, when several key economic indicators reached their trough and the economy started growing again.</br></br>But the seven-member group said Monday that it wasn't ready to mark the official end date, given the chance -- however small -- that the economy could start shrinking again or that revised data could shift the timing of the economy's low point.</br></br>"Although most indicators have turned up, the committee decided that the determination of the trough date on the basis of current data would be premature," the committee said. "Many indicators are quite preliminary at this time and will be revised in coming months."</br></br>The decision bred controversy on the committee, underscoring the range of opinions about the state of the economy. | no | 0 |
The CPI: Small Change, Big Savings | The new interest in the CPIÛÓthe consumer price index, the best-known inflation indicatorÛÓ attests to the power of numbers. The CPI is used to adjust government benefits (mainly Social Security) and taxes (the personal exemption, standard deduction and tax brackets). Last week, for example, the government announced that Social Security benefits will rise 2.6 percent in 1996 because the CPI has increased by 2.6 percent in the past year. The idea is to prevent inflation from invisibly eroding benefits or raising taxes. Good. But suppose the CPI overstates inflation. Then benefits will be too high and taxes too low. Presto: a quick way to cut budget deficits. Just dial back the CPI adjustment.</br></br>Comes now a commission of five economists who say the CPI actually does overstate inflation. In a report to the Senate Finance Committee, they conclude that the overstatement is probjibly about one percentage point a year. After then-report, Sen. Daniel Patrick Moynihan (D-N.Y.) enthused on the op-ed page of The Post: ÛÏIf we were to do no more than declare that henceforth the cost of living adjustment will be CPI minus one percentage point, we would save $634 biljion</br></br>Not really. Moynihan's rhetoric may be a reaction to the Clinton administrationÛªs unwillingness to do anything about indexing; but! fids proposal goes too far. I am not arguing that there should be no reduction in the CPI adjustment. There should be; indeed, I have long contended that the CPI exaggerates inflation. Yet once Congress grasps the staggering power of apparently small changes in the index, it may overdo things. The economistsÛª one-percentage-point figure is only an educated guess. If adopted, the practical effect would be to enactÛÓslowly but surelyÛÓa huge benefit reduction and tax increase that falls mostly on those with the lowest incomes.</br></br>Consider first Social Security. In 1995 the average payment for a married couple is $14,160. Increased 3 percent a year, that becomes $16,416 after five years; increased 2 percent annually, the amount is almost $800 less ($15,635). Social Security now provides 40 percent of the income for Americans over 65, but its importance drops as incomes rise. Among the poorest fifth of the elderly, it accounts for about 80 percent of income; among the richest fifth,, jtÛªs only a fifth.</br></br>The tax effects are similar. In 1995; the personal exemption is $2,500 per dependent. If thatÛªs raised 3 percent a year, it becomes $2,890 after five years; at 2 percent, it grows only to $2,760. The lower the exemption, the more money is subject to income tax. The difference ($130) means that, for a family of four, taxable income would be $520 greater after five years. Obviously, that matters more for a family .with $25,000 of income than for one with $250,QO,9- | no | 0 |
Flyi Raises Possibility of Bankruptcy Filing | Financially troubled low-cost carrier Independence Air painted a gloomy picture of its future yesterday, saying it may be forced to file for bankruptcy protection.</br></br>The airline's Dulles-based parent, Flyi Inc., said in its quarterly filing with the Securities and Exchange Commission that it won't be able to pay its bills unless it soon raises "significant funds." "Such matters raise substantial doubt about the Company's ability to continue as a going concern," the filing said. It added that if the situation continues, it will have to file for bankruptcy protection.</br></br>Some Wall Street analysts have been predicting since last fall that Flyi may be forced to file for bankruptcy protection. The airline has raised the possibility, too, but never with the sense of urgency it demonstrated yesterday.</br></br>In a mid-afternoon conference call with Wall Street analysts before the quarterly report was filed, Flyi chief executive Kerry B. Skeen didn't mention bankruptcy. But he raised serious concerns about the company's future and outlined steps to address its liquidity crisis.</br></br>Skeen said his 14-month-old airline plans, for example, to reduce the number of flights it offers by 17 percent this fall, eliminate service to San Jose, Calif., borrow more money, sell off some assets, delay the purchase of future aircraft and ask creditors to forgive or restructure more debt. | no | 0 |
Metrobus Looks Down Road on Service | Express commuter buses, new routes in areas hungry for transit, and high-tech devices to allow buses to zip past cars were among the initial recommendations offered yesterday by consultants working on a $2 million bus study for Metro.</br></br>The study, the first comprehensive analysis of the region's bus system in 30 years, began two years ago and is focused on Metrobus as well as more local bus service, such as Ride On and Fairfax Connector.</br></br>"One of our goals is to improve the bus image, to make people want to ride it," said Rick Stevens, Metro's director of business planning and development. "That means improving reliability, enhancing amenities so you're not standing in the rain waiting for your bus. . . . This is about making it a premium service, like rail."</br></br>The study analyzed existing service, relying on a raft of data, including a customer survey of 40,000 riders and a telephone survey of 1,000 riders. It found good service and coverage on weekdays but crowding on many District routes and poor productivity -- meaning few riders -- on some suburban routes, said Larry Englisher, of MultiSystems Inc., a consultant to Metro.</br></br>Increasing frequency, extending evening and weekend service, improving feeder service to subway stations and reducing crowding on District buses were among the ideas Englisher presented to Metro directors yesterday. | no | 0 |
Dismal Science: Mortgages and Musical Chairs | Financial crises usually come from left field. But that doesn't stop swamis from searching for the next trigger. Right now, the prospect of rising interest rates is focusing swamis on trouble in the bond market. Not a bad bet, since the past few years of falling rates have produced a ton of complicated ways to extract profits from fixed- income securities. Also not a bad bet since a forecast of higher rates is driving investors to unwind positions -- presenting a perfect moment to expose flaws in hedging and other strategies.</br></br>So it's hardly surprising that concentration of risk is Topic One. Consider, for example, a recent speech by the new head of the Federal Reserve Bank of New York. In lovely Fed-speak, Timothy Geithner blended concerns about the increasing vulnerability of the financial system to the growth in Fannie Mae and Freddie Mac and the high degree of concentration in the market for interest-rate options.</br></br>Mr. Geithner was vague in the extreme, but the details of his concern are laid out in a report from Credit Suisse First Boston. Here are the mechanics of a possible crisis scenario in which the particular nature of risk in the mortgage market becomes concentrated in the market for interest-rate options.</br></br>The chain of transmission starts with the mortgage market. (Bear in mind that, at some $7 trillion, this market is enormous.) Mortgages are of course wondrous financial instruments. They allow people, even those with humble means, to own a big asset -- a house -- without having to pay the full price up-front. But mortgages have an almost as wondrous property -- they give home buyers the opportunity to pay off before maturity. This prepayment option allows homeowners to transfer interest-rate risk to mortgage holders.</br></br>Holders of mortgage securities borrow money to buy those securities. If all goes according to plan, holders buy securities that yield more than they pay on their debt. However, when interest rates fall and homeowners prepay, mortgage holders find that cash flows have changed. What was a nice deal of, say, receiving 6% on mortgages and paying 5% on debt could become a less comfortable arrangement of receiving 5% on mortgages and paying 5% on debt. Not good. Or say that interest rates go up; then homeowners keep their mortgages and holders could find themselves getting 6% on assets but paying 6% on debt. Also not good. | no | 0 |
Bond Prices Surge as U.S. Completes Financing That Drew Positive Response | NEW YORK -- Bond prices surged yesterday as the government completed a massive $17 billion borrowing operation that drew an enthusiastic response from investors.</br></br>Prices of some actively traded Treasury bonds rose by almost a point, or nearly $10 for each $1,000 face amount. In the past two sessions, these issues have regained about one-third of the losses suffered in the previous five days. Interest rates on short-term Treasury bills declined yesterday.</br></br>The Treasury yesterday sold $4.51 billion of new 20-year, one-month bonds at an average annual yield of 10.75%. That was down from 12.04% at the previous auction held March 28. The Treasury received a total of $13.53 billion of bids. That was up sharply from $10.7 billion received at the March auction, when $4.26 billion of bonds were sold.</br></br>The bond sale was the third and final part of the government's financing. The Treasury sold $6.54 billion of new four-year notes Tuesday at an average annual yield of 9.72% and $6.02 billion of new seven-year notes Wednesday at an average yield of 10.4%.</br></br>The Federal Reserve System late yesterday reported a $1.5 billion decline in the nation's money supply for the week ended June 17. But the decline, which was the first following six weekly increases, had been widely anticipated and had little effect on bond prices. Even with the decline, the basic money supply, known as M1, remains far above the Fed's target range, which calls for 4% to 7% growth this year. | no | 0 |
Ahead of the Tape | More Liquidity Only Douses Growth Sparks</br></br>Today's ultralow interest rates have helped boost profits, but not economic growth.</br></br>This is plainly evident in recent figures. Since the recession ended in mid-2009, U.S. corporate profits have jumped by about 43% to a record $1.45 trillion as of the first quarter, after taxes, inventory and accounting adjustments, according to the Commerce Department.</br></br>What hasn't recovered, however, is economic growth. Indeed, in real terms, gross domestic product hasn't even returned to its prerecession peak.</br></br>On Friday, Commerce data is likely to show GDP losing further ground. Second-quarter growth, originally reported at a measly 1.3%, is expected to be revised down to 1% in part because exports proved weaker than first thought. That follows GDP growth of just 0.4% in the first quarter, on a seasonally adjusted annualized basis. | yes | 1 |
Power and Peril: America's Supremacy and Its Limits; Trade-Off: As China Surges, It Also Proves A Buttress to American Strength; Beijing Feeds a Giant Appetite In U.S. for Low-Cost Goods And Borrowed Capital; The Wood-Furniture Paradox | [Second ina Series]</br></br>DONGGUAN, China -- Frank Lin joined fellow Chinese furniture makers at a hotel here last summer to discuss some alarming news from America: U.S. furniture companies were asking Washington to investigate "illegal" Chinese trade practices and restrict Chinese sales to the U.S. Among the petitioners was one of Mr. Lin's longtime customers, Virginia-based Hooker Furniture Corp.</br></br>Mr. Lin's dismay turned to confusion days later when he received an e-mail from Hooker's chief executive. Hooker looked forward to an "exciting future" doing business with China, said the message, and wanted to "continue the extraordinary growth we have had in the last few years with Asian imports."</br></br>Indeed, thanks largely to the imports, Hooker has boomed. It closed a factory in North Carolina last summer but has boosted profits and dazzled investors with a stock that more than quadrupled in two years.</br></br>"I just don't understand what they are doing. It makes no sense," Mr. Lin said after receiving the e-mail in August. On his desk lay designs sent from America. Lining the wall, newly crafted chairs stood ready for inspection by U.S. buyers. "If they don't import, they die. They need us. So why do they want to hurt us?" Mr. Lin wondered. | no | 0 |
The Beautiful Machine; Greed on Wall Street and blindness in Washington certainly helped cause the financial system's crash. But a deeper explanation begins 20 years ago with a bold experiment to master the variable that has defeated so many visionaries: Risk. | Howard Sosin and Randy Rackson conceived their financial revolution as they walked along the Manhattan waterfront during lunchtime outings. They refined their ideas at late-night dinners and during breaks in their busy days as traders at the junk-bond firm of Drexel Burnham Lambert.</br></br>Sosin, a 35-year-old reserved finance scholar who had honed his theories at the famed Bell Labs, projected an aura of brilliance and fierce determination. Rackson, a 30-year-old soft-spoken computer wizard and art lover, arrived on Wall Street with a Wharton School pedigree and a desire to create something memorable.</br></br>They combined forces with Barry Goldman, a Drexel colleague with a PhD in economics and a genius for constructing complex financial transactions. "Imagine what we could do," Sosin would tell Rackson and Goldman as they brainstormed in the spring of 1986.</br></br>The three men had earned plenty of money through short-term deals known as interest-rate swaps, a clever transaction designed to protect banks, corporations and other clients from swings in interest rates that threw uncertainty into the cost of borrowing the money necessary for their business operations.</br></br>They believed their revolution could never happen if they stayed at Drexel. Swaps in those days typically lasted no longer than two or three years. The trio envisioned deals lasting decades that would lock in profits and manage risks with unprecedented precision. But the junk-bond firm's inferior credit rating sharply raised its borrowing costs, making it a dubious and risky partner for such long-term deals. | no | 0 |
From the City to a Cabin in the Woods; Program Takes D.C. Children Camping in a World Far From Home | The children's defenses lowered, and a sense of camaraderie and adventure rose to take their place at a campsite in rural Maryland. At once, 37 boys and girls were just a short ride from their fractured District neighborhoods -- and fully a world away.</br></br>Two boys wandered off from a blazing campfire and ran to a bench in the shadow of an old barn. They lay down on their backs and looked up into the black sky, taking in all the stars that are so hard to see from home.</br></br>"I've never been to a place like this before," Toribio Contreras, 13, told his friend Clayton Chatman, 12. "Why can't it always be this good?"</br></br>Toribio and Clayton, who both live in the Shaw neighborhood of Northwest Washington, met 35 other children from some of the District's most impoverished neighborhoods Saturday night to do something so removed from their everyday experiences that for some, it required an explanation. They went camping.</br></br>"Is there going to be a test?" asked Isaac McLaughlin, 10, as he found a seat on a school bus that picked up 12 children from an Anacostia apartment building. "Are we going to the Virginia? That must be five hours away. What if we fail the test?" | no | 0 |
Berlin Crisis Blamed | Midweek saw a vigorous upward drive following some fairly sluggish consolidation the week before. The averages might have hit a new peak, despite profit-taking, if not for the heightening Berlin crisis which led to nervous selling on Thursday.</br></br>The market was at its best on Wednesday when the second biggest daily jump of the year was achieved. This session was marked by solid gains of blue chip stocks as well as continued activity in secondary issues. The move served notice that the big institutional investors thought prices were not going much j lower, not for the present, anyway, j</br></br>This big leap was enough to put \ the market ahead on the week and chalk up the second straight week- ; ly rise.</br></br>The Associated Press average of 80 stocks rose S2.50 to S206.90. At its best closing high on Wednesday the AP average stood at S207.50. only 20 cents below the record of S270 70 reached Nov. 20.</br></br>Wall Street chartists found comfort in the fact that the Dow industrials had successfully negotiated a resistance level in the 550-560 area. Whether the AP average and the Dow would make another historic peak before the yearend was anybodyÛªs guess. | no | 0 |
Boy Scouts Still Prepared | As we mark the 214th anniversary of the Declaration of Independence, the Times Mirror Center for the People and the Press has issued a report saying that today's 18- to- 30-year-olds know less, care less and vote less than any previous generation. The authors term this "the age of indifference," adding that "The ultimate irony is that the Information Age has spawned such an uninformed and uninvolved population."</br></br>This is not the first time we have been given this message. Last November, People for the American Way released a study by pollster Peter D. Hart, focusing on 15- to-24-year-olds, which found they were "turned off by politics and tuning out on citizen participation." Asked to describe a good citizen, few of those Hart interviewed suggested any civic involvement; only 12 percent even mentioned voting as part of the definition. Their teachers, in a parallel poll, agreed by a 2 to 1 margin that today's high school students have less interest in public affairs than their counterparts from the previous decade.</br></br>The consistency of these studies' findings clearly sends a warning signal about the failure of us older-generation Americans to impart to our children the importance many of us feel about the obligations and rewards of involvement in the community and nation.</br></br>But these studies don't capture all of the American reality either, as I was reminded this spring when I listened to the leaders of some of the major youth organizations, meeting under the auspices of the Council for the Advancement of Citizenship. Julian Dyke of the Boy Scouts of America, for example, said that membership in the Scouts has grown every year for the past 10 years, reaching 4.3 million-one-third higher than it was in 1980.</br></br>So has emphasis on community service. Last year, he said, a "Scouting for Food" program, in which Scouts went door-to-door in their own communities, saw four million Scouts collect 72 million food items for distribution locally to homeless and needy people. | no | 0 |
Stock Prices Close Higher After Recovery | NEW YORK, July 24 (AP) ÛÓ In what analysts said might indicate a change in market psychology, at least for the near term, stock market prices closed up today for the seventh straight session.</br></br>The Dow Jones average of 30 industrials, which had been down more than 5 points during the session, closed the day up 5.57 at</br></br>Volume on the Big Board was a moderate total of 16.28 million, and advancing issues had 744-to-700 lead over declines. Declines earlier had been ahead of advances 2 to 1.</br></br>The Amex index rose .07 to 23.37, erasing a mild loss earlier in the session. Advances led declines, 475 to 334, with 333 issues unchanged. Volume was 2.98 million shares.</br></br>In over-the-counter trading, the NASDAQ composite index rose .54 to 108.29. Advances led declines by 633 to 579 among 3,054 issues traded. Volume was 6.10 million shares. | no | 0 |
Dollar Finishes Even on Its Rivals After Weak Consumer-View Data | The dollar was little changed late in New York Friday after a day of choppy trading triggered by a weaker-than-expected consumer sentiment survey early in the session.</br></br>The University of Michigan's mid-August report, which showed a steep drop in its consumer-expectations index together with a sharp rise in inflationary expectations, sent the dollar tumbling.</br></br>Yet the dollar managed to recoup much of its losses against major currencies as traders used the report as an excuse to trade through an otherwise data-light August Friday.</br></br>Choppy movements with little lasting effect may be par for the dollar's course next week, analysts said, with no U.S. data scheduled for release until Wednesday and the August vacation season in full swing.</br></br>Late in New York, the euro was at $1.2830, little changed from $1.2829 late Thursday. The dollar was at 115.78 yen, down from 115.94 yen, while the euro was at 148.57 yen, off from 148.75 yen. The dollar was trading at 1.2327 Swiss francs, compared with 1.2326 francs, while sterling was fetching $1.8817, down from $1.8847. | yes | 1 |
Letters to the Editor: Why, Oh Why Do You Ignore Tax Indexation? | Why do you continually ignore the salubrious effects of indexing the basis of capital gains for inflation? Why do you maintain the House-passed capital-gains plan is a "temporary" reduction when it is not?</br></br>I think the reason is that you are confusing tax "rates" with tax "payments." Your Sept. 29 page-one story on the House-passed capital-gains plan is a good example. You lead readers to believe that the House reduced the capital-gains tax for two years only. You virtually ignore the tax-reducing power of indexation, which in many cases is more substantial than a lower rate.</br></br>The monetary tax benefit of indexation for all gains in excess of inflation can be measured using the following equation: tax rate, times inflation rate, times basis for the gain. Depending on the size of the gain and the rate of inflation, indexation can mean a lower tax payment than using the 19.6% rate without indexation. But in any event -- and this is the important point -- tax "payments" on capital gains will be lower with indexation than under current law, even though the tax "rate" is the same under both systems.</br></br>As you can see, the capital-gains reduction plan adopted by the House would not be temporary, but permanent. I hope that you begin talking about the plan's permanent and, in my view, most beneficial feature -- indexation.</br></br>Rep. Robert K. Dornan (R., Calif.) | no | 0 |
>itomy ?eter Milius | There has already heeti one hig tax increase this year, in Social Security taxes, which was effective Jan. 1.</br></br>\ The President met yesterday aiternoon tor an hour with Shultz, Stein, Cost oj Living, Council director John T. Dun-\ lop, Connally, Federal Reserve^ Board chairman Arthur F.</br></br>?ut expanded all economists unsustainable S.O pet cent in1 quarter oi last iirst quarter oi iirst quarter oi ^e boom was ac y a O.e per cent ion.</br></br>nomists think that s out oi hand, and towed hy a new re-Che White House present policies can economy off, stopping its growth</br></br>YesterdayÛªs ÛÏpreliminaryÛª report irom the Commerce! Department included, as is! customary, only eight oi the' 12 leading indicators. Six of' the eight receded, including! contracts and orders for plant! and equipment, building permits, new orders for durable' goods and stock prices. Only! twoÛÓthe average workweek! and industrial materials prices! | yes | 1 |
Stocks Stage Big Rally on Fed's Statement | A relief rally carried Wall Street sharply higher Thursday after the Federal Reserve appeared to soften its stance on future interest rate hikes, saying it would consider both the economy's health and inflation as it formulates its policy. The Dow Jones industrial average had its biggest one-day point gain in more than three years.</br></br>The Dow surged 217.24, or 2 percent, to 11,190.80, its biggest single-day jump since March 21, 2003. The Standard & Poor's 500- stock index climbed 26.87, or 2.2 percent, to 1272.87, its largest gain since March 17, 2003; the Nasdaq composite index jumped 62.54, or 3 percent, to 2174.38, its biggest jump since July 27, 2002.</br></br>While investors had been expecting the quarter-point increase in short-term lending rates, they were reassured by the central bank's accompanying statement, in which it noted economic growth had moderated but that "some inflation risks remain." The Fed has tended to focus on inflation in past statements, but this time said it would look at the economy's growth rate along with the impact of inflation in deciding whether to raise rates in the future.</br></br>Bonds rose further on the Fed's statement, with the yield on the 10-year Treasury note tapering to 5.20 percent from 5.25 percent late Wednesday. The 2-year yield dropped to 5.20 percent, a signal of heightened confidence in holding long-term debt.</br></br>The Fed's announcement enabled Wall Street to look past a steep jump in oil prices after a report showed shrinking U.S. gasoline reserves with the start of the busy summer driving season. | no | 0 |
The Bear Precedent | If the Federal Reserve hadn't arranged the sale of Bear Stearns and taken over responsibility for its most questionable securities, the company likely would have had only one avenue as it ran out of operating cash late last week: bankruptcy.</br></br>That bankruptcy would have been painful, sending new waves of distrust through the financial system and likely forcing Bear's counterparties to book reserves for losses. But even in a world of bad choices, there's always a worst choice. And the Fed, by being so quick to jettison the bankruptcy process, cut off a valuable source of new information to financial markets and blurred the critical distinction between sophisticated and unsophisticated investors.</br></br>True, a Bear bankruptcy would be a mess. To get an idea, pull up one of the Enron bankruptcy spreadsheets from six years ago: creditor after creditor listed on page after page, with amounts owed from a few hundred dollars to hundreds of millions each.</br></br>A Bear bankruptcy would also have caused shocks through the financial system. Institutional investors would have to rethink whether or not they trust the party on the other side of each of their trades, particularly in the opaque derivatives market. ("Is the company good for the money?") Hedge funds, and other personal and institutional clients, would have to worry about who has actual custody of their accounts.</br></br>And so, to avoid those shocks, the Fed has done something unprecedented. It has provided $30 billion in guarantees behind Bear's most complex, illiquid securities, so that the much larger and more secure J.P. Morgan Chase & Co. would be willing to buy the company for $2 a share. | no | 0 |
REVIEW & OUTLOOK (Editorial): Why Free Trade? | The air is thick with hyperbole, invented statistics and insults to the other guy's mother. Congress must be gearing up to debate Nafta. Perhaps before we get in too deep, it would be helpful to tune out the demagoguery and listen to what leveler heads say on the central issue here: free trade.</br></br>The first level head, Ronald Reagan, discusses Nafta nearby (see related article: "Tear Down the Trade Wall" -- WSJ Sept. 13, 1993). We'd like to talk about Adam Smith and David Ricardo, the great economists who laid the groundwork for our understanding of the West's spectacular rise to prosperity. Mr. Ricardo was a Jewish stockbroker who married a Quaker, made a fortune in the stock market and retired young to think about economics. Mr. Smith, the author of "The Wealth of Nations," needs no introduction.</br></br>Messrs. Smith and Ricardo first sketched out the idea that 200 years later remains an article of faith among economists. The idea is called comparative advantage. It says: Let us each specialize in the production of what we're good at, and then trade the fruits of our labor.</br></br>Consider Joe Sixpack, who makes his living fixing cars. With the money he earns, he pays other people to grow his food, assemble his refrigerator and program his Gameboy. Nobody would advise Mr. Sixpack to knock off early at the auto shop and grow his own corn. He can enjoy more of everything by fixing more cars, which is his comparative advantage.</br></br>Notice that it doesn't matter at all to Mr. Sixpack that his Gameboy was programmed in Japan and his frijoles were grown by a Mexican. Adam Smith put it this way: "If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage." | no | 0 |
Dollar Falls against Europe's Currencies as Germany Tightens Interest Rates | NEW YORK -- A startling decision by the German central bank to raise key interest rates, coinciding with demoralizing comments about the U.S. economy, pushed the dollar down against European currencies.</br></br>The greenback rose slightly against the yen and the Canadian dollar. But rather than representing optimism about the dollar, those advances reflected a broad yen sell-off and the fact that interest rates in Canada are falling even faster than in the U.S.</br></br>In late New York trading, the dollar was quoted at 1.4770 marks, down from 1.4880 marks late Wednesday in New York. Against the Japanese currency, the dollar rose to 131.27 yen from 131.15 yen. Sterling was trading at $1.9660, up from $1.9625.</br></br>In early trading in Tokyo Friday, the dollar was trading at about 131.35 yen, down slightly from Thursday's Tokyo close of 131.40 yen. Meanwhile, the U.S. currency was trading at 1.4800 marks, off a bit from 1.4895 marks at Thursday's close.</br></br>Reports late in the New York afternoon that Iraqi vehicles were massing on the Saudi border helped pull the dollar out of its troughs for the day. However, the Pentagon discounted reports of a "massive deployment" of Iraqi troops. Even without that denial, traders have become so jaded to news about the Mideast the war was "a secondary situation" for the market, said Al Soria, foreign-exchange manager at Kansallis Osake Pankki in New York. | no | 0 |
An Accidental Tax Boon | Sometimes in Washington, good things are more likely to happen by accident than by congressional or executive design. Treasury secretary nominee Henry M. Paulson Jr. is no doubt aware of this fact, but it's one worth keeping in mind in the continuing debate over tax reform, which is sure to command a good deal of the new secretary's attention. I'm thinking of one program in particular: the alternative minimum tax, or AMT.</br></br>The AMT is viewed by many as a bad thing. Yet, consider this: There is wide agreement among economists on the benefits of a federal "flat tax" on income that would apply a uniform rate to every taxpayer and eliminate most current deductions and tax credits. A flat tax would get rid of a large number of economic distortions resulting from the many tax "subsidies" that often benefit narrow interest groups. This is tax "pork," and Congress is as addicted to it as to the ordinary spending kind.</br></br>In places around the world, including Eastern Europe, governments creating new tax systems have been turning to a flat tax to avoid this sort of thing. What does this have to do with the AMT? Just this: As Post business reporter Albert B. Crenshaw has noted, the AMT "approaches a modern-day flat tax." It imposes a uniform rate of 26 percent up to $175,000 in income, and above that 28 percent.</br></br>Tax revolutions are few and far between. Taxes are so important to the economy that major changes in tax law are best achieved incrementally, giving notice well in advance and avoiding potentially large disruptions from big surprises. That's part of the genius of the AMT. If it is left alone, it will move us gradually but steadily toward a flat tax on income as inflation brings more people within its ambit.</br></br>Some leading Republican conservatives have long advocated a flat tax. Yet few of them are speaking out vigorously for retention of the AMT. In fact, many are joining the clamor in Congress for its repeal or limitation. It would seem that they were either hypocritical in advocating a flat tax or have somehow failed to recognize that the AMT is in essence a new, evolving form of flat tax. | no | 0 |
REGIONS: Novel California Pension Plan Provides an Inflation Antidote | IN CALIFORNIA, retired state and local government workers are benefiting from an innovative plan that helps keep pension income from being wiped out by inflation. But local governments, who pay the lion's share of the retirement benefits, think the system has serious flaws.</br></br>It's called IDDA, short for Investment Dividend Disbursement Account, and it's unique to California. The legislature this year voted to extend the plan until Jan. 1, 1994, despite grumbling by city and county governments and taxpayer groups. IDDA's fans note that the plan is paying an annual $127 million bonus to certain retired members of the Public Employee's Retirement System whose pension benefits have been eroded by inflation -- all without taking a dime from the state budget.</br></br>Critics say the trick is done by grabbing interest-bearing funds from employee retirement accounts before they get into the general retirement fund. As a result, employers end up paying more into pension funds than they otherwise would, the opponents say.</br></br>No one argues with IDDA's goal -- easing the financial strain of retired workers. A state employee who retired in 1975 with a $1,000 monthly retirement check has seen the purchasing power of that check cut in half. Regular and special cost-of-living adjustments have supplemented the monthly allotment, but these occasional payments cost the state a bundle without making up much of the considerable ground that elderly retirees have lost to inflation.</br></br>IDDA MAKES THE LOSS less severe. It kicks in enough money to bring retirees' monthly benefits to 75% of their original purchasing power. The retirement checks of about 95,000 ex-government workers are now receiving an IDDA boost. | no | 0 |
Industrial Index Backtracks by 7.17, Led by Merck's 4 5/8-Point Decline | Again following the lead of the bond market, the stock market yesterday finished moderately lower after failing to extend its late blue-chip rally from Monday. Trading continued at a relatively slow pace.</br></br>Technology, oil and some of the chemical issues were among the casualties. Some of the housing stocks gained.</br></br>After jumping 11.48 points on Monday, the Dow Jones Industrial Average backtracked 4.63 points in yesterday's first half hour, but erased this loss in the next hour; falling again during the afternoon, the index was down 8.50 points at 3:30 p.m. EDT and then closed at 1126.88, off 7.17 points. The transportation indicator also fell, but the utility average posted a small rise.</br></br>The downturn was less apparent in the broader market than in the industrial average. New York Stock Exchange losers led gainers by only about 7-to-6. A big part of the industrial average's setback was accounted for by Merck, which skidded 4 5/8 to 86 1/8 in active trading.</br></br>"The psychology of the market is dominated by interest rates, as illustrated by the sharp rally on Monday when bond prices rose and the lack of follow-through (yesterday) when the bond market faltered," commented Michael T. Murray, vice president of Loomis Sayles, Chicago. | yes | 1 |
Going Global: The Euro's 'Soft Underbelly'; Tepid Growth Forecasts Elicit Some Bearishness on the Currency | Paris -- FOR MONTHS, the foreign-exchange market has been squarely focused on the huge U.S. trade and budget deficits, the weakening dollar, even the possibility of a dollar crisis. Now some money managers and others are beginning to examine the highflying euro's soft underbelly. What they see isn't very appealing.</br></br>Take Bridgewater Associates, a Westport, Conn., institutional bond and currency manager and one of the world's biggest institutional hedge-fund managers with just under $100 billion under management. The firm, whose managers have been longtime dollar bears, now has a short- euro position that's as big as its short position in the dollar.</br></br>Among major developed countries, the 12-nation euro zone "has the weakest economy, the lowest interest rates, the strongest currency and among the highest probabilities for significant capital outflow," says Bob Prince, Bridgewater's co-chief investment officer.</br></br>Shorting both the dollar and euro, Bridgewater is long the Swiss franc, pound sterling and Swedish krona. "And in particular, we like the yen against the euro," says Mr. Prince. While Bridgewater forecasts the euro to be little changed against the dollar in 12 months, the firm sees the euro roughly 15% lower at about 114 yen. In a little-noticed decline, the euro has already fallen to 134.71 yen from above 141 yen in late December.</br></br>Meanwhile, at a two-day shindig last week that Morgan Stanley hosts annually for its clients, "there was a remarkably strong sense that the dollar could surprise on the upside against several European currencies" and that the euro could decline against the yen and other Asian currencies, says Stephen Jen, the firm's global head of currency research. He suspects that this outlook largely reflects investors' reaction to the dollar's new-year's rally that has seen the euro retreat 4.5% against the U.S. currency since Dec. 30 to $1.3074. | no | 0 |
Mills Corp. Profit Flat in Fourth Quarter, Up in '94 | Mills Corp., the District-based company that owns Potomac Mills and similar factory outlet shopping centers around the country, reported that operating results for the fourth quarter were flat because rising interest rates canceled out higher income from its malls.</br></br>For the year, the company said, operating results were up because rents it charges in its malls rose and because it expanded Potomac Mills.</br></br>Most real estate companies such as Mills report two sets of results -- standard net income and funds from operations, a measure that gauges operating results by removing the accounting effects of items such as depreciation and amortization. Mills, however, did not release standard net income figures in a way that would allow comparisons among its operating periods.</br></br>For calendar 1994, a period that included four months before the company went public, funds from operations on a pro forma basis came to $54.6 million ($1.66 per share), up 7 percent from $51.03 million ($1.55).</br></br>In the fourth quarter, the measure was $14.8 million (45 cents), compared with $14.7 million (45 cents) in the pro forma period a year earlier. | no | 0 |
Purchasers Say Growth Slowed In December --- Survey Finds Employment, Orders and Output Fell; Price Decline Continued | NEW YORK -- The economy continued to grow in December, but at a slower pace, a monthly survey by purchasing agents indicated.</br></br>The National Association of Purchasing Management said its members reported a decline in new orders, production and employment in December. For the 13th consecutive month, prices continued to fall.</br></br>"Traditionally the industrial economy slows in December, so what we are seeing isn't unusual," said Robert J. Bretz, chairman of the group's business survey committee and purchasing director at Pitney Bowes Inc. "However, the fourth quarter and the year were a pleasant surprise. The continued low level of price increases also indicates inflation isn't on the horizon."</br></br>The report, based on a survey of purchasing managers at 250 industrial companies, indicates whether various indicators of the economy are better, the same, or worse than the previous month.</br></br>The survey's composite index, on a seasonally adjusted basis, declined to 51.1% in December from 53.3% in November, the first drop in three months. But it was the fourth consecutive measure above 50%, a sign that the economy is expanding. A reading below 50% indicates the economy is in a declining phase. | yes | 1 |
Deals Help Juice KKR Profit; Private-Equity Firm Has Its Busiest Quarter for Buyouts in About Two Years | KKR & Co.'s third-quarter profit surged more than 60%, buoyed by the increasing value of companies it owns and fees the buyout firm reaped from new deals it struck.</br></br>KKR's third-quarter net income rose to $204.74 million, the buyout firm reported Thursday. So-called economic net income rose more than 20% to $613.75 million. Private-equity firms contend economic net income better reflects their performance because it gauges both realized and unrealized gains and losses from investments and factors in accounting quirks related to partnerships becoming public companies.</br></br>The private-equity firm's economic net income after taxes amounted to 84 cents a adjusted unit, soundly beating Wall Street expectations. Analysts polled by Thomson Reuters expected 59 cents. In 4 p.m. trading on the New York Stock Exchange, the buyout firm's shares rose 45 cents, or 2%, to $23.36.</br></br>KKR's profits were largely the result of increases in the value of companies the firm bought and then partially sold in initial public offerings, including hospital operator HCA Holdings Inc. and NXP Semiconductors NV. The value of KKR's private-equity funds, which gather money from investors to buy companies, increased 5.9%.</br></br>New York-based KKR's most-high-profile deal of the quarter, the takeover of industrial-pumps manufacturer Gardner Denver Inc., was a key contributor to its results in the quarter, as the buyout firm benefited by selling chunks of its equity in the $3.7 billion deal to other investors. That, along with similar work on other deals, resulted in transaction fees rising more than 70% compared with the same period a year ago, to $129.13 million. | no | 0 |
Japan Ambiguous on U.S. Demands; Pressure to Stimulate Economy Reveals a Contradiction in Goals | Japan has given a clear response to U.S. demands that it stimulate its domestic economy: yes, no, maybe so.</br></br>Take today, for example. First came the news reports this morning that the Japanese government was considering tax cuts. Then, later in the day, Prime Minister Ryutaro Hashimoto backtracked slightly, ambiguously urging "caution" on the tax cut issue.</br></br>Japan's chief government spokesman, Kanezo Muraoka, also spoke up, saying Japan would pursue both economic stimulus and fiscal reform. Most economists say that these goals are contradictory. The government will have to spend money to stimulate Japan's economy quickly, but is also planning to cut spending to meet fiscal reform goals.</br></br>Today's mixed signals are just the latest in a litany of vague and often contradictory statements about economic programs made by Japanese officials since last weekend's Group of Seven finance ministers meeting in London, where Japan was pressured to boost its economy.</br></br>For example, some officials are vigorously trying to jawbone stock prices higher, setting a target of 18,000 on the Nikkei 225-stock index by March 31. The date is important because that's the end of Japanese banks' fiscal years, and they may have to report dramatically lower values on their stock market holdings if prices don't rise. | no | 0 |
Commerce Agency's Revised GNP Data Change View of Economic Performance | WASHINGTON -- When the Commerce Department released figures late last year showing a substantial improvement in economic growth during the fourth quarter of 1984, the news was cheered by traders, economic analysts and politicians alike.</br></br>But last week the department released revised figures indicating those cheers were for nought. Instead of growing at an inflation-adjusted 4.3% rate, as previously thought, the new figures showed economic growth was limping in the fourth quarter of 1984 at a meager 0.6% pace.</br></br>That drastic change illustrates how the highly technical "benchmark" statistical revisions completed recently by the department have revamped the economic landscape. The department is the sole source of statistics on the nation's total output, or gross national product, and when it alters its numbers, it alters everyone else's view of the world.</br></br>The department's revisions altered virtually all the GNP figures back to 1972, and in some cases reached as far back as 1929. The revisions reflected newly available information, improved estimating techniques and a shift in the price "base," used in adjusting GNP for inflation, to 1982 from 1972.</br></br>For the Reagan administration, the revisions make the economic record look less successful. The revisions show, among other things, that the 1982 recession was more severe than previously thought, and that the expansion that has followed isn't quite as strong as earlier statistics had suggested. | yes | 1 |
A Star To Follow | "Y ou are doing a disservice to your readers," a man I called Ursa Major, the Great Bear, told me a while back. He was referring to my perennial bullishness, my buy-and-hold obsession.</br></br>Specifically, he pointed to an article that said, "The best way to approach the market is simply to go along for the ride wherever it leads."</br></br>Ursa Major's view at the time was that the ride was headed off a cliff and that I should have been warning of the imminent catastrophe. What was happening in the stock market, he told me, was "crazy," and "it doesn't end happily."</br></br>My conversation with Ursa Major became the focus of a column, published on July 23, 1998, that presented the bearish case for stocks -- Ursa's case, not mine. It appeared a little less than two years before the tech-stock bubble popped and a widespread bear market began.</br></br>At the time, I emphasized that I didn't believe that the "intelligent bear's case," however convincing, should lead readers to dump shares of good companies that they bought for the long haul. As it turned out, the case was not only intelligent but prescient -- although not quite as prescient as you might think. I am glad I published it. My only regret was that Ursa Major discouraged me from using his real name. | no | 0 |
Strapped Hood College to Dip Into Endowment | Hood College, beset by financial woes that threatened its survival, has won permission to use $10.5 million of its endowment funds to pay off its most serious debts in a move that some experts called unique.</br></br>The private college in Frederick, which admitted men to its residential program for the first time this year, had defaulted on loans to two banks and was on the verge of having to consider closing when it took the unusual step of seeking a judge's approval to tap into its $50 million endowment, according to court records.</br></br>The bulk of Hood's endowment is made up of funds earmarked by donors for special purposes -- such as scholarships or new buildings -- that generally cannot be touched for regular operating expenses. But Hood officials argued in their petition to Frederick County Circuit Court that the institution would have to shut down if not allowed access to the restricted funds. Hood's actions were first reported in the Baltimore Business Journal.</br></br>Like many small, private liberal arts colleges, Hood has been buffeted in recent years by a flagging economy and the sharp decline in enrollment experienced by many other women's colleges. That trend prompted Hood's decision last year to go fully coeducational starting with the current academic year.</br></br>President Ronald J. Volpe said last week that the unconventional endowment disbursal is one of several moves he believes have set the institution on the path to fiscal rejuvenation. Hood recently laid off about 30 non-teaching employees to reduce expenses. Meanwhile, enrollment has risen in the past two years from 1,500 to 1,700 full- and part-time students, and Hood last week sold part of a large off- campus property in a deal that will provide a $3 million cushion for the coming academic year. | no | 0 |
Nederland, Colorado; When Main Street Met Wall Street; Across Nation, Investors Take Losses With a Calm Born of Long-Haul Outlooks | It is a long way from Wall Street to this mountain community near the Indian Peaks Wilderness 30 miles northwest of Denver, but the ties that bind millions of Americans to the stock market even wind through here.</br></br>As many other small investors did on Monday, real estate broker Liz Ford took a keen interest in the market's stomach-churning plunge. But not for the same reasons. Two weeks ago, the investing newsletter she subscribes to advised its clients to dump their holdings, and Ford moved about three-fourths of her $160,000 in mutual fund shares into cash -- everything except those funds that require a letter to sell.</br></br>Her reaction on Monday? "Yes!" she said, pumping her fist in the air, savoring her adept market timing and anticipating buying back in at significantly lower prices. "I didn't get out at the top, but I didn't get out at the bottom, either."</br></br>Across the hall at the Fowler Real Estate office in this picturesque former tungsten mining town of 1,500 people, her colleague, Jim George, was not celebrating. But he was not despondent either, despite seeing his $90,000 investment nest egg shrink to $58,000 as of this morning. He took his biggest hit in a fund that he belatedly learned has 17 percent of its assets invested in Russian bonds, something he ruefully admits he would have known had he read the fund's prospectus.</br></br>Nonetheless George is holding tight, having learned an earlier painful lesson when Iraq invaded Kuwait, the market dropped, and he sold "and took a hit." "When it's down this much, you can't bail out," said George, who now classifies himself as a long-term investor. "Luckily I have $11,000 in credit left on my Visa card and the grocery store and the gas station take Visa. I'd love to get a $100,000 home equity loan now and put it in the market." | no | 0 |
Inflation Control Eludes Nixon Too | It was that way during the presidency of Lyndon Baines Johnson and it has been that way during the presidency of Richard Milhous Nixon.</br></br>ing costs rose less rapidly in November was that food prices dropped much more than they customarily do in late fall.</br></br>Most other prices went up. They climbed more than in some months and less than in others, but they boomed ahead at a six per cent a year clip thnfc gives no reason to hope that inflationary pressures are cooling significantly.</br></br>The best that the experts can offer is that prices may climb less rapidly during the closing months of the year than at the beginning. But that is the same prediction that has raised false hopes so often before. Some of the best economists, in and out of government, are not buying it again.</br></br>NIXONÛªS COUNCIL of Economic Advisers prepared a forecast just a year ago that had price inflation slowed to a 2.5 per cent pace by the closing months of 1970. Prices are bounding ahead at better than twice the rate that the CEA predicted, though, and the inflation spiral now is well into its sixth destructive | no | 0 |
Modest Tax Increase Won't Hurt Economy, Former Fed Chief Tells Panel | Paul Volcker, adding his weighty prestige as a former Federal Reserve Board chairman to the forces favoring higher taxes, said yesterday that there isnÛªt "any credible caseÛ for believing that a modest tax increase would damage economic growth.</br></br>VolckerÛªs testimony, which was delivered before a blue-ribbon commission examining the federal budget deficit, contradicted the argument of President-elect George Bush that a tax increase would threaten the expansion.</br></br>Volcker said that the chief danger facing the economy is the deficit, and failure to shrink it would "maximize the riskÛ of a ÛÏsevere recessioij."</br></br>Volcker told the National Economic Commission that although spending cuts would be better for the economy than tax increases, spending cuts might clash with other national priorities such as education and the environment. And he said: ÛÏ1 donÛªt think you can argue that from an economic standpoint, you would do grave damage to the economy by raising any or all taxes by relatively modest amounts."</br></br>Volcker said that a gasoline tax increase would probably be least harmful because it would promote energy conservation, and he also said that excise taxes on tobacco, beer and liquor could be raised because those levies have declined in inflation-adjusted terms. The former Fed chiefÛªs testimony closeiv tracked that of the cur- rent chairman, Alan Greenspan, who told the commission two weeks ago that priority should be placed on reducing the deficit even if it meant raising taxes. | no | 0 |
Money Managers Aren't Yet Leaving Bonds for Stocks --- Balanced Funds Won't Move Into Equity Investments As Quickly as Expected | NEW YORK -- Managers of investment funds whose assets routinely are switched back and forth between the stock and bond markets aren't yet rushing into stocks.</br></br>At least for now, these gentlemen (and women) prefer bonds.</br></br>Managers of such balanced funds say continued low inflation, tempting bond yields and the economy's still-moderate expansion have sidetracked their plans to move aggressively into equity investments.</br></br>"I had hoped to be doing much more stock investing than I'm doing now," says Cynthia Flowers, portfolio manager of National Securities & Research Corp. of New York's $125 million balanced fund.</br></br>"But many stocks are overvalued, the fundamentals aren't good, and while I'm struggling to find attractive stocks to buy," the risk-to-reward ratios on bonds are quite attractive, she says. | no | 0 |
Poof! `Smart' Investment Ideas Go Up in Smoke, as Market Tumbles --- For Manager Who Stuck With Value, It's Payback Time | IRRATIONAL exuberance?</br></br>Make that uncontrollable, indefatigable, unreasonable, outlandish exuberance.</br></br>Before the market's great fall early this year, investors managed to convince themselves that this time was different, that stocks couldn't go down very much, or for very long if they did. Bolstered by this ill-advised overconfidence, lots of people did lots of things they no doubt wish they hadn't.</br></br>Turn back the clock, to the first quarter of this year. Investors who were content to settle for mutual funds and stocks with 10% to 20% annual returns were made to feel like, well, dullards. They just didn't get it.</br></br>The people who did get it were leaving their Old Economy jobs for the excitement and riches of dot-com-dom. Or, if they didn't go to work for Internet companies, they were working with Internet companies and getting a piece of the action by taking shares in lieu of cash for business they did. Now, much of that stock may be more valuable as wallpaper. | no | 0 |
Business and Finance | Intel agreed to broad restrictions to settle U.S. charges it unlawfully stifled competition to preserve its dominant position in the computer-chip market.</br></br>---</br></br>Stocks and the dollar rose following encouraging reports on private-sector hiring and the services sector. The Dow gained 44.05 points to 10680.43.</br></br>---</br></br>Job growth remained weak in July as employers continued to expand slowly, surveys found. | no | 0 |
Signs Are Pointing South on Wall St.; Credit Woes Foster Bets on Bad Times | Investors in stocks and bonds are paying prices that indicate they believe a snowballing housing crisis and worsening credit crunch will soon tip the U.S. economy into a recession, analysts said. Many economists, including leaders of the Federal Reserve, don't think things will get that bad, but some say the risk of a serious downturn has risen in recent weeks.</br></br>Investors were so eager to buy ultra-safe government bonds yesterday that they were willing to accept sharply lower interest rates. The rate on the 10-year Treasury bond fell to 3.84 percent from 4 percent Friday. The low rates indicate investors expect the Federal Reserve to cut interest rates aggressively in the coming year to ease the pain of recession.</br></br>Stocks are now down more than 10 percent from their peak in October. The Standard & Poor's 500-stock index fell 2.3 percent yesterday, dropping the market to a level that Wall Street analysts say reflects an expectation that corporate profits will fall.</br></br>Taken together, those and other data indicate that financial markets have a decidedly negative prognosis for the economy. "They're saying the odds of a recession are pretty damn high," said Diane Swonk, chief economist at Mesirow Financial.</br></br>There are reasons to think things will not get that bad, however. Holiday sales started Friday with a strong 8.3 percent gain over last year, and U.S. consumers have proven resilient in past periods of financial distress. With the dollar weakening, U.S. exporters will be at an advantage; joblessness remains near historic lows, at 4.7 percent; and the stock market, an old joke goes, has predicted nine of the past five recessions. | no | 0 |
Md. Begins Crackdown On Insurance Form Fees | Maryland insurance regulators yesterday cracked down on insurance agents who are illegally charging clients for filing insurance verification forms required by the state.</br></br>Maryland drivers who paid insurance companies to file the FR-19 auto insurance verification form are entitled to be reimbursed within 30 days, and the firms that illegally imposed the fee will be fined as much as $50,000, officials of the state insurance commission said.</br></br>Insurance Commissioner Edward J. Muhl issued an order directing the stateÛªs 500 licensed property and casualty insurance companies to submit to the commission a list of policyholders who were improperly charged, the agents who billed the policyholders and a written explanation of the firmÛªs procedure for filing forms on behalf of policyholders.</br></br>"Any such charge that has been made [for filing the FR-19] constitutes a violation of the Maryland insurance law,Û MuhlÛªs order said. Not only do guilty insurance firms that charged the fee face fines, but also agents who imposed the fee can be fined $500 per violation, he said. More than 35,000 insurance agents work in Maryland, according to the insurance commission.</br></br>Muhl initiated yesterdayÛªs action after receiving complaints from state Del. Casper R. Taylor Jr. (D-Allegany and Washington counties), who said he had received numerous complaints. | no | 0 |
Clintonomics: In Arkansas, Governor Usually Tries to Help Big Local Companies --- As Leader of a Poor State, He Often Puts Jobs Before Issues Like Environment --- Wooing `the Good Suit Club' | {Second of two articles on Bill Clinton's economic policies}</br></br>LITTLE ROCK, Ark. -- When International Paper Co. threatened to close its Pine Bluff paper mill in 1985, Gov. Bill Clinton sprang into action.</br></br>Meeting with company executives, he agreed to a package of lucrative benefits, including a 7% sales-tax credit for manufacturers that invest $5 million or more in their Arkansas facilities. The result: The company stayed put. "I jumped on that thing like a hot rock," Mr. Clinton says proudly. "I plead guilty, I sure did."</br></br>But not everyone in the state is as happy with the result as Mr. Clinton. Critics say the tax break turned out to be a giveaway potentially totaling more than $100 million to prosperous businesses already located in the state. "He's just been too accommodating to those guys," grouses J. Bill Becker of the state's AFL-CIO. "He goes to them with hat in hand."</br></br>Mr. Clinton is running for president as a populist for the 1990s. He frequently launches rhetorical grenades at big business and calls for measures forcing them to spend more on training and to reduce bloated executive salaries. His proposals for investment tax incentives include a conspicuous tilt away from big companies and toward smaller ones. | no | 0 |
Proposals to Curb Federal Salaries, Benefits Weighed: Limits on Federal Pay And Benefits Weighed | Congressional Republicans seeking ways to reduce the deficit are considering a 5 percent pay cut for members of Congress and other top government officials, a pay freeze for other federal workers and a two-thirds reduction in inflation adjustments for all major benefit programs, including Social Security and government pensions.</br></br>While no decisions have been made, proposals for limits on government salaries and retirement benefits appeared to he gaining momentum as Congress continued groping for alternatives to President ReaganÛªs budget.</br></br>Sen. -lesse Helms (R-N.C.) suggested a 5 percent cut for senior government officials at a meeting Wednesday of the Steering Committee, an informal group of conservative Republican senators that he heads. Although some Senate leaders dismissed the proposal as unlikely to survive, Helms said he had gotten nothing but positive responses from his colleagues.</br></br>Û¢ Sen. Ted Stevens (R-Alaska), who has championed the cause of federal pay increases in Congress, told reporters that he was ÛÏnot. too happyÛ about proposals to cut pay for top executives only a year after Congress finally agreed to raise their long-frozen salaries.</br></br>But he said civilian government pay may have to he frozen at all levels next year and military pay limited to an increase of .Û÷1 to 5 percent. Reagan has proposed pay increases of 5 percent for civilian workers and 8 percent for the military. | no | 0 |
Chipping Away at Japan's Bailout Culture | The battle for Elpida Memory is shaping up as a test case for how Japan treats troubled companies. The failed chip maker's restructuring could have broad implications for the country's other debt-laden firms.</br></br>Elpida sought court protection in February after falling DRAM chip prices and the strong yen left it unable to pay its hefty debts. The company agreed in July to be taken over by Micron Technology of the U.S. for $760 million and the promise of $1.8 billion later out of Elpida's cash flow. This could mean banks and other secured creditors would receive 70% of what they are owed, while unsecured creditors like bondholders would get just 20%-30%.</br></br>Some bondholders are livid, saying the Micron offer is too low, "vague and confusing." They value the company at $3.8 billion and have filed a rival plan with the Tokyo court that would see a yet-unnamed sponsor take over.</br></br>The battle probably wouldn't have happened in Japan's recent past. Previously, investors mostly rolled over while a restructuring was forced upon them. Often, the government would force a shotgun takeover of a collapsed firm by one if its peers. The failed company would be a drag on the rescuer, bad loans would fester, employees would remain in make-work jobs, and the resulting bloated company would weigh on the broader economy.</br></br>But Japan Inc. probably isn't in the bailout business anymore. The government no longer seems to have the stomach for forced mergers, and with public debt more than double gross domestic product, Tokyo can't stump up more taxpayer cash for moribund firms. No wonder Elpida looked to the U.S. for a white knight. Also Sharp, faced with a $16 billion debt load and rapidly falling earnings, also has sought a rescue overseas, from Taiwan's Hon Hai Precision Industry. | no | 0 |
Dow Jones Industrials Hit High for Year After Upbeat Fed Keeps Rates Unchanged | The Dow Jones Industrial Average reached a new high for the year following a generally upbeat assessment from the Federal Reserve, which left interest rates unchanged.</br></br>The Fed signaled that the prospects for the economy are improving, helping to keep stocks up across the board even though the rate decision was anticipated. Many investors said they were relieved the Fed didn't signal excessive nervousness about inflation, though it did give one of its first indications that it might raise interest rates later this year if the economic turnaround continues.</br></br>The Dow Jones Industrial Average closed up 0.54%, or 57.50 points, at 10635.25. That's just above the previous high for the year, hit a week ago, of 10632.35. The Standard & Poor's 500-stock index climbed 0.41%, or 4.74 points to 1170.29. The Nasdaq Composite Index rose 0.20%, or 3.81 points, to 1880.87.</br></br>Bond prices edged higher and the dollar was up.</br></br>Stocks dropped slightly after the Fed's announcement at 2:20 p.m. EST but managed to fend off afternoon selling pressure and close in positive territory. | yes | 1 |
China's Increase in Sales to U.S. Finally Outstrips Rise in Imports | PEKING ÛÓ Despite a widening trade deficit, ChinaÛªs sales to America have increased faster than its purchases from America, according to U.S. trade statistics released here last week.</br></br>Figures for the first three months of this year show that Chinese exports to the United States grew by 84 .percent over their level for the same period of 1980, while ChinaÛªs imports rose by 53 percent.</br></br>Despite the relative gain in Chinese exports, PekingÛªs overall sales to the United States are still so low compared to its imports that its latest success does nothing to offset the huge imbalance in Sino-American trade: ChinaÛªs deficit in the first three months of this year reached $805 million compared with $570 million in the same period of 1980.</br></br>Accounting for the largest increases in Chinese exports were textiles, clothing, peanuts and such nonferrous metals as tin, tungsten and titanium, according to the report prepared by U.S. Commerce Department officials. '</br></br>Economic analysts said the statistics reveal an unexpected and dramatic reversal in the pattern of bilateral trade. Since the' two nations normalized relations in 1979, PekingÛªs imports from America consistently have risen at a much faster rate than exports. | yes | 1 |
JacobsÛª forecast has ABC in first place | JL he shift of Fred Silverman to NBC has received more attention lately than inflation, the president or the Congress, but donÛªt expect his new job to change the competitive ratings for the coming TV season. The highly reliable forecast from Herb Jacobs of Telecom Associates of Los Angeles keeps ABC in first place, followed by CBS and with NBC in its customary third place.</br></br>Jacobs has been doing these forecasts for the past 20 years and has been able to claim an accuracy level of more than 99 per cent. He notes that for the first time in TV history, the schedules at all three networks are affected by the same man, Silverman, who started at CBS, moved to ABC and has now become president of NBC-TV. Jacobs does doubt, however, that the networks are through tinkering with the fall schedule: ÛÏ. . . I don't think the moves are for real and expect many more to be made by September.Û</br></br>The potential new hits, according to Jacobs, are ABCÛªs ÛÏBattle Star Galatica,Û "Vega$,Û and ÛÏTaxi.Û CBSÛª most likely successes are ÛÏKaz, ÛÏMary Tyler MooreÛ (a one-hour variety show), ÛÏWKRP,Û a situation comedy and ÛÏJust the BeginningÛ (another sitcom about a priest and a hip nun). And what about the new hits on NBC? Jacobs answers with one word: "None.Û</br></br>The potential flops in this forecast are ABCÛªs ÛÏMork and MindyÛ and ÛÏApple Pie;Û CBSÛªs ÛÏPeople,Û ÛÏPaper ChaseÛ and ÛÏAmerican Girls"; and NBCÛªs ÛÏLifelineÛ and ÛÏWhoÛªs Watching the Kids.Û</br></br>Another category, which Jacobs calls "Maybes,Û meaning the programs have a chance to get passing ratings, are ÛÏGrandpa,Û ÛÏWaverlyÛ and ÛÏDick Clark," all from NBC. | no | 0 |
Dow Posts Modest Gain On Greenspan Comments | Stock prices posted modest gains today after Federal Reserve Chairman Alan Greenspan said the economy is slowing its torrid pace but not heading into recession.</br></br>The central bank's chief also said the Fed might hold interest rates steady as the economy cools down.</br></br>The Dow Jones industrial average ended up 9.08 points at 3973.05. Advancing issues led declining ones by about 5 to 4 on the New York Stock Exchange. Trading volume climbed to 339.2 million shares from 308.1 million Tuesday.</br></br>Blue-chip issues made the strongest gains, but broad market indexes also moved higher. The NYSE's composite index rose 1.06 to 263.04, the Standard & Poor's 500-stock index added 2.33 to 485.07 and the Nasdaq index gained 3.31 to 787.93. The American Stock Exchange index climbed 1.07 to 448.58.</br></br>"Greenspan didn't say anything that upset the apple cart, so it gave us a little extra boost," said Peter Coolidge, senior equity trader at Brean Murray, Foster Securities. | no | 0 |
Differences Among Money-Market Funds Produce Varying Yields and Levels of Risk | NEW YORK -- Money-market mutual funds have enjoyed a resurgence of popularity this year. Their assets may never return to the record levels reached in the fall of 1982, shortly before banks were allowed to offer competing "money market accounts." But the floundering stock market, the rise in interest rates and a rate advantage over the bank competitors have led consumers to increase their holdings of these easy-access, market-rate investments.</br></br>Investors shouldn't assume that the more than 300 money funds are all alike. The funds can differ in such things as their minimums for investment and check-writing and the ease of getting through to customer-service people on the telephone. Perhaps more important, they also vary widely in the types of short-term assets they buy. These differences produce varying yields and levels of risk.</br></br>"Money funds are looked at as a homogeneous, commodity-type product. But when you look at them closely, you see there are really big differences in risk and management policy," says Edward A. Taber III, money-fund portfolio manager at T. Rowe Price Associates in Baltimore.</br></br>Consumers haven't had to become aware of the risk differences because the money funds have an excellent safety record. No fund has ever owned a security that defaulted. Investors suffered a 6% decline in principal in one small fund several years ago, but that was because the fund had extended the maturity of its holdings to the point that many would say it wasn't even a money fund anymore. Nevertheless, there conceivably could be principal losses in a money fund, so investors should be aware of how much risk their particular fund is taking.</br></br>The most common type of money fund is one that invests in a diversified portfolio of short-term government securities, bank certificates of deposit and corporate obligations called "commercial paper." Other funds stick to the safety of government obligations. There also are big distinctions within each category. Yields generally rise with the risk of the investments, as shown in the accompanying data from Donoghue's Money Fund Report. | no | 0 |
Bush Picks Adviser as Greenspan's Successor; Bernanke Pledges to Maintain Continuity at Federal Reserve | President Bush yesterday named his top economic adviser, Ben S. Bernanke, to succeed Federal Reserve Chairman Alan Greenspan, who steps down Jan. 31 after helping guide the U.S. economy for more than 18 years.</br></br>Bernanke, 51, who served as a Fed board member and once chaired Princeton University's economics department, "is the right man to build on the record Alan Greenspan has established," Bush said to reporters in the Oval Office yesterday.</br></br>Bernanke assured listeners that Greenspan's coming retirement will not trigger any significant shift in the Fed policies -- primarily the adjustment of interest rates -- that have helped deliver solid economic growth, low inflation and low unemployment for much of the past two decades.</br></br>"My first priority will be to maintain continuity with the policies and policy strategies established during the Greenspan years," Bernanke told reporters, as the Fed chairman stood a few feet away. "If confirmed by the Senate, I will do everything in my power, in collaboration with my Fed colleagues, to help ensure the continued prosperity and stability of the American economy."</br></br>Stock prices rose yesterday as Wall Street welcomed the selection of a highly regarded economist who has focused his academic career on studying Fed policy, whose thinking is well known to financial markets and who would arrive with recent experience working with Greenspan at the Fed, analysts said. | yes | 1 |
Why Gas Costs So Much in Md. | Maryland motorists who suffer from sticker shock every time they fill their tanks routinely look for the cheapest fuel they can find. But they don't find much difference in prices from one station to the next -- or at least not as much difference as they found a few years ago. The reason lies in a fascinating tale of Annapolis favoritism.</br></br>The story begins with the 2000 spike in oil prices, which caused gas prices to soar. Consumers responded by avoiding traditional service stations and buying lower-priced gas from chains such as Sheetz and Wawa. The two convenience chains were expanding into Maryland at the time, and several grocery stores and shoppers clubs also were opening gas stations to attract customers. The sight of motorists queuing up at these retailers worried the owners of traditional service stations, who appealed to state lawmakers for help. Annapolis has a history of restricting price competition to protect politically connected businessmen, so their call did not go unheeded.</br></br>The result was legislation to prohibit retailers from selling gas below state-established minimum prices derived from weekly wholesale prices. The legislation also empowered the state comptroller to investigate reports of illegally cheap gas and gave the comptroller the authority to suspend or revoke the license of any retailer caught offering low prices. The legislation's supporters said the new law was necessary to prevent "predatory pricing" in which one retailer undercuts competitors to drive them out of business and then raises its prices. But I've not heard of a single instance in which Sheetz or Wawa had engaged in predatory pricing, which economists generally considered to be unworkable.</br></br>Sheetz and Wawa fought the legislation, but in vain. It passed both houses of the legislature by overwhelming margins and was signed into law by Gov. Parris N. Glendening on May 18, 2001. The following September, Comptroller William Donald Schaefer sent letters to the editors of several Maryland newspapers proclaiming the legislation to be "good for the consumer" and assuring motorists that the new law would not cause gas price increases. When the law went into effect that October, Sheetz and Wawa promptly raised their prices.</br></br>What would Maryland gasoline prices be like if the minimum-price law were lifted? A loophole in the law gives an indication. A gas station can lower its price below the minimum "in good faith to meet competition." If Sheetz or Wawa tried to lower its prices to draw customers away from a nearby service station, that would not be legal competition, and the owner of a competing station could call the comptroller's office. But what if a Sheetz store were near a Wawa outlet and they wanted to compete against one another instead of calling the comptroller? In St. Mary's County, this is happening. As of April 18, one Wawa was selling regular unleaded for $1.99; the nearby Sheetz was selling it for $2. In response, the Texaco and Shell stations down the road were selling gas for $2 a gallon. In contrast, the statewide average gas price that day was $2.22 for regular unleaded. | no | 0 |
What Went Wrong; How did the world's markets come to the brink of collapse? Some say regulators failed. Others claim deregulation left them handcuffed. Who's right? Both are. This is the story of how Washington didn't catch up to Wall Street. | A decade ago, long before the financial calamity now sweeping the world, the federal government's economic brain trust heard a clarion warning and declared in unison: You're wrong.</br></br>The meeting of the President's Working Group on Financial Markets on an April day in 1998 brought together Federal Reserve Chairman Alan Greenspan, Treasury Secretary Robert E. Rubin and Securities and Exchange Commission Chairman Arthur Levitt Jr. -- all Wall Street legends, all opponents to varying degrees of tighter regulation of the financial system that had earned them wealth and power.</br></br>Their adversary, although also a member of the Working Group, did not belong to their club. Brooksley E. Born, the 57-year-old head of the Commodity Futures Trading Commission, had earned a reputation as a steely, formidable litigator at a high-powered Washington law firm. She had grown used to being the only woman in a room full of men. She didn't like to be pushed around.</br></br>Greenspan, Rubin and Levitt had reacted with alarm at Born's persistent interest in a fast-growing corner of the financial markets known as derivatives, so called because they derive their value from something else, such as bonds or currency rates. Setting the jargon aside, derivatives are both a cushion and a gamble -- deals that investment companies and banks arrange to manage the risk of their holdings, while trying to turn a profit at the same time.</br></br>Unlike the commodity futures regulated by Born's agency, many newer derivatives weren't traded on an exchange, constituting what some traders call the "dark markets." There were now millions of such private contracts, involving many of Wall Street's top firms. But there was no clearinghouse holding collateral to settle a deal gone bad, no transparent records of who was trading what. | no | 0 |
j^Jv\jna.jA&c: wao um i,y | The closely watched Dow Jones average of 30 blue chip industrials rose 7.68 to 1,047.49, an all-time high. Standard & PoorÛªs 500 stock index climbed 0.47 to 119.87, also an all-time high. Advances led declines, 745 to 687, among 1,795 issues on the tape. The average price of a NYSE common share gained 14 cents.</br></br>The Amex's price change index climbed 05 to 26.68, and gaining issues t o p p ed losers 524 to 404 among the ÛÏThe market shows that the path of least resistance is still up,Û said Robert Stovall, analyst with Reynolds Securities Inc.</br></br>Despite three sessions of strong gains in which the Dow rose some 36 points since last Friday, the market resisted profit taking, he noted.</br></br>ÛÏNormal January reinvestment demand that always surfaces at the beginning of a new year also helped the market,Û said Larry Wachtel, analyst with Bache & Co.</br></br>7.7 per cent drop. The company projected fiscal 1974 earnings at a level lower than some brokers had been anticipating. | no | 0 |
Home Equity Loans Cutting Installment Debt, Data Show | The year's first data from the Federal Reserve on consumer installment credit confirm what many have suspected: Americans are using the equity in their homes to consolidate debts at lower interest rates and finance purchases with largely tax-deductible credit.</br></br>Although consumer credit rose slightly during January, revolving credit-overdrafts, bank and retail charge cards-fell by $366 million, a 3.3 percent drop on an annual basis. Other types of personal bank loans fell by 1.7 percent in the same month. Automobile loans increased enough to account for the overall rise, but the pace was only half that of December's $2 billion.</br></br>The Fed noted that "credit, other than for automobiles, declined in January, perhaps reflecting continued substitution of home equity loans for more traditional forms of consumer credit."</br></br>Although home equity loans are not broken out, Fed figures show that total bank loans secured by real estate rose by $8.1 billion in January, compared with $4.7 billion a year earlier.</br></br>The changes in loan balances reported by 400 banks nationwide in the monthly survey were sufficient to cause the Fed to investigate. Subsequent telephone calls by the staff to the banks revealed that many new home equity loans were being used to pay off charge card balances. | no | 0 |
Merchandise Trade Deficit Falls to Three-Month Low: Decline in Imports Offset High Oil Bill | The merchandise trade deficit is the gap between what the US imports and what it exports. Exports are "free alongside ship." Imports include customs.</br></br>The U.S. merchandise trade deficit narrowed sharply in January to $9.49 billion, the smallest in three months, as a big decline in consumer imports offset a higher oil bill, the Commerce Department reported yesterday.</br></br>The department said the imbalance between imports and exports fell by 13.7 percent from a revised December deficit of $10.99 billion as the United States posted a rare trade surplus with Europe and the deficit with Japan fell to its lowest point in 1'h years.</br></br>The Bush administration hailed the development as an encouraging sign of progress in whittling down the countryÛªs huge trade deficit.</br></br>But many private economists were far less encouraged. Some called the January figure a one-month fluke in what they believe will | no | 0 |
A22 MONDAY, OCTOBER 30, 1978 | TRIM IS A BAD idea. But it is likely to be enacted radical. It would set a ceiling not on the tax rate, but by voters in Prince GeorgeÛªs County, and it ap- on the tax revenues. It does not attempt a rollback; pears no less than an even bet in Montgomery. There like its Montgomery counterpart. It would simply de-are real dangers in the impact of rapid inflation on dare that the total - amount of money raised by the assessment of familiesÛª homes, but this kind of county real-estate taxes in any future year could not legislation is the wrong answer. exceed the present yearÛªs revenuesÛÓsomewhere</br></br>TRIMÛÓalso known as Son of Proposition 13ÛÓis around $140 million. If assessments rise, the rate will shorthand for the charter amendments on the Nov. 7 have to drop. There is no provision for inflation. If ballot in both Maryland counties that would restrict more houses are built in the county, as they surely local taxing powers. The acronym stands for Tax Re- will be, the tax on each existing house will have to be lief in Montgomery or (in Prince GeorgeÛªs) Maryland, cut. There is no emergency clause. The ceiling could The measures are fueled by the exasperation of prop- be lifted only by another charter amendment and erty owners who see local budgets continue to go up referendum like this one.</br></br>when population is almost static, as in Montgomery, The trouble with these arbitrary and rigid limits is</br></br>In Montgomery, where the budget has been rising authority that they need to meet unexpected chal-fast, TRIM is widely regarded as a right-wing attack lenges. But if the solution is a bad one, it also has to' on schools and services. While all the candidates are be said that the distress is real. Sudden increases in calling for restraint in spending, most of them have real-estate assessments impose unpredictable and in-declined to endorse the amendment. In Prince escapable burdens on families with fixed incomes, GeorgeÛªs the budget, corrected for inflation, is ac- families with children to educate, families coping tually a little lower now than it was five years ago. with major illnesses. Jumps in assessment increase There TRIM travels as a cause of the liberals, protect- the segregation of suburban neighborhoods by age big working people hard pressed by inflation, and and income. ItÛªs not the assessorÛªs fault. ItÛªs another virtually all of the candidates have endorsed it. unhealthy consequence of inflation.</br></br>The two amendments differ sharply. MontgomeryÛªs Ideally, the remedy is to shift more of the local tax TRIM would hold the real-estate tax rat6 to $2.25 per burden from the property tax to the income tax, which $100 of assessed value. ThatÛªs a rollback of 35 cents, ac- is far better designed to take account of individual cording to TRIM; some of its opponents argue that it familiesÛª differing circumstances. But just as tradition would squeeze out other taxes as well, and have wider gives the property tax to the counties, it gives the ineffects than its authors intended. If it passes, that will be come tax to the state. That can be chainged, but not rap* a question for the courts. The amendment has, at least, a idly. If the TRIM amendments pass, they will mean that safety valve. In a declared emergency, the county coun- those two big counties will have less discretion in self-cilÛÓby a vote of six out of its seven membersÛÓcould ex- government at home, and will have to turn to the state ceed the ceiling. But even with the ceiling, taxes could more often. That would be particularly true in the case continue to rise with a houseÛªs assessment of Prince GeorgeÛªs, as inflation shrank the value of | no | 0 |
Va. Unemployment Hits 7.8 Pet. | RICHMOND, March 2ÛÓFierce winter weather and the full impact of the national recession delivered a one-two punch to Virginia in January, sending the stateÛªs unemployment rate to a post-World War II high of 7.8 percent.</br></br>But for those who are out of work, there was an encouraging word; Gov. Charles Robb announced today that the state will reopen 18 branch offices and restore placement services at 12 other locations.</br></br>The jobless rate was the highest since it hit 7' j percent in March 1975, and 1.7 percent higher than January 1980. Things were worse in some of the stateÛªs metropolitan areas, where layoffs were concent rated.</br></br>8.4 percent in January. RoanokeÛªs rate was 7.1 percent in December, and rose to 7.7 percent in January.</br></br>Northern Virginia continued to have the lowest unemployment rate of the stateÛªs metropolitan areas: 4 1 j percent. But even in that populous area, home for many federal employes who work in D.C., the rate was up from 3.9 percent in December. | yes | 1 |
Safe bets for pessimists, or this optimist | The stock market has performed magnificently of late. But the gurus at the No-Load Fund Analyst newsletter forecast that returns for U.S. stocks over the coming five years will be in the low to middle single digits -- far below the long-term annualized return of just under 10 percent.</br></br>I don't share the newsletter's depressing outlook. But I take what its editors say seriously. They are smart, careful investors. In recent years, I've found their asset-allocation calls more helpful than their fund picks. What's more, the lousy returns they're predicting are in line with what a lot of other top market strategists are saying.</br></br>To earn healthier returns in the coming years, Jeremy DeGroot, chief investment officer at No-Load Fund Analyst, is most excited about a handful of unconventional bond funds. But don't expect them to return 10 percent a year, either.</br></br>These are long-term investors who don't try to time the markets or make drastic changes to their recommended asset allocations. They tend to adjust those allocations on the margin based on their assessment of economic conditions and valuations of different asset classes.</br></br>DeGroot and his colleagues forecast grim returns for nearly every part of the stock market. "We don't think this is a typical recession cycle," he says. "Recoveries from financial crises, such as this one, tend to be worse than average recoveries." | yes | 1 |
Nasdaq dealers shunning offer in U.S. inquiry | NEW YORK -- The Justice Department's antitrust investigation of the Nasdaq Stock Market may not result in the neat wrap-up that the agency had sought.</br></br>Executives at major Wall Street securities firms who deal on Nasdaq say they haven't taken up the Justice Department on its offer to commence settlement talks to end the federal agency's year-old investigation of the market's trading practices.</br></br>On the contrary, these Nasdaq-dealing firms say they remain convinced that the Justice Department will have a hard time bringing and proving an antitrust case, and for now it's worth letting the government's investigation grind on.</br></br>In making its settlement overture nearly a month ago, the Justice Department clearly had hoped the dealers would think it best to settle the matter without millions of dollars more in legal costs for both sides. But so far, at least, the major dealers disagree, partly because the Justice Department has been coy about disclosing exactly how it will prove antitrust violations.</br></br>"People don't know what they have, if anything," explained a Wall Street lawyer intimately familiar with the investigations. "It's a big poker game, it's cat and mouse" at this point, with the dealers unwilling to capitulate unless the Justice Department shows more of its hand, this person said. | no | 0 |
Tracking the Economy | TECHNICAL DATA ECONOMIC RELEASE PREVIOUS CONSENSUS INDICATOR PERIOD DATE ACTUAL FORECAST</br></br>Consumer March Monday 97.0 99.3 Confidence</br></br>Existing Home February Monday 3.71 3.80 Sales million million</br></br>Durable Goods February Wednesday +0.2% +0.2% Orders</br></br>Initial Week to Thursday 384,000 418,000 Jobless Claims March 23 | no | 0 |
Stocks Slump On Korean Peace Move | NEW YORK, March 24 t/P).ÛÓ General MacArthurÛªs peace bid to the Chineses Communists, inspired a selling wave in the stock marketj that forced prices down by morel .than $3 a share.</br></br>Most sharply hit were the rails,; i aircrafts, steels, and motors. Not' a single major segment of the market was able to make hoad-Iway against the downward trend.</br></br>| Nervousness was apparent in ! the market from the start of todayÛªs two-hour session. Traders felt their way along cautiously, and then apparently everyone dc-icidcd at once to sell.</br></br>Wall Street does not believe there will be a major change in the United States rearmament program if the Korean war turns from hot to cold.</br></br>But, it is pointed out, the | emphasis on rearmament might well shift from war goods to civilian needs, and there could be changes in taxes, Government controls and the campaign against inflation. | no | 0 |
U.S. News: Existing-Home Sales Fall; Backlog Shrinks | Sales of previously owned homes declined in August, but in a promising sign the backlog of unsold homes shrank.</br></br>Sales of existing homes fell 2.2% in August from the previous month to an annual sales pace of 4.91 million units, the National Association of Realtors said Wednesday. The data cover sales of homes, condominiums and townhouses.</br></br>The inventory of unsold houses fell to a 10.4-month supply at the current sales pace, compared with July's 10.9-month supply. The current inventory is still large, and many analysts say prices must fall even more to attract buyers. The median home price was $203,100 in August, down 9.5% from the year before.</br></br>"We would not expect to see any real stability in the housing market until we work off more of this inventory," said Wachovia Corp. economist Adam York in a note to clients.</br></br>Sales increased in parts of California, Florida and Nevada where subprime loans and foreclosures are heavily concentrated, the NAR said. Chief economist Lawrence Yun noted that sales of deeply discounted properties "are accounting for a disproportionately high level of sales in the current market" and helping to drive down the median sales price. | no | 0 |
Japan's Weak GDP Suggests Little Hope Soon --- Quarterly Figure Off 0.8%; Economists, Officials Wary of Deflation Threat | TOKYO -- News that Japan has fallen into its longest economic contraction in five decades has led some economists and government officials to suggest that the country has nudged closer to a vicious spiral of falling prices, falling employment and falling output that would damage its economy even further.</br></br>Economic activity fell 0.8% during the April-to-June quarter from the previous quarter, the government said Friday, an annualized decline of 3.3%. And with spending by companies and consumers plummeting, there was almost no sign the situation will improve soon.</br></br>"The Japanese economy is walking along the edge of a deflationary spiral," said Taichi Sakaiya, head of the government Economic Planning Agency.</br></br>Even before the gross domestic product numbers were released Friday, the benchmark Nikkei stock index plunged more than 5% amid concern over the economy and the gyrating U.S. stock market. At the end of the morning session on Monday, the Nikkei was up 30.12 points to 13947.10. The dollar weakened almost five yen during the Asian trading day as spooked investors brought dollar investments home and cashed them in for yen. The Japanese bond market touched another record high as yields, which move in the opposite direction of prices, plunged to 0.79% on the benchmark long bond.</br></br>Japan's report on gross domestic product -- the total value of goods and services produced in the economy -- was a litany of problems that exceeded even the downbeat expectations of most private economists. | no | 0 |
Commodities Report: Soybeans Surge on Forecasts For Hotter and Drier Weather | CHICAGO -- Soybean prices closed sharply higher yesterday amid a rare agreement in weather forecasts suggesting hotter and drier-than-normal weather is likely to become entrenched during the first half of August.</br></br>While soybeans can handle some heat and dryness in July, August is the time frame when U.S. soybean yields are determined. After one of the hottest summers since the drought of 1988, soybeans' recuperative powers have been curtailed already this season.</br></br>On the Chicago Board of Trade, the most actively traded November soybean futures contract jumped 18.50 cents a bushel to $5.3650.</br></br>While some skeptical soybean-market bears said some of the rally was a function of end-of-the-month commodity fund positioning, many believe the recent increased volatility is likely to remain a feature of this market into the South American harvests through next May.</br></br>"Today's rally was the culmination of three different factors," explained Dale Durchholz, a market analyst for the farm marketing firm of AgriVisor Services Inc. in Bloomington, Ill. | no | 0 |
Stocks Rose Before The Lights Went Out | Upbeat economic news reassured investors that business is improving, sending stocks moderately higher on a day when a giant power outage struck the Northeast just after the market closed.</br></br>The blackout sent stock exchanges scrambling to switch to backup generators. Major exchanges said they were prepared to open as scheduled on Friday, using backup power if necessary.</br></br>Stocks recouped some of their losses from Wednesday, when a big sell-off in the bond market spilled over to the equity market. As bond prices fall, yields rise, which can make bonds more attractive than stocks.</br></br>Still, the gains were modest, which analysts said was due to investors feeling more cautious with the major indexes near their highs for the summer.</br></br>The Nasdaq composite index rose 13.73, or 0.8 percent, to 1700.34, and the Standard & Poor's 500-stock index advanced 6.48, or 0.7 percent, to 990.51. | no | 0 |
Short-Term Rates Continue Sharp Drop As Federal Funds Charges Lead Decline | NEW YORK -- Short-term interest rates fell sharply again yesterday, continuing a steep decline that began early this month.</br></br>Rates on some Treasury bills tumbled by about three-eighths of a percentage point. The interest rate on federal funds, which are reserves banks lend each other, dropped to as low as 4% yesterday afternoon from Tuesday's average of 9.24%.</br></br>The big drop in rates this month mainly reflects a slowdown in economic growth and a credit-easing move by the Federal Reserve System, many analysts say. But even these analysts contend that yesterday's extremely low federal funds rate probably was an aberration. Banks and savings institutions had to settle their accounts yesterday with the Fed. The funds rate often swings widely on settlement days.</br></br>Interest rates have tumbled in recent weeks despite a huge volume of U.S. notes and bonds that have been sold. Yesterday, the Treasury sold $6.02 billion of new three-year, 11-month notes at an average annual yield of 11.42%. That was down sharply from 13.69% at the previous auction of similar notes last June and was the lowest auction average since last December. The Treasury also sold $1 billion of the notes in a special form, designed for foreign investors, at an average yield of 11.41%.</br></br>"The Fed is engaged in a rather vigorous easing" move, said Robert A. Brusca, vice president and money-market economist at Irving Trust Co. Fed officials, as usual, won't comment on current policy. But Mr. Brusca said he expects banking figures to be released this afternoon by the Fed to confirm that it has eased credit conditions. | no | 0 |
/ -V. . å£l)c il)ttsl)inåÇjton JJost | Retailers in the metropolitan area, while relatively optimistic about sales tor the remainder of the year, agfee that a scheduled pay increase for 300,000 federal white-collar .workers will have little or no effect on- business.</br></br>In fact, a survey of several leading Washington-area merchants yesterday showed that they really havenÛªt factored the pay increase into their store plans. WhatÛªs more, they donÛªt intend to make any adjustments based on President ReaganÛªs recommendation, of a 4.8 percent pay hike for white-collar employes.</br></br>Moreover, several merchants pointed out that federal employment in the Washington region is no longer the dominant sector of the work force. It has been replaced by the rapidly growing services industry.</br></br>On the other hand, if the same group of federal employes had succeeded in winning White House approval of a 15.1 percent pay increase, the. effect would he quite significant where retail sales are concerned.</br></br>ÛÏI think it would," agreed Robert J. Mulligan, vice chairman of Woodward & Lnthrnp Inc., the region's biggest department store chain. ÛÏThatÛªs a pretty hefty increase, and I think it has a psychological effect,Û Mulligan said of the 15.1 percent that had been proposed earlier. | no | 0 |
DIGEST | General Electric Capital will give refunds totaling at least $60 million to Montgomery Ward customers who were illegally targeted to repay their credit card debts even though they had filed for bankruptcy protection, the Federal Trade Commission said. Along with the FTC agreement, GE Capital settled a class action lawsuit and entered a consent judgment with attorneys general for all 50 states.</br></br>Consumer credit rose by $6.7 billion in June to $1.256 trillion as auto loans advanced and credit-card borrowing staged a rebound, Federal Reserve figures showed. Analysts had expected an increase of $3.5 billion for June. The gain was the biggest since a $7.5 billion increase in March. Economists watch the Fed's consumer credit statistics because it helps them gauge changes in consumer spending.</br></br>A jury in Los Angeles awarded $760.6 million in punitive damages to 38 former employees who claimed they were harmed by toxic chemicals while building the stealth fighter for Lockheed Martin. The judgment against Exxon, Unocal, Ashland, Shell Oil and DuPont, but not Lockheed, follows a compensatory damages verdict last week in which the workers won $25.4 million.</br></br>Blacks, Hispanics and American Indians are being turned down for home mortgage loans more often than whites at every income level, according to a survey of 7,925 banks, thrifts and credit unions by the Federal Financial Institutions Examination Council. NAACP President Kweisi Mfume said he and Rep. Joseph P. Kennedy II (D-Mass.) will request a Justice Department investigation of bank lending practices. Kennedy and other lawmakers also asked top banking regulators to overhaul their rating system for banks under community-lending laws.</br></br>Two major airlines confirmed they are increasing fares by 4 percent on selected non-business flights. Delta Air Lines said the rate increase will apply to many, but not all, of its leisure tickets. Continental Airlines said it would match the fare increase in all of its domestic markets. Airline analysts said AMR Corp., owner of American Airlines, and American Eagle, also raised prices 4 percent, but company officials were not immediately available to confirm or deny it. | no | 0 |
Among Governors, A Deficit of Foresight | From coast to coast, governors are tiptoeing around gaping deficits in state budgets. They have appeared suddenly, like sinkholes in tapped-out oil fields: $12.5 billion in California, $1.4 billion in Michigan, $533 million in Kentucky. These shortfalls are small by federal standards. But unlike the government in Washington, state governments must balance their budgets every year: Virtually all are forbidden, by law or constitution, from running deficits. As a result, 40 states must close a collective $40 billion in deficits for fiscal 2002, according to the National Association of State Budget Officers.</br></br>But this being an election year, the story doesn't end there. From Hartford to Sacramento, these gaps are generating significant political tension. Virtually every state chief executive has ruled out the most potent revenue-raising weapon in his or her arsenal: income tax increases. And that's a mistake. Governors are turning their backs on the most ready source of revenues -- as well as the fairest and most painless way of raising funds.</br></br>It wasn't always this way. During the last recession, in the early 1990s, governors and big city mayors faced much the same challenge. Many of them, Democrats and Republicans alike, took what seemed to be the easy route. They simply cut spending and pushed through income tax hikes. Presidents George H.W. Bush and Bill Clinton pursued essentially the same strategy, boosting marginal income tax rates on the highest-earning Americans.</br></br>But while the income tax increases of a decade ago proved to be solid fiscal successes, they were abject political failures. And as a result, today's governors treat income tax increases the way members of the Texas congressional delegation treat Enron. They shudder even to mention the powerful force that until recently provided them with immense benefits even though, from a fiscal perspective, it makes the most sense to tax the richest vein of revenues.</br></br>Never mind the hoary debate over regressive sales taxes and progressive taxes on income. Raising taxes on income simply doesn't enter the vocabulary of today's governors, regardless of their party. Instead, today's fiscally challenged governors are earnestly pledging to cut spending, commandeering funds from the tobacco settlement, and placing big bets on two fiscal long-shots: a swift economic recovery and increased federal aid. Those who are raising revenues are embracing less politically painful -- and likely less effective -- taxes on cigarettes, telephones, sales and services. | no | 0 |
US Jobless Claims Disappoint | WASHINGTON (Dow Jones)--New applications for unemployment benefits stayed nearly unchanged from last week, showing that the labor market's recent improvement may be slowing.</br></br>Initial jobless claims decreased by 1,000 to a seasonally adjusted 388,000 in the week ended April 21, the Labor Department said Thursday. Economists surveyed by Dow Jones Newswires predicted that 376,000 new claims would be filed last week.</br></br>It was the third straight week the level topped 385,000 -- claims haven't stayed that consistently high since November.</br></br>The prior week's level of claims was revised up to 389,000 from a previously reported 386,000.</br></br>The four-week moving average of claims, which smoothes out week-to-week volatility, increased by 6,250 to 381,750, the highest reading since the first week of the year. | yes | 1 |
Heard on the Street / Financial Analysis and Commentary | Kindle Is a Page Turner for Amazon Investors</br></br>Amazon.com CEO Jeff Bezos said the Kindle e-book reader is "turning into something special." But just how special for investors?</br></br>Right now, it likely isn't adding to Amazon's bottom line. Mr. Bezos gave a clue Thursday when he told shareholders at the annual meeting they should regard the digital-books business as being in "investment mode" right now rather than a "big cash-flow generator for us."</br></br>His comment reinforces speculation in the publishing industry that Amazon is losing money on at least some of the books it sells for the Kindle. Most of the 290,000 titles available sell for $9.99 or less, a price point in many cases probably below what Amazon pays publishers. Generally speaking, retailers pay 50% of the publishers' list price, which for new, popular titles can be as much $25 to $30.</br></br>Any losses are likely to increase as Kindle-book sales become a bigger part of Amazon's business. E-books are a tiny but rapidly expanding part of the overall market, nearly doubling last year while the overall book market shrank, estimates the Association of American Publishers. Mr. Bezos said Thursday that Kindle sales account for 35% of Amazon's physical book sales for titles available in both formats. | no | 0 |
In Recession, Watch the Stock Ratios: Market Could Be Back Where It Was Just Before the 1987 Crj | Corporate earnings in a typical recession would drop enough to make stock prices as overpriced as they wdre in the summer of 1987.</br></br>Why? It has to do with price-to-earnings ratios, an indicator used to tell whether you're paying too much fof a stock. With lower earnings possible, those ratios could go out of balance quickly.</br></br>Keep that in mind if you venture into the stock market. The bottom line is this: If there is a recession and company profits decline the typical 16 percent to 25 percent, the stock market would be back where it was right before the 1987 crash, with P/E ratios in the low 20s-to-l.</br></br>The stock marketÛªs recent ascent has put P/E ratios at around 16.5-to-1. In 1987, the ratio was about 23-to-l for the 400 companies that make up the Standard & PoorÛªs 400 stock index.</br></br>The P/E ratio for the stock market is a simple calculation derived by dividing the collective prices of companies (in this case the 400 S&P stocks) by the collective eaming9 per share of those companies, The ratio can increase either by the numerator (the stock prices) going up or by the denominator (the earnings) going down. | no | 0 |
Most Banks Keeping Consumer Rates Steady: Market Conditions Preclude Need to Follow | When the Federal Reserve Board moved to curb inflation by boosting interest rates this year, shudders ran through Wall Street. Stock and bond prices plunged, and it was widely assumed that borrowers and savers across the country would soon be seeing higher rates.</br></br>So far, the conventional wisdom has not proven true. Although mortgage rates jumped sharplyÛÓbecause they are tied to the Wall Street capi- tal marketsÛÓmany of the rates that banks pay to depositors or charge for ] consumer loans have remained steady or risen only slightly.</br></br>The reason is market conditions in , the banking industry. Competition to ÐÊ attract loan customers has kept down rates charged for auto and other , loans.</br></br>And banks have so much money ' available that they do not have to Û¢ raise rates paid to customers to at- * tract depositors. '</br></br>Û÷It's an interesting sort of situation. The rules of thumb you would have used [in the past] to look at bank pricing donÛªt seem to be holding," said Alfred Smith, principal economist at NationsBank Corp. in Charlotte, N.C. The prime rateÛÓwhich banks charge their best customersÛÓhas clicked upward a quarter of a point, taking with it certain types of loans that are tied to it, notably home equity lines of credit. But a quick check of banks here and in other parts of the country shows that the reaction on other loan and deposit products has been mild so far. | no | 0 |
Dow Industrials Rally 71 Points As Profits Shine | STRONG EARNINGS reports from International Business Machines and Merrill Lynch propelled the Standard & Poor's 500-stock index to a fresh four-year high.</br></br>The Dow Jones Industrial Average rose 71.57 points, or 0.68%, to 10646.56, a four-month high. It still is down 1.3% for 2005. The S&P 500 rose 0.67%, or 8.22 points, to 1229.35, now up 1.4% this year.</br></br>The Nasdaq Composite Index, home to most technology stocks (though not NYSE-listed IBM), jumped 1.32%, or 28.31 points, to 2173.18. The Nasdaq is at its highest level since the start of January and near its own four-year high, down only 0.1% since the end of 2004.</br></br>"The market continues to be led by two sectors, energy and technology," said Tim Heekin, trading director at San Francisco brokerage firm Thomas Weisel Partners.</br></br>After regular hours, investors received mixed earnings news. Amgen reported better-than-expected results and rose 8% in after-hours trading. But Intel and Motorola fell 1% and 4% respectively after hours, as their profits barely exceeded analyst forecasts. Tech investors now are harder to impress, which could make gains harder. | yes | 1 |
U.S. News: Governor Names Ally to Byrd Seat | West Virginia Gov. Joe Manchin named a political ally Friday to temporarily succeed the late Sen. Robert C. Byrd, clearing the way for Mr. Manchin to seek the seat in a special election.</br></br>Carte Goodwin, a 36-year-old Charleston attorney and Mr. Manchin's former general counsel, will hold the Senate seat until a special election expected in November. Mr. Manchin is likely to be a candidate in that race; Mr. Goodwin said he won't run. Both are Democrats.</br></br>State lawmakers were meeting Friday to set the process for the election. The term of Mr. Byrd, who died last month at age 92 after more than 50 years in the Senate, expires in 2012.</br></br>"I'm truly confident that Carte Goodwin will look out for West Virginia and will do us proud," said Mr. Manchin on Friday at the state capitol in Charleston. He praised Mr. Goodwin for helping draft state mine-safety laws in 2006 after several deadly coal-mining accidents.</br></br>Minutes after Mr. Goodwin is sworn in as a senator Tuesday, he "will make the 60th vote" needed to ensure passage of a bill to extend unemployment benefits, said Sen. Jay Rockefeller (D., W.Va.). The bill has been stalled since Mr. Byrd's death. Republicans and one Democrat, Nebraska Sen. Ben Nelson, have opposed the bill because it would add to the deficit. | no | 0 |
ICICI Bank to Launch Fixed-Rate Home Loans | MUMBAI -- ICICI Bank Ltd., India's largest private sector lender by assets, Thursday said it will launch two new home loan products with interest rates fixed for one and two years--a reminder of the teaser loan schemes which became a banking sector trend in 2009-2010.</br></br>"Fixed interest rates will shield customers from frequent changes in home loan interest rates," the bank said.</br></br>Most lenders, after the 2008 Lehman crisis, had come out with loans at cheaper fixed rates to stimulate consumer demand as global conditions slowed growth in Asia's third-largest economy.</br></br>But, as growth picked up pace and interest rates moved higher, the central bank raised provisioning rules on such loans, leading the lenders to discontinue these schemes.</br></br>ICICI Bank will offer loans at interest rates of 10.50%-11.50% for a fixed one-year tenure. | no | 0 |
Europe's Big Bust Robert J. Samuelson | We can Ieain something from Europe's big bust. It wasn't supposed to happen. By now, ÛÏEC 92ÛÛÓthe European CommunityÛªs latest lunge at creating a vast single marketÛÓwas supposed to have ignited an explosion of new jobs and investment. Instead. Europe is in deep recession. The jobless rate is near 11 percent and headed higher. Europe's distress is one of the great disappointments of the post-Cofd War world)</br></br>Overseeing weak economies, Europe's governments are insecure and passive. Preoccupied with domestic troubles, they havenÛªt provided much leadership on anything, from war in the former Yugoslavia to the turmoil in Russia. EuropeÛªs slump is also hurting our recovery, because Europe buys about a quarter of U.S. exports. But beyond these specific problems, EuropeÛªs faltering economy also provides an object lesson for Americans.</br></br>To many, Europe's welfare states represent a model worth emulating. Please, look again. Their very protectiveness and generosity are self-defeating. ThereÛªs a vicious drde. The combination of rigid wages and generous welfare benefits hampers economic growth; which raises welfare spendingÛÓwhich hampers;.growth. Sooner or later, the system buckles under its own weight. ThatÛªs happening now. All of Europe faces rising social pressures from economic stagnation and big budget deficits.</br></br>To be fair, the immediate cause of EuropeÛªs slump is high German interest rates. These were rased in 1990 to combat inflation cansed by huge spending on German reunification. Unfortunately, Europe's fixed exchange-rate system forced other countries to adopt GermanyÛªs hrigh interest rates. (Countries that keep their currencies locked together must have similar interest rates. Otherwise, massive amounts of money would flow to any country with higher rates.) The effect has been devastating.</br></br>High interest rates may have been needed in Germany, but elsewhere they have simply suffocated economic growth. ÛÏWe donÛªt see any reason for a strong recovery in 1994,Û says British economist Nigel Gault of the consulting service DRI in London. | no | 0 |
Rumor-Prone Market Slips for Third Day: Volume Tops 8 Million | NEW YORK, Sept. 30 (AP)ÛÓThe stock market today took its third loss in a row as some recent gainers wilted under profit taking and Wall Street showed further concern about the chance of stiffening credit for stock purchases.</br></br>it was another busy day, with the ticker late two minutes at the close, and volume at 8.68 million shares compared with 10.61 million yesterday.</br></br>The market advanced in the morning, with the emphasis showing signs of shifting a little from recent speculative favorites to steels, motors and other cyclical issues. But the session ended in a scramble when three big aerospace issues were swamped with orders due to a prediction by a news service that Defense Secretary Robert McNamara would announce the award of the $2 billion contract for the huge C-5A military transport to Lockheed.</br></br>The news spurred Lockheed, brought waves of selling to Boeing and Douglas Aircraft, its rivals for the contract, and resulted in a halt in trading in all three stocks. After the market close, McNamara made the announcement.</br></br>The Dow Jones Industrial average, which had been up as much as 3.29 at noon, ended with a net loss of 1.81 at 930.58. | no | 0 |
London Stock Exchange Urges More Use Of Arbitrage, Hedging in Crash Report --- Special to The Wall Street Journal | LONDON -- Participants in the British stock market should increase their use of arbitrage and hedging techniques to help prevent a repeat of the October stock market crash, London's stock exchange said Wednesday.</br></br>The recommendation, which contrasts with the sharp criticism of hedging and arbitrage techniques in similar reports on the New York market crash, came in a detailed study on the crash and its aftermath by the stock exchange's quality of markets unit.</br></br>Unlike U.S. reports on the crash, the study didn't propose any change in the regulatory system for the London stock market and didn't suggest the need for restrictions on trading during times of market volatility.</br></br>Trading systems "coped remarkably well" in the week of the Oct. 19 market crash, the report concluded.</br></br>Arbitrage and other index hedging techniques are relatively rare in Britain, the report said. The lack of these techniques caused the London options and futures markets to trade at a substantial discount to the cash market during the crash, the report adds. | no | 0 |
Fed Finds Few Banks Lifted Time-Deposit Rate | A Federal Reserve Board survey indicated yesterday that banks made relatively little immediate use of the authority given them in early December to raise interest rates on time deposits.</br></br>Less than one-fourth of all banks which belong to the Federal Reserve System, the Board said, raised rates on any type of time or savings deposit immediately after early December or said they had plans to do so.</br></br>In a move toward tighter money, the Board on Dec. 3 had raised the discount rateÛÓ the fee banks must pay the Federal Reserve to borrow moneyÛÓand authorized an increase in the interest rate on time deposits to 5.5 per cent.</br></br>Tlie previous rate was 4 per cent on time deposits of 30-89 days and 4.5 per cent on deposits of 90 or more days. The maximum 4 per cent interest rate on passbook savings accounts remained unchanged.</br></br>In its survey, the Board asked member banks to report interest rates as of Dec. 3 and any changes made after that date. Reports were received, from 6192 of the 6221 [member banks, the Board I said. | no | 0 |
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Description
This dataset is the HuggingFace version of this dataset.
It has been reduced to the task of relevance detection. Each text has a label representing whether it is related to the US Economy or not. Hence, it is exclusively focused on the US economy and not the topic "economics" as a global one.
Full credits to the author on Kaggle.
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Models trained or fine-tuned on samchain/economics-relevance