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a personal view of the week's news from Erithacus
Another miserable week on the stock markets for many, finished with the FTSE100 significantly under 6000 and at its lowest level in two years. Falls on the U.S. exchanges and continued economic uncertainty in the USA added to the woes of UK investors, although the predictions of many on Friday that the Dow Jones and Nasdaq indices were in freefall and would finish hundreds of points down proved unfounded. Both of these important US indices managed to claw back some of their earlier losses by close, with the Nasdaq, having hit its lowest level since December 1998 at over 88.67 points down, managing to show a gain of 17.55 points on the day at 2262.51 but still 6.7% down on the week after losses in the four preceding trading sessions. The Dow Jones, similarly, recovered from 233 points down to finish 84.9 lower at 10441.9 and 3.3% worse than it started the week. The recovery in the indices happened in just the last half-hour of trading, but although some analysts expect the rally to continue on Monday, most feel it will be short-lived.
Predictions of where the UK stock market will go next are mixed, with analysts seemingly at odds with each other as to whether the present relative strength of the UK economy will prevent the falls deepening. Some are predicting another 10% to 20% will be lost on the value of the FTSE100 before there is a sustained rise, but others point to the strong uptrends shown by companies such as HSBC and BOC, and have commented that at the very least the Markets will remain highly volatile. The FTSE100 has remained above the 5000 level since the Russian financial crisis of the autumn of 1998, but a pessimistic view of the present situation sees falls to that level again in the near future. It should be remembered that just five of the 100 FTSE100 companies make one third of the total index: Glaxo, BP, Vodafone, HSBC and Shell, and the huge falls in Vodaphoneís share value has had a devastating effect both on the value of the index and on the confidence of investors. Similarly, the indexís biggest tech stock, Marconi, has dropped from 700p to 500p in just three weeks, further lowering sentiment generally.
Other UK news this week has concentrated on the outbreak of foot and mouth disease first discovered at an abattoir in Essex. The virus, known to spread quickly and carried by people, vehicles, other animals or even simply in the air, can devastate livestock and is one of the greatest threats to the farming community. During the last widespread outbreak in 1967, thousands of animals were destroyed throughout the country, and already this is being repeated. Although, fortunately, there is no risk to humans from the virus, disruption to everyday life seems certain with movement of animals prohibited, exclusion zones around infected areas and areas where suspected cases of the disease have appeared, exports of meat and most dairy products banned, the public asked to stay away from farms and from the countryside generally. Most disturbing of all is the destruction and burning of farm animals in and near the outbreaks. Devastating as it is for the farmers, there is something far more disturbing in this mass slaughter. Even knowing that all these animals were destined for an abattoir eventually; knowing that this is the realistic and sensible action; not being a vegetarian nor having any particular leaning towards animal rights movements, this killing and burning raises uncomfortable thoughts and images. Difficult as it is to pinpoint the exact source of these disturbing feelings, I wonder whether itís just me?
On a slightly lighter note, it was reported that the U.S. space agency NASA had a major setback after the launch of a huge balloon from the Australian outback resulted in the football-field sized monstrosity floating gently back to Earth not far from its launch site after a few hours. It appeared that the balloon, designed to spend two weeks floating around the globe measuring cosmic radiation, had quite simply sprung a leak. The Australian Broadcasting Corporation who had taken a keen interest in the launch from Alice Springs, merely announced that is was not know what caused the leak. Comments from an inhabitant of Alice Springs that it is fortunate NASA donít manufacture contraceptives, were not broadcast.
I was interested to read this week that the British justice system seems to be undergoing an interesting change. A judge, apparently unimpressed by the attempts of a small group of criminals to rob him as he returned home, gave chase with every intention, it seems, of at least detaining the miscreants if not actually administering summary justice. At the same time, I note that the attorney general, Lord Williams, is urging judges to take an on-going interest in those they convict by visiting them in prison. Whilst wondering whether we will, in the future, actually be able to dispose of so many elements of our legal system now that judges are so keen to perform these additional roles, I also see that Tony Blair intends to visit a prison on Monday. He is, apparently, the first Prime Minister in over 100 years to step inside a prison, which some say explains the state of our justice system. I think there is a more sinister explanation to it all. Itís the ultimate deterrent to criminals: "Commit a crime and we promise you regular visits in prison from judges and from Tony Blair." That should reduce the crime figures dramatically.
24th February 2001