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News Comment
"A View From Across The Pond" an Englishman's personal view of the week's news in the USA -
from Erithacus

Stock Markets remained unhappy this week as a string of uncomfortable economic data was only interrupted by company profit warnings and reports of a downturn in business. One financial commentator summed up the mood of the Markets with the comment "Investors had virtually no place to hide in February, unless they bet that the Nasdaq market would fall off a cliff". By the end of the week the Dow Jones index had reached 10466.31, which in fact was 24.41 higher than the previous week’s close. The Nasdaq, however, lost a further 144.88 points to end the week at a miserable 2117.63 with many predicting further falls to come. The closing levels of both these important indexes came as a relief to many traders, following sharper falls during Friday that many had seen as the start of a serious market crash.

Having the greatest effect on Friday’s markets was news released after market close on Thursday by Oracle that it would miss earning forecasts for the most recent quarter. Earlier in the week the failure by the Federal Reserve’s Chairman, Alan Greenspan, to announce a further interest rate cut had also disappointed the Markets, yet Mr Greenspan’s speech was positive and upbeat, confirming his opinion that a further cut was not needed at this stage and that the economy was not heading for recession. Some economic analysts are not so sure, and few now predict any significant upturn in either the economy or the Stock Markets before the third quarter of this year.

Treasury Secretary Paul O’Neill expressed delight at the swift action by the House of Representatives on President Bush’s proposed tax cuts, and suggested that even more was possible. Appearing on the Fox News program and asked whether the cuts would be enough to boost the slowing economy, he replied, "It’s not over yet." A more specific question about whether a larger tax cut this year might be necessary in light of the current economic slowdown, O'Neill added: "As I said, I think it's not over yet'' and added, "Getting money back to people right away is really an important thing to do.'' On the subject of federal spending, Paul O’Neill answered questions about the President’s proposal to limit increases to 4%. When pressed on the issue of what would be done should the 4% prove to be inadequate, he said, "If we get to that pass, I suppose we'll have to deal with it. It ought to be a cakewalk to live within 4 percent.'' He said it was not clear whether the economy already was in recession, but was a little more positive on when economic recovery might start: "Fairly soon", he said, "I'm hopeful we're going to see a quick rebound."
Something about this man does not inspire my confidence. Is it only me?

Leaving the economy and financial markets for a moment, I wonder how many people realise just how easily the balance of power in Washington may change? The Senate, as many will know, is split 50-50 between Democrats and Republicans and only under the control of the Republicans because Vice President Dick Cheney has the tie-breaking vote. Less well known, is that the oldest member is in fact 98, has served since first elected in 1954, and although the oldest-ever member of Congress, Strom Thurmond has declared his intention of celebrating his 100th birthday on Capitol Hill. If, however, he should for any reason be unable to continue, then it seems likely his replacement who would be chosen by South Carolina Governor. Jim Hodges, a Democrat, would also be a Democrat and the balance would immediately shift. Amid speculation about Mr Thurmond’s state of health, some are unconcerned. A Republican commented this week, "They can speculate. My guess is Thurmond will be laughing at many of their funerals". Good luck, and good health to him.

4th March 2001                        

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