-Caveat Lector- from: http://www.aci.net/kalliste/ <A HREF="http://www.aci.net/kalliste/">The Home Page of J. Orlin Grabbe</A> ----- ------------------------------------------------------------------------ Today's Lesson from The Catcher in the Rye by J.D. Salinger If you really want to hear about it, the first thing you'll probably want to know is where I was born, and what my lousy childhood was like, and how my parents were occupied and all before they had me, and all that David Copperfield kind of crap, but I don't feel like going into it, if you want to know the truth. In the first place, that stuff bores me, and in the second place, my parents would have about two hemorrhages apiece if I told anything pretty personal about them. They're quite touchy about anything like that, especially my father. They're nice and all--I'm not saying that--but they're also touchy as hell. Besides, I'm not going to tell you my whole goddamn autobiography or anything. I'll just tell you about this madman stuff that happened to me around last Christmas just before I got pretty run-down and had to come out here and take it easy. I mean that's all I told D.B. about, and he's my brother and all. He's in Hollywood. That isn't too far from this crumby place, and he comes over and visits me practically every week end. He's going to drive me home when I go home next month maybe. He just got a Jaguar. One of those little English jobs that can do around two hundred miles an hour. It cost him damn near four thousand bucks. He's got a lot of dough now. He didn't use to. He used to be just a regular writer, when he was home. He wrote this terrific book of short stories, The Secret Goldfish, in case you never heard of him. The best one in it was "The Secret Goldfish." It was about this little kid who wouldn't let anybody look at his goldfish because he'd bought it with his own money. It killed me. Now he's out in Hollywood, D.B., being a prostitute. If there's one thing I hate, it's the movies. Don't even mention them to me. ===== Bubble Trouble Should Central Banks Prick Asset-Price Bubbles? I'm not a central banker, but I play one on TV IN 1994, at a conference to celebrate the tercentenary of the Bank of England, Alan Greenspan, chairman of America�s Federal Reserve, raised the delicate question of whether central banks should worry more about asset-price bubbles. He concluded: �I would much prefer to be in an area where I could ask that question rather than answer it.� Five years later, discussing the same issue at the annual symposium last weekend of the Federal Reserve Bank of Kansas City in Jackson Hole, Wyoming, he was still searching for an answer. Mr Greenspan told the gathering of central bankers that the prices of shares and property are playing an increasing role in driving economies; and thus that central bankers need to pay more attention to asset prices. The snag is that there is huge uncertainty about the correct value of assets, let alone their impact on the economy. Mr Greenspan suggested that profits were being understated in company�s published accounts, and that this might justify some of the sharp rise in American share prices. But he said it is unlikely that this could be the central explanation. Privately, many at Jackson Hole thought that America�s stockmarket and economy were looking suspiciously bubble-like. But Mr Greenspan insists that there is no way to be sure. This uncertainty makes it hard for a central bank to prick a bubble in its early stages, in order to prevent it bursting later with more painful effects. Indeed, the general consensus among central bankers is that monetary policy should not try to respond directly to share prices. There was therefore huge relief that the paper on asset prices and monetary policy commissioned for the Jackson Hole conference fully supported this view. Ben Bernanke of Princeton University and Mark Gertler of New York University concluded that central banks should focus solely on consumer-price inflation; share prices should never be a direct target of monetary policy. They should raise interest rates in response to a rise in asset prices only if it spills over into excessive demand�and hence threatens higher inflation. The authors used an economic model to simulate the impact of an asset-price bubble on the economy and found that if a central bank aims directly at asset prices it can create more not less instability. One problem with the study is that the simulations assume that, when the central bank pursues a simple inflation target, investors, firms and consumers will expect interest rates to go up if rising share prices do in fact threaten to push up future inflation. This expectation helps to dampen share prices. But what if investors instead believe that the central bank will not raise interest rates until there is hard evidence of inflation�but it will always slash interest rates if share prices fall sharply? This belief is widely held in America today. Although the Fed appears to believe that it should do nothing to prevent share prices from rising, Mr Greenspan has made clear that it would cut interest rates fast if the market crashed and threatened to inflict serious economic damage. In this way, though, the Fed may have inadvertently created a sort of moral hazard, encouraging investors to buy shares in the belief that it will always step in to prevent a collapse. Fearful asymmetry When accused of acting asymmetrically, Mr Greenspan insisted that �the markets are asymmetric; we are not.� Central banks respond neither to a gradual rise in share prices nor to a gradual fall, he said; they respond only to sharp movements, which tend to be declines, as in October 1987 or last autumn. Nevertheless, if the market perceives an asymmetry in monetary policy, this is bound to foster moral hazard. Moreover, even if one accepts that central banks should take account of asset prices only if they are expected to feed into future inflation, America�s monetary policy has been too lax. Messrs Bernanke and Gertler find that in the early and mid-1990s the Fed held interest rates below the level their model predicted if policy were aimed at future inflation. The Federal Reserve might have had a livelier if less comfortable debate on asset prices had it invited along more central bankers or economists of the opposing viewpoint. Charles Goodhart, a member of the Bank of England�s monetary policy committee, presented a controversial paper on asset prices at a Eurostat conference this week. He argued that central bankers have focused on too narrow a measure of inflation and that the prices of houses and financial assets should be included in a broader inflation index. If inflation is defined as a fall in the value of money then the price of future consumption matters as much as the price of goods and services consumed today. Mr Goodhart argues, therefore, that a rise in the price of a house (a claim on future housing services) or a share (a claim on future dividends) should be counted as inflation, just as much as a rise in the prices of carrots or cars. The Bank of England could soon face precisely Mr Goodhart�s problem. House prices in Britain are rising fast, creating fears of higher inflation unless interest rates go up. So far the fears may be overdone: house prices in most of the country are still below their level in 1989. But the Bank will be loth to repeat the mistake of the late 1980s, when too lax a monetary policy inflated a property-price bubble. For that, in turn, encouraged a massive borrowing binge, which fuelled inflation. Thus in the late 1980s private-sector net savings in Britain swung from a surplus of 4% of GDP to a deficit of 5% of GDP. America has experienced an almost identical deterioration in its private-sector net savings in recent years. Britain�s deficit proved to be unsustainable, causing the economy to suffer a hard landing once the bubble burst. The argument against Mr Greenspan is that it would have been better to seek to prevent a bubble inflating in the first place, even if that meant raising interest rates before consumer-price inflation took off. The Economist, September 4-10th, 1999 Land of Mochtar Riady Thousands Desert Indonesian Army to Join East Timor Violence How much we hate independence JAKARTA - As the bloodletting in East Timor worsened, diplomats and military analysts said Monday that they had received new evidence that thousands of East Timorese members of the Indonesian Army and national police had deserted their units, and had effectively joined the militias in their violent rampage. ''It's a mutiny-like situation,'' said a Western military analyst here. ''You've got a breakdown of command and control, and a lot of desertions.'' The desertions, the analyst said, raised questions about whether the armed forces commander, General Wiranto, was orchestrating the mayhem, or, perhaps more worrying, whether he had lost control of his own army. But while the situation in East Timor appeared to be spiraling out of control - with fires burning throughout the capital, Dili, and gunfire and grenade explosions continuous - diplomats and others said the word ''anarchy'' did not properly describe the situation. While the armed mobs ruled the streets, they still appeared to be acting with purpose and direction - and even some apparent restraint. The United Nations compound still has not been directly attacked, for example, suggesting that someone had given the order that it was off-limits to an assault. The UN office is ''not actually coming under direct attack, so there still seems to be that barrier there,'' said a Western diplomat evacuated from Dili. ''It's not really total chaos, because these guys are under control,'' he added. The UN evacuated about 200 people, or half its staff, to Darwin, Australia. The Australian government also began special evacuation flights for foreigners. The death toll from the rampage was believed to be in the hundreds, and one diplomat here said she had heard reports of bodies being dumped into mass graves across the border in West Timor. Among those singled out for execution were well-known pro-independence leaders, according to diplomats and other sources. ''In Atambua, we have heard reports that many people are being killed, and big holes are being dug to bury them,'' said Ana Gomes, who heads the Portuguese Consulate in Jakarta. She added that the reports could not be independently verified. ''This is a nightmare,'' she said. ''This is as bad as the things we had in Rwanda.'' With chaos gripping the territory, Xanana Gusmao, the jailed independence leader, rejected an Indonesian government plan to release him Wednesday in East Timor's capital, Dili, to the custody of the UN. With the UN compound there under siege, and the military and policemen apparently now actively engaged in the violence, Mr. Gusmao's supporters said the Indonesian plan amounted to a certain death sentence for the independence leader. After meeting with Justice Minister Muladi, Mr. Gusmao agreed to be released in Jakarta, and will decide later where he will go. His lawyer, Hendardi, said Australia had offered to give Mr. Gusmao sanctuary. There are an estimated 6,000 East Timorese in the Indonesian Army in the territory - including two all-Timorese battalions - serving as noncommissioned officers and soldiers of the regular army, the so-called ''territorial forces.'' In addition, there are about 1,000 East Timorese serving in the national police force and based in Timor, according to military analysts. Most of these soldiers and police are said to have mutinied and are responsible for much of the current mayhem in Timor, the analysts said. Diplomats, UN officials, and other foreigners in East Timor have reported seeing police and army troops firing on vehicles and openly assisting the militias. Until Monday, diplomats and other said they had been unable to confirm that these troops had actually deserted their units. General Wiranto has said he is racing three new army battalions to East Timor to help quell the violence that erupted on Saturday, after the results of an Aug. 30 referendum showed an overwhelming 78.5 percent of East Timorese wanted independence from Jakarta. Some of those new troops have already arrived. But the diplomats said these new troops, many of them Javanese, have found themselves outnumbered by the East Timorese mutineers - and there may have already been clashes. ''We've already heard reports of soldiers shooting soldiers,'' a Western military analyst said. ''They are running amok,'' said Salim Said, a political scientist and military analyst who teaches at the army staff college in Bandung. ''I think what is going on in East Timor now can probably be described as desertions by East Timorese members of the Indonesian military who are now running amok in East Timor.'' The opposition leader and front-running presidential candidate, Megawati Sukarnoputri, also weighed in on the Timor crisis, blaming the incumbent, B.J. Habibie, for the violence and holding him personally responsible as head of state and supreme commander of the armed forces. It was Mr. Habibie who set recent events in motion with his surprise decision in January to hold a ''snap referendum'' on East Timor's fate, giving the people a choice between staying in Indonesia with broad autonomy, or independence. But Mrs. Megawati on Monday accused Mr. Habibie's government of pursuing a two-track policy, saying ''on the one hand, it offered a referendum with the appearance of a democracy policy,'' while on the other hand, it exerted efforts to retain East Timor ''by whatever means, including also by letting violence drag on.'' Mrs. Megawati again promised that if she becomes president, she would respect the outcome of the referendum. International Herald Tribune, September 7, 1999 Deflation Chinese Deflation Picks Up Stream Oops, the government can't stop it. Fancy that. China's finance minister warned last night that the government might not be able to put a stop to deflation. Xiang Huaicheng's warning comes despite the fact that extra spending to combat 22 months of falling prices has pushed the budget deficit to a record Rmb180bn ($21.7bn) this year - nearly double last year's. Saying he was not "over-optimistic" about Beijing's ability to halt deflation, Mr Xiang said it "might be more difficult to solve than inflation". The extra spending includes Rmb54bn in wage, pension and unemployment benefits announced over the weekend. Government efforts to boost the economy had placed severe strain on government finances, necessitating the issue of a record amount of treasury bonds, Mr Xiang said. But China was resolved to reform its government finances, making the budget more transparent and boosting tax collection. Several measures were planned to reduce the deficit, including the introduction of a new social security tax to fund welfare payments, he said. The planned tax, which economists say may resemble Singapore's Central Provident Fund, will require contributions from both employees and employers, he said. This year's budget outlook, Rmb30bn more than an original target of Rmb150bn, would have been worse had it not been for an unexpected increase in tariff revenues as imports have risen because of a clampdown on smuggling. Overall government tax revenues had risen by 24 per cent in the first seven months, much more than anticipated, and the increase should be 18 per cent for the year as a whole. Still, the higher deficit would necessitate the issue of Rmb401.5bn in treasury bonds, up sharply from an original plan of Rmb341bn and an actual Rmb280bn last year. These figures exclude large special bond issues totalling Rmb60bn this year and Rmb100bn last year to finance urgent infrastructure spending. Mr Xiang sought to deflect concerns among economists that such borrowing was not sustainable since low government revenues of only 12 per cent of gross domestic product made debt hard to service. Total government debt was still only about 10 per cent of GDP, he said. Some Rmb250bn of this year's new bond issues would go to refinance maturing issues rather than add to the net burden. Mr Xiang stressed his "absolute confidence" that the fiscal deficit would not exceed 2 per cent of GDP this year, though he admitted China's accounting methods meant the actual deficit would be higher if calculated on international norms. Pressure on government finances would be reduced by a plan to raise the proportion of government revenues to 20 per cent of GDP within five years. The new social security tax, which will be implemented next year, would help. The Financial Times, September 7, 1999 The Fourth Estate Rupert Murdoch Dumps on the Dalai Lama So the Chinese destroyed Tibet--who cares? RUPERT MURDOCH, the chairman of News Corporation, was condemned by human rights activists and Tibetans yesterday after criticising the Dalai Lama and condoning the Chinese occupation of Tibet. Mr Murdoch, who hopes to expand his business interests in China, said of the leader of Tibetan Buddhism: "I have heard cynics who say he's a very political old monk shuffling around in Gucci shoes." Mr Murdoch, 68, who recently married a 31-year-old Chinese woman, Wendi Deng, also excuses China's disregard for human rights on the ground that the average Chinese person cares more about "his next bowl of rice" than democracy. Tibetan groups in America reacted furiously to Mr Murdoch's comments in an interview with Vanity Fair magazine, calling them "ignorant", "cynical" and "self-serving". His attack comes at a time when the Dalai Lama and the cause of Tibet are more popular than ever in the United States. Mr Murdoch expresses his support for China's forced occupation of Tibet by asking whether Tibet's own culture was ever worth preserving: "It was a pretty terrible old autocratic society out of the Middle Ages. Maybe I'm falling for their propaganda," he says of the Chinese government, "but it was an authoritarian, medieval society without any basic services." "Rupert Murdoch knows nothing about Tibet," said Tashi Tsering, a spokesman for the Tibet Fund, which sends money from the West to Tibetans exiled in India and Nepal. "People like him who work with the Chinese government are directly supporting the occupation of Tibet. He is definitely not someone to make moral judgments, particularly about someone like the Dalai Lama. He should stick to making money." Mr Murdoch says that Tibet's main problem is "that half the people of Tibet still think that the Dalai Lama is the Son of God". The Dalai Lama, however, is supposedly the reincarnation of the first Dalai Lama rather than the son of God. In his ambition to expand his Star satellite television business in China, Mr Murdoch has already been accused of placing his commercial interests above freedom of speech. In 1994, he dropped the BBC from Star after it was critical of Chinese leaders and of the Tiananmen Square killings. Last year, he ordered his publishing company HarperCollins to abandon publication of Chris Patten's recollections of his time as Governor of Hong Kong because they too were critical of the Chinese government. The London Telegraph, September 7, 1999 ----- Aloha, He'Ping, Om, Shalom, Salaam. Em Hotep, Peace Be, Omnia Bona Bonis, All My Relations. Adieu, Adios, Aloha. Amen. Roads End Kris DECLARATION & DISCLAIMER ========== CTRL is a discussion and informational exchange list. Proselyzting propagandic screeds are not allowed. Substance�not soapboxing! These are sordid matters and 'conspiracy theory', with its many half-truths, misdirections and outright frauds is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. 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