-Caveat Lector- from: http://www.aci.net/kalliste/ Click Here: <A HREF="http://www.aci.net/kalliste/">The Home Page of J. Orlin Grabbe</A> ----- Leveraged Finance Tiptoeing Through the Tulips The US, with a negative savings rate, continues to borrow from the rest of the world to buy stocks. It was when day traders began buying tulip futures that the professionals started to get nervous. The arrival in the Dutch tulip market of small-time investors - weavers, spinners, grocers - drawn by news of the rising prices of tulip bulbs, marked the beginning of "tulipomania". From that point, in about 1634, it was only a matter of time before the inevitable crash. On the surface, the parallels with the US are a little too close for comfort. According to Edward Chancellor's history of financial speculation, Devil Take the Hindmost, the hallmarks of the Dutch economy of the 1630s were optimism about the trade outlook, a thriving stock market, rising house prices and a consumer boom. In the US, the last three factors are closely linked. Consumers are spending more because they feel wealthier as a result of gains in stocks and real estate. More Americans now own shares, either directly or indirectly, than ever before. According to a survey published last month by the Securities Industry Association and the Investment Company Institute, 49.2m US households - nearly half - own equities, either as individual stocks or through mutual funds. Separate figures from the Federal Reserve, collated by Credit Suisse First Boston, suggest that equities now make up a record proportion of ordinary Americans' total financial assets: more than 60 per cent. The value of households' direct stake in equities is approaching $7,000bn, well over three times the 1990 figure, and represents some 40 per cent of the market. A further 30 per cent is held by mutual funds and private pension funds. Not surprisingly, who US investors are and how they might react to a market correction are matters of concern at the highest level. The Fed used to get nuisance mail from retired savers when it cut interest rates, because a reduction hit interest income. Now when it meets to discuss the possible tightening of monetary policy, as it does this week, the central bankers must consider the reaction of a market propped up on millions of mutual fund savings programmes, pension plans and, yes, day trading accounts. Day traders are, happily, the least of the Fed's worries. Most US retail investors are comparatively unmoved by stock market turbulence, according to the SIA/ICI survey. The typical equity owner is a married 47-year-old with household income of $60,000 and assets of $85,000. True, if this model of calm and stability is using the internet to trade he or she is probably trading at high volume - but only 11 per cent of US investors were trading online when the survey was conducted in January and February this year. The average investor is more likely to seek professional investment advice, views shares as a long-term investment (96 per cent) and does not worry about short-term fluctuations (83 per cent). In 1998, a pretty scary year for all financial markets, nearly half of those investors who owned individual stocks neither bought nor sold. And at least three quarters of those who sold stocks or mutual funds reinvested all or part of the proceeds in the market. That seems to back up the theory that retail investors "buy on the dips" in the market and that it would take a large jolt to dislodge them altogether. A market crash would dispel the wealth effect, but US consumer confidence has proved resilient in the past. Christine Callies, CSFB's US market strategist, points out that even after the multiple shocks of the 1987 stock market crash, rises in interest rates and increases in capital gains tax, "it still took two years before retail activity collapsed". So, a sustained dose of disappointment about returns from the equity market may be the only development likely to dent American shareholders' stoicism. Many investors now appear to believe that recent past performance is a guide to future results. According to PaineWebber and Gallup's monthly investor optimism index, shareholders expect returns from the equity market in the coming year of 15.7 per cent and average annual returns over the next 10 years of 16 per cent. At those rates it would indeed appear foolish to switch out of shares and that message is being peddled to a growing number of Americans. The problem is that while investors in large US company stocks have seen a compound annual rate of return in the 1980s and 1990s of more than 17 per cent, only two other decades since the First World War (the 1920s and the 1950s) have registered double figures. Tulips, anyone? The Financial Times, November 15, 1999 Japanese Finance Japanese Loan Sharks Seek Pound of Flesh Or else just a few body parts. Kenji Utsunomiya, a Japanese lawyer, sits in his Tokyo office and switches on a cassette player. Out shrieks the voice of a debt collector: "Get the money you owe!" "I can't," the debtor replies. "Then sell something: your house, your kidney, liver! Your eyes - an eye fetches good money!" Mr Utsunomiya stops the tape. The recording, he says, will be a key piece of evidence in a lawsuit his client, the debtor, is bringing against Nichiei, Japan's largest shoko, or commercial lending group, for alleged usury and improper business methods. "This recording is important evidence," he warns solemnly. "Something is wrong in Japan's [commercial lending] business." When the scandal of the debt collector's tactics hit the press, dozens of harassed debtors began seeking lawyers such as Mr Utsunomiya to seek redress through the courts. Nichiei and Shohkoh Fund, Japan's two largest shoko groups, are facing hundreds of lawsuits, and Japanese regulators are considering suspending Nichiei's operations. The companies deny the charges. But as more debt dramas are unearthed by the media, Japan is being forced to confront the seamier side of some of its business practices and the economic cost of its distorted financial system. The shoko sector plays an important role in the economy: it has an estimated 2m clients and ¥8,000bn (£47bn) in outstanding loans. It fills a niche that commercial banks will not touch by extending unsecured loans to small businesses. Instead of collateral, the shoko rely on traditional social ties to back loans. Under this scheme, a borrower qualifies for a loan, usually less than ¥10m, if he can name two or three people who can guarantee repayment in case of default. Shoko finance companies charge interest rates of up to 40 per cent, compared with the long-term market interest rate of 2 per cent, and their default rates are lower than banks. As a result, they are highly profitable and have become a hot stock for foreign investors and investment bankers. Citibank recently arranged more than ¥100bn of securitised finance for Shohkoh, while Merrill Lynch arranged around ¥20bn worth of funds for Nichiei. Domestic investors have remained wary. For what most Japanese know - but avoid discussing with foreigners - is that shoko loans have been inflicting tremendous hardship on some Japanese families during the recession. "Most Japanese will not buy shoko shares," a senior fund manager at one of Japan's largest brokers recently said. "We feel national shame." The lawsuit Mr Utsunomiya is handling is a case in point. In 1995, the president of a small construction company in Chiba needed to borrow ¥2m to pay his workers. He could not raise a bank loan so he asked a 57-year-old neighbour to be a guarantor for a Nichiei loan. Although the neighbour earned just ¥160,000 a month, he could not refuse this "duty" because he had recently received work from the company president's brother. The construction company went bankrupt in 1997. Nichiei demanded repayment. By then, the outstanding loan had risen from ¥2m to ¥7m without the guarantor's knowledge, a sum he could not pay. When a subsidiary of Nichiei started harassing him - and suggesting that he sell a body organ to raise funds - the guarantor had a nervous breakdown. Nichiei insists that this case was an isolated incident. "Our company has never told debtors [to sell their body parts], and we have never cheated on interest rates," says the company. It points out that most of the 300 lawsuits against Nichiei are challenging the interest rate charged, not its debt collection methods. Taro Yamazaki, deputy general manager of Shohkoh Fund finance department, says: "We have never used aggressive methods to collect debts." But Japanese lawyers suing the companies claim such cases are widespread, and have even led to suicides. For in Japan, unlike most western countries, suicide does not invalidate a life assurance policy - giving families the means to repay shoko loans. "Often the [borrower] will have made family members the guarantors," claims Mr Utsunomiya. "So, there is no escape, except suicide." Such allegations may not stand up in court. The shame associated with debt in Japan means that few victims record alleged telephone threats. Nevertheless, the scandal has prompted the government to consider cutting the maximum permitted interest rate from 40 per cent to 30 per cent. The guarantor system may also be abolished. The reforms might deliver a cleaner shoko industry. In the meantime, the credit crunch that gave rise to the shoko industry has not gone away. Government loans for small businesses are providing some relief, but demand for affordable loans remains unsatisfied. "What we need to do is rebuild a healthy, private-sector financial system - that is the best solution," admits one Ministry of Finance official. "Without this, creating a sustainable economic recovery will be difficult." The Financial Times, November 15, 1999 US-China Negotiations Over China's Entry into WTO Continue No deal unless China agrees to let the NSA run Chinese telecommunications. WASHINGTON - As Prime Minister Zhu Rongji of China began a delicate state visit to the United States, President Bill Clinton made a strong pitch Wednesday for the country's membership in the World Trade Organization, calling such a move ''profoundly in our national interests.'' WTO membership has been resisted by some in Congress because of China's trade barriers and human-rights practices. Speaking to a conference of the U.S. Institute of Peace, Mr. Clinton said the United States had ''an interest in integrating China into the world trading system'' and in seeing it join the World Trade Organization on ''clearly acceptable commercial terms.'' He said: ''Getting this done and getting it done right is profoundly in our national interest. It is not a favor to China. It is the best way to level the playing field.'' Chinese membership, he added, ''will give us broad access to China's markets while accelerating its internal reforms.'' Although he gave no indication of the timing of the next U.S. step in the process of China's WTO application, Mr. Clinton issued one of his strongest defenses yet of a policy of engaging with Beijing. ''The bottom line is this,'' the president said. ''If China is willing to play by the global rules of trade, it would be an inexplicable mistake for the United States to say no.'' To join the body, Beijing must negotiate agreements with its major trading partners to lower obstacles to the import of foreign goods. The United States is China's largest trading partner - the U.S. trade deficit with China was $57 billion last year - and an endorsement by Washington would carry great weight at a major meeting of the world trade body in November. U.S. officials say progress has been made in intense bilateral negotiations on trade sectors such as agriculture and telecommunications, but they also say that a breakthrough allowing announcement of an overall agreement during Mr. Zhu's visit appears unlikely. If the White House does fully endorse Chinese membership, it would still face a congressional hurdle: Congress would have to approve permanent most-favored-nation trading status for China. For years, the annual renewal of this status on a temporary basis has been hotly debated in Congress before passing. A spokesman for the U.S. trade representative's office declined to comment on what chances there might be for an agreement during Mr. Zhu's visit. ''The fact Zhu's in town will not force our hand,'' the spokesman said. ''We're willing to negotiate beyond his visit.'' If Washington and Beijing do settle their bilateral differences, that still leaves many other countries, including the 15 European Union members and Canada, to work out their own packages on trade in goods and services with the Chinese. But an agreement in Washington ''will inject confidence and momentum into negotiations,'' a European Commission official, Hiddo Houben, told Reuters. ''People will think that if the U.S. is satisfied, then other countries will negotiate to try and come to a conclusion fairly rapidly,'' he said. In his speech, Mr. Clinton said that China was following a politically perilous path toward adopting reforms clearly in the U.S. interest. Mr. Clinton warned American politicians ''in a political season'' not to revert to a Cold War mentality toward China because of controversies over human rights, trade and alleged spying at U.S. nuclear laboratories. He displayed unusual empathy with the problems facing the Beijing leadership as it attempts broad economic reforms, saying that the Chinese were just as wary of U.S. intentions as Americans were of the Chinese. The leadership under Mr. Zhu and President Jiang Zemin is ''committed to making necessary, far-reaching changes,'' Mr. Clinton said, by working to reform banks and state enterprises and fight corruption. But Beijing labors under grave fears that reform, in the short run, will bring higher unemployment, leading in turn to unrest, he said. The United States, Mr. Clinton said, must seek to bolster the cause of reform but realize that China is coping with ''the kinds of problems a society can face when it is moving away from the rule of fear but is not yet firmly rooted in the rule of law.'' ''We can't do that,'' he said, ''simply by confronting China or trying to contain her.'' China is depicted by some Americans as a huge economic opportunity, by others as a looming military threat, Mr. Clinton said. It has the resources to take the latter road, he said, but it is ''far from inevitable'' that China will choose this path. ''We should not make it more likely that China will choose this path by acting as if that decision had already been made,'' he said. Even while remaining prepared if China chooses the militaristic path, Mr. Clinton said, ''Let us not forget the risks of a weak China, beset by internal conflicts, social dislocation and criminal instability.'' International Herald Tribune, November 15, 1999 Evolution Homo Sapiens Declared Extinct Humans have finally gone, but the 24-hour global party continues. by Bruce Sterling A D 2380: After a painstaking ten-year search, from the Tibetan highlands to the Brazilian rainforests, it's official - there are no more human beings. "I suppose I have to consider this a personal setback," said anthropologist Dr Marcia Raymo, of the Institute for Retrograde Study in Berlin. "Of course we still have human tissue in the lab, and we could clone as many specimens of Homo sapiens as we like. But that species was always known primarily for its unique cultural activity." "I can't understand what the fuss is about," declared Rita "Cuddles" Srinivasan, actress, sex symbol and computer peripheral. "Artificial Intelligences love to embody themselves in human forms like mine, to wallow in sex and eating. I'm good for oodles of human stuff, scratching, sleeping, sneezing, you can name it. As long as AIs honour their origins, you'll see plenty of disembodied intelligences slumming around in human forms. That's where all the fun is, I promise - trust me." The actress's current AI sponsor further remarked via wireless telepathy that Miss Srinivasan's occasional extra arms or heads should be seen as a sign of "creative brio", and not as a violation of "some obsolete, supposedly standard human form". A worldwide survey of skull contents in April 2379 revealed no living citizen with less than 35 per cent cultured gelbrain. "That pretty well kicks it in the head for me," declared statistician Piers Euler, the front identity for a collaborative group-mind of mathematicians at the Bourbaki Academy in Paris. "I don't see how you can declare any entity 'human' when their brain is a gelatin lattice, and every cell of their body contains extensive extra strands of industrial-strength DNA. Not only is humanity extinct but, strictly speaking, pretty much everyone alive today should be classified as a unique, post-natural, one-of-a-kind species." "I was born human," admitted 380-year-old classical musician Soon Yi, speaking from his support vat in Shanghai. "I grew up as a human being. It seemed quite natural at the time. For hundreds of years on the state-supported concert circuit, I promoted myself as a 'humanist', supporting and promoting human high culture. But at this point, I should be honest: that was always my stage pretence. Let's face it: gelbrain is vastly better stuff than those grey, greasy, catch-as-catch-can human neurons. You can't become a serious professional artiste while using nothing but all-natural animal tissue in your head. It's just absurd!" Gently fanning his wizened tissues with warm currents of support fluid, the grand old man of music continued: "Wolfgang Mozart was a very dull creature by our modern standards but, thanks to gelbrain, I can still find ways to pump life into his primitive compositions. I also persist in finding Bach worthwhile, even in today's ultracivilized milieu, where individual consciousness and creative subjectivity tend to be rather rare, or absent entirely." Posthumanity's most scientifically advanced group, the pioneer Blood Bathers in their vast crystalline castles in the Oort Cloud, could not be reached for comment. "Why trouble the highly prestigious Blood Bathers with some trifling development here on distant Earth?" demanded President Arno Hopmeier of the World Anti-subjectivist Council. "The Blood Bathers are busily researching novel realms of complex organization far beyond mere 'intelligence'. We should feel extremely honoured that they still bother to share their lab results with creatures like us. It would only annoy Their Skinless Eminences if we ask them to fret over some defunct race of featherless bipeds." A Circumsolar Day of Mourning has been declared to commemorate the official extinction of humanity, but it is widely believed that bursts of wild public enthusiasm will mar the funereal proceedings. "When you sum them up," mused Orbital Entity Ankh/Ghih/9819, "it's hard to perceive any tragedy in this long-awaited event. Beasts, birds, butterflies, even the very rocks and rivers must be rejoicing to see humans finally gone. We should try to be adult about this: we should take a deep breath, turn our face to the light of the future, and get on with the business of living. "Since I've been asked to offer an epitaph," the highly distributed poetware continued, "I believe that we should rearrange the Great Wall of China to spell out (in Chinese of course, since most of them were always Chinese) - 'THEY WERE VERY, VERY CURIOUS, BUT NOT AT ALL FARSIGHTED. ' "This historical moment is a serious occasion that requires a sense of public dignity. My dog, for instance, says he'll truly miss humanity. But then again, my dog says a lot of things." ------------------------------------------------------------------------ Bruce Sterling (http://www.well.com/conf/mirrorshades/) is the author of Schis matrix and many other novels and stories; the nonfiction work The Hacker Crackdown; coauthor (with William Gibson) of The Difference Engine; and editor of Mirrorshades: The Cyberpunk Anthology. Nature, November 11, 1999 ----- Aloha, He'Ping, Om, Shalom, Salaam. Em Hotep, Peace Be, Omnia Bona Bonis, All My Relations. Adieu, Adios, Aloha. Amen. Roads End 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. That being said, CTRL gives no endorsement to the validity of posts, and always suggests to readers; be wary of what you read. CTRL gives no credeence to Holocaust denial and nazi's need not apply. Let us please be civil and as always, Caveat Lector. ======================================================================== Archives Available at: http://home.ease.lsoft.com/archives/CTRL.html http:[EMAIL PROTECTED]/ ======================================================================== To subscribe to Conspiracy Theory Research List[CTRL] send email: SUBSCRIBE CTRL [to:] [EMAIL PROTECTED] To UNsubscribe to Conspiracy Theory Research List[CTRL] send email: SIGNOFF CTRL [to:] [EMAIL PROTECTED] Om
