-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 Glass-Bead Game by Hermann Hesse Incidentally, there exists an ancient and honorable exemplar for the attitude of our own culture toward music, a model to which the players of the Glass Bead Game look back with great veneration. We recall that in the legendary China of the Old Kings, music was accorded a dominant place in state and court. It was held that if music throve, all was well with culture and morality and with the kingdom itself. The music masters were required to be the strictest guardians of the original purity of the "venerable keys." If music decayed, that was taken as a sure sign of the downfall of the regime and the state. The poets told horrific fables about the forbidden, diabolic, heaven-offending keys, such as the Tsing Shang Key, and Tsing Tse, the "music of decline"; no sooner were these wicked notes struck in the Royal Palace than the sky darkened, the walls trembled and collapsed, and the kingdom and sovereign went to their doom. ===== Single Currency Euro Tanks Again Investors want to be in dollars when the world ends LONDON - Stock markets rallied worldwide Thursday, while the euro fell to a record low against the dollar, a day after the U.S. central bank raised its interest key rate modestly. The Federal Reserve Board's decision led stock-market investors to believe the central bank would keep the U.S. economy growing at a healthy pace without igniting inflation. ''It's going to keep this recovery going longer than it would otherwise,'' John Llewellyn, chief economist at Lehman Brothers, said. ''That's good for markets.'' The euro, meanwhile, appeared to fall victim to fresh signs Thursday that the U.S. economy was continuing to expand at a robust pace. A survey of U.S. purchasing managers indicated manufacturers were enjoying their strongest level of business since July 1997. The euro's problem is the contrasting positions of the European and U.S. economies, Anne Parker Mills, a senior currency economist at Brown Brothers Harriman & Co., told Bloomberg News. The United States has the best of all possible worlds: strong stock prices, U.S. yields that offer an attractive return and a buoyant dollar. The euro touched a record low of $1.0195 on Thursday. At 4 P.M. in New York, the European currency was at $1.0229, down from 1.0347 on Wednesday. In addition to the signs of strong U.S. growth, the euro was undermined by comments from the German economics minister, Werner Mueller, who said the European Central Bank should support economic growth as long as inflation was not a problem. Although Mr. Mueller said the European bank's half-point rate cut in April had done enough for growth, he appeared to hint at political pressure for lower rates and underscored the continuing inability of European politicians to speak with a common voice on the euro. Jim O'Neill, currency strategist at Goldman Sachs International in London, said the fresh decline raised serious questions. ''This is not reflecting cyclical differences,'' Mr. O'Neill said. ''This is the market apparently not having much confidence in the euro.'' The European Central Bank, as expected, left its own base rate unchanged at 2.5 percent Thursday, half the level of the new U.S. federal funds rate of 5 percent. Stock markets rallied strongly across Asia, with the Nikkei index of 225 Japanese stocks rising 331.01 points, or 1.89 percent, to 17,860.75, its highest level in nearly two years. Stocks also rose by 4.19 percent in South Korea and by 2.17 percent in Singapore. In Europe, the Dow Jones Euro STOXX 50 Index of leading European companies rose 92.15 points, or 2.46 percent, to 3,839.53. On Wall Street, the Dow Jones industrial average, which surged 155 points after the announcement Wednesday by the Federal Reserve, closed 95.62 points higher 11,066.42. The Fed cheered investors because it coupled its small rate increase with a statement that it did not necessarily believe a further increase would be necessary. But the survey of U.S. purchasing managers created fresh uncertainty on Thursday. In addition to pointing to strong growth, the survey showed that prices paid by factories for goods rose to the highest level since October 1997. The Fed conditioned its neutral policy stance by saying it would remain ready to raise rates if inflation showed signs of accelerating. There is still a substantial risk of further Fed tightening, said Mark Cliffe, chief economist at ING Barings. ''The real issue is when is the U.S. economy going to slow? There is still no evidence of this.'' The survey drove long-term interest rates higher. Prices of 30-year U.S. government bonds fell, pushing up their yield to 6.01 percent from the 5.98 percent Wednesday. In Europe, by contrast, expectations of stronger growth had helped support the euro in recent days, but actual evidence of an upturn remains patchy. A survey of European purchasing managers released early Thursday showed sentiment improved among business in the euro zone in June, but much less than in the United States. ''The U.S. numbers are not weak, the European numbers are still soft,'' said Alison Cottrell, senior economist at PaineWebber in London. The Fed move did contain some important reassuring messages, analysts said. It eliminated the risk of a sharp rise in rates in the short term. And as the first rate increase in two years, it signaled that the central bank believed the global financial crisis was largely over. ''The world economy isn't looking very robust, but clearly the worst is past,'' said Richard Davidson, chief European economist at Morgan Stanley Dean Witter. Morgan Stanley recently raised its growth projections for most major economies, with the United States expected to grow by 4 percent this year, the 11-country euro zone by 2.1 percent and Japan essentially flat after a major recession. Elsewhere, the dollar fell to 120.77 yen from 121.23 yen Wednesday. Analysts said the Bank of Japan could be forced to delay a rise in interest rates or intervene on foreign exchange markets to prevent further yen strength from undermining Japan's nascent economic recovery. The government on Thursday reported its foreign reserves fell by a record $22.7 billion in June, evidence that the central bank intervened heavily during the month. ''A further yen rise at this stage could be negative for the recovery,'' said Brendan Brown, chief economist at Mitsubishi Finance International in London. The British pound dropped to $1.5735 from $1.5773. The dollar rose to 1.5692 Swiss francs from 1.5502 francs. International Herald Tribune, July 2, 1999 Coffee Market Specialty Beans Bringing Higher Prices I love the smell of pesticides in the morning This year Victoria Coronel Crúz will harvest half the coffee beans she usually gathers from her tiny, sloping plot in the Sierra Madre mountains of Mexico's Oaxaca state. The diminutive Zapoteca Indian has been busily pruning the coffee bushes growing haphazardly on her communally-owned plot for the first time since they were planted 13 years ago under the shade of rosewood and wild avocado trees. The effort, which also includes making composts and building terraces of branches and leaves to protect against erosion, has earned her crop a highly prized certification as organically-grown coffee. Doña Coronel Crúz reckons that next year she will be able to double her harvest and improve her asking price by as much as a third over the meagre $150 a month she makes growing conventional coffee. Like many coffee growers scraping a living in isolated indigenous communities around Mexico, she is tapping into a growing demand for speciality coffees in North America and Europe that has placed a premium on chemical-free beans. Health-conscious coffee drinkers are willing to pay upwards of a third more for organic coffee - a marked difference over regular Mexican coffee which usually trades at a 30 per cent discount to international prices. Added to the insurance it provides subsistence farmers against otherwise volatile coffee prices, organic coffee is our only option, says Antelmo Perez España, secretary for the 21st of September coffee growers co-operative in Oaxaca, Mexico's second largest coffee producing state. Unlike Brazil and Columbia which have boosted yields through the use of pesticides and the removal of forest cover, Mexico's traditional harvesting methods have made it a natural candidate for organically-grown coffee. Since pioneering the first crop in 1967 it has become the world's leading producer, harvesting 60,000 60kg sacks a year for export to Europe, the US and Japan. But while the goal of groups like the Oaxaca State Coffee Producers Network (CEPCO), an umbrella organisation representing 45 state co-operatives, is to convert all its 23,000 members to organic coffee, less than 3 per cent of its small landholders are certified. The protracted certification process is not only prohibitively expensive for such grassroots organisations but culturally demanding. Farmers, often illiterate and unsure as to the size of their land, balk at having to fill out detailed reports, says Jesús Martínez Salazar, co-ordinator for CEPCO's organic coffee programme. "A coffee grower isn't used to paper work. He knows about working in the field, he doesn't know about keeping files." To cut the cost of bringing in foreign certifiers which charge upwards of $350 a day, co-operatives are looking to train their own members as internal inspectors. "Added to high transport costs and small volumes, many of CEPCO's 1,260 organic coffee producers are still subsidised after six years in the programme," says Jaime Hernandez, CEPCO's marketing director. To ensure their investment pays off, CEPCO and other organic growers have been clamouring for a more level playing field when it comes to judging what is organic and what is not. In particular, they note that growers in countries like Brazil and Costa Rica, who do not use agro-chemicals, are considered organic producers despite the fact that their crops are cultivated under full sunlight without contributing to an area's biodiversity. In contrast, CEPCO members like Doña Coronel Crúz grow coffee under the shade of diversified forest species as well as other subsistence crops like papaya and mango trees. According to a study by the Smithsonian Institute in Washington DC, 90 per cent more bird species are found living among shaded coffee crops compared with mechanised, single crop plantations. To distinguish its growers, co-operatives in Oaxaca are working with certifiers and environmental groups to develop a special seal that would identify their coffee as not only organic but as a non-timber forest product. The coffee would also be branded as a fair trade commodity, which seeks better prices for third world indigenous producers. "The recognition could easily win growers double the price they receive for conventional coffee," says Lucino Sosa, director of Certimex, a Mexican organic certifier. It could also help assuage problems of extreme poverty and environmental degradation that have plagued Mexico's coffee regions, causing severe social strife, including the rise of armed guerrilla movements. "If they can offer better quality coffee both ecologically and intrinsically, they can become more competitive in a market that is already saturated with coffee," says Mr Sosa. For Doña Coronel Crúz the organic coffee will not only guarantee her a better living, but as she fingers the new green buds sprouting on her carefully tended plants, it is also an investment in the future. "This year we had hardly any harvest," she says. "But look what's coming." The Financial Times, July 2, 1999 Der Fuhrer Invades Yugoslavia Gangs Rule Pristina German mark to replace Yugo dinar? GANG rule on the streets of Pristina, the Kosovo capital, is becoming an increasing headache for British soldiers trying to restore peace. The United Nations has set up an office in Pristina that aims to rebuild civic institutions, and aggressive patrolling by Nato has prevented total anarchy. But the soldiers can do little to halt the activities of the violent underclass from Kosovo and Albania intent on profiting from the chaos. When the war ended nearly three weeks ago, the primary victims were Serb civilians and gipsies who stayed in the capital. Many of them have since fled and it is now the ethnic Albanians who are the targets of the thugs. Nato troops, spearheaded by the Parachute Regiment and Irish Guards, are hard-pressed to curb their activities. If they find no guns on them or no proof they have committed a crime, they must let them go. The lack of a civilian administration means that many Pristina residents now fear a knock on the door, particularly at night. Young men - some freelancers, others working for gangs - prowl blocks of flats looking for empty homes to commandeer. Lirie, a middle-aged ethnic Albanian housewife who stayed through the war in Pristina and lives in a well-to-do district, said: "We're having different kinds of problems now. Problems with our own people and with the people from Albania. My son is living in my mother's apartment because we fear we may lose it." Some Albanians showed unparalleled generosity to their ethnic cousins from Kosovo when the war began. But many saw the crisis as a way to profit and it is they who have now come to town to loot and profiteer. Lirie added: "We're really scared of them. I don't know what they're doing here but I don't like it. They certainly haven't come to help us." Machismo is now much in evidence in Pristina. Typically, gang members drive a Jeep or a Mercedes with as many as five men, some swarthy and unshaven, crammed in. They wear sunglasses, smoke incessantly and some wear shell suits. On the prowl for "business" opportunities, they operate against the background of general lawlessness that is overwhelming Pristina. As refugees return, scores are settled and houses looted and burned. Fatima, a young ethnic Albanian who has recently returned and is six months' pregnant, said: "It makes you feel uncomfortable watching all the looting and the burning houses. I am scared I will lose everything I was so lucky not to lose during the war. Every time I see somebody disarmed by Nato, I thank God." The Kosovo Liberation Army claims to regulate the civilian running of Pristina, but yesterday one of its officials seemed unconcerned by the reports of growing criminality. The KLA said it was working to compile a list of empty flats throughout the city for re-allocation. In at least one block, the KLA is part of the problem. The guerrillas have taken over three Serb flats. Some of the looting is carried out by dispirited ethnic Albanians from the countryside who lost everything during the three-month Serb orgy of destruction. A few have moved into houses vacated by Serbs. For the Nato peacekeepers, sympathy with those who suffered under Serb rule is wearing thin. A Canadian soldier explained yesterday how he had to intervene after a group of Albanians moved into a block where other Albanians already lived and began evicting them. He said: "Many of the problems are from people from small towns who have lost their houses. They come to Pristina looking for what they can get. But they can't go around attacking their own people." One feature of Pristina life that underlines the criminality is the line of tractors which rolls in with empty carts after dawn, only to depart loaded with household goods at dusk. * Oliver Poole writes: The Foreign Secretary, Robin Cook, proposed yesterday that the mark be used as a currency in Kosovo, alongside the Yugoslav dinar. German money is widely used in the province and is the preferred method of payment in hotels, restaurants and shops. The London Telegraph, July 2, 1999 Electronic Trading Cantor Fitzgerald Opens Electronic System for International Bonds And EIB completes Internet bond offering Cantor Fitzgerald, the US Treasury bond broker, yesterday stepped up the pace of the electronic revolution sweeping the financial markets with the launch of the first global electronic trading platform for international bonds. The launch of Cantor e.speed follows the announcement last week that seven of the world's largest banks would launch a global electronic inter-broker dealer system for US and European government bonds. The system, BrokerTec, will be available to professional users within the next few months. This year EuroMTS, based on the Italian government bond trading system, became the first to launch an electronic platform for euro-denominated government bonds. Others, including Instinet, the electronic brokerage owned by Reuters, and the International Securities Market Association, plan to launch electronic bond trading systems in the next few weeks. "The bond markets are the last significant bastion of financial markets to go electronic," said Michael Paull, managing director of European fixed income at Instinet. Bankers say the switchover from telephone to digital trading of mainstream bonds will happen quickly. "By this time next year we won't be able to believe we were doing all this stuff by telephone," said one. Like its competitors, Cantor e.speed will initially offer trading in only the most liquid and creditworthy government bonds. The system also offers facilities for trading repos - repurchase agreements where securities are lent in exchange for a fee. All the platforms plan to offer other products including corporate bonds and derivatives based on government bonds on their systems at a later stage. "It is much easier to put the highest volume and lowest margin products such as government bonds on the screen first because they are easiest to trade," said one official. "It also frees up resources for banks to concentrate personnel on the higher margin/ lower volume side of the fixed income markets." The bond markets are the last important part of the financial markets to move to screen-based trading. Most stock exchanges moved over to electronic systems in the 1980s and early 1990s. The foreign exchange markets switched in the early to mid-1990s. Last year Liffe, the London International Financial Futures and Options Exchange, switched from floor to screen-based trading after an assault from Eurex, its electronic rival based in Frankfurt. Bankers say the switchover in bonds will enable them to cut costs in bond trading and improve efficiency of execution. It will also enable them to better manage their counterparty risks and help centralise the management of their collateral. Yesterday the European Investment Bank became the first borrower to complete fully a bond offering on the internet, exchanging E800m ($824m) of old bonds for new on its web site. The Financial Times, July 2, 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. 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. 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