sg.biz.yahoo.com Wednesday February 5, 9:38 PM

CARACAS (Dow Jones)--Venezuela's currency markets remained closed Wednesday, the day the government said it would lift a two-week halt on foreign-exchange sales, a trader at a foreign bank with local offices said.

"There are no forms you're supposed to fill out according to the new rules that haven't yet been announced," the trader told Dow Jones Newswires.

"Maybe if they get the whole thing done and print the forms tonight, maybe, we'll be up Thursday," the trader said.

ADVERTISEMENT But, given the volume of work involved to implement new foreign-exchange trading rules President Hugo Chavez said would be implemented Thursday, trading may remain halted well into next week, the trader said.

Various government officials have said the new rules will likely set the bolivar ($1=VEB1853) at a fixed rate, which will apply to imports of critical goods like food and medicine, as well as to transactions by government firms. A second rate may later be established in a parallel market in which the central bank may participate.

The first fixed rate will likely be between VEB1600 and VEB1750 per dollar, analysts have said.

Chavez has said government agencies will handle more imports, and those who haven't backed opposition efforts to oust him will be given preferential access to foreign currency.

The government said last week it will announce the new exchange-control measures on Feb. 5, ending a halt on foreign currency sales to preserve international reserves and stabilize the bolivar.

In the 13 business days of this year before the government called the sales to a halt, Venezuela's international reserves had dropped an average $59.3 million a day, according to Finance Minister Tobias Nobrega.

Foreign reserves stood at $11.24 billion Friday, down from $11.93 billion at the beginning of the year, according to central bank statistics.

Traders have said the central bank has been pumping in upwards of $70 million a day over the last weeks in an unsuccessful attempt to stop a steep slide in the bolivar, which has lost more than 25% of its value against the dollar since the beginning of the year. The currency lost 46% against the dollar last year.

Despite the sales halt, the bolivar is still trading in an informal secondary market - as weak as VEB2500 per dollar - amid soaring demand for dollars as Venezuelans flee to safe haven on fears the government may be forced to impose even tougher measures given a two-month general strike that began Dec. 2 has had a devastating effect on the economy.

Some analysts have predicted gross domestic product will shrink up to 40% in the first quarter, and the government is quickly running out of money, given the work stoppage has virtually shut the country's vital oil industry, which accounts for about half of government income.

Tax collections, too, have been badly affected as thousands of businesses closed due to the strike.

Although many businesses have reopened, opposition leaders have said they won't call off an oil-sector walkout unless Chavez agrees to early elections.

Chavez's critics blame his left-leaning policies for the country's deepening economic crisis, as the economy likely contracted about 8% last year amid unemployment of 17% and inflation of 31%.

Chavez, first elected in 1998 on promises to eradicate corruption and inequality, has blamed the recession on an "economic coup" by his opponents.

Central bank Web site: www.bcv.org.ve

-By Jehan Senaratna, Dow Jones Newswires; 58212 564 1339; jehan.senaratna@dowjones.com

www.bday.co.za

LONDON - World oil prices surged on Wednesday as the market braced itself for US Secretary of State Colin Powell's address to the UN Security Council and the release of weekly data on US stockpiles.

The price of reference Brent North Sea crude oil for March delivery rallied 65 cents to $30.90 a barrel.

New York's benchmark light sweet crude March-dated futures rallied 69 cents to $33.45 a barrel on Tuesday and was expected to make further progress when trading resumed later.

"We've seen a strong performance yesterday (Tuesday) on Nymex products and there's been no let-up overnight," said Prudential Bache oil broker Tony Machacek.

Machacek said investors were cautious ahead of Powell's presentation which he is expected to use to disclose sensitive intelligence in an effort to dispel widespread doubts - both in the corridors of power and on the street - that Baghdad is flouting UN demands to disarm.

Analysts meanwhile said the market would also be keeping a close watch on US weekly oil inventory data released later.

GNI analyst Lawrence Eagles said the market was expecting a 1.5-million-barrel build in US crude stocks, offset by a 3.5-million-barrel draw in distillate stocks and a 1.7-million-barrel drop in gasoline stocks.

US stockpiles have fallen in recent weeks to their lowest level in around 27 years after a general strike crippled exports from Venezuela, a key supplier to the US marketplace.

Opponents of Venezuelan President Hugo Chavez on Sunday called an end to a 63-day general strike.

But analysts said that having opted to keep the strike in force against the state oil company, the market was still unsure when oil exports would return to normal levels.

Opposition leaders have accepted that production has risen to 1.2 million barrels a day, while Chavez has claimed production is running at 1.8 million barrels.

But even that figure is well below the pre-strike average of around 3.0 million barrels a day.

www.bankrate.com By Laura Bruce • Bankrate.com

There's a little bit of gambler in most investors. After all, if you invest in stocks or mutual funds, you're taking on some risk.

So, while you're waiting for the stock market to quit behaving badly you might consider wagering, I mean investing, some money in a futures contract on Saddam Hussein's future.

Tradesports.com, www.tradesports.com based in Dublin, Ireland, has come up with a way to combine betting and investing.

"Tradesports is an exchange," says John Delaney, CEO. "We don't post any odds or make any book. Everything on the site is posted by other traders of the exchange. We provide a way for people to do futures contracts on issues."

One of the hottest futures contracts on the site is whether Saddam Hussein will still be the president of Iraq after March 31, 2003. A similar, more expensive, contract is available for June 30. A December 2002 contract expired unexercised since Saddam remained in power. If he's still top dog at the end of June, a fourth futures contract will be issued for Sept. 30. Continued below

"About 30,000 contracts will have traded for the three Saddam contracts; it's very popular." Delaney says. "When those chemical warheads were found, the market reacted very quickly. The probability of him being gone, assigned by the market, went up 10 percent, to 40 percent. As news comes out it's quickly assimilated by the traders."

"The current contract -- will Saddam be in power after March 31 -- is listed on a zero to 100 scale. If he's gone by the end of March that contract will settle at 100. If he's still president, the contract settles at zero."

Chris Cooper, a Toledo, Ohio, certified financial planner, lends a hand in explaining futures contracts.

"In investing, you win and lose together. You could have bought WorldCom when the stock was doing well and the company was doing well. But now the stock is down to 6 cents; you're not doing well and neither is the company.

"In commodities there's a winner and a loser. You think it goes up and the other guy thinks it goes down. One will be right, the other will be wrong.

"We've always had a bartering society. You trade corn for musket balls, chickens for pigs. Now we formalize it with commodities to represent the delivery of goods or services in the future. We have not only physical commodities such as oil and grain, but financial assets such as stocks and bonds. Here is a tongue-in-cheek sports marketplace that looks like a commodities exchange."

If betting on Saddam's future isn't your cup of tea, Tradesports lets you take positions on other current-event issues such as whether President Bush will win re-election, who will be the Democrats' candidate, who will win the Oscars and a full slate of sports bets.

When the Federal Open Market Committee gets busy adjusting rates again, Tradesports will offer three contracts; a change in bias, a move up or down by 25 basis points; and any move at all. Wheee!!

"It's a novelty bet, a lot of sports books offer bets on politics. It's not too uncommon. But I don't know of anyone else doing a proposition on Saddam Hussein," says Ashley Lang of Gambling Times magazine.

"They're not asking whether he'll be violently taken over, it's just a matter of whether he'll be the leader of Iraq. He could be out for a number of reasons -- steps down, or taken out of power by the U.S. or other forces."

But what if the U.S. and allied forces attack Iraq? Would Tradesports pull the contract when bloodshed begins?

"That's one of the trickiest questions for me to answer in an abstract way," says Delaney. "If you exclude what's happening in Venezuela regarding oil, the oil contract is really a Saddam Hussein contract. If there's bloodshed would people stop trading defense stocks or oil? I don't think we could and I don't think we should. But we'll always be respectful of what's going on in the world."

When you open an account with Tradesports and fund it, any money you put on a futures contract is frozen. If you win, money from the loser's account will flow seamlessly into your account, according to Delaney.

Of course it will flow seamlessly out of your account if you lose.

If you close your account or want a portion of the money that's in it, Tradesports sends a cashier's check. Delaney says accounts that hold more than $5,000 are paid interest.

If this seems like just another way to lose money, it probably is. Treat it like the lottery, worthy of a small part of your entertainment budget if you're so inclined.

-- Posted: Feb. 5, 2003

www.forbes.com Jerry Flint, 02.17.03, 12:00 AM ET

It's easy to appreciate the drive for lower costs. The auto industry is terribly competitive. But are labor costs all that important? The most successful vehicle makers are foreign, and they are expanding here. Globalism--also known as the hunt for lower wages--continues apace in the auto industry. Move the work to Canada, where the cheap currency and government-paid health care lower labor costs by a third. Move it to Mexico. Move it to China, where wages are really low. General Motors (nyse: GM - news - people ) will build a new sport utility vehicle, the Equinox. The six-cylinder engine and some other parts will come from China and go to a Japanese-run assembly plant in Ontario. That will save money for sure.

In fact, all Chrysler's PT Cruisers come from Mexico, while Chrysler's new Pacifica wagon and many of its minivans come from Canada. Ford gets all its Crown Victorias from Canada. New York's cab drivers and just about all our police use them.

Partsmakers try even harder to ship work abroad to low-wage countries because they are under enormous price pressure from their automaking customers. Delphi (nyse: DPH - news - people ), the giant partsmaker spun off from General Motors, is the largest employer in Mexico.

It's easy to understand the drive for lower costs. The auto world is terribly competitive. But are automaker direct-labor costs, which account for 8% of a car's price, all that important? The most successful vehicle makers today are foreign: Toyota, Honda, BMW, Mercedes, Nissan and Hyundai. What are they doing? Expanding their manufacturing here.

Nissan (nasdaq: NSANY - news - people ) is building a new plant in Mississippi to build big pickup trucks. The plant isn't in China or Bangladesh. Toyota (nyse: TM - news - people ) is going to announce a new truck plant in a couple months for Texas, not Romania. Honda (nyse: HMC - news - people ) and Mercedes (nyse: DCX - news - people ) are expanding in Alabama, and Hyundai will build a new plant there. BMW is expanding in South Carolina.

Yes, the foreigners have advantages when they build here. They avoid protectionism. They get huge subsidies from those southern states for their plants. And while they pay Detroit wage scales, their nonunion workers are younger, don't get the top rates and aren't collecting pensions yet.

But the point is they wouldn't be building here if it weren't a good place for manufacturing--if, that is, they couldn't get high quality and build at competitive costs. I'm not a fool. I understand Detroit's global thinking: They want not only to lower labor costs but also to spread costs with similar design and engineering for products sold across the world. Building abroad also creates a presence in countries that will in time become good markets, like Korea. And the union and the environmentalists and the lawyers make it tough to do business in the U.S.

Detroit will never dominate the automobile world as it once did. It will never even dominate the U.S. market as it once did. But carmakers don't have to go bankrupt like steel companies or move away like textile companies. The U.S. still is a fine place to manufacture vehicles. What counts is not where the vehicle is built or what the labor costs are. What counts is how good the car or truck is. Americans are proving every day that they will pay more for a vehicle if they think it's better.

Nothing is written in stone in the auto industry, neither the success of the foreign manufacturers nor the decline of Detroit. There are no quitters in this business. At the Detroit Auto Show in January General Motors showed an array of production vehicles coming out over the next 30 months that could lead to a real resurgence. Naturally, the competition from the Japanese and Germans is fierce. And the enemies of the automobile are on the attack. They talk of how cars and trucks pollute (not really, not anymore), how they warm the Earth (maybe, maybe not), how they make us slaves to the oil terrorists (though most of our oil comes from home or Canada, Mexico and Venezuela) and how SUVs kill almost everybody in sight (not true).

With this kind of pressure it's good to have lots of workers at home who vote. This type of thinking might be old-fashioned. Possibly in the future our jobs will consist of moving little electronic bits on computer screens, and manufacturing will be done only in the Third World.

But I can't help recalling an exchange that took place a half-century ago. It was after World War II. A Ford (nyse: F - news - people ) manager was showing off a new Ohio plant to Walter Reuther, head of the United Auto Workers. The manager pointed at the row after row of robotic machines running without workers. He laughed and said something like, "Who's going to join your union?" Walter came back with, "Who's going to buy your cars?"

Jerry Flint, a former Forbes Senior Editor, has covered the automobile industry since 1958. Visit his homepage at www.forbes.com/flint.

news.ft.com By Nerma Jelacic in London Published: February 5 2003 12:26 | Last Updated: February 5 2003 16:33

Gold prices slipped off their highs in Wednesday afternoon trade as Colin Powell, the US secretary of state, presented his case against Iraq to the United Nations' security council.

Earlier in the day the commodity soared to its highest level in more than six years as investors searched for safety amid heightened fears of the inevitability of a US-led war with Iraq.

In his address, Mr Powell claimed that Saddam Hussein, the Iraqi president, had made no effort to disarm "as required by the international community".

"How much longer are we willing to put up with Iraq's non-compliance, before we as a council, as the United Nations say, 'enough, enough'," he said.

Gold was quoted at $380 a troy ounce in London, down from the morning fix of $385 a troy ounce but still up from the previous session's fix of $376.55 an ounce. Wednesday morning's fix was the highest since September 1996.

The spot market gold price reached a high of $388.50 an ounce, up from levels around $378.65 in New York trade on Tuesday.

The commodity has gained more than $10 this week and 12 per cent since the beginning of this year. Gold, traditionally a safe-haven asset in times of uncertainty, was also helped by a weakening in the dollar. The dollar fell close to a four-year low against the euro on Wednesday.

Investors also looked for safety in oil markets, pushing Brent crude futures for March delivery up 37 cents to $31.46 per barrel on London's International Petroleum Exchange, off a high of $31.60.

Reports that Opec is considering reducing its output added to the bullish pressure on the crude price.

Iran's oil minister said on Tuesday that if Iraq and Venezuela sustain production the cartel would have to cut output in the second quarter.

Crude oil has made some hefty gains on the back of the twin uncertainties of war in the Gulf and the threat of disruption to exports from the oil-rich region, and the 63-day general strike that crippled Venezuela's exports.