Tuesday, March 11, 2003
Stock market outlook bleak on third anniversary of tech bubble peak
www.canada.com
Canadian Press
Monday, March 10, 2003
TORONTO (CP) - Overseas stock markets were down and Wall Street index futures were weak Monday, on the third anniversary of the peak of the technology-stock craze and a week before the March 17 deadline envisioned by the United States in a proposed United Nations ultimatum to Iraq.
American State Secretary Colin Powell said he is close to rounding up the votes for the disarmament deadline, and warned that a French veto would have "a serious effect on bilateral relations."
European stock markets were down, on war worries and after Deutsche Telekom reported the worst corporate loss in European history.
Europe's largest telecommunications company said Monday it lost 24.6 billion euros ($27.1 billion US) in 2002. The net loss was largely on writedowns of such holdings as wireless company T-Mobile USA, but chief executive Kai-Uwe Ricke acknowledged: "There is no way to put a good face on it."
The Deutsche Telekom loss - reported on the third anniversary of the Nasdaq's technology-bubble peak - exceeded the records set last week by France Telecom, at 20.7 billion euros, immediately overshadowed by Vivendi Universal, which lost 23.3 billion euros last year.
The German DAX index was down 1.7 per cent early in the afternoon. The Paris CAC-40 declined 0.8 per cent, while London's FT-SE 100 index was little changed, slipping 3.4 points to 3,488.2
Asian stocks closed down. The key Nikkei index in Tokyo fell to a new 20-year low, down 101.86 points, or 1.25 per cent, to 8,042.26, led down by banks.
The Hong Kong Hang Seng index declined 45.23 points to 8,861.87.
South Korea's main index closed 0.33 per cent lower after North Korea test-fired a missile into the sea in what was seen as a move to raise tensions further over its nuclear programs.
The Canadian dollar was trading at 68.37 cents US, up 0.13 cent from Friday's 32½-month high, after gaining 0.85 cent last week.
The currency got an additional boost Monday morning as Canada Mortgage and Housing Corp. reported that housing starts last month were up 34.5 per cent over the January level.
The euro was solidly above its four-year highs of $1.10 US, while the yen strengthened to 116.5 to the American dollar amid fears that war will wound the already shaky American economy.
In Canadian corporate news, business software maker Cognos has announced an alliance with the Giuliani Group, a consulting firm headed by former New York mayor Rudolph Giuliani.
Canada's largest pension-fund manager, the Caisse de depot et placement du Quebec, reports Monday on what is believed to have been a bad year. Reports say the Caisse lost more than $2 billion on telecommunications investments last year, mostly on cable company Videotron.
Analysts suggest the fund lost $10 billion in 2002, out of $133 billion in assets. The fund's report precedes an expected
UPDATE 1-Oil rises as diplomatic battles rage on Iraq
UPDATE 1-Oil rises as diplomatic battles rage on Iraq
www.forbes.com
Reuters, 03.10.03, 7:50 AM ET
(updates thoughout, PVS SINGAPORE)
By Sujata Rao
LONDON, March 10 (Reuters) - War jitters boosted oil prices on Monday as the United States seemed confident of gaining U.N. support for a resolution allowing it to disarm Iraq by force.
London benchmark Brent for April rose 24 cents to $34.34 a barrel while U.S. light crude rose 26 cents to $38.04, about $3 under highs hit in the buildup to the 1990 Gulf War.
In Vienna, OPEC oil ministers were assembling to discuss output policy ahead of a possible attack on cartel-member Iraq.
Iran said on Monday it would oppose any proposal to suspend output limits should war break out in Iraq as this could imply support for a U.S.-led war.
Saudi Arabia and Kuwait have signalled they could allay supply fears by allowing cartel members to pump oil freely.
But Saudi faces stern opposition from Iran for a plan that Tehran says implies support for a U.S. attack by controlling oil prices.
"Iran will not back politically motivated decisions," Iranian Oil Minister Bijan Zanganeh told the official IRNA news agency.
OPEC should refrain from taking decisions which would imply support for a "U.S. military assault against one of OPEC's member states," Zanganeh said.
"It looks like it could be a very strong week for crude and products as war fears mount," said GNI Man Research analyst Lawrence Eagles.
"It's difficult to see oil going lower with the potential of conflict so close. There's really nothing to push prices down very quickly, the risks are all skewed to the upside," said David Thurtell, strategist at Commonwealth Bank in Sydney.
Price hurtled higher on Friday after a new draft resolution proposed by the United States and Britain set a deadline of March 17 for Iraq to destroy all weapons of mass destruction, or face war. Iraq denies having such weapons.
The showdown vote could come as soon as Tuesday.
The resolution has sparked a wave of intense lobbying in the 15-member U.N. Security Council and U.S. Secretary of State Colin Powell said there was a "strong chance" of getting up to 10 votes in favour of the document.
The issue of Iraq's compliance with U.N. demands has created a bitter divide in the U.N. Security Council.
The United States, Britain, Spain and Bulgaria seek support for military action from Pakistan, Chile, Mexico, Angola, Cameroon and Guinea, while veto powers France, Russia and China say U.N. arms inspections should continue.
But analysts say war will go ahead even if the resolution is defeated, as Washington intends to lead a "coalition of the willing" against Iraq even without U.N. approval.
"The U.S. position is no longer about avoiding a veto but of demonstrating that if a veto is used, that a majority of the Security Council members support such action," Eagles said.
OPEC QUOTAS
OPEC, which supplies over a third of the world's crude oil, wants to prevent any oil price shocks that could dampen future global economic recovery, but it is expected to stick to its current 24.5 million barrels per day (bpd) output limit for now.
"There may be no formal suspension of quotas but the two or three who can do so will be given freedom to pump at will to cover any losses," predicted one delegate.
But although OPEC has pledged to fill any supply gap should war halt Iraqi exports of two million bpd, many in the group are already pumping close to full capacity.
Only Saudi Arabia has any appreciable room to turn up the taps and analysts estimate OPEC has little over 1.7 million bpd of untapped capacity -- the equivalent of daily Iraqi exports.
But the war threat, hot on the heels of a strike which crippled Venezuela's oil industry is coming at a time when stocks in the United States, the biggest oil consumer, are at low levels unseen since the Arab oil embargo of the mid-1970s.
Heating oil stocks are especially worrying as cold weather is expected to persist over the U.S. Northeast in coming days.
Personal Drug Use Already Decriminalized in Ecuador - A Conversation with Fernando Buendía
www.narconews.com
By Reed Lindsay
Narco News Authentic Journalism Scholar
March 10, 2003
Fernando Buendía leads of one of Ecuador’s most powerful political parties, the Pachakutik Movement. A small, balding, sociologist with gracious manners, he speaks slowly and deliberately, measuring each phrase and stopping for long pauses.
Fernando Buendía
Photo D.R. Jeremy Bigwood 2003
But his unprepossessing demeanor is soon forgotten when he unleashes the fire in his tongue. Buendía is piercing and direct, and he plays no favorites. His fool’s gallery includes such luminaries as the U.S. government, the International Monetary Fund, Plan Colombia and some of the policies of his current ally, President Lucio Gutiérrez.
In an interview with Narco News on the eve of last November's presidential election, Buendía claimed the United States was violating its agreement to use the airbase at Manta solely in drug interdiction efforts. He also raised the possibility of opening a debate about drug legalization.
At that time, he was overseeing the work of those officials charged with drafting a plan of operation for the new Gutiérrez government. Since then, as an independent advisor at the Economy Ministry representing the Pachakutik Movement, Buendía has become an increasingly important player in the new coalition government. He was interviewed recently in Mérida, Mexico, where he gave a keynote speech drug legalization summit co-sponsored by Narco News.
Narco News: What is the legal status of drug use in Ecuador?
Fernando Buendía: Under Ecuadorian law, the consumption of drugs is not penalized. It is considered a disease, and the drug user is not persecuted nor punished, although the drug trafficker is…
Narco News: You can use drugs in the street and nothing will happen to you?
Fernando Buendía: It is not socially permitted, but it is not a crime… If you are taking drugs on a street corner and a policeman arrives he can cause problems if you’re obstructing the street, but he can’t bother you for taking drugs…
Narco News: Is drug consumption a problem in Ecuador?
Fernando Buendía: It is a growing problem... In the Third World the consumption of drugs has to do with poverty, while in the First World, it has to do with alienation.
Narco News: How has Ecuador been affected by drug trafficking?
Fernando Buendía: Criminalization has provoked grave consequences for Latin America and for Ecuador. We’re paying an extremely high cost for prohibition… In Ecuador’s case, there are thousands of people in the jails who worked as mules, or small-scale transporters of drugs, who lacked other opportunities and turned to drug trafficking as a way out of poverty. The Ecuadorian jails are full of people who were linked in one way or another to drug trafficking.
Narco News: Has drug production in Colombia spilled over into Ecuador?
Fernando Buendía: As a result of the war in Colombia, there is evidence that coca leaves are beginning to be cultivated in Ecuador and that clandestine laboratories are functioning. Last year, two labs were discovered and eliminated… Along with this problem there is an economic problem. The volume of money laundering in the case of Ecuador must be extremely high, because Ecuador has a dollarized economy and the flow of currency can no longer be controlled. Ecuador is now a paradise for narco-laundering, and it is generating serious distortions in the economy because money is being invested in consumption, in real estate, in the financial system, and as a result we have heavy speculation that works against investment in productive industries.
Narco News: Is Ecuador’s economy becoming narcotized, like Colombia’s?
Fernando Buendía: In last year’s trade balance, the country had a deficit of 1.4 billion dollars, or approximately 8 per cent of the Gross Domestic Product. This is very high, and it’s explained in part by narco-laundering…
There is a strong pressure on demand. Where do these resources that maintain the pressure on demand, especially on luxury articles, come from? In part, it is explained by the remittances from emigrants, and on the other hand it is explained by narco-laundering…
We also have a political problem, which is that the quality of our democracy is being eroded, because the resources from narco-trafficking help finance electoral campaigns and buy judges and government officials.
Narco News: How can Ecuador resolve these problems?
Fernando Buendía: If we don’t resolve the problem of poverty, we aren’t going to be able to attack the structural causes of the problem of drug consumption…
The other issue that goes to the heart of the matter is foreign policy. We have to begin constructing an international arrangement that would be more balanced in the face of this unilateralism (of the United States), and in this context falls the issues of decriminalization of the drug trade. For this reason, it is important that we construct spaces of alliance among the Latin American countries, of the countries from the South…
We think that we’re on the offensive and that in the coming years there will be important changes in Ecuador, in Brazil, in Venezuela and even in Argentina, Chile, Paraguay and Uruguay, which are behind the others, but whose social movements are beginning to make important advances.
Narco News: What can Ecuador do in the face of the U.S.-promoted “Plan Colombia”?
Fernando Buendía: “Plan Colombia” is the form in which the conservative ideology is taken advantage of to channel interests that don’t have to do with the problem of drug production, but more specifically with the imperial efforts to control the Amazon region.
Narco News: Will Ecuador take any action in opposition to “Plan Colombia” or in favor of drug legalization?
Fernando Buendía: Ecuador is 0.04 percent of the world economy. The government wouldn’t last a week if it legalized drugs. For example, look at the (U.S. military’s) Manta airbase. We suspect the United States has come to stay for a good while and they’re here to extend their presence until they convert this base into the one they lost in the Panama Canal. The capacity of the runways is being increased, for example. The asphalt has been raised 25 centimeters and the extension of the runway to 1.5 kilometers. What (drug) interdiction plane needs so much space for this type of runway? Only the Galaxy. And the Galaxy is not a toy plane. It is the biggest plane in the world and it transports heavy war machinery.
We are at the point at which what happened to Panamá under Noriega could happen to us. The Galaxies land, they unload combat vehicles and in eight hours they are in Ecuador’s capital overthrowing the government. Our sovereignty, our capacity of movement is very determined by the broader context.
I was in the meeting with the International Monetary Fund, after the president had resolved to choose the route of negotiation with the IMF. I was conscious that we could demand, criticize and even shout, but we had to reach an agreement with the IMF. If not, the country would become economically unviable. That is, the government didn’t have the money to pay the teachers’ salaries that month. This is a process that has established itself over time. We have a state with limitations on its economic and political sovereignty. The influence that the United States and the international organizations have in this country is huge. (You are) obliged to negotiate because you have a knife to your throat, but it is quite another thing to adopt policies of such a worn-out economic model, of the neoliberal model.
Narco News: How do you evaluate these first weeks of President Lucio Gutiérrez’s administration?
Fernando Buendía: The initial moves by Lucio are very conflictive, from the perspective of economic policy, foreign policy and also as regards political reform. The Pachakutik Movement characterizes this government as transitional. It is not a popular government nor is it a government that is going to make deep changes… In general, the Pachakutik Movement is not content with the policies of President Gutiérrez. They don’t correspond with the accords of the alliance we formed with the government… Now, the president wants to dissolve Congress any way possible, whether it is in according to the Constitution or outside the Constitution. This runs the risk of becoming a new Fujimorazo... Lucio comes from a military tradition. He believes more in presidential systems, in the executive being above all other powers of the state.
Full Disclosure: The author wishes to acknowledge the material assistance, encouragement, and guidance, of The Narco News Bulletin, The Narco News School of Authentic Journalism, publisher Al Giordano and the rest of the faculty, and of the Tides Foundation. Narco News is a co-sponsor and funder of the international drug legalization summit, "OUT FROM THE SHADOWS: Ending Prohibition in the 21st Century," in Mérida, Yucatán, and is wholly responsible for the School of Authentic Journalism whose philosophy and methodology were employed in the creation of this report. The writing, the opinions expressed, and the conclusions reached, if any, are solely those of the author.
Apertura total: El autor desea reconocer la asistencia material, el ánimo y la guía de The Narco News Bulletin, La Escuela de Narco News de Periodismo Auténtico, su Director General Al Giordano y el resto del profesorado, y de la Fundación Tides. Narco News es copatrocinador y financiador del encuentro internacional sobre legalización de las drogas “Saliendo de las sombras: terminando con la prohibición a las drogas en el siglo XXI” en Mérida, Yucatán, y es completamente responsable por la Escuela de Periodismo Auténtico, cuya filosofía y metodología fueron empleadas en la elaboración de esta nota. La escritura, las opiniones expresadas y las conclusiones alcanzadas, si las hay, son de exclusiva responsabilidad del autor
Abertura Total: O autor deseja reconhecer o material de apoio, o propósito e o guia do Boletim Narco News. a Escola de Jornalismo Autêntico, o editor Al Giordano, o restante de professores e a Fundaçáo Tides. Narco News é co-patrocinador e financiador do encontro sobre a legalizaçao das drogas Saindo das Sombras: terminando com a proibiçao das drogas no século XXI em Mérida, Yucatan, e é completamente responsável pela Escola de Jornalismo Autêntico, cuja filosofia e metodologia foram implantadas na elaboraçao desta reportagem. O texto, as opinioes expressadas e as conclusoes alcançadas, se houver, sao de responsabilidade do autor.
FUTURES MOVERS: Oil prices ease as OPEC mulls output
cbs.marketwatch.com
By Myra P. Saefong, CBS.MarketWatch.com
Last Update: 3:10 PM ET March 10, 2003
NEW YORK (CBS.MW) -- Crude futures closed lower Monday with traders mulling the prospect of U.N. approval to give Iraq just one more week to disarm and OPEC members poised to discuss possible changes to its oil production limits.
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On the New York Mercantile Exchange, April crude fell 51 cents to close at $37.27 a barrel after trading between a high of $37.77 and a low of $37.05. Brent for May delivery closed at $32.92, down 22 cents on London's International Petroleum Exchange.
Meanwhile, gold for April delivery closed at $354.80, up $3.90. See Metals Stocks.
The U.S. and Britain are pushing for a U.N. vote on a second resolution that provides a March 17 deadline for Iraq to rid itself of weapons of mass destruction. A vote could come as early as Tuesday, news agencies reported. See Special Report: Countdown to War.
Secretary of State Colin Powell said there was still a "strong chance" of getting up to 10 votes in favor of a second resolution on Iraq, even though France, Russia and China are expected to vote against the document.
"The U.S. position is no longer about avoiding a veto, but of demonstrating that if a veto is used, a majority of the Security Council members support military action," Michael Fitzpatrick, an analyst at Fimat USA, said in a note Monday.
And OPEC members are gathering in Vienna to discuss oil prices and production quotas. They'll attempt to balance a possible shortage of oil in the event of war with a possible glut in supplies as demand declines, as usual, in the second quarter. OPEC, excluding Iraq, has an official production quota of 24.5 million barrels per day. See OPEC preview story.
"War will certainly create a shortfall, especially if northern Kuwait and Iraq go offline for a period of ten days or longer," said John Person, head financial analyst at Infinity Brokerage Services.
The world wants to know how OPEC members will "adjust to increasing supplies to offset any potential supply disruptions," Person said.
Bijan Namdar Zanganeh, oil minister for OPEC member Iran, said Monday that Iran opposes a suspension of production quotas in the event of war. "Iran will not back politically motivated decisions," news agencies quoted him as saying.
Heating oil, natural gas close lower
Also on Nymex, natural-gas and heating-oil futures closed with a loss on the session, following hefty gains Friday.
Forecasts call for above-normal temperatures in much of the U.S. over the next few days.
April heating oil fell back by 2.28 cents to close at $1.0857 a gallon, while April natural gas declined 47.8 cents to $6.515 per million British thermal units.
"It remains highly likely that the U.S. and U.K. are going to war this month against Iraq and that event will be hard on fuel prices," said Todd Hultman, president of commodity information and research provider, Dailyfutures.com.
Even if the U.S. releases oil from its Strategic Petroleum Reserve, the release won't help provide much-needed supplies of heating oil or unleaded gasoline in the short term, he said.
Gasoline futures prices eased back from Friday's gain of nearly 5 percent. April unleaded gasoline fell 2.81 cents to close at $1.1286 a gallon on Nymex.
At the retail level, gasoline prices averaged $1.69 a gallon, up from $1.684 on Friday and a stone's throw away from the all-time high of $1.718 seen in May 2001, according to AAA's Daily Fuel Gauge Report.
In the equities arena on Monday, oil-services companies traded mostly lower, as the Philadelphia Oil Service Index ($OSX: news, chart, profile) chalked up a loss of more than 1 percent. See Energy Stocks.
And the Reuters/CRB Index, a broad-based measure of the commodity futures market, closed at 246, down 0.5 percent amid weakness in energy futures.
Myra P. Saefong is a reporter for CBS.MarketWatch.com in San Francisco.
Immigrants learn hard lessons doing business in S. Florida
Posted by sintonnison at 5:02 AM
in
america
www.sun-sentinel.com
By Doreen Hemlock
Business Writer
Posted March 10 2003
Back in Argentina, business owner Eduardo Citcioglu operated without a credit card.
Like most Argentines, he bought and sold goods for cash or with checks, some postdated for deposit later. Few wanted credit cards anyway, since banks tended to offer them only to people with hefty collateral. And with Argentina's history of high inflation, interest rates were sky-high, often more than 30 percent a year.
So, it's understandable that when Citcioglu started exploring opportunities in South Florida five years ago, he failed to take a friend's advice and immediately establish credit. He focused on other pressing tasks: scoping out businesses and opting in 2001 to buy a dry cleaner/laundry in Davie, One Low Price Cleaners on South University Drive.
But Citcioglu is paying a price. When he bought his business, he paid a big cash down payment and financed the rest through the sellers -- at interest rates higher than at most banks. And while he now has a credit card, he had too low a borrowing limit and too little credit history to qualify for loans for a car. He recently had to ask a friend to co-sign for a car loan.
"I should have listened, but there was so much new to learn at once. Now, I understand that credit here depends on your payment record, not on your assets," said Citcioglu, 39. "When you come to the United States, it's like being reborn. You have to learn all over again."
Such woes are increasingly commonplace across South Florida. U.S. census data show that Greater Miami-Fort Lauderdale has the highest concentration of foreign-born residents of any major metropolitan area in the United States. And the immigrants tend to be wealthier and better educated than those in other areas, likely increasing the chances they'll start their own businesses.
Many missteps are predictable, however, as immigrants try to do business as they did back in their homelands.
For South Americans long used to high interest rates, mastering credit is but one common headache. Many also stumble by over-hiring, accustomed to far lower costs for labor. And too often, they act with little market research, coming from nations where business information tends to be tougher to get and more expensive than market data widely available in the United States, business consultants say.
"There's a joke going around, `How do you go back to Latin America with $1 million? Come up with $2 million and lose the first,'" said accountant María Antonieta Díaz of GBS Group in Weston, which specializes in immigrant businesses.
"I keep telling people, `This is a new beginning,'" she said. "It takes time and money to adapt. Folks have to be careful with every dollar."
Cutting the fat
Industrial engineer Carolina Rojas learned the hard way that Florida is more than just miles from Colombia, where her family makes beauty-treatment machines used in spas and gyms that lift and massage the skin and aim to reduce the appearance of cellulite.
Problems began for the family's Dermocell Inc. when an acquaintance from Colombia casually suggested he might help market the machines in the United States. But it turned out the equipment needed approval first from the U.S. Food and Drug Administration -- a process that took a year.
Unfamiliar with U.S. taxes, credit, labor laws and other business practices, the family then entrusted its U.S. start-up to a group of Colombians in Florida more experienced in U.S. business.
But that group ended up spending more on salaries and other start-up costs than the family liked. So the Dermocell group from Colombia ended that union and opted to operate the U.S. business directly.
"Our sin was confiding too much in other Colombians, because we were wary of a new system," said Rojas, 27, who splits her time between Miami and Bogota as her brother remains full-time in South Florida. "But now, we're getting advice, doing research, and getting training, so we can adapt to the U.S. market ourselves."
Helping out the Rojas family is a nonprofit group: the Americas Community Center in Weston and Miami, which helps immigrants, mainly Latin Americans, adapt in South Florida. The group has found that lots of newcomers, like the Rojases, stumble over government licenses and approvals, coming from nations where regulation and enforcement of rules tend to be less strict.
"Many times, folks successful in their home countries figure they know what to do -- until they face fines for not having the right paperwork or their business just doesn't take off," warned Colombian-born Fabio Andrade, the center's president.
Tour troubles
Venezuelan banker Alberto Sánchez-Banard learned a lesson in liability, customer protection and competition when he moved to South Florida in 1996 and decided to try his hand at the travel business.
Sanchez set up Fort Lauderdale-based Amazing Tours International to help his family market a small hotel they own on Venezuela's plains. He figured: "Venezuela's exotic. People will come."
But his South American homeland turned out to be a relatively expensive destination, with tourism networks little developed and sometimes unreliable. U.S. customers insisted on quick refunds if a taxi failed to show up or other things went wrong. Yet recouping cash from Venezuelan suppliers in the wrong proved a colossal frustration -- with customer protections far weaker in his homeland.
"When you're in Caracas, you have no idea how tough it will be," the 48-year-old banker said.
Sanchez eventually left the travel business and took a job as chief financial officer for a Latin music dot-com. But when the Internet bubble burst, he returned to his finance roots. He now owns a Fort Lauderdale mortgage brokerage, York & Goldman Mortgage Corp., and also works with several big financial groups, offering financial services largely to Latin American immigrants.
"You think it's all the American dream," Sanchez warned. "But it's not easy. If you have an accident or unforeseen problems, if you don't have insurance and lawyers, if you don't have money, it can be the American nightmare."
A helping hand
Indeed, so many immigrants have stumbled in starting businesses in Florida that there's a cottage industry developing to help the tens of thousands of Latin American newcomers.
Set to have its debut this summer, for example, is a Spanish-language guide to doing business in Florida, prepared by the staff at AmericáEconomía, the veteran Chile-based business magazine with South Florida offices. The book will cover such varied topics as visas, networking and market research, said Miami-based senior correspondent Carlos Molina, a Peruvian who also has lived and worked in Europe.
"Our goal," said Molina, "is to help Latin American immigrants navigate between two cultures."
Doreen Hemlock can be reached at dhemlock@sun-sentinel.com or 305-810-5009.