That hasn't happened since the Great Depression, but it's possible By DANIELLE DIMARTINO Dallas Morning News 1/5/2003

Last year, market prognosticators declared that 2002 would be an up year. After all, the market hadn't seen three down years in a row since World War II.

Now, for 2003, most market gurus are saying the markets can't possibly fall for a fourth straight year. But their optimism seems subdued from a year ago.

If 2003 is another down year, it would be the first four-year losing streak since 1929-33, the throes of the Great Depression.

By all economic measures, the United States is not in a depression. But some analysts say excesses still must be eliminated from the economy after the go-go 1990s.

And more say the future seems harder to read today than it did at this time last year, when the country was emerging from what seemed like an old- fashioned recession.

On the plus side, experts say the nastiest of the corporate scandals are behind us. Two of the Bush administration's goals - a quick end to the conflict in Iraq and an expedited tax cut package - could take some pressure off the markets.

For its part, Wall Street at least appears appropriately sheepish after being fined $1.4 billion for letting stock analysts play both hands of a game that left investors out in the cold.

Now, experts say, if the economy could begin turning in measurable growth in business spending and hiring, the recovery could break out of its funk.

"The outlook was better at the same time last year," said Chuck Hill, Thomson First Call's director of research. "A delay in capital spending was an easy call at the beginning of last year, but now the question is, how much of a delay is enough? Pushing it back one year may not be enough."

Hill's company compiles Wall Street analysts' estimates of earnings growth. Their 2003 forecast is for 14 percent growth among Standard & Poor's 500 companies, although that number usually falls through the year. Hill says normal revisions will bring the number down to about 10 percent.

Tobias Levkovich of Salomon Smith Barney is one of the Wall Street analysts who contributes to the consensus estimates. He is coming off his second year as chief equity strategist at the brokerage. Several of his peers have fallen in 2002, unable to repair images tarnished by their permanently bullish calls.

Levkovich is predicting that corporate profits will chalk up about 7 percent growth in 2003.

If 2002 had any take-aways, it was that the market does not react well to reduced estimates.

"Fourteen percent for the year is not too bad a number," Hill said. "The problem is it's very back-end-loaded to the third and fourth quarters, and companies don't have any visibility for the second half. They just won't say."

Revised earnings estimates may make for yet another bumpy ride in trading in 2003, regardless of the final outcome.

"We are in a trading market," Levkovich said, pointing to the 1974-82 bear market, when six major trading rallies averaged gains of 32 percent.

He calls himself a "rational bull," emphasizing that his expectations for the market's recovery are muted but positive. Although he forecasts stocks to be up as much as 20 percent in the next 12 months, he sees three major hurdles.

"Greed will overcome fear at some point in the future," Levkovich said. "But it will take time."

Cleaning up the excesses:

He cited regional real estate bubbles and unregulated hedge funds that may yet burn unsuspecting investors.

Capitalist disincentives:

The example he gave was "paying an executive $30 million, regardless of performance."

"Every man with a plan could raise $30 million," he said of the ease with which capital could be raised in the late 1990s. Wringing out these excesses is the key, he says, to reaching a new starting point for the next major bull run. "Everything has to be flushed out to clean the system."

One way Levkovich sees companies wooing investors back is with dividends. 2002 marked the second time since 1963 that dividend yields outpaced money market returns. Add to this the attention that President Bush has given to reducing the double taxation of dividends, Levkovich says, and investors have a good formula to count on positive returns.

"After 21/2 years of bruising losses, investors are demanding some income up front," he said. "For the first time in 30 years, companies are increasing dividends ahead of earnings growth."

One bear argues that earnings have to get much lower before a true rally can take hold. David Tice, portfolio manager of the Dallas-based Prudent Bear Fund, has been on a tear for two years. Investors in his funds have profited from the bets he's placed on the market's fall.

As he sees it, the main drag that will keep markets down for yet another year is the excess credit that has been extended to corporations and consumers.

"It's like a squirrel before winter - you want it to be saving nuts, not throwing a party by adding on to the kitchen or buying a new car," Tice said, blaming Federal Reserve Chairman Alan Greenspan for encouraging consumers to spend rather than save.

"There's definitely a housing bubble," he added. "Greenspan's notion that there is not one is preposterous."

When Tice puts pencil to paper, he figures that $1.6 trillion has been pumped into stocks since 1990. Estimates show that $100 billion was pulled out in the last year.

"Nobody's sold yet. If we revisit historic lows, it will be very ugly," he said.

The market nearly touched historic averages of price-to-earnings ratios in October, before the market rallied. But Tice predicts that the Dow may have to trade at half of where it is today before it can turn the corner.

"As an individual, if you think you are going to lose your job, save some money, pay off your debts and sell some stock," Tice advised.

Layoff announcements surged in the last quarter of 2002, according to Challenger, Gray & Christmas, a job placement firm.

"October and November were the second- and third-heaviest layoff months of the year - that is certainly cause for alarm. It is very similar to what we saw in 2001. And it's not what we should be seeing if we're in the midst of a recovery," said John Challenger, the firm's chief executive.

For 17 years the firm has offered a free holiday job-search advice hotline. This year, of the 1,600 callers, more than 1,000 told counselors they thought it would be harder to get a job in 2003, Challenger said. Counselors do not remember callers ever being more discouraged, even during the jobless recovery of the early 1990s.

Challenger said companies are unable to comfortably increase their global market share, given the looming probability of war.

"It's more than the Iraq situation; now it's North Korea," he said.

Hill's concerns lie closer to home. "I'm less concerned about North Korea and Iraq than I am about Venezuela. If that turns into a civil war, if the army splits in supporting Chavez, energy prices would become a real problem."

Levkovich downplays such gloom-and-doom notions. "Fear mongers give educated investors opportunities," he said, although he did acknowledge the risks of a sustained rise in oil prices in 2003.

"Energy prices can bite sharply into the estimated $37,000 of after-tax median income," Levkovich said. But he stressed that oil prices usually have to double or triple before a falloff in consumer spending is detected.

And, as he predicted, OPEC announced Monday that it would step in and relieve the supply shortages created by the Venezuela standoff.

Still, he's worried about the ability of consumer spending to continue driving the economy. He noted that last year's recession was the first in which consumers didn't stop consuming.

Like many analysts, Levkovich places his hopes in the new Congress to give consumers a nudge.

"2003 could end up being known as "The Year of the Government' if the federal government solves some economic problems. The American people have said to the Republicans - "OK, this is your shot.'"

Al menos dos personas murieron y más de 20 resultaron heridas el viernes en Venezuela por choques violentos, que incluyeron tiroteos, entre partidarios y opositores del presidente Hugo Chávez, en el día 33 de un paro general contra el gobierno.

La confusa balacera ocurrió durante manifestaciones de ambas partes en los alrededores de la base militar Fuerte Tiuna, en el suroeste de Caracas, en medio de una ráfaga de gases lacrimógenos y perdigones lanzados por policías y tropas para separar las protestas contrarias.

El secretario de salud de la Alcaldía Metropolitana de Caracas, Pedro Aristimuño, informó que durante la noche murieron dos hombres de los seis heridos de bala, cuando eran intervenidos en un hospital.

Además de esos heridos, el comandante de los bomberos de Caracas, Rodolfo Briceño, dijo a Reuters que se registró uno por perdigones; otros 20 con contusiones, especialmente por piedras; y 75 que sufrieron los efectos de los gases.

El viernes por la tarde hubo escenas de pánico cuando tanto los manifestantes como los efectivos de seguridad se arrojaron al piso para protegerse de los disparos que atacaron a las personas congregadas en la Avenida Los Ilustres, cercana al Fuerte Tiuna y hasta donde pudo avanzar la marcha opositora, llamada "La Gran Batalla".

"Estamos tirados en el piso, están disparando. No sé de dónde vienen los tiros", dijo una reportera de Reuters en el sitio. Agregó que ambos bandos se lanzaban piedras, palos y fuegos artificiales.

El origen de los disparos no fue identificado de inmediato por las fuerzas del orden. Los testigos dijeron que vieron personas de ambos lados sacando armas después que comenzaron los tiros.

Los enfrentamientos comenzaron cuando cientos de simpatizantes de Chávez colocaron barricadas para impedir el paso de los miles de opositores, que se empeñaron en no abandonar la marcha y rompieron una barrera policial.

Venezuela, quinto exportador mundial de crudo, enfrenta una aguda crisis política en medio de un paro que ha casi detenido las actividades de la vital industria petrolera y exaltado los ánimos en las calles desde su inicio el 2 de diciembre.

El paro petrolero ha generado la pérdida de millones de dólares en ingresos y llevado al gobierno a reducir a la mitad sus estimaciones de crecimiento económico para el 2003 y plantear un recorte de entre 3,0 y 9,0 por ciento en el gasto público, dijo a Reuters el Ministro de Finanzas, Tobías Nóbrega.

SI ME OBLIGAN, ESTADO DE EXCEPCION: CHAVEZ En medio de los choques, Chávez dijo el viernes que si se viera forzado declararía un estado de excepción, que implica la suspensión de algunas garantías constitucionales, pero agregó que de momento no hay condiciones para ello.

"Estoy obligado a proteger el pueblo; yo estoy obligado a proteger el orden público, obligado a proteger la seguridad, la soberanía y la defensa del país, así que si me obligan pues yo tendré que hacerlo", dijo en el palacio presidencial.

Las protestas de ambos bandos, radicalmente polarizados en torno al teniente coronel retirado que asumió el poder hace casi cuatro años, se han vuelto cotidianas en Venezuela.

"No tenemos miedo, no tenemos miedo", gritaban los opositores que marchaban entre las nubes de gas exigiendo la libertad del general disidente Carlos Alfonso Martínez, quien fue detenido el lunes y sigue bajo custodia militar a pesar de que un tribunal ordenó su liberación.

El general no comanda tropas y es acusado de participar en el alzamiento contra Chávez en abril. Integra un grupo de oficiales que el 22 de octubre se declaró en "desobediencia" y llamó a sus compañeros de armas a desconocer al gobierno.

El "chavismo", por su parte, se congregó también en las cercanías del Fuerte Tiuna para apoyar al gobierno y pedir cárcel a los "golpistas", entre los cuales incluyen a algunos militares, líderes opositores que llamaron a la desobediencia tributaria y a trabajadores de la estatal Petróleos de Venezuela (PDVSA) que se sumaron al paro.

"Ellos arruinaron mi futuro pero el futuro de mis hijos no se lo van a robar, eso es un golpe petrolero", dijo el comerciante informal Angel Navarro, de 42 años, uno de los cientos de "chavistas" que se congregó en el lugar.

La medida de fuerza ha perdido vigor entre el sector comercial e industrial, pero ha sido sostenida por los trabajadores petroleros, a quienes Chávez llama saboteadores.

Los promotores del paro --empresarios, sindicalistas, dirigentes políticos y organizaciones civiles-- reiteraron el viernes que no lo levantarán hasta lograr su objetivo: la renuncia de Chávez y el adelanto de elecciones.

"Resistiremos hasta el final", dijo Carlos Ortega, presidente de la poderosa organización sindical opositora, Confederación de Trabajadores de Venezuela (CTV), tras condenar los hechos de violencia de los que culpó al gobierno.

La oposición acusa a Chávez de haber sembrado el odio social entre los 23 millones de venezolanos con sus mensajes de corte izquierdista, de querer instalar un sistema socialista como el cubano, así como de llevar la economía a la ruina.

Ana Isabel Martínez Reuters 3 de Enero de 2003

Reuters Posted January 2 2003, 1:34 PM EST

CARACAS, Venezuela - Venezuelans seeking an extra bang for their New Year's parties or political protests have found a noisy new ally -- the Bin Laden.

The name of Osama bin Laden, leader of the militant Islamist al Qaeda network and suspected mastermind of the Sept 11, 2001, attacks in the United States, has been borrowed by Venezuelans to describe a particularly loud, powerful -- and dangerous -- type of firecracker.

As in many countries in South America and Asia, Venezuelans use fireworks and firecrackers to add zest to feast days, Christmas and New Year celebrations -- and political marches.

At a New Year's party in Caracas held early on Wednesday by tens of thousands of foes of leftist President Hugo Chavez, the thunderous clap of exploding ``Bin Ladens'' punctuated a barrage of firecrackers and fireworks.

In ear-splitting decibel power, the ``Bin Laden'' tops the bewildering arsenal of fireworks sold at this time of year by street vendors in bustling downtown Caracas.

Before the Sept. 11 attacks, the noisy explosives went Spanish names like ``Tumbaranchos'' (Hut-destroyer) or ''Matasuegras'' (Mother-in-Law killer).

But the Bin Laden, a battery-sized cylinder wrapped in colored paper and packed with gunpowder, has passed into the popular Venezuelan vocabulary.

``The Bin Laden is the most dangerous ... that is powerful gunpowder,'' said 22-year-old Juan Diego Ramirez, selling fireworks at a small stand in central Caracas.

``Bin Laden was someone who really made a bang, which resounded around the world,'' said fellow vendor Javier Lopez.

Caracas Fire Chief Rodolfo Briceno says Bin Ladens can maim and kill. He says fireworks killed nine people and injured over 200 in December. Fireworks started at least 400 fires in the last two months, including a big Nov. 18 blaze in Caracas that killed three people and injured more than 50.

by IMC Brazil • Saturday January 04, 2003 at 04:44 PM contato@midiaindependente.org

Two thousand landless families in Guarulhos, Brazil are facing the risk of eviction on Monday morning. Your international solidarity may be decisive.

Their story begins on mid July 2002 when a group of a few hundred families squatted an abandoned urban area in Osasco, near Sao Paulo, Brazil. The 50 hectares area in a fancy neighborhood used as a clandestine garbage field was soon occupied by ten thousand poor people living in simple tents. The city government and the rich neighbors immediately started a campaign accusing them of stealing land and bringing thiefs and drug dealers to the neighborhood. After a 5 months campaign, they were evicted. The owner of the area and the city government brought bulldozers protected by riot police who violently destroyed people's houses. One could see workers, women with children and the elderly crying over their destroyed houses filled with poor furniture and their personal possesions..

The homeless managed to get a deal with the state government and were transferred to a state unused area in Guarulhos - still near Sao Paulo but over 20 miles away from their former houses and jobs. But once the buses transferring them arrived, they had again to face the police. The city government of Guarulhos (controlled by the PT, the "Worker's" Party) had called the city police to prevent them from getting into the area. City government argued that the city has no structure to host the families and that their transferring violated urban legislation. After long negotiations they managed to get in.

But the city government went to the courts and a judge just decided for a new dramatic eviction, due to next Monday, January the 6th. The homeless have no option but to resist. Riot police will arrive early in the morning and people fear a massacre as families can't leave because they simply have nowhere to go. Local activists are mobilizing to join the homeless. International activists are called to put pressure on authorities.

What you can do:

You can send emails to the following authorities:

Governador do Estado de São Paulo São Paulo State Governor Mr. Geraldo Alckmin Email: saopaulo@sp.gov.br

Secretaria de Justiça e Defesa da Cidadania do Estado de São Paulo State Secretary for Justice and Citizenship Mr. Alexandre Morais Email: justica@justica.sp.gov.br

Prefeito de Guarulhos City Mayor of Guarulhos Mr. Elói Pietá Email: prefeito.guarulhos@sp.gov.br

Partido dos Trabalhadores (PT) The Worker's Party Email: presnacional@pt.org.br

www.arabnews.com 5 January 2003

The general strike in Venezuela, already disastrous in economic terms, is threatening to turn even uglier, now that the first two lives have been lost in a mysterious shooting into a crowd of demonstrators. The strike has already polarized Venezuelan society into the predominantly poor supporters of President Hugo Chavez and the middle classes and the upper class elite, who are resisting the president’s proposed reforms.

Venezuela needs reforms, but the president chose the wrong strategy. He chose to confront the entrenched interests of the country’s superrich, when a wiser man would have sought to negotiate and compromise. By picking battles that did not need to be fought, Chavez has sabotaged the implementation of his on radical political agenda. The result is the chaos into which this important oil-producing country has sunk.

Part of Chavez’s problem is that he is a military man, used to giving orders and having them carried out. A modern industrial democracy does not work that way. What he has very probably achieved by his headstrong behavior is throw away the chance to engineer long-overdue changes. It seems inconceivable that any sort of settlement of this bitter general strike will lead to the sort of consensus necessary to implement more than the most superficial of reforms.

The concern now is that the strikers are now calling on the armed forces to join them. This is the point where their protests depart from the legitimate. It is not the business of armed forces to involve themselves in politics. Latin America has suffered enough from the maladministration of military men. If the strikers cannot attain their aims by protest, then they should acknowledge they have failed and return to their jobs.

By seeking to involve the military, they are placing their country in the gravest danger. Some units may be persuaded to intervene while others will rightly see it as their duty to stay loyal to the democratically elected president. If the military splits, the result could be civil war. Such a thing ought to be unthinkable to all parties. But the first blood has already been drawn and tempers are running higher. If the strike does not collapse soon, the government’s own stocks of fuel will start to run out and public order could evaporate completely.

Chavez may still be the elected head of state but the time is fast approaching when he must consider his own position. Can he really continue to occupy his office if, by doing so, his country will be plunged into armed conflict? His reform program is in ruins, Venezuelan society has been split into two rival camps and paralyzed by the general strike.

The answer may be that the president calls a snap election, to renew the reform mandate. Such a contest is likely to be as violent as it would be bitter, but it may be the least of the evils facing the country. If Chavez loses, then, the reform agenda will have been halted, but it will not go away. Other wiser heads can take up the torch of reform at a later date. If, however, he wins, then his political opponents will have lost ground, to the extent that their will to resist change will have been broken. Either way, by returning to the ballot box, Venezuela will have been steered away from civil war.