Cambridge Asset Management By Martin & Bart Siegel, CPA, CFP

Second-guessing doesn’t count especially when you have no responsibility for outcomes. This particularly includes retired generals appearing as pundits, offering conflicting views of the unfolding war scenario. Military success is a function of perception, as well as reality. When their actions erode confidence in leadership, they are in essence giving aid to the enemy. This phenomenon also takes place in our economy. When political leaders erode confidence in our economy by making unjustified statements, or thwarting positive action, they are in essence promoting recession, or at the very least delaying our potential recovery.

Again it is the media, stupid. The reporters that are imbedded in the military units have assumed the obligation to report honorably, as accepted members of their units. They aren’t supposed to practice punditry. We are encouraged to believe what they report. This holds true domestically. Their obligation is report the news, not slant it according to their philosophical, or political, desires. If they want to editorialize, it should be labeled as an opinion, not fact. As we approach the next election we will watch the polarization of the media, and politicians. It is difficult to find politicians that believe that there are things more important than their political self-interest. You are even witnessing news networks blatantly splitting along political lines.

A clear example of this is the confusion over drilling in ANWAR. The key to this problem is the 60 votes necessary to prevent a filibuster in the Senate. Isn’t it clear that this has become a national security issue? Without oil from ANWAR, our reliance on Middle Eastern crude according to an energy department agency is to grow from 24% in 2000, to 50% in 2020. Other examples of our oil interdependence is the recent labor strike in Venezuela, which exports 2.5 million barrels per day, as well as the political unrest in Nigeria, which is another major oil exporter. One would think that our Senators would realize that it is crucial that we reduce our dependence on foreign sources of oil. The anti-drilling coalition continues to pull out the same, worn out, protests to drilling. They describe the 2000 acres of permafrost muck on which total darkness descends for 58 days each year, where the temperature drops to 70 degrees below zero, as pristine wilderness. They claim they are worried about the caribou. The caribou actually thrive near the oil fields, where they find some warmth under the pipelines. Then they question the amount of oil that will be derived. They describe it as only a small fraction of US consumption. What they seem tend to leave out is the production of ANWAR could replace10 years of Iraqi production. They also seem to forget that the production of 10 billion barrels of oil will affect the supply/demand function, thus reducing oils overall price.

We at Cambridge have said many times that we recognize our responsibility to remain honest as we report to our readers. We offer opinions, as well as honest data. By providing data, which we used to form our opinions, it allows our readers to interpret the data, and form their own conclusions. The stock market, at any moment in time, is a closed system, with a limited supply of shares outstanding. This offers an opportunity to investors. Each investor synthesizes the information they deem relevant, and comes to their own conclusions. There are only three actions available, that is to buy, hold, or sell. These decisions are made by millions of investors, both large, and small. Those that own stock in an emerging market generally make money. It is that simple. When the tide rises, most boats rise. The number of investors that outsmart the market is extremely small.

It is our considered judgment that we are witnessing a broadening base that is now several months old. We believe that the stage is being set for the next market advance. There are those that do not wish the public to become optimistic about their future. They do not believe it is in their own political self-interest. There are also reporters willing to sacrifice your families well being in order for them to achieve their own career goals. First it was hiding the horrific treatment of the Iraqi people. Then it was the number of body bags that would be coming home. Now that that hasn’t occurred, it is the turmoil, and the cost of rebuilding Iraq. If you go back to World War II did you know that the French killed as many as 50,000 of their own countrymen, in revenge, after the war ended? Lets not even talk about the cost of the rebuilding Europe. Where is the objective journalism? Where are the congratulations for President Bush from the Democrat politicians for a successful mission? Where is the talk of cooperation in jumpstarting our economy? It is a sad situation.

We at Cambridge continue to believe in our leadership. We believe that our Harvard MBA President is up to the challenge presented him, even considering the poisonous political environment. We believe that order is going to be brought to Iraq. This example of potential consequence for rogue nations will hopefully promote peace in the Middle East. We also believe that a positive economic package will be passed, and will be coordinated with intelligent monetary. This should bode well for the economy. We are entering a presidential cycle. Historical trends are on our side. Stay strong, and remain confident.

<a href=usinfo.state.gov>Washington File 13 April 2003

The International Monetary and Financial Committee (IMFC) of the International Monetary Fund (IMF) April 12 unanimously agreed that the international community, including the World Bank and International Monetary Fund (IMF), is "essential for sustained economic, social and political development in Iraq" and the Iraqi people are responsible for determining their own future, according to the committee's chairman, Gordon Brown, of Britain.

The committee further agreed that a new United Nations Security Council resolution regarding Iraq's future is needed, said Brown, briefing reporters following the committee's semi-annual meeting in Washington. The meeting was part of the World Bank/IMF spring meetings, which conclude April 13. Brown added that the IMFC didn't discuss the contents of a resolution.

"The Committee notes that the present situation in Iraq poses significant challenges, with an urgent need to restore security, relieve human suffering and promote economic growth and poverty reduction," the committee said in a post-meeting communiqué.

It urged early involvement of the Paris Club on the issue of Iraqi debt. The Paris Club is an informal group of official creditors. The amount of debt will first need to be determined before talks of debt restructuring or forgiveness can take place, said Horst Köhler, IMF managing director, at the briefing.

Brown said he was pleased with the spirit of cooperation at the IMFC meeting, which was based on a "common approach" and "shared values" towards poverty reduction.

The IMFC projects stronger growth in the second half of 2003 by the world's advanced economies, the communiqué said.

It said low-income countries could boost their prospects for growth through "improved economic policies, stronger institutions, progress in resolving regional conflicts and increased donor resources," including debt relief under the IMF/World Bank heavily indebted poor country (HIPC) program.

Brown stress the importance of trade liberalization and called on industrialized, emerging and developing countries to renew efforts to address obstacles to trade negotiations in advance of the World Trade Organization (WTO) meeting in Mexico later this year. Four areas needing urgent attention are agriculture, pharmaceuticals, services and healthcare for developing countries, he said.

The committee noted that accelerated labor and product market reforms are needed in Europe more steps to strengthen the banking and corporate sectors and to end deflation are needed in Japan.

WTO Director-General Supachai Panitchpakdi addressed the committee, Brown noted.

The IFMC welcomed progress with the standards and codes process, the communiqué said. It also supports the IMF's continued efforts to make surveillance of members' economic policies more comprehensive and accountable, it said.

The communiqué also said the IMF should have an important role in assisting poor countries make progress toward meeting the Millennium Development Goals of reducing poverty by half by 2015.

Other areas the IMFC supports, according to the communiqué are:

-- the inclusion of collection action clauses in international sovereign debt issues, done most recently by Mexico; -- continued work on developing a "concrete" sovereign debt restructuring mechanism"; -- an increase in the voluntary publication of country IMF staff reports; -- encouraging policies to reduce countries' credit vulnerabilities; -- promoting more effective economic crisis resolution mechanisms; -- actions by members to combat money laundering and the financing of terrorism; and -- strengthening the voice of African nations in the IMF.

The next meeting of the IMFC will be September 21 in Dubai.

Following is the text of the IMFC communique:

(begin text)

Communiqué of the International Monetary and Financial Committee of the Board of Governors of the International Monetary Fund

The International Monetary and Financial Committee held its seventh meeting in Washington, D.C. on April 12, 2003, under the Chairmanship of Mr. Gordon Brown, Chancellor of the Exchequer of the United Kingdom.

Global Economic Outlook

Meeting at a time of economic uncertainty, the Committee reaffirms its commitment to close international cooperation to strengthen confidence and support the global recovery. It underscores the importance of continued vigilance. But with readiness to adjust policies as necessary and determined further action on the structural front, the world economy has the prospect of strengthening growth and renewed prosperity. Substantial and concrete progress with multilateral trade liberalization is a key priority for the coming months and has the full political commitment of Ministers.

In the advanced economies, sound fundamentals and policies should deliver stronger growth in the second half of the year. With inflationary pressures well contained, monetary policies should remain accommodative, and in many countries there is room to ease monetary policy further if needed. On the fiscal side, the automatic stabilizers should be generally allowed to operate, though in many countries action is needed to address medium-term fiscal pressures, including those arising from ageing populations. The advanced economies have a shared responsibility to go further in implementing structural reforms -- to enhance prospects for a sustained broad-based world recovery that helps correct global imbalances. In the United States, policies consistent with a sound medium-term fiscal position remain important. In Europe, labor and product market reforms need to be accelerated. In Japan, further steps are needed to strengthen the banking and corporate sectors and end deflation, accompanied by a start toward strengthening the medium-term fiscal position.

Emerging market countries will need to continue to strengthen their policies for macroeconomic stability and structural reforms and therefore their resilience to adverse global developments. In countries facing external financing constraints, efforts to sustain macroeconomic stability will continue to be key to restoring confidence. For all countries, the continued implementation of reforms to strengthen banking and corporate sectors and underpin growth remains a priority. The IMF has a key role to play in supporting these efforts.

Prospects for stronger growth in low-income countries should be supported by improved economic policies, stronger institutions, progress in resolving regional conflicts, and increased donor resources, including through debt relief under the HIPC Initiative. Sustained implementation of sound policies, supported by strong ownership and the Monterrey Consensus, will remain key to reducing poverty and meeting the Millennium Development Goals (MDGs). African countries need to continue to press ahead with the wide-ranging reforms embedded in the New Partnership for Africa's Development (NEPAD) -- in particular to improve the quality of their institutions and ensure peace and security. The Committee reiterates the importance of technical assistance, including the contribution of AFRITACs [African Regional Technical Assistance Centers] and other regional technical assistance centers. It calls on the international community to urgently mobilize additional assistance to address the serious food shortage in Africa.

The Committee notes that the present situation in Iraq poses significant challenges, with an urgent need to restore security, relieve human suffering and promote economic growth and poverty reduction. We support a further UN Security Council resolution. We further note that engagement by the international community including the Bretton Woods institutions would be essential for sustained economic, social, and political development in Iraq, recognizing that the Iraqi people have the responsibility to implement the right policies and build their own future. The IMF and the World Bank stand ready to play their normal role in Iraq's re-development at the appropriate time. They will also monitor closely the impact of the conflict on all their members and stand ready to help and support those adversely affected. It is important to address the debt issue, and we look forward to early engagement of the Paris Club.

The Committee -- having greatly benefited from the views of Dr. Supachai Panitchpakdi, Director-General of the World Trade Organization -- underscores the urgency of concrete progress toward multilateral trade liberalization under the Doha Round through the continued commitment of the international community. This will be critical in supporting higher economic growth and poverty reduction, and enabling developing countries to participate more fully in the benefits of globalization. The Committee accordingly calls on industrial, emerging, and developing countries to play their part in renewed efforts to address obstacles to further progress in advance of the ministerial meeting of the World Trade Organization in Cancún next September. Urgent progress is needed in a number of areas, including agriculture, where better market access and lower trade distorting subsidies are particularly important for developing countries. The IMF, in collaboration with other international institutions, stands ready to support members' closer regional cooperation in the context of deeper integration into world markets.

Strengthening Crisis Prevention

The Committee reiterates the importance it attaches to strengthening the IMF's crisis prevention capacity and welcomes the steps in many countries to improve economic resilience and financial stability. However, there is still room for further improvement. Going forward, sustained implementation of a strengthened framework of bilateral, regional, and multilateral surveillance will be essential to provide more robust assessments of crisis vulnerabilities, debt sustainability, currency mismatches and other balance sheet and capital account developments, as well as further progress in strengthening data provision to the IMF and data dissemination to the public.

The Committee welcomes progress with the standards and codes process and the Financial Sector Assessment Program (FSAP) and the role these play in enhancing IMF surveillance. It calls on the IMF to continue to move forward with these initiatives to strengthen members' institutions, policy frameworks, and financial sectors, including through technical assistance. It stresses the importance of further enhancing the quality and effectiveness of standards and codes assessments, and calls on the IMF to implement quickly agreed measures to strengthen prioritization, technical assistance, and follow up of FSAP and ROSC assessments. In this context, the Committee looks forward to the further work of the Financial Stability Forum and standard-setting bodies on strengthening the content and coverage of standards in accounting, auditing, and corporate governance, and on improving transparency and financial disclosure.

The Committee supports the IMF's continued efforts to make surveillance more comprehensive and accountable, including through strengthening the IMF's policy advice on reducing vulnerabilities; greater attention to the spillovers from policies in countries of systemic or regional importance; more effective use of the IMF's cross-country experience; enhanced awareness of political economy factors; and bringing to bear a fresh perspective in surveillance of program countries. The Committee looks forward to the IMF's further work on surveillance and other crisis prevention issues and a report on progress for this year's Annual Meetings.

The Committee welcomes the increase in voluntary publication of country staff reports, but notes that the rate of publication across countries and regions remains uneven. It looks forward to further progress through the forthcoming review of the IMF's transparency policy, and stresses that the candor of the IMF's analysis and advice should be preserved.

The Committee emphasizes support for ways to achieve the objectives of the Contingent Credit Lines (CCL) in encouraging policies to reduce vulnerabilities and providing a means of support for members with strong policies in dealing with global financial developments. It looks forward to a report on how best to promote these objectives following the conclusion of the review of the facility.

Improving the Capacity to Resolve Financial Crises

Effective crisis resolution mechanisms, by promoting sound policies and better functioning capital markets, contribute to crisis prevention. The Committee welcomes the strengthened framework on access to IMF resources. This includes: the substantive criteria for exceptional access in capital account crises; and strengthened procedures, such as early involvement of the Executive Board in the process and a separate report evaluating the case for exceptional access. Consistent implementation of the framework will provide members and markets with clarity and predictability about IMF decisions in crises.

The Committee welcomes the inclusion of collective action clauses (CACs) by several countries, most recently Mexico, in international sovereign bond issues. It also welcomes the announcement that, by June of this year, those EU countries issuing bonds under foreign jurisdictions will include CACs. The Committee welcomes the work of the G-10, emerging markets, and the private sector in contributing to the development of CACs. It looks forward to the inclusion of CACs in international bond issues becoming standard market practice, and calls on the IMF to promote the voluntary inclusion of CACs in the context of its surveillance. The Committee welcomes recent initiatives to formulate a voluntary code of conduct for debtors and their creditors, which will improve the restructuring process, and encourages the IMF to contribute to this work.

The Committee welcomes the work of the IMF in developing a concrete proposal for a statutory sovereign debt restructuring mechanism (SDRM) and expresses its appreciation for the IMF management and staff's efforts. The extensive analysis and consultation undertaken in developing the proposal have served to promote better understanding of the issues to be addressed in bringing about orderly resolution of crises. The Managing Director's report sets out the current position. The Committee, while recognizing that it is not feasible now to move forward to establish the SDRM, agrees that work should continue on issues raised in its development that are of general relevance to the orderly resolution of financial crises. These issues include inter-creditor equity considerations, enhancing transparency and disclosure, and aggregation issues. The IMF will report on progress at the Committee's next meeting.

Implementing Initiatives to Support Low-Income Countries

The Committee recognizes the urgent need to address the challenge of meeting the Millennium Development Goals, and reiterates that the IMF continues to have an important role to play in assisting low-income countries progress toward them. This will require enhanced efforts by developing and developed countries working in partnership. The Committee stresses the importance of sound macroeconomic policies and strong public expenditure and financial management systems. The Committee recognizes the urgent need to enhance market access and to increase the level and effectiveness of donor resources for developing countries. Proposals to achieve this, including facilities, are being considered, and the Committee looks forward to progress in the coming months. Building on countries' poverty reduction strategy papers (PRSPs), the Committee encourages the IMF to work with low-income countries to strengthen further the alignment of the PRGF, domestic budgets, and the PRSP approach. This will be facilitated through more realistic economic projections, systematic analysis of the sources of growth, effective Bank-Fund collaboration, and flexibility in program design, including to accommodate higher aid inflows. The Committee encourages donors to coordinate and harmonize their assistance in line with PRSP priorities, and to provide technical assistance to help members build the needed capacity to design and operationalize PRSP strategies and to improve public expenditure management. It endorses further work on the linkages between growth and poverty reduction, including the role of the private sector. The Committee also looks forward to the review of the role of the IMF in low-income countries over the medium term, and its paper on helping low-income countries to deal with shocks.

The Committee welcomes the further progress made in implementing the HIPC Initiative, but notes that some countries have experienced delays in reaching the completion point, and that other eligible countries are facing obstacles to participation in the Initiative. It looks forward to a review of these issues at its next meeting. The Committee reaffirms its commitment to the full financing of the Initiative. It urges all creditors to participate fully, and encourages further Bank-Fund efforts to help creditor and debtor countries address HIPC-to-HIPC debt relief and creditor litigation issues. It emphasizes the need to ensure lasting debt sustainability, which will require both the full implementation and financing of the Initiative, and continued sound economic policies, good governance, and prudent debt management. In this context, the Committee welcomes the efforts by some countries to provide additional debt relief beyond HIPC terms. The Committee supports joint Bank-Fund work to improve its assessments of longer-term debt sustainability for heavily indebted poor countries, and looks forward to a progress report at the next meeting.

Other Issues

The Committee welcomes the further actions by members to combat money laundering and the financing of terrorism, and notes with satisfaction the progress with the 12-month pilot program of AML/CFT [anti-money laundering/combating the financing of terrorism] assessments. It underscores the importance of continued close cooperation between the IMF, the World Bank, the FATF [Financial action Task Force], and regional bodies to complete the pilot successfully, and of further enhancing the delivery of critically needed technical assistance. The Committee encourages all members to adopt AML/CFT laws and practices consistent with the agreed international standards, and looks forward to a full report at the conclusion of the pilot program.

The Committee considers it important that, as pointed out in the Monterrey Consensus, all members should have an adequate voice and representation in the institution. It welcomes recent administrative steps to strengthen the capacity of the African constituencies. The Committee notes that the Twelfth General Review of Quotas has been concluded and that the IMF is well positioned to meet the projected needs of its members. The Committee looks forward to receiving a status report by the 2003 Annual Meetings on the adequacy of IMF resources, the distribution of quotas, and measures to strengthen IMF governance, consistent with the resolution of the Board of Governors, in the context of the Thirteenth General Review of Quotas. The Committee recommends completion of the ratification of the Fourth Amendment.

The Committee welcomes the thorough follow up being given to the first report of the Independent Evaluation Office on prolonged use of IMF resources. It looks forward to future IEO reports as a way of enhancing the listening and learning culture within the IMF.

The Committee expresses its appreciation of the work of Eduardo Aninat as Deputy Managing Director.

The next meeting of the IMFC will be held in Dubai, on September 21, 2003.

INTERNATIONAL MONETARY AND FINANCIAL COMMITTEE ATTENDANCE April 12, 2003

Chairman, Gordon Brown Managing Director, Horst Köhler

Members or Alternates

Hamad Al-Sayari, Governor, Saudi Arabian Monetary Agency (Alternate for Ibrahim A. Al-Assaf, Minister of Finance and National Economy, Saudi Arabia)

Edward George, Governor, Bank of England, United Kingdom (Alternate for Gordon Brown, Chancellor of the Exchequer, United Kingdom)

Felipe Pérez Martí, Minister of Planning and Development, República Bolivariana de Venezuela (Alternate for Diego L. Castellanos, Governor, Banco Central de Venezuela)

Ian Campbell, Parliamentary Secretary to the Treasurer, Australia (Alternate for Peter Costello, Treasurer of the Commonwealth of Australia)

Job Graca, Deputy Minister of Finance, Angola (Alternate for José Pedro de Morais, Jr., Minister of Finance, Angola)

Hans Eichel, Minister of Finance, Germany

Geir Hilmar Haarde, Minister of Finance, Iceland

A.H.E.M. Wellink, President, De Nederlandsche Bank N.V. (Alternate for Hans Hoogervorst, Minister of Finance, The Netherlands)

Jamaludin Mohd Jarjis, Finance Minister II, Malaysia

Mohammed K. Khirbash, Minister of State for Finance and Industry, United Arab Emirates

Aleksei Kudrin, Deputy Chairman of the Government and Minister of Finance, Russian Federation

Mohammed Laksaci, Governor, Banque d'Algérie

Roberto Lavagna, Minister of Economy, Argentina

John Manley, Minister of Finance, Canada

Francis Mer, Minister of Economy, Finance and Industry, France

Antonio Palocci, Minister of Finance, Brazil

Guy Quaden, Governor, Banque Nationale de Belgique (Alternate for Didier Reynders, Minister of Finance, Belgium)

Masajuro Shiokawa, Minister of Finance, Japan

Bimal Jalan, Governor, Reserve Bank of India (Alternate for Jaswant Singh, Minister of Finance and Company Affairs, India)

John W. Snow, Secretary of the Treasury, United States

Paul Toungui, Minister of State, Minister of Finance, Economy, Budget and Privatization, Gabon

Giulio Tremonti, Minister of Economy and Finance, Italy

Kaspar Villiger, Minister of Finance, Switzerland

Li Ruogu, Assistant Governor, People's Bank of China (Alternate for Zhou Xiaochuan, Governor, People's Bank of China)

Observers

Oscar de Rojas, Acting Head, Financing for Development Office, Department of Economic and Social Affairs, United Nations (UN)

Willem F. Duisenberg, President, European Central Bank (ECB)

Heiner Flassbeck, Chief, Macroeconomic and Development Policies Branch, United Nations Conference on Trade and Development (UNCTAD)

Donald J. Johnston, Secretary-General, Organisation for Economic Cooperation and Development (OECD)

Malcolm D. Knight, General Manager, Bank for International Settlements (BIS)

Caio Koch-Weser, Interim Chairman, Financial Stability Forum (FSF)

Eddy Lee, Economic Adviser and Director, International Policy Group Department, International Labour Organization (ILO)

Trevor A. Manuel, Chairman, Joint Development Committee

Pedro Solbes, Commissioner for Economic and Monetary Affairs, European Commission

Supachai Panitchpakdi, Director-General, World Trade Organization (WTO)

James D. Wolfensohn, President, World Bank

(end text)

(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: usinfo.state.gov)

This site is produced and maintained by the U.S. Department of State's Office of International Information Programs (usinfo.state.gov). Links to other Internet sites should not be construed as an endorsement of the views contained therein.

<a href=www.zenit.org>URL Code: ZE03041201 Date: 2003-04-12

NEW YORK, APRIL 12, 2003 (Zenit.org).- Developing nations are reducing their reliance on new overseas loans and depending more on direct investment. Remittances by migrant workers are also becoming a key source of finance. These are some of the conclusions from the World Bank's Global Development Finance report for 2003, released April 2.

The 1997-98 financial crisis in Asia continues to affect all developing nations. One consequence has been a decline in new private lending. The situation worsened in 2001 and 2002 because of the global economic difficulties.

Yet, the decline in new loans has a positive side. According to Philip Suttle, lead author of the report: "Over reliance on debt has been a problem for many countries. Looking ahead there is room for cautious optimism that capital flows to developing countries will be less volatile in the future. This would be good for growth and for poor people."

According to the report, net private debt flows to developing countries, made up of bonds and bank loans, peaked at about $135 billion a year in 1995-96 and have since declined steadily, becoming net outflows in most years since 1998. Last year, developing countries paid $9 billion more on old debt than they received in new loans. This came on top of a 2001 outflow of almost $25 billion.

This means that even though net foreign direct investment has gone from a 1999 peak of $179 billion to $143 billion in 2002, it is increasingly the dominant source of external financing for developing countries.

The report identifies advantages in the increased reliance on investment, as opposed to debt. Investors tend to be more oriented to the long term and, compared to debt holders, are more inclined to tolerate short-term adversity. "The shift from debt to equity highlights the importance of developing countries' efforts to foster a sound investment climate," said Nicholas Stern, the World Bank's chief economist and senior vice president for development economics.

The drawback with the debt repayments is that the developing world has become a net capital exporter to the developed world. As a result, capital is no longer flowing from high-income countries to economies that need it to sustain their progress toward development goals. This shortage, notes the report, is compounded in the poorest countries by a significant drop in official development assistance from bilateral donors.

According to the World Bank, the intense pressures to pay down external debt have placed many countries under severe stress in recent years, usually with particularly adverse consequences for poor people. There is now a growing consensus that the mechanisms available to cushion these debt pressures are in need of reform.

The plan to alleviate the debt burden of the poorest countries, known as the Heavily Indebted Poor Countries Initiative, has resulted in "significant progress," observed the report. But continued weakness in the prices of commodities exported by these nations means that some of the countries will need still further help to reduce their debt.

Remittances to the rescue

Another notable development in recent years is the increase in remittances coming from migrant workers. The overall amount they sent home reached $80 billion in 2002, up from $60 billion in 1998.

The increase in remittances helps ensure greater financial stability compared to reliance on debt. The report observed that remittances tend to be countercyclical, since economic downturns encourage additional workers to emigrate while those already abroad tend to send more money to families left behind.

Remittances were particularly important for the Latin America and Caribbean region. In 2002 this area received $25 billion from migrant workers sending part of their paycheck back home. Mexico, the Dominican Republic, El Salvador, Colombia, Brazil and Ecuador are among the top-20 country recipients of remittance, with Mexico being only second to India. As a percentage of gross domestic product, remittances are largest in Central America.

Remittances were also important for the countries in South Asia, which received $16 billion last year. This is the second highest among developing regions and equals 2.5% of the GDP for the area.

Regional variations

Economic growth in developing countries was 3.1% in 2002, up by 0.3% on the 2001 performance. According to the World Bank, growth was restrained by the weakness in richer countries, and by financial and political uncertainties in several large emerging markets.

The report noted that growth in Latin America and the Caribbean was held down by the government debt default and banking collapse in Argentina. Other factors were the uncertainty about Brazilian elections, worsening conditions in Venezuela, and an associated falloff in financial market flows. GDP in the region dropped by 0.9% in the year.

In terms of regional trends in debt and investment, the Latin American and Caribbean region paid $9 billion more on old debt than what it received in new private loans. Foreign direct investment dropped to $42 billion, from $69 billion in 2001, the severest decline among all regions. But Brazil and Mexico were the second- and third-largest recipients of investment (after China) with $16.6 billion and $13.6 billion, respectively.

Overall, the report expects growth in Latin America and the Caribbean to accelerate by the most of any region in 2003, led by a recovery of Argentina. Regionwide GDP is expected to grow 1.7% this year and 3.8% in 2004.

The situation in South Asia is healthier. The report notes that South Asia's GDP rose 4.9% in 2002, and is expected to rise by 5.3% this year. The report is also forecasting a rise in foreign direct investment from $5 billion in 2002 to $9 billion in 2005.

In East Asia and the Pacific, foreign direct investment rose to $57 billion in 2002, up from $48.9 billion in 2001. The increase was largely due to the continuing rise in investment in China. In 2002, China became the largest foreign direct investment recipient, surpassing the United States for the first time, by attracting a record high of $52.7 billion. This amount accounted for 37% of the developing countries' total in 2002.

In the Middle East and North Africa region, capital flows are traditionally much more modest. In recent years foreign direct investment has been around $2 billion to $3 billion a year. The report noted that the region has the lowest returns on investment in the world. This factor, combined with prewar uncertainty over Iraq and the continuing Israeli/Palestinian conflict, has eroded investor confidence and posed obstacles to investment.

Regarding the role of developed countries, the report said that they could support development most directly "through coherent aid and trade policies that promote development." The report particularly called on industrial countries to reduce agricultural subsidies and trade barriers that discriminate against exports from developing countries.

Regarding aid to developing countries, the report pointed out that the commitment to increase assistance made prior to the U.N. Conference on Financing for Development, in Mexico in March 2002, was a welcome contrast to previous cuts. However, the amounts promised are insufficient to reach the development goals set for 2015. One can only hope that the richer countries will not be too distracted by their own problems to forget the plight of developing nations.

<a href=www.zwire.com>The New Britain Herald By BRIAN FRAGA, Staff Writer April 12, 2003

SOUTHINGTON -- The First Congregational Church in Southington will once again demonstrate its social conscience Palm Sunday as Pastor Gordon Ellis will give a sermon entitled "Jesus, Bullies, Justice and Fair Trade."

Ellis will speak out on the fair trade issue, which has become a focal point of social activists nationwide. These activists allege American corporate entities exploit foreign workers in the age of globalization by paying them sub-standard wages for desired commodities in the United States.

The targeted commodity Sunday will be coffee, with worshippers being served "fair trade coffee" after worship. The Church Council recently voted to exclusively use the politically-conscious java, which is often organically grown by coffee farmers paid a minimum wage by fair trade organizations.

The church has also asked all its members to drink fair trade coffee exclusively at home.

"It’s like drinking a cup of justice," Senior Minister Gordon Ellis said in a written statement. "To quote Erbin Crowell (a Lutheran social activist), ‘Communities of faith are looking for ways to do justice in our daily lives. One simple way to reach out to communities in need is with the cup of coffee that we hold in our hand.’"

Coffee is a major cash crop for farmers in such South American countries as Brazil, Columbia and Venezuela. Many of them were harmed economically as world coffee prices plummeted to a historic low of 45 cents-per-pound in 2001, down from a high of $1.40-per-pound in 1999.

According to Equal Exchange, a fair trade organization, the low price of coffee along with middlemen taking a large chunk of profits has led to the farmers’ communities and families being devastated. The fair trade organizations often subsidize the farmers with minimum wages to assist with living expenses.

To become fair trade certified, a coffee importer must meet stringent international criteria; paying a minimum price per pound of $1.26, providing credit to farmers to invest in equipment and providing technical assistance such as helping to transition to organic farming.

"When farmers can’t get a fair price for their coffee, it has a ripple in their communities, their country and even the world," said Crowell, an Equal Exchange member. "Without a stable income, they can’t afford to invest in their farms, they can’t pay for their children’s education, they can’t afford medicines and they can’t plan for the future."

The First Congregational Church has shown a distinct social conscience during this Lenten season. The church has held a weekly seminar series focusing on world issues such as the war on Iraq and the Palestinian-Israeli conflict. Ellis has participated in antiwar rallies himself.

Brian Fraga can be reached at bfraga@newbritainherald.com or by calling (860) 225-4601, ext. 225.

<a href=www.gdp.ch>Giornale del Popolo di Corrado Bianchi Porro

Dopo la disinflazione degli anni ottanta e novanta, gli Stati Uniti percorreranno una via inflazionistica per rimettere in sesto i propri pesanti deficit. Tassi in discesa a breve, ma in salita più avanti. Cammino inverso per il dollaro, più forte ora nel dopo guerra, più debole in prospettiva.

Chi si aspettava che la fine della guerra avrebbe riportato il sereno nei mercati finanziari, dovrà ricredersi. I mercati avranno ancora a che fare con il Bello, il Brutto e il Cattivo. Vi sarà ancora volatilità nei mercati e dunque anche opportunità. Ma vi sono alcuni nodi strutturali da risolvere, primo tra questi i deficit americani (federale e commerciale). Quale soluzione dunque? Tagliare le spese o aumentare le tasse, sarebbero le misure classiche, nessuna delle quali è tuttavia bene accetta dall'amministrazione repubblicana nel momento in cui ci si avvicina all'anno elettorale. Poiché non è dunque praticabile la via giapponese della deflazione, non resta che una via all'italiana per riequilibrare i conti: re-inflazionare l'economia. In sostanza a breve i tassi americani scenderanno ancora per aiutare la ripresa (la Fed vorrà dare adrenalina al mercato), ma a medio termine sono destinati ad aumentare e magari a ritornare ai livelli a due cifre degli anni ottanta. Così il dollaro a breve potrà guadagnare, ma a medio raggio dovrebbe perdere terreno. Questa l'analisi di Burkhard Varnholt, capo del dipartimento dei Prodotti finanziari del Credit Suisse Private Banking, intervenuto ieri alla sede luganese di via Canova. Veniamo al Bello dei mercati. Le grandi bolle sono ormai scoppiate e i guadagni delle imprese si stabilizzano; la guerra in Iraq è breve e vi è stato un rally delle borse. Le Brutte notizie sono che i cash-flow delle aziende rimangono deboli in quanto esse debbono ristrutturare l'indebitamento e mantenere le promesse pensionistiche fatte ai propri dipendenti. Inoltre, la fiducia nei mercati non è esaltante e l'approccio al rischio per gli investitori rimane a livelli molto bassi. Le Cattive notizie sono legate all'aumento dei debiti pubblici, al dover fronteggiare le spese della guerra, al prezzo del petrolio che crea inflazione anche per i problemi in Nigeria e Venezuela, alla fattura del ribasso di borsa, alla necessità di equilibrare i fondi pensionistici. Secondo la Goldman Sachs, il contributo annuo per i fondi pensionistici potrebbe salire a 40 miliardi di dollari a 120 miliardi annui. In sostanza, il 2003 sarà un anno di "chemioterapia" per pareggiare i conti ed è questo che crea il pericolo di una grafica a "w", caratterizzata da caduta, risalita e nuova caduta prima della ripresa. Secondo Burkhard Varnholt, c'è bisogno di bassi interessi per la ripresa del mercato azionario e tuttavia non è affatto da escludere uno scenario inflazionistico che riporti il tasso dei bond dal 2,4% attuale al 14% di vent'anni fa. Il deficit federale si andrà infatti ampliando a dismisura. Se gli anni 1980-2000 sono stati caratterizzati da: • Riduzione del peso del governo; • Globalizzazione; • Privatizzazioni; • Prevalenza della grandi società; • Tecnologia e asset intangibili; • Dominio del dollaro; • Pace; • Deflazione. Gli anni verso cui ci muoviamo possono invece percorrere il cammino opposto. In questo caso avremo: • Incremento del peso del Governo; • Protezionismo; • Nazionalizzazioni; • Prevalenza di piccole società; • Energia e asset reali. • Debolezza del dollaro; • Guerra; • Reflazione. In sostanza, gli USA hanno interessi convergenti a re-inflazionare l'economia e questo farà comodo anche alle economie di Paesi indebitati che hanno oneri denominati in dollari. Non c'è dunque alle viste uno scenario alla giapponese, un mercato chiuso, che si avvolge su se stesso e con caratteristiche politiche e demografiche del tutto diverse da quelle americane. Anzi, è persino possibile che lo stesso Giappone decida di abbandonare la sterile via della deflazione.