Wednesday Night #951

Written by  //  May 24, 2000  //  China, Economy, Herb Bercovitz, Markets, News about Wednesday Nighters, Reports, Rights & Social justice, Science & Technology  //  Comments Off on Wednesday Night #951

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…there is one hope for Western civilization so long as your Salon allows doers and thinkers to just talk and think–rather than go through life with no more thought than a frog hopping across a pond.  Terry Jones, Washington DC.

Only 50 more Wednesdays until we reach the magical number of the Arabian Nights! Think about it. And we certainly have more than one tale to tell for each night.

HISTORY WAS MADE  tonight at the Salon. For the first time in nineteen years, a Radio Canada journalist, Annie Richer, armed with tape recorder was permitted to tape the proceedings (which were conducted in both French and English) and interview the guests. This unusual procedure necessarily curtailed the time allocated to debate and discussion, but made for a fascinating bilingual evening. The dialogue mostly covered such ongoing topics as the economy, China and the W.T.O. and Microsoft.

Several new faces were introduced, including Robert Russel, a futurist (and former policy wonk with Pierre Juneau’s staff) who is now writing for Silicon Valley North. With Bob was well-known Toronto artist, Jean Townsend who re-discovered several old San Miguel friends during the course of the evening. Lucienne Kroha‘s guests brought expertise in Italian literature and theatre, notably Prof. Donato Santeramo, Dept. of Modern Languages, Queen’s University; Prof. Amilcare Iannucci, Director of the Humanities Institute and Professor of Comparative Literature, University of Toronto and Ms. Gloria Di Falco , Actor, however because of the time constraints, we will have to wait for another evening to explore those subjects with their guidance.

Another historic moment found our Right Hands and Left Hands not only knowing what one another were doing, but joining in agreement that while Microsoft was never The Great Innovator, it created a standardized operating system and a standard language which have been good for the rapid advance of the information age. Furthermore, despite the fact that each of the seven sisters in the Oil cartel probably prospered to a greater extent than the parent company would have, power in the end is mostly misused, and it would be prudent to split Microsoft. Guy Stanley, Gerald Ratzer and the Chair think the break up of MS is very bad for computing! In a word – dumb!
Another voice was heard mentioning that Thomas Edison and Alfred Nobel didn’t have to suffer break-ups, but admitting that break-ups actually benefit investors. Warren Allmand reminded us that break-ups maintain competition which benefits innovation.

Stock Market
The stock market remains a source of concern to some guests and comfort to others. Chil Heward expressed his concern that growth in Southeast Asia will put tremendous pressures on Canada. The Canadian economy is too strong. Another guest is nervous about technology stocks, but bullish on oil stocks, and still another is concerned about the “single-digit midgets”, down 90% from their peaks. With stories like Red Hat and Corel, there is still investor complacency. Read “Irrational Exuberance”. Portfolios are down 40%-50% and not just because of technology stocks. Half of the households in the U.S. are financing discretionary spending with stock investments. La valeur net des foyers depend des valeurs des fonds de pension and if they drop.

While there appears to be a pause in the upward surge probably due to the interest rate situation, portfolio managers still must find a home for increasingly available funds. As long as this continues, the market will continue its unprecedented upward trend. Technology has increased speculation however, and while good values are still available, especially in Canada , fortunes have been made and lost over the past year.

There is some concern about banks lending money to companies, especially West Coast companies while on this roller coaster ride. Just as happened in Japan, there are a lot of people hurting. Tech stocks, the darlings of the market have lost some of their lustre, while the old solid standbys, until recently considered the dinosaurs of this market, are coming back into fashion.
The North American economy remains strong. American GDP is up for the first quarter. In Canada, the leading indicator is up 0.9. Inflation is rising, but in Canada, the increase is 1% less than in the United States. The American interest rates will rise 1/4% in June, 1/4% in August, and 1/2% in December following a pause for the U.S. elections. Canada will be forced to follow because of the weakness of the Canadian dollar.

China and the WTO

The decision on the granting of permanent most favoured nation status to China by the United States is based on economics, the moral issue and human rights. Economically, the United States benefits more than China from trade. Although considered unlikely, a punitive trade tariff could lead to a unilateral devaluation of the Chinese currency. With a G.D.P. of over a billion dollars, China is in the same league as Canada and Italy, inflation is extremely low, the economy is growing at a rate of 7-8% and China enjoys a balance of payments surplus. The Chinese financial and banking systems represent their only weakness. This is currently being addressed. On this basis, there is little likelihood of China being denied admission to the WTO.
As for the human rights issue, China is misleading the world, there are no human rights in China, it’s a sham. Meantime, the United States has never let an appalling human rights record interfere with economic advantage and is unlikely to do so in the current case. Nor is the United States likely to allow the Europeans to strike a deal with China, while holding back on moral grounds. Canada’s position is let everyone “join the game and play by all the rules”. One observer and trade authority suggests that the Russians will play a critical role in this issue. Another asked why the U.S.A were so close to Saudia Arabia with its apalling Human Rights – e.g., women can’t vote or even drive a car.

On Microsoft
* “If you have ever traveled around Europe with a hair dryer, you know about standards.
* “We should fear the politics of the decision – the tyranny of Democracy.

On the Stock Market:
* “It has become a casino.”
* When people (ask), how’s the market?, you have to say, ‘Which market’?
* We are now on the top of Mount Everest and very soon, people will be sliding down.
* When enough money is lost, public opinion will ask ‘ why weren’t we protected?’

On China and the W.T.O.:
* If you are going to play the game, you have to play by all the rules.
* I personally am a China pessimist, but I’m not sure that sanctions are an effective tool. China is a problem, a danger, but I’m not certain that facilitating trade might not be good in the long term, or keeping them out bad.

Tony Deutsch, on sabbatical, will reappear briefly in August, then in October and again in December.
Susan Eyton-Jones departs, June 3rd for the Ashlawn Festival in Northern Virginia (near Charlottesville) where she will be singing in Don Giovanni (in English) and in Oklahoma!
Hans Black will be appearing as a special guest on the PBS Nightly Business Report with Paul Kangas, June 9, after he (Hans, not Paul) returns from Monte Carlo (car races) then off to his Bermuda office for a weekend.
David & Terry Jones are returning to Montreal from Washington on a visit and will join us on Wednesday Night June 21st.
Margaret Lefebvre is Councillor in charge of many things in Westmount including the Web site which is now looking great. For example, the Events Calendar is right up to date!

T H E  I N V I T A T I O N

This Wednesday you are invited to spin a tale for a charming young lady, Annie Richer, from Radio Canada. Annie will be here to soak up the WN ambiance, take a few sound bites and generally enjoy herself while preparing a report on what makes people want to participate in serious discussion in this era of no free time. Please come prepared to explain yourselves.

Royal Bank chief economist John McCallum says “Canadians should take comfort in the fact that the lion’s share of interest-rate increases are behind us now … we think the Bank of Canada has reached the end of its tightening cycle.” The bank also predicts that a volatile stock market and higher energy prices will combine to cool the consumer sector.

12 May Merge or we’ll decide: Harel Bills introduced to ease way for metropolitan community, town amalgamations
The Quebec government won’t hesitate to impose municipal mergers if that is what it takes to reduce the number of cities and towns, Municipal Affairs Minister Louise Harel said yesterday.
“Nobody has a right of veto to maintain the status quo by deciding that the fate of their neighbour doesn’t concern them,” Harel said during question period. “So it is here that it will be decided.”
24 April 2000 Washington Post Montréal story “Springs Back From 30-Year Decline”
28 April 2000 Heart-surgery wait lengthens Up 15%, government figures show
28 April 2000 Windfall for cities pledged More than $1.5 billion over five years: Harel
26 April 2000 Louise Harel’s plans for municipal reform are sound, as long as she leaves out the part about forced mergers.
26 April 2000 Quebec could force mergers Takes a carrot-and-stick approach ELIZABETH THOMPSON

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