GLOBAL MARKET HIGHLIGHTS
Another Bush, another jobless recovery 05-09-03 (economist.com) OF ALL the signs that America's economy is sputtering, none is more striking than the jobs market. Overall unemployment, at 6%, is still relatively low, but this headline figure masks a much tougher reality. More than 500,000 jobs have disappeared in the past three months, pushing the total lost under George Bush above 2m. Long-term unemployment, at 1.9m, is at its highest for ten years. And these numbers do not include the large number of “discouraged workers” (people who would like to work but have given up looking) and the even larger number of “underemployed” (those who are working, but not as much as they would like to). The weak jobs market is itself harming the chances of recovery. Consumers worried about losing their jobs are more likely to save their cash than spend it. And politically, the risks are even starker. George Bush senior famously lost the 1992 election during a jobless recovery. 
Early deflation alert 05-09-03 (USA Today) Consumers living in an age of saturation Wal-Mart ads may have trouble understanding what could be wrong with deflation -- an economic term that describes falling average prices. In the ads, a smiley face happily rolls back prices on everything from tires to dishwasher detergent. Customers are pleased, and Wal-Mart is hugely successful. Why not? For years consumers have enjoyed the benefits of ever-cheaper products, from computers to video cameras. But while price cuts resulting from improved efficiency for a few specific items are a blessing to budget-conscious families, a drop in overall prices on all products would be devastating. So devastating that the Federal Reserve Board was wise to issue an early warning about the risk of deflation Tuesday after its meeting to decide interest rates. Economists may differ on how to treat deflation, but they agree it is best avoided. 
Burying Budget Reality With Budget Fantasy 05-09-03 (newsday.com) The last remaining architect of the house of cards that is the Bush administration's economic policy is leaving Washington, a change that is certain to bring no change for your average American. As White House budget director, Mitch Daniels' singular achievement has been the meltdown of record federal surpluses into record federal deficits. He also helped put an end to that silly Washington parlor chatter about what might happen if the United States actually paid off its debt - a possibility and, yes, a promise when George W. Bush took office. The Treasury Department just asked Congress instead to lift the debt ceiling again by the end of May, two months earlier than expected. 
Good and bad tax cuts 05-09-03 (boston.com) Who would doubt that working adults, the unemployed, and hard pressed city and state governments reeling from their worst financial crisis since World War II would spend the money as soon as the check arrived? These would be the beneficiaries of a tax cut package offered this week by Democrats as a counterpoint to the president's tax cut proposal, which would fail to help the states and would actually reduce revenue for many of them even as it delivered most of its benefits to the wealthy. 
Pound and dollar hit new euro lows 05-09-03 (BBC) The latest falls came after the European Central Bank left interest rates unchanged at 2.5%. That preserved the interest rate gap between the eurozone and the US, where rates are 1.25%, and that meant the single currency continued to benefit. Investors are selling dollars and buying euros in order to get a better return for their money. "It is business as usual now. The euro's bull run continues," said analyst Jane Foley at Barclays Capital. 
Treasurys Snow: U.S. in Wobbly Recovery 05-09-03 (Yahoo) Treasury Secretary John Snow on Thursday said the United States was experiencing a 'wobbly' recovery as weak global expansion sapped domestic growth. Testifying before the House Appropriations Subcommittee on Transportation, Snow was asked to characterize the economy's performance 'I think the economy is in recovery ... but it's something of a wobbly recovery,' he said. 
New Claims for Jobless Benefits Decline 05-09-03 (Yahoo) Fewer workers sought unemployment benefits last week, but the level of new claims remained high, another sign that cautious companies are keeping their work forces lean amid a muddled postwar economic climate. 

 LATIN AMERICA
Argentinas Menem faces defeat in runoff 05-09-03 (globeandmail.com) Ten days before a landmark runoff election, former Argentine president Carlos Menem is on the ropes. That's not just any old cliché. For the language of pugilism is being used to describe Mr. Menem's predicament by no less than the current President of Argentina, Eduardo Duhalde. "Menem has two possibilities, as in boxing . . .," Mr. Duhalde said on Tuesday during a television broadcast. "He can lose by default, or by a knockout." 
Brazil and Argentina study economic tie-up 05-08-03 (Financial Times) With Brazil and Argentina gradually emerging from financial crisis, South America's two largest economies are relaunching ambitious plans for economic integration. Ahead of Thursday's visit to Brazil by Néstor Kirchner, the favourite in Argentina's presidential race, the Brazilian government announced plans to create a $1bn fund to finance bilateral trade. There is also renewed talk of a common currency and both sides have set up a negotiating framework to move in that direction. Though few analysts expect immediate progress, the efforts signal a break from two years of tense relations. Bilateral trade dropped from more than $13bn in 2000 to $7bn last year, largely as a result of Argentina's debt default and subsequent currency devaluation in January 2002. Trade has begun to recover, rising 24 per cent for the first quarter compared with last year. 
Brazil debates intervention in currency market 05-08-03 (Financial Times) The strength of the Brazilian Real has triggered a national debate over central bank intervention in the currency market. President Luiz Inácio Lula da Silva last week shook financial markets with suggestions of government interference. His warning last Thursday that the Real should "not strengthen too much" prompted it to fall by nearly 2 per cent. The next day he backtracked, insisting "the government will not interfere in the question of the dollar". While industry leaders and some ministers warn that a strong Real could weaken Brazil's export growth, the finance minister and central bank chief have insisted on a free-floating currency. 
IMF to relax terms of Argentina accord 05-08-03 (Financial Times) The International Monetary Fund has agreed to relax some of the terms of an interim agreement with Argentina - a clear sign of the IMF's growing confidence in the country's economic recovery and its economic team. More importantly, the IMF team also agreed to give Argentina's central bank greater flexibility in issuing new money. In a press conference late on Tuesday, Roberto Lavagna, Argentina's economy minister, said an IMF mission in Buenos Aires had agreed to increase its estimate for economic growth this year from 1 per cent to 4 per cent. The IMF also agreed to lower its inflation forecast from 35 per cent, outlined in January's agreement, to below 20 per cent, he said. 
Argentina slashes inflation forecast 05-08-03 (Financial Times) Argentina slashed its 2003 inflation forecast yesterday in a further sign of economic recovery just 16 months after the country descended into political and financial chaos. "With the latest data we have, we should be heading towards annual inflation of about 8 per cent," said Alfredo Atanasof, Argentina's cabinet chief. Mr Atanasof's forecast almost halves the government's previous estimate of 14 per cent, and is not much more than a third of the 22 per cent predicted in this year's budget. The government's National Statistics Institute is today expected to confirm the downward trend with the publication of inflation figures for April. 

 AFRICA
East Africa floods may worsen 05-09-03 (BBC) Floods are wreaking havoc in large areas of eastern Africa, ending a harsh drought. The floods have killed at least 40 people in southern Ethiopia, officials say. Another 40 people have died in Kenya, according to Red Cross figures. Tens of thousands of people across the region have fled their homes. 

 OIL PRICES
High gas prices? Just take a walk 05-09-03 (sfgate.com) As we have reported on this page before, one of the the most maddening practices in Sacramento -- almost epidemic in the timidity-plagued Assembly -- involves legislators trying to play both sides of tough issues by simply not voting when the roll is called. It's known as "taking a walk" -- even though the nonvoters are typically present in the Capitol hearing room. 
US Forecasts Lower Summer Gasoline Prices 05-09-03 (Yahoo) U.S. consumers will find more relief at the pump this summer as gasoline prices are expected to be less than previously forecast, thanks to lower crude oil costs, the government said on Thursday. In its monthly forecast, the Energy Department's analytical arm said the price at the pump should average $1.46 a gallon this summer, down 10 cents from the prior estimate. 
Gas prices still fair, oil executives say 05-09-03 (globeandmail.com) Canadians are getting a good deal on gasoline despite record-high prices in March, oil-industry executives told a parliamentary committee yesterday. Executives said prices jumped in March to an average of 84.2 cents a litre because of increases to crude oil and wholesale gas prices. 
Break oil dependence 05-08-03 (orlandosentinel.com) After a war in Iraq, and amid continued instability in the Middle East, it's amazing that some members of Congress still are unwilling to act decisively to reduce America's dangerous oil addiction. Last month the House approved an energy plan that differs little in emphasis from the bad bill members passed two years ago. Most of its $18 billion in tax incentives would go to the oil, gas, coal and nuclear industries just to do what they've always done. Only a third would promote development of new, fuel-saving technologies and alternative energy sources. 
Oil scandal billionaire tells French court of bribes 05-08-03 (guardian.co.uk) An Iraqi-born British billionaire told a French court yesterday how he had paid millions of pounds in kickbacks to French oil executives. Nadhmi Auchi, 65, reputedly Britain's seventh-richest man, is one of 37 company administrators and business partners accused of being involved in France's biggest postwar financial scandal in which the oil firm, now TotalFinaElf, allegedly paid out huge sums in bribes and backhanders to expand its empire. Mr Auchi gave himself up in London after two years resisting French demands for his arrest in connection with Elf's purchase in the 90s of interests in Spanish refineries owned by Cepsa, and petrol stations belonging to Ertoil.