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Stocks Slammed by AIG Woes, War Jitters - Reuters

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  • Elizabeth Lazarowitz - Reuters
    Stocks Slammed by AIG Woes, War Jitters Tue February 4, 2003 04:36 PM ET By Elizabeth Lazarowitz NEW YORK (Reuters) - Stocks slumped on Tuesday after American
    Message 1 of 62 , Feb 4, 2003
      Stocks Slammed by AIG Woes, War Jitters
      Tue February 4, 2003 04:36 PM ET
      By Elizabeth Lazarowitz
      NEW YORK (Reuters) - Stocks slumped on Tuesday after American
      International Group Inc. AIG.N , the world's largest insurer, warned
      it had greatly underestimated its liabilities, further unnerving
      investors on edge ahead of a diplomatic meeting that could heighten
      the threat of war with Iraq.

      War jitters sent the price of gold to a 6-year high, drove the dollar
      lower and pumped up oil prices a day before Secretary of State Colin
      Powell is scheduled to provide the U.N. Security Council with
      evidence Washington says will show that Iraq is hiding banned weapons
      from U.N. arms inspectors.

      "Apprehension is growing about the uncertainties of what may occur in
      the Middle East," said A.C. Moore, chief investment strategist at
      Dunvegan Associates. "It's to be expected to see this type of
      volatility and softness until, perhaps, a successful outcome is
      obtained."

      Worries about the foggy corporate profit outlook were reignited after
      AIG announced a massive charge of $1.8 billion to cover liability
      claims that have built up in recent years. AIG sank more than 6
      percent and pulled other insurers down.

      "AIG is more than a bellwether. It's a reflection of where the global
      economy is, and for them to say they have balance sheet problems, it
      calls into question valuations everywhere," said John Gillette, ADR
      trader at investment firm Lazard Freres.

      Technology bellwether Cisco Systems Inc. CSCO.O dropped 2 percent as
      investors awaited its earnings after the bell. Telecommunications
      stocks limped lower after French equipment maker Alcatel CGEP.PA
      ALA.N warned of weak sales.

      The blue-chip Dow Jones Industrial average .DJI fell 96.81 points, or
      1.19 percent, to 8,013.01, and the broad Standard & Poor's 500
      index .SPX dropped 12.14 points, or 1.41 percent, to 848.18. The tech-
      loaded Nasdaq Composite .IXIC lost 17.79 points, or 1.34 percent, to
      1,306.00.

      Decliners beat advancers by a ratio of about 10 to 7 on the New York
      Stock Exchange and about 5 to 3 on Nasdaq. More than 1.4 billion
      shares changed hands on the Big Board and more than 1.3 billion were
      traded on Nasdaq in heavy trading.

      INSURERS GET WHACKED

      AIG sank $3.63 to $51.70 and topped the New York Stock Exchange's
      most active list. The after-tax charge will help cover runaway costs
      of workers' compensation and directors' and officers' liability
      claims, the company said.

      Investors worried that the problems affecting AIG, regarded as one of
      the best-performing insurers, would hurt rivals. ACE Ltd. ACE.N fell
      $1.50, or 5 percent, to $28.25. Chubb Corp. CB.N sank $2.97, or 5
      percent, to $51.60. Travelers Property Casualty Corp. TAPa.N dropped
      55 cents, or 3 percent, to $15.60.

      Cisco fell 28 cents to $12.98 during the regular session and topped
      Nasdaq's most active list by a wide margin. The world's No. 1 maker
      of gear that directs Internet traffic after the close reported a
      higher quarterly profit, but said its sales fell amid the technology
      spending slowdown.

      Dow component General Electric Co. GE.N fell 60 cents, or 2.5
      percent, to $23.05. British bank Abbey National ANL.L sold most of
      its First National consumer lending unit to General Electric for 848
      million pounds ($1.39 billion) -- a premium of 218 million pounds
      over the firm's net tangible assets.

      French telecoms equipment maker Alcatel lost 22 cents, or 3 percent,
      to $6.78 after it predicted a deeper-than-expected decline in first-
      quarter 2003 sales. U.S. competitor Lucent Technologies Inc. LU.N
      fell 19 cents, or 10 percent, to $1.65. The North American
      telecommunications index .XTC fell more than 1 percent.

      Biotechnology company Genzyme General GENZ.O tumbled $2.55, or more
      than 7 percent, to $30.65. The company said its earnings for 2003
      would trail Wall Street estimates due to steep costs to develop and
      market new drugs.

      NAGGING WAR WORRIES

      Investors worry that war will jeopardize the nation's fragile
      economic recovery, trigger a spike in oil prices and put the brakes
      on corporate profit growth. The bulk of the fourth-quarter reporting
      season is over with few signs that corporate earnings are poised for
      a solid upturn in 2003.

      "The key to a stock market recovery would be a feeling among
      investors that profits are going to recover," said Rick Meckler,
      president of investment firm LibertyView. "Some of the large and well-
      known companies are really disappointing -- maybe not so much in
      actual numbers but in outlook."

      Powell, who will address the U.N. Security Council on Wednesday, has
      said he will provide "sober and compelling proof" that Iraq is hiding
      weapons from U.N. arms inspectors -- a move seen as adding to the
      likelihood of a U.S.-led attack against Iraq.

      Friction between the United States and North Korea put another dent
      in investor sentiment. U.S. aircraft and warships were put on alert
      for possible deployment after North Korea said on Monday its troops
      were at the ready in case of any U.S. "military and political moves"
      against it.
    • SDP
      Any one these days can promise the havens and the earth......but delivering on the promise is another thing altogether. Some examples of unfulfilled
      Message 62 of 62 , Mar 8, 2003
        Any one these days can promise the havens and the earth......but delivering on the promise is another thing altogether.

        Some examples of unfulfilled promises....;

        JUDGE MY GOVT BY ITS RESULTS: PM Goh Chok Tong

        The Rhetoric

        "The price of a good government is $34 million a year - just $11 per
        Singaporean a year - or the cost of five plates of char kway teow per
        citizen."
        - Straits Times, July 1, 2000

        "A million dollars for a minister seems a lot when compared with the
        salary of a worker. But $34 million for all the ministers and
        political office-holders is a tiny drop when compared with the
        increase in GDP that a good government can produce..."
        - PM Goh Chok Tong, Straits Times, July 1, 2000


        The Reality

        The Singapore economy contracted by 2% in 2001 (Singapore Department
        of Statistics). Singapore has undergone two recessions in three
        years - 1998 and 2001. December 2001 figures show that 101,800
        persons are unemployed.
        ------------------------------------------------------------------------

        SIZE DOES MATTER

        The Rhetoric

        "GLCs added only 12.9% to the Singapore economy, says BG Yeo. Smaller
        companies need not worry about being edged out."
        - Straits Times, February 24, 2001

        "...there is a perception that GLCs dominate our economy...This is
        not correct."
        - MTI Minister George Yeo, Straits Times, Feb 24 2001

        The Reality

        "The government external economy constituted more than 50% of the
        total external economy in 1998. If one takes into account the GLC-
        owned external economy, then the government share balloons to some
        60%. Foreign MNCs accounted for 29% whereas the local private sector
        (excluding GLCs) owned 11%. It is therefore clear that if the
        government and GLCs fail to secure a good return on their external
        economy, the performance of the economy overall would be adversely
        affected."
        - Morgan Stanley report "Singapore's Investment Abroad 1997-1998"

        "GLCs have evolved into major economic institutions that account for
        over 60 percent of Singapore's GDP."
        - US Embassy in Singapore economic report Sept 2000

        "GLCs estimated contribution to GDP in 1998 of 12.9 per cent was not
        insignificant."
        - Singapore Department of Statistics, March 2001

        --------------------------------------------------------

        LABOUR CHIEF WANTS TO LOWER YOUR WAGES

        The Rhetoric

        "A worker in Singapore will cost $1000 per month or more, but there
        is a bountiful stream of workers in China who will gladly work for
        $100 per month ... that is why we should lower our wage costs."
        - Labour chief Lim Boon Heng, Straits Times, June 17 2002

        The Reality

        "Singapore ninth most expensive city in the world."
        - Economic Intelligence Unit, Jan 2001

        -----------------------------------------------------------------
        A tale of two salaries

        The Rhetoric

        "This stingy government of ours is paying me only RM16,000 a month to
        do two jobs."
        - Malaysia's Prime Minister and Finance Minister Dr Mahathir Mohamad,
        Straits Times, 25 Nov, 2002

        "A million dollars for a minister seems a lot when compared with the
        salary of a worker. But $34 million for all the ministers and
        political office-holders is a tiny drop compared with the increase in
        GDP that a good government can produce."
        - PM Goh Chok Tong, Straits Times, July 1, 2000

        The Reality

        "Malaysia's economy expanded by by 5.6 per cent in the third quarter."
        - Straits Times, Nov 28, 2002

        "Singapore may face its second recession in two years."
        - Straits Times, Nov 19, 2002

        ----------------------------------------------------------------
        FATHER & SON ON JBJ

        The Rhetoric

        "If you are Singaporean, you should stay on and fight and argue your
        case and persuade more people to believe you and one day change the
        policy, not opt out and leave because no policy is set in stone
        forever."
        - DPM Lee Hsien Loong praising J.B. Jeyaratnam as an example of
        a "stayer", Straits Times, Oct 3 2002.

        The Reality

        "Look, Jeyaretnam can't win the infighting. I'll tell you why. WE are
        in charge. Every government ministry and department is under our
        control...I will make him crawl on his bended knees, and beg for
        mercy."
        - Lee Kuan Yew on JB Jeyaratnam, 1981, as related by ex-President
        Devan Nair in this article

        During a 1986 inquiry into whether he had violated the Parliamentary
        Privilege Act by questioning the integrity of judges, Jeyaretnam
        asked Lee, "So you think I have to be destroyed?" Lee
        replied, "Politically, yes."

        --------------------------------------------------------------

        ONE FAMILY?

        The Rhetoric

        "We all are one family."
        - PM Goh Chok Tong, August 9, 2001

        The Reality

        Between 1998 and 1999, the average household monthly income of the
        poorest 10 percent of the population decreased by nearly 50 percent
        from $258 to $133. In the same period, the incomes of the richest 10
        percent increased by 2.6 percent from $15,053 to $15,451.

        The following year, the average household income of the poorest 10
        percent fell by another 54 percent from $133 a month to $61. In the
        same period, the incomes of the richest 10 percent increased by
        another 8.8 percent.

        ---------------------------------------------------------

        CHU MEI-FENG AND LEE KUAN YEW

        The Rhetoric

        "I believe we've got a responsible press. They are not ashamed of
        what they are doing.."
        - Mr Lee Kuan Yew on the press in Singapore.

        The Reality

        "Mediacorp TV has been fined $10,000 for airing "sexually suggestive
        and offensive" footage from the sex-scandal video of Taiwanese
        legislator Chu Mei-feng."
        - Straits Times, Feb 23 2002

        "Our dear opposition "rebel" Chee gets sued for defamation for asking
        about the 10-billion dollar loan, is denied the right to speak up in
        support of the Malays in the tudung issue, and gets only a few
        minutes to speak on TV. Instead the current Miss World Wh*** Chu Mei
        Feng got a whole half-hour slot on Channel U on Friday to highlight
        her arrival in Singapore AND WAS GIVEN THE RIGHT TO PERFORM on stage.
        What a joke Sillypore has turned out to be."
        - A (pissed-off) forumner on the Internet

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