2 - The Michigan Daily - Wednesday, February 25, 1998 N A
Inflation is zero, yet Gree
asian 'storm clouds' are ai
TION/WORLD
nspan says
AROUND THE NATION
t. , Y
WASHINGTON (AP) - Inflation is zero and
the economy is still humming. But Federal
Reserve Chair Alan Greenspan warned Congress
that "storm clouds" out of Asia make the future
highly uncertain.
While describing the economy's current combi-
nation of low inflation and high job growth as an
"exemplary performance," Greenspan said yester-
-day that the Asian crisis was forcing the Fed to
navigate in uncharted waters with large doubts
about how events will unfold.
"The key question going forward is whether the
restraint building from the turmoil in Asia will be
sufficient to check inflationary tendencies that
might otherwise result from
the strength of domestic
spending and tightening labor ""
markets," Greenspan told a
House Banking subcommittee. deliaeree
If the Asian currency crisis
depresses the U.S. economy ddle-oa
more than currently expected,
the Fed might have to cut testimoi
interest rates, Greenspan said.
But if U.S. demand remains
strong and inflationary pres-
Sures start bubbling up, then
the central bank will be pre-
pared to raise rates, he said.
Many economists said Greenspan's comments
yesterday in delivering his semi-annual monetary
report to Congress supported their belief that the
Fed is going to remain on hold through the first
half of this year at least.
"Greenspan went out of his way to strike a bal-
ance between the threats facing the economy,"
Said David Jones, chief economist at Aubrey G.
Lanston & Co. in New York. "He implied strong-
ly that he will be keeping ,policy unchanged for
some time to come."
Financial markets, where some optimists had
been pushing the notion that Asian worries would
force the Fed to cut rates soon, sagged on
Greenspan's remarks. Demand for the 30-year
Treasury bond fell, pushing the yield up to 5.95
percent, and the Dow Jones industrial average
ended the day down 40 points, at 8,370.
"Greenspan delivered a very evenhanded, mid-
dle-of-the-road testimony," said Allen Sinai, chief
global economist at Primark Decision Economics.
"What we' learned here is that the Fed doesn't
know a lot about Asia and its effects at the present
time."
7span
d a very ...
ff-te -road
I " "
- Allen Sinai
Economist
While expressing high
uncertainty about the exact
fallout from Asia, Greenspan
delivered an upbeat assess-
ment of current conditions,
noting that the lowest unem-
ployment levels in nearly
three decades were coexist-
ing with falling inflation
rates.
The Labor Department
reported yesterday that infla-
tion disappeared in January
with consumer prices not ris-
pproaching
a 10-year high of 3.8 percent in 1996 to a more
sustainable pace of around 2 percent to 2.75 per-
cent this year. It also expected inflation to remain
low, with consumer prices rising by 1.7 percent to
2.25 percent, little changed from 1997's increase
of 1.7 percent.
Greenspan, however, stressed that the econo-
my's actual performance this year will depend on
how much the Asian currency turmoil cuts
demand for American exports to the region while
boosting U.S. demand for cheaper Asian prod-
ucts.
"The outlook for total spending on goods and
services produced in the United States is less
assured of late because of storm clouds massing
over the Western Pacific and headed our way,"
Greenspan said.
While Republicans generally praised the Fed's
handling of the economy, a number of Democrats
worried the Fed will be more quick to fight infla-
tionary pressures by raising interest rates than it
will be to ward off a recession by cutting rates.
"It is time now to start talking about a pre-emp-
tive strike against recession and against disinfla-
tion," Rep. Barney Frank (D-Mass.) told
Greenspan.
Greenspan insisted the central bank is poised to
move in either direction but the worst thing the
Fed could do would be to act too quickly to fight
inflation or a recession, only to learn later that the
real threat came from the opposite direction.
The Fed last changed interest rates in March
1997, when the central bank nudged its federal
funds rate - the interest banks charge each other
- up a quarter point to 5.5 percent.
While many economists then believed that
would be the first of many Fed rate hikes, the cen-
tral bank left policy alone the rest of the year,
largely because inflationary pressures decreased.
Rescuers search Florida tornado debris
KISSIMMEE, Fla. - Rescuers with dogs searched the piney woods near a tor-
nado-devastated campground yesterday for the bodies of people blown away when
a swarm of tornadoes swept across central Florida.
At least 38 people were killed and hundreds of homes and businesses were
destroyed Monday. Seven people were still missing yesterday, four from t
Ponderosa Park Campground.
As hope of finding more survivors faded, searchers began yelling to the two
dogs, "Go find Fred!"-the signal for the black Labrador and Weimaraner to find
bodies hidden in the underbrush surrounding the campground.
"Search!" - the command to find survivors - could no longer be heard.
"There's nothing in there," said Lt. Mark Bogush of the Tampa Fire-Rescue
Canine Unit. "They don't want to shut that door of hope, but this is basically a
cleanup"
Rescuers picked through the mass of twisted metal, shattered glass and splin-
tered lumber the day after six to 10 El Nino-driven twisters tore through central
Florida from the Gulf of Mexico.
Monday's tornadoes, packing 260 mph winds, were the state's deadliest on reco
killing more people than Hurricane Andrew in 1992. The weather service issue
warnings 20 to 30 minutes before the tornadoes hit, but warnings did little good.
ing at all, helped out by the biggest plunge in
energy prices in seven years.
In a second report, the Conference Board said
consumer confidence surged to a 30-year high
this month, reflecting satisfaction with the econo-
my's performance.
As part of Greenspan's report to Congress, the
Fed updated its economic outlook. The new ver-
sion tracks closely the expectations of the Clinton
administration and many private economists.
The Fed projected that growth would slow from
U.S. students trail
rest of the world
WASHINGTON - High school
seniors in the United States scored
below students from most other coun-
tries in an international test of math and
science, according to results released
yesterday.
Even those Americans who took tough
physics and advanced math courses per-
formed worse than most students taking
equally rigorous courses elsewhere,
according to the Third International
Mathematics and Science Study.
Although students from 21 countries
took the test of general math and sci-
ence knowledge toward the end of the
1994-1995 school year, Americans
scored below the international average.
They outperformed only students
from Cyprus and South Africa. Asian
countries did not participate in the
12th-grade study.
A comparison of the high school elite
- those who took physics and advanced
mathematics - showed Americans
close to the bottom of the 16 nations
where those comparisons were made.
"Americans have comforted them-
selves when confronted with bad news
about their educational system by believ-
ing that our better students can compare
with similar students in any country i'
the world," said William Schmidt, a pn
fessor at Michigan State University.
Men arrested for
trafficking organs
NEW YORK - Human rights
activists said yesterday that a thriv-
ing black market in body parts for
transplantation has been illuminated
by the arrests of two men o
charges of trying to illegally se
organs from executed Chinese pyis-
oners.
The two men, Cheng Yong Wang
- who told undercover investigators
he had been a prosecutor on Hainan
Island in China - and Xingqi Fu -
Chinese citizen living in New York -
were seized after meeting with an
FBI agent posing as a medical execu-
tive.
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IRAQ
Continued from Page 1.
day, Hans Corell, the U.N. legal counsel,
estimated that there are about 1,500
buildings within the presidential sites.
Other senior U.N. officials put the num-
ber at "just over 1,000," but the U.S. offi-
cial said that despite an inspection last
week by U.N. cartographers, the U.S.
still has not heard a coherent estimate of
how many buildings there are in these
compounds that would fall under the
jurisdiction of the Special Group.
Annan has said he believes he can
work out any differences over the role of
UNSCOM through personal discussion
with Richard Butler, the Australian diplo-
mat who is UNSCOM's chair. But U.N.
sources said that Annan's sympathetic
responses to Iraqi complaints about
UNSCOM inspectors allegedly being
disrespectful of Iraq's sovereignty, digni-
ty and national security have caused
anger and resentment within UNSCOM.
Pursuing a theme he first sounded in
Baghdad, Annan told a news conference
yesterday that UNSCOM staff members
"have to handle Iraq and the Iraqis with
a certain respect and dignity and not
push our weight around and cause ten-
sions." The sources said that during the
closed meeting with the ambassadors of
the 15 Security Council countries, he
went further, saying some UNSCOM
staffers were "cowboys" who some-
times had behaved irresponsibly while
pursuing their duties within Iraq.
I
AROUND THE WORLD
,-
_ ,
; /.'
PRESENTING A CONFERENCE
ON WOMEN'S ISSUES:
Kim Dae-Jung takes
helm in S. Korea
SEOUL - Kim Dae-jung, one of the
20th Century's most resolute crusaders
for democracy, was sworn in as president
this morning in a ceremony that com-
pleted the first transfer of power from a
ruling party to the opposition in modern
South Korean history.
At an outdoor inaugural jubilee
attended by more than 40,000 people,
Kim, a man who has been persecuted,
jailed, exiled and hounded for decades
as an enemy of the state, called for
reconciliation with South Korea's
authoritarian past and a tough national
effort to overcome the disastrous eco-
nomic straits into which the nation has
lately fallen.
"We are standing at a crossroad from
where we can march forward or retreat,"
Kim said. "Let us open a new age during
which we will overcome the national cri-
sis and make a new leap forward." Kim
also declared that he intends to bring to a
gradual end the "shame" of the divided
Korean Peninsula through a cooperative
reunification with rival North Korea, and
he said he would push for immediate
improvement in communications with
the Communist north.
"It's a miraculous day," Han said of
weather. "Maybe God thinks he will be
great president."
"I thought this day would never
come," said former U.S. ambassador
James Laney.
Israeli secret police
chief resigns
JERUSALEM - The chief
Israel's renowned Mossad intelligence
service resigned yesterday under
intense pressure here and abroad for his
role in a bungled assassination attempt
in Jordan last fall.
Danny Yatom submitted his reoig-
nation one week after a govern ment
commission blamed him and other
key Mossad officers for botching an
operation to kill Khaled Meshal, a
leader of the militant Islamic groi
Hamas, in Amman, the Jordani
capital.
- Compiled from Daily wire reports.
Anthropology in Bordeaux a Jewish History in Prague
Economics in Warsaw International Relations in Seoul
Traditional Medicine in Pune " Cinema in Cannes
Art History in Florence a Theatre in London, and much more in India,
France, Korea, Spain, Czech Republic, England, Italy, Germany and Poland
Some internships Two to ten weeks Early May to late August
Penn Summer Abroad n University of Pennsylvania
College of General Studies
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email: sdanti@sas.upenn.edu a phone: (215)898-5738
Friday, March 13 - Sunday, March 15
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NEWS Janet Adamy, Managing Editor
EDITDRS: Maria Hackett. Heather Kamins. Jeffrey Koss'eff, Chris Metinko.
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GRAPHICS Jonathan Weitz, Editor
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