The White House Drifting

U.S. appears to be heading toward a dilemma without an exit.

Paul O’Neal, Secretary of the Treasury, said in the meeting of the G7, “U.S. will pull the global economy out of recession and will post stable 3 to 3.5% growth by the end of this year.” He emphasized, “The U.S. will continue its strong dollar policy, and it will have positive effects on the U.S. economy.”

However, the U.S. dollar fell to its 15-year low despite O’Neal’s call for strong dollar policy. Some speculate that the dollar would remain weak until the end of the year and would fall to 96cents per Euro and 115 Yen per dollar.

On the other hand, there is rising concern that the economy would fall into the double dip, where the economy would fall into another recession after a short recovery. Retail sales fell 0.9% in May from the previous month. This is the largest decline since November 2001, and the stock market responded immediately from the news. S&P 500 fell 27.93 points to 981.63, which is the lowest since the terrorist attach on September 11, 2001.

Furthermore, the first quarter current account deficit, which will be announced on June 20, is expected to reach $100 billion, which would bring the current account deficit to GDP close to 4%. This would also be the worst in 3 quarters.

In addition, The General Accounting Office forecasted that the fiscal deficit would reach $100 billion in this year.

However, there seem to be no remedy upon surmounting bad news.

New York Times reported on June 17 that Allen Greenspan’s hands are tied in regards to interest rate policy, which is the most important tool in economic policy.

Federal Reserve Board shifted its policy to neutral from supporting recovery, because additional interest rate cut did not appear to be necessary as there have been signs of economic recovery. Federal reserve rate stands at 1.75%, which is the lowest in 40 years.

New York Times reported that lowering rates would have little effect on boosting the economy, but it would send a signal that the FRB recognizes that the economy is still in recession to increase anxiety. The paper also noted that raising the rates would not be an option as the economic recovery is slowing.

As such, the paper reported, Greenspan has become a spectator like the rest of the people.

제 목 Mr. Nadaero

1. Tower of Pisa

2. Leaning from a shot by North Korea in 1966

3. With a cannon ball shot today by South Korea

4. Let’s make it stand upright.

11. China opens to service industry

China will establish ‘Special Economic Zone for Service Industry (SEZSI)’ in Shenzhen. It is the first time in the history.

At 16th June, Financial Times, British daily paper specialized in economy, reported that Chinese government will establish ‘Special Economic Zone for Service Industry’ in Shenzhen of Guangdong, and open the zone to foreigners totally. The zone will induce 20 service industries such as; finance, securities, harbor, government procurement, tourism, hospital, logistics industries, etc.

The policy is analyzed to establish trial zone and to monitor the advantages and disadvantages from the open policy before opening the service industry totally as a obligation of the join to WTO. When China introduced market economy system in 1979, it established four trial economic zones such as Guizhou, Xiamen, Shenzhen, etc to evaluate the system and decided to open the economy.

Last year, as Joining WTO, China promised to open service market as well within three to five year in the future.

According to the Financial Times, Shenzhen Special Zone will not restrict to the ownership of corporation by foreigners while other regions restrict to 50% at maximum for service industry.

A person of the International Trading & Economic Cooperation of SEZSI of Shenzhen said that the central government allowed to open 20 key service industries, and tax exemption and other benefits are under consideration for the exporting of domestic products by government procurement business.

He added that 20 reputable multinational corporations show interesting for the economic zone at the moment and Shenzhen economy will take off again.

Shenzhen is bigger than Hong Kong (1091 km²) twice and induced 1860 cases of foreign investment, 4 billion dollars last year.

At the moment, Shanghai has also applied open project of service industry to the central government, and Tianjin and others will apply similar projects plan soon.

12. A Warm Welcome for Poland and a Cold Treatment for Portugal

‘One’s fortune was a matter of time.’

The Polish national team, which was knocked out of the World Cup competition early with a miserable 1-2 record, was surprised to see its home fans’ warm welcome.

They arrived at the Chopin International Airport in Warsaw on the 17th using the Presidential plane with thousands of cheering home fans. This warm welcome was because of their huge 3-1 win against the US although they lost to Korea and Portugal without a goal. They have been changed from traitors to national heroes because they defeated the super power, the US, and they are even being agonized by many fans, who wanted their autographs. The police, who was there for possible problems, was dejected.

There once was a critical public opinion; however, a sympathetic public opinion aroused that the hot and humid climate of Korea bothered the Polish team. The manager of the Polish national team Yeji Engel said, “it’s unbelievable,” and “I was worried that we will be humiliated on our way home.” Especially, manager Engel, who was on the line of getting fired, thanked his fans insistence that his position should be guaranteed until the proposed contract date of 2004. The Polish goalie posted a praising article on his homepage right after his arrival to Poland and he said, “I am pleased that Korea reached the round of 16, and Koreans were really incredible.”

The Saudi Arabian team, who collapsed in the first round with 3 losses and 12 goals allowed including a terrible loss to Germany with score of 0-8, received a warm sympathy other than being reproved. The Crown Princess Apdula Bin Apdel Aziz even ordered to found a special committee headed by a member of the royal family to improve the national team’s performance.

The Irish team, who suffered a heart breaking PK loss to Spain is regaining its strength by the comment of manager Michael McCarthy, ‘let’s go back with smile,’ and the home press is encouraging the players saying ‘we were unlucky.’

On the other hand, the championship contenders France and Portugal are suffering apprehension of being blamed by their fans, being submitted to a disciplinary measure of a major player, and the rumor of managers being changed. Especially, the Portuguese players had to drop their head to hundreds of blaming fans, who were waiting at the arrival area. What is more, the players raised a scandal by asking a tax exemption for their World Cup playing bonus of 4.75 million dollars.

Jung-Ahn Kim credo@donga.com