THE $87 BILLION DOLLAR MISUNDERSTANDING, AND OTHER QUESTIONS
by Mark Scheinbaum
American Reporter Correspondent
Boca Raton, Fla.
BOCA RATON, Fla., Oct. 17, 2003 -- The Bush administration's call for $87 billion in initial additional funding to get Iraq up and running as an OPEC-rich economy has me puzzled.
Some members of Congress who basically support the plan suggested it should be a loan, as in "Down the road, when you've got the oil wells going, pay us back."
Other members of Congress say, "No, no, you can't make it look like a loan, because that will be bad faith to the Moslem world, as if we are not willing to be generous with our gifts to help the people of Iraq, who we put into this situation in the first place by bouncing Saddam."
So my question is this: If strict Islamic tenets forbid charging "interest" in the pure Western sense, then why not make the $87 billion a loan, but show our respect for their ancient culture, by making it interest free."
This has a win-win implication for George W's supporters and critics. Since most of our debtors never repay us anything, at least we won't lose any interest, and in the meantime we can claim we are not trying to "make money" on the deal. Or, if they default on the loans, a la Brazil, Argentina, Indonesia, and others, we can say it was "just a gift."
All of this leads to a few more items in the news to ponder:
Why are giant mutual fund families such as Fidelity and Vanguard, so eager to eliminate the "outcry" or "auction" system of the New York Stock Exchange?
Could it be because they own their own brokerage firms, and control NASD "market makers" whose own voodoo creates irrational spreads, illegal short-selling, illiquidity, and "backing away" from trades in times of crisis, as with the Crash of 1987 when the NASDAQ market makers sometimes didn't answer their phones?
Sorry, this is too much shop talk, try it this way:
Your town has a "green market" in the town square every Saturday morning. Farmers bring fresh corn, melons, homemade jellies and jams, and local crafts to the market. Watermelons are $2.99 each, but depending on size the farmer will negotiate. As you get closer to the 3 p.m. closing time, he might sell you four for ten bucks. In any case, when you walk into the plaza each week you know there are folks who know their product, rely upon the quality and marketability of their product for their own livelihood, and depending on market conditions can negotiate, right there in front of the public. In fact, if the farmer runs out of melons, and you show up and say "Mr. Brown, sorry I'm running late today, but I guess I missed the last of your great watermelons today, oh well!"
"Not so fast," Farmer Brown says, and motions to his son Larry on the back of the melon truck. "Larry, go down to Phil Wilson's stand, you know, the one with the pole beans and cabbage, and see if he brought some melons today, the ones his wife Martha was growing out behind the shed last week when we drove by."
Enough sylvan setting--you get the idea. In an open outcry system, with all of it's flaws for potential greed and gluttony, there's still the possibility of an inherent honesty, all in open air. Just the way the first stock exchange started on the streets of Philadelphia (not New York), more than two centuries ago.
The NASD system is the Super Wal-Mart. It's the Kroger, the Safeway, the Von's, the Winn-Dixie, the Grand Union, the Albertson's. The melons, asparagus, radishes, and corn, are neatly cropped and chopped and topped in splendid rows. The price is stated. The quality or lack thereof is visible, but there's no negotiation, no room to "work the trade." The big boys--the wholesalers, the distributors, the commodity brokers, the Fidelities of the world, they love the supermarket. They hate the green market.
And finally, I love baseball and I'm confounded by baseball.
When that Cubs fan stole an apparently foul ball "out" from Moises Alou, it only took 12 hours for rumors to spread on the floor of the New York Stock Exchange that the hapless fan would appear as a Late Night guest with David Letterman.
Some colleagues shared by wonderment.
Would the fan then go into the Federal Witness Protection Program?
Would he move his family to Boston?
Would he run for Mayor of Miami?
Mark Scheinbaum, former UPI newsman, is chief investment strategist for Kaplan & Co. Securities, www.kaplansecurities.com in Boca Raton, Fla.