Dollar Plunges While Oil and Gold Hit New Records

US Dollar Plunged to a Record Low Against the Euro While Oil and Gold Hit New Records.

The dollar slumped to a fresh record low point against the euro on Friday and a near three-year trough versus the yen on increasing worries about the weakness of the US economy, traders said.

In early European trading, the euro reached a historic peak of 1.5239 dollars. It later stood at 1.5205 dollars compared with 1.5197 in New York late on Thursday. The dollar on Friday dropped to 104.23 yen -- the lowest level since May 2005. It later stood at 104.39 yen compared with 105.30 late Thursday.

The weakness of the dollar also benefited commodities, with oil and gold prices striking record highs, dealers said. New York crude reached a record 103.05 dollars per barrel and gold hit a best-ever 976.32 dollars per ounce.

A weak US currency boosts demand for dollar-denominated raw materials because it makes them cheaper for buyers using stronger currencies. However the increased demand eventually leads to higher prices.

US central bank chief Ben Bernanke had warned on Thursday that the American economy faced more complex problems than before the last recession. "Following Bernanke's testimony yesterday, which implied deeper and more sustained real rate cuts may be required, concerns have mounted over US growth and there has been a shift back towards the safer haven currencies," said ABN Amro analyst Melinda Smith.

Federal Reserve chairman Bernanke said the US economy faced a different and more complex set of issues than before the recession of 2001. "We are facing a situation where we have simultaneously a slowdown in the economy, stress in the financial markets and inflation pressure coming from these commodity prices abroad," Bernanke told Congress.

"Each of those things represents a challenge. We have to make our policy in trying to balance these different risks in a way that will get the best possible outcome for the American economy," he added.

Financial markets have been turbulent since last year over rising mortgage defaults by Americans with poor credit histories, raising concerns over a credit crunch as financial institutions cover their losses.

But Bernanke's remarks surprised some dealers after a month dominated by positive signs. The market had been digesting hefty rate cuts by the Fed and news that credit ratings for major bond insurers would remain steady. "The market's insecurity over the US economy strengthened" after Bernanke's comments, said Masaki Fukui, a senior market economist at Mizuho Corporate Bank.

Bush and Bernanke Optimistic About US Economy

Bush, Fed Chief See US Weathering Economic Storm; Recession Not Seen on the Horizon.

The economy is in turmoil, yet President Bush and Federal Reserve chief Ben Bernanke say the country will weather the storm. Neither sees a recession on the horizon. Both Bush and Bernanke are on the front lines of the government's efforts to right an economy that increasing numbers of economists fear is on the verge of its first recession since 2001, if it hasn't fallen into one already.

The housing market's collapse, a credit crisis and galloping energy prices are crimping spending and investing. Those are mighty punches to a teetering economy that nearly stalled at the end of last year.

Bush and Bernanke acknowledged the dangers Thursday. But Bush, at a White House news conference, and Bernanke, in congressional testimony, seemed to strike the same hopeful note that the economy should be able to survive the fallout. "I don't think we're headed to a recession, but no question we're in a slowdown," Bush said.

The Federal Reserve is not forecasting a recession. It does predict slow growth for this year as well as higher unemployment. "I realize that my testimony wasn't the most cheerful thing you'll hear today ... but I do very much believe that the U.S. economy will return to a strong growth path with price stability," Bernanke told the Senate Banking, Housing and Urban Affairs Committee. It was his second day in a row on Capitol Hill discussing the economy.

Oil prices, which have set records in recent days, shot past $102 per barrel Thursday. Pump prices rose closer to record territory above $3 per gallon, with the prospect of $4 gasoline when the busy summer driving season arrives. "That's interesting. I hadn't heard that. ... I know it's high now," Bush said during reporters' questioning.

Those high energy prices are a double-edged sword for the economy: They are spreading inflation and restraining economic growth because people clobbered by big bills to fill up their gas tanks and heat their homes are cutting back spending elsewhere. Fears have grown that the country could come under the grip of stagflation, when stagnant growth is combined with rising inflation, for the first time in decades.

Bernanke rejected the notion. "I don't anticipate stagflation," he told lawmakers. "I don't think we're anywhere near the situation that prevailed in the 1970s." Bernanke said he expects inflation to calm down. For now, he said, the biggest risk is the weakening economy. To that end, Bernanke signaled that the Fed stands ready to lower a key interest rate again to bolster the economy.

The central bank started lowering that rate in September. Over just eight days in January, the Fed reduced it by 1.25 percentage points, the biggest one-month reduction in a quarter-century. Economists and Wall Street investors predict the Fed will cut rates again at its next meeting, March 18.

A government report Thursday showed the fragile state of the economy. The economy nearly stalled over the final three months of 2007. It grew at a pace of just 0.6 percent, a big loss of momentum compared with the brisk growth rate of 4.9 percent from July through September.

The National Association for Business Economics expects economic growth from January through March to slow to a meager 0.4 percent pace. Some analysts believe the performance could be even worse and actually shrink during this period. Under one rough rule, the economy would have to contract for six months in a row for the country to be viewed as in a recession.

Bernanke and the Bush administration are hopeful the economy will turn stronger in the second half of this year, helped by the Fed's rate reductions and the recently enacted rebates for people and tax breaks for businesses.

"We'll see the effects of this pro-growth package," Bush said, acknowledging that some lawmakers already are talking about a second aid plan. "Why don't we let stimulus package 1, which seemed like a good idea at the time, have a chance to kick in?"

As Bush urged patience, Treasury Secretary Henry Paulson expressed skepticism over proposals pushed by Democrats for more action to deal with the housing crisis, which has forced record numbers of people from their homes. "So while some in Washington are proposing big interventions, most of the proposals I've seen would do more harm than good," the secretary said in remarks prepared for delivery Thursday night before the Economic Club of Chicago.

The administration has promoted ways to help struggling homeowners, including temporarily freezing rates on certain mortgages held by subprime borrowers -- people with tarnished credit who were hit the hardest by the mortgage meltdown. All the economy's woes have rattled Wall Street, the public and businesses.

Bush suggested he understands the situation. "There's a lot of uncertainty, " Bush said. "No question about it, it's a difficult period."

Further Fed Rate Cut Pledged to Fight Stagflation

Bernanke Says Fed's Priority Is Shoring Up the Economy, Pledges to Cut Interest Rates.

The Federal Reserve is ready to lower interest rates again to brace the wobbly economy even as zooming oil prices spread inflation, Chairman Ben Bernanke signaled to Congress on Wednesday. He is fighting to keep the economy afloat after mighty blows from the housing and credit crises, while trying to contain inflation.

For now, the priority is shoring up the economy, Bernanke suggested in an appearance before the House Financial Services Committee. He pledged anew to slice a key interest rate and help the economy, which many fear is on the verge of a recession, if not already in one. "The economic situation has become distinctly less favorable" since the summer, the Fed chief told lawmakers.

Since then, the housing slump has worsened, credit problems have intensified and the job market has deteriorated. Bernanke said that combination of bad news has made people and businesses more cautious about spending and investing, further weakening the economy.

The country should prepare for "sluggish economic activity in the near term," Bernanke said. Concern is growing about the possible return of stagflation, when stagnant growth is combined with rising inflation, for the first time since the 1970s.

Were energy prices to continue to rise at a sharp clip -- something the Fed does not anticipate -- it would "create a very difficult problem" for the economy, Bernanke said. Inflation would spread and growth would be further restrained, he said. If that happened, it would be a "very tough situation," he added.

The Fed is prepared to lower rates again to bolster economic growth, Bernanke said. The Fed "will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks," he said, sticking closely to assurances he offered earlier this month.

The central bank started lowering a key interest rate in September. Over just eight days in January, the Fed shaved 1.25 percentage points, the biggest one-month reduction in a quarter-century. Economists and Wall Street investors predict the Fed will cut rates again at its next meeting, March 18. Some analysts believe rates will drop again in April. Brian Bethune, economist at Global Insight, said Bernanke's remarks "keeps the door wide open for further rate cuts."

Bernanke said that at some point this year, the Fed will need to "assess whether the stance of monetary policy is properly calibrated" to foster the Fed's objectives of price stability "in an environment of downside risks to growth." He was hopeful that previous rate reductions and the $168 billion economic aid plan of tax rebates for people and tax breaks for business would energize the economy in the second half of 2008.

As the Fed chief began his first day of back-to-back appearances on Capitol Hill to discuss the economy, there was more bad news on the housing and manufacturing fronts. Sales of new homes fell in January for a third straight month. Orders to factories for big-ticket manufactured goods dropped in January by the largest amount in five months.

Bernanke has come under some criticism for not acting sooner in cutting rates. But Alabama Rep. Spencer Bachus, the committee's top Republican, expressed sympathy. "There is perhaps no other public figure in America who has been subjected to as much Monday morning quarterbacking as you have" over the past months, Bachus said.

The committee chairman, Rep. Barney Frank, D-Mass., suggested the economy is not suffering through a garden-variety slowdown. He made clear that he wasn't trying to put the R-word -- recession -- in Bernanke's mouth. "I'm not going to be responsible for the nervous people at the stock market who overreact when you twitch your nose," Frank told Bernanke. "But the problems we now have are different."

Many of those woes are linked to the housing meltdown. Bernanke was asked when he thought the housing market might stabilize. It's possible, he said, that by "later this year it will stop being such a big drag directly" on the economy. But home prices probably will decline into next year, he added. "It is very difficult to know, and we've been wrong before," Bernanke said.

Even as the Fed tries to bolster the economy, it must remain mindful of inflationary pressures, Bernanke said. Oil prices, which have set records, briefly shot past $102 a barrel on Wednesday; prices eased, but still remain close to $100 a barrel.

"Should high rates of overall inflation persist," Bernanke said, "the possibility also exists that inflation expectations could become less well-anchored." If people think inflation is escalating, they will act in ways that could make things even worse, a sort of self-fulfilling prophecy. Bernanke said that could complicate the Fed's job of trying to nurture growth while keeping inflation under control. If oil prices continue to skyrocket this year, it would be "hard to maintain low inflation," Bernanke acknowledged.

Vietnam Inflation Highest in Decade

Vietnam's Inflation Rate Hits 15 Percent, Highest in More Than a Decade.

Vietnam's inflation rate reached 15.7 percent in February, the highest in more than a decade, as the government struggled to control prices in Southeast Asia's fastest-growing economy. The increase was driven by sharp price gains in food, housing and construction materials, the General Statistical Office said on its Web site Thursday.

Food prices were 25.2 percent higher than the same period last year, and housing and construction materials were up 16.4 percent. "Everything is getting more expensive these days," said Nguyen Thu Huong, 31, who was buying groceries in Hanoi Thursday morning. "Life is getting much more difficult for people with low incomes."

Economists said Vietnam's inflation rate, the highest in the region, was fueled by both domestic and global forces. Fuel and food costs are up around the world, but inflationary pressures are especially strong in Vietnam, which has been enjoying strong economic growth for several years now as the communist nation has embraced market reforms.

Foreign investment has been booming since Vietnam joined the World Trade Organization last year, when the economy grew at 8.5 percent. Investors have also been pouring money into the red-hot real estate market and Vietnamese stocks, which enjoyed a remarkable boom last year but have recently been losing ground.

Meanwhile, strong growth in the banking sector has led to a rapid rise in lending. Loans by Vietnam's joint stock banks were up 90 percent last year, said Jonathan Pincus, chief economist at the United Nations Development Program in Hanoi. "Their lending grew at a really astonishing rate," Pincus said. Vietnam's difficulties are compounded by the fact that its currency, the dong, is pegged to the very weak U.S. dollar, Pincus said.

The country imports many construction materials from China, whose currency has been rising against the dollar, further fueling price increases here. Meanwhile, the government has been phasing out subsidies for various commodities, including oil. It announced a 12 percent hike in gas prices this week and a 35 percent hike for diesel.

While Vietnam's inflation rate is cause for concern, the country remains an attractive investment destination, said Adam Sitkoff, director of the American Chamber of Commerce in Hanoi. "Vietnam is still a cost-competitive place to manufacture products," Sitkoff said. "I don't think inflation will make Vietnam less appealing to investors, but it will hurt Vietnam's poor."

In an effort to curb rising prices, Vietnam's central bank has recently increased interest rates by half a percentage point. It has also ordered commercial banks to buy 20.3 trillion dong ($1.3 billion) in treasury bills and asked commercial banks to raise their cash reserves.

Microsoft Fined Record $1.3 Billion

EU Fines Microsoft Record $1.3 Billion for Charging Rivals Too Much.

The European Union fined Microsoft Corp. a record $1.3 billion Wednesday for the amount it charges rivals for software information. EU regulators said the company charged "unreasonable prices" until last October to software developers who wanted to make products compatible with the Windows desktop operating system.

The fine is the largest ever for a single company and brings to just under $2.5 billion the amount the EU has demanded Microsoft pay in a long-running antitrust dispute. Microsoft immediately said the issues for which it was fined have been resolved and the company was making its products more open.

The fine comes less that a week after Microsoft said it would share more information about its products and technology in an effort to make it work better with rivals' software and meet the demands of antitrust regulators in Europe.

But EU Competition Commissioner Neelie Kroes remained skeptical and said Microsoft was under investigation in two additional cases. "Talk is cheap," Kroes said. "Flouting the rules is expensive."

Microsoft's actions have stifled innovation and affected millions of people around the world, Kroes said. She called the record 899 million euro fine "a reasonable response to a series of quite unreasonable actions. We could have gone as high as 1.5 billion euros ($2.23 billion)," she said. "The maximum amount is higher than what we did at the end of the day."

Microsoft fought hard against a March 2004 decision that led to a 497 million euro ($613 million) fine and an order that the software maker share interoperability information with rivals within 120 days. The company lost its appeal in that case in September. Microsoft was fined $357 million in July 2006 for failing to obey that order.

The EU alleged that Microsoft withheld crucial interoperability information for desktop PC software -- where it is the world's leading supplier -- in an effort squeeze into a new market and damage rivals. The company delayed compliance for three years, the EU said, only making changes in October to the patent licenses for companies that need data to create software that works with Microsoft.

Microsoft had initially set a royalty rate of 3.87 percent of a licensee's product revenues for patents and demanded that companies looking for communication information -- which it said was highly secret -- pay 2.98 percent of their products' revenues.

The EU complained last March that the rates were unfair. Under threat of fines, Microsoft two months later reduced the patent rate to 0.7 percent and the information license to 0.5 percent -- but only in Europe, leaving the worldwide rates unchanged.

The EU's Court of First Instance ruling that upheld regulators' views changed the company's mind again in October when it offered a new license for interoperability information for a flat fee of 10,000 euros ($14,900) and an optional worldwide patent license for a reduced royalty of 0.4 percent.

Oil Hits Another Record $102

Oil Spikes Above $102 a Barrel As Weakening Dollar Draws Investors to Commodities.

Oil prices broke through a new intraday high of $102 a barrel Wednesday as a slide in the U.S. dollar prompted investors to pump more money into energy futures as a hedge against inflation.

The dollar sank to a record low against the euro after the release of three disheartening U.S. economic reports Tuesday that show that the economy is slowing as prices for consumer goods rise. The dollar's decline prompted investors to seek a safe haven from turmoil in the financial markets and the threat of inflation.

"Crude has cracked through the $100-level again and that's driven by financial investors moving money into commodities markets," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.

"The U.S. dollar weakened against the euro and the economic data also indicated that inflation in the U.S. rose in January, and commodities are generally considered a hedge against inflation," Shum said. "We are therefore seeing these strong prices that have really little to do with oil market fundamentals."

Light, sweet crude for April delivery spiked as high as $102.08 a barrel in electronic trading on the New York Mercantile Exchange before slipping back to $101.23, up 35 cents. The contract on Tuesday jumped $1.65 to settle at $100.88 a barrel, a record close. In London, Brent crude added 33 cents to $99.80 a barrel on the ICE Futures exchange, below the intraday record of $100.30 a barrel set earlier in the session.

The U.S. Labor Department said wholesale inflation rose by 1 percent in January on soaring oil and food costs. And Standard & Poor's also reported that U.S. home prices fell 8.9 percent in the last three months of 2007 from a year earlier.

A report by the Conference Board, a business-backed research group, that its Consumer Confidence Index fell to the lowest since February 2003, far below what analysts had been expecting, indicated that consumers might continue to curb their spending in the coming months.

But traders in both the energy market and the U.S. stock market, which also advanced sharply, seemed largely unfazed. Oil has risen in recent days amid an increase in speculative buying, with some traders believing that global demand will be high enough to support higher crude prices even if the American economy is slowing.

Analysts expect the U.S. Energy Department's Energy Information Administration to report later Wednesday that the nation's crude oil stocks rose last week by 2.4 million barrels, which would be the seventh straight week of gains. Gasoline inventories are expected to rise by 400,000 barrels while supplies of distillates, which include heating oil and diesel, fell by 1.8 million barrels last week, according to a Dow Jones Newswires poll of analysts.

Also supporting prices were concerns about supply disruptions from unrest in Iraq, a major oil exporter. Turkish ground forces pushed their offensive against Kurdish rebels deeper into the north of Iraq, seizing seven guerrilla camps, officials said Tuesday.

China Authorities Urge Firms to Gauge Share Market

China's Stock Regulator Says Companies Should Gauge Market Before Making Share Sale Plans.

China's stock regulator has warned companies against "malicious money grabbing," urging them to take investor demand into account when drawing up plans for raising funds through share offerings.

The China Securities Regulatory Commission's statement, carried on the front pages of many newspapers Tuesday, came after share prices dropped to a seven-month low Monday amid mounting apprehension over a slew of new share offerings.

"Listed companies should consider market conditions, investor sentiment and their own funding needs before deciding the timing and size of refinancing," the commission said in a comment posted on its Web site. "Companies by no means should engage in malicious money grabbing in the market," it said. The benchmark Shanghai Composite Index gained 45.65 points, or 1.1 percent, Tuesday to 4,238.18, after falling 4.1 percent in the previous session.

The CSRC's statement was made in a question-and-answer "dialogue" between an unnamed journalist and an unnamed CSRC spokesman that referred to plans by Shanghai-traded Ping An Insurance, among other companies, for major share offerings.

Ping An's shares have fallen about 30 percent since it announced last month that it planned to raise funds through share and bond sales. The company has said it plans to raise up to $22 billion for acquisitions. The insurer's shares rose 4.1 percent Tuesday to 68.04 yuan ($9.54), after the state-run China Securities Journal reported the company would reconsider the timing and size of its fundraising plan.

The CSRC official said that Ping An's proposal was still in the planning stages and had not yet been presented to the commission. Such proposals would be "subject to strict examination, taking into account market conditions, their feasibility and their conformity with regulations and law," the official said.

On Monday, shares in mobile phone carrier China United Telecommunications, also known as China Unicom, fell by the daily limit of 10 percent amid speculation that the company also was planning a share offering. Although China Unicom issued a statement saying it has no new fundraising plans, its shares fell 4.2 percent Tuesday to 10.46 yuan ($1.47).

The CSRC's statement stressed that refinancing through share sales is a legitimate and reasonable strategy. But it said the agency would review such plans carefully. The stock watchdog also said it would crack down on insider trading, price manipulation, falsified disclosures and other abuses -- chronic problems that have also hurt market sentiment.

China's share markets have long struggled with imbalances between share supply and demand. Prices have faltered with some 400 billion yuan ($56 billion) worth of shares held by strategic investors and large shareholders due to become tradable in March, when a series of IPO- or share reform-related lockup periods expire.

The market's weakness already has prompted some companies to scale back on or postpone fund raising plans. Major contractor China Railway Construction cut the size of its initial public offering in Shanghai to 2.45 billion shares from the originally planned 2.8 billion shares.

New Zealand and China to Sign Free Trade Deal

New Zealand to Sign Free Trade Agreement With China in Early April.

New Zealand will sign a free trade agreement with China in early April, the government announced Tuesday -- the first such deal between the Asian economic powerhouse and a developed economy.

Trade Minister Phil Goff said outstanding technical requirements and processes to finalize the deal "are on track for completion" in coming weeks. The signing ceremony and related events are "planned to take place in Beijing from 6 to 9 April," he said.

China and New Zealand began 15 rounds of detailed negotiations for the agreement in July 2004, as China sought to consolidate and extend its trading arrangements with developed economies. Beijing said it had selected New Zealand to enter the talks as it was the first developed economy to recognize the emerging China as having a market-based economy. New Zealand was also the first Western nation to have reach a bilateral deal with China on its accession to the World Trade Organization.

"This FTA has been negotiated with the overriding objective of opening up economic opportunities for New Zealand business in China and to boost commercial ties with our now third largest trading partner," Goff said.

Earlier, he predicted the trade deal potentially will boost New Zealand's exports of goods and services to China by up to 400 million New Zealand dollars ($326 million) a year. Two-way trade between the two states is worth more than 4.8 billion New Zealand dollars ($3.9 billion) a year, with Chinese exports making up about 80 percent.

Prime Minister Helen Clark said Monday the free trade agreement would cut tariff barriers for New Zealand farm exports to China. Farm output makes up half of New Zealand's annual economic production.

"China has very open access to our market now. The key breakthrough in this agreement with China will be us getting some reciprocity because we do face quite significant tariffs on key exports," she told reporters. "There's no question in my mind that ... it is a very, very big move for the Kiwi economy -- very big and very beneficial," Clark said.

It would be the largest free trade agreement for New Zealand since it signed the closer economic relations agreement with Australia in 1982, she noted. Beyond trade in goods, the agreement covers the services sector, from insurance and banking to education and labor supply.

China has already sought agreement from New Zealand for specialist workers, including chefs and Chinese language teachers, to work in New Zealand. Goff has said New Zealand will study the proposal closely. Some 3.5 percent of New Zealanders are of Chinese origin.

Economists See US Already in Recession

Top Economists See Growing Signs That the Country Has Toppled Into a Recession.

Job growth is faltering, consumer confidence plunging. The fallout from the worst housing slump in a quarter-century grows. Wherever you look, the signs are unmistakable that the economy is in trouble. Because of all the bad news, more and more economists foresee the country falling into a recession, according to the latest survey by the National Association for Business Economics.

The group said in a report being released Monday that 45 percent of the economists on its forecasting panel expect a recession this year. In September, only one in four economists was pessimistic enough to put the chance of a recession at 35 percent or higher.

The drumbeat of bad news since last fall has caused many analysts to consider a recession more likely now, said Ellen Hughes-Cromwick, chief economist at Ford Motor Co. and NABE's current president.

The survey shows that 55 percent still believe the country will be able to skate by without falling into an actual downturn, typically defined as two consecutive quarters of declines in the gross domestic output, the broadest measure of economic health. All the analysts, however, expect growth to slow considerably this year.

The forecasters believe GDP will expand by 1.8 percent this year, which would be the weakest growth in five years. That compares with an estimate of 2.5 percent growth for 2008 made in the previous survey, in November. The new estimate is in line with a downgraded forecast from the Federal Reserve this past week.

The NABE forecast reflects the expectation the economy will grow only sluggishly or actually contract from January through June. Then it is seen starting to expand more strongly in the second half of the year. Helping accomplish that is a $168 billion federal aid plan, with its rebate checks for millions of families, and aggressive interest rate cuts from the Fed.

The panel of 47 top forecasters thinks "any recession, if it occurs, will be short and shallow," Hughes-Cromwick said. The biggest change in the new survey involves the outlook for interest rates.

In November, economists expected the Fed would keep a key rate, the federal funds rate, at 4.5 percent through all of 2008. That rate, the target for overnight bank loans, already is at 3 percent, after significant cuts by the Fed in January. Fed Chairman Ben Bernanke has indicated that further rate cuts will be coming if the economy fails to rebound. So the NABE experts now predict the funds rate will end this year at 2.5 percent.

Inflation is expected to moderate greatly this year as the weak economy cools price pressures. Inflation shot up by 4.1 percent in 2007, the biggest jump in 17 years. The Consumer Price Index is forecast to rise by 2.5 percent. That is based in part on the NABE panel's view that demand will weaken for oil and the barrel price will drop to about $84 by December. The current trend, however, is up; crude oil jumped to all-time highs above $100 per barrel over the last week.

The weaker growth will mean higher unemployment, according to the forecasters. They predict that the jobless rate for 2008 will average 5.2 percent, compared with 4.6 percent last year. Mark Zandi, chief economist at Moody's Economy.com and a NABE panelist, said he believed the economy entered into a recession in December and it will pull out of the downturn in June, aided by the rebate checks that begin going out in May.

If problems worsen for the financial industry, hard hit by the housing downturn, then Zandi said Washington will rush through a second rescue measure because nervous politicians will not want to be seen as dawdling before the November elections.

"A recession in an election year represents a problem for incumbents," Zandi said. "That is why the first stimulus package got passed so quickly and that is why I expect more of a policy response before this is all over."

A second panel member, David Wyss, chief economist at Standard & Poor's in New York, also believes the country is now in a recession. While he believes the economic aid plan signed by President Bush should make the downturn a mild one, he worries the economy could falter again next year. "There is a danger that this could turn into a double-dip recession," he said. "Once the rebate checks are spent, we could go back down again."

The latest NABE forecast, however, shows the economy continuing to grow in 2009. It predicts a modest GDP increase of 2.7 percent for the whole year, compared with the 1.8 percent expected this year and the 2.2 percent actual GDP growth in 2007.

Singapore Inflation Hits 6.6% in January

Singapore Inflation Rises 6.6 Percent in January, a 25-Year High.

Singapore's inflation rose 6.6 percent in January, a 25-year high, with housing and food costs rising much faster than analysts predicted. The consumer price index, a non-core measure of costs for goods and services, accelerated after rising 4.4 percent from a year earlier in December, the Department of Statistics said Monday. January's rise was the fastest since March 1982.

Economists polled by Dow Jones Newswires forecast an average increase of 5.9 percent. The data were the latest in a series of rising price figures that have prompted the government to raise its 2008 inflation forecast, creating a greater need for tight monetary policy.

The government recently raised its inflation forecast for the year to 4.5-5.5 percent, faster than the 3.5-4.5 percent announced in November. However, the Ministry of Trade and Industry said the January inflation figure was consistent with the government's official inflation forecast. The ministry said Monday that inflation momentum in the city-state has neither accelerated nor abated in January and that the higher year-on-year increase largely reflected a low base 12 months ago.

On a three-month moving average basis, "inflation picked up sharply in July 2007 and has stayed at around 0.8 percent since," the same as in December, the ministry said in a statement. "This largely reflects the impact of higher global inflation in food and energy which has persisted through the last seven months. The underlying momentum in inflation in January 2008 is therefore in line with the inflation experience to-date," the statement said.

Housing costs were the main driver of January's inflation, rising 11.1 percent from a year earlier. Transport and communication costs gained 6.9 percent on-year, due to more expensive petrol and higher taxi fares and car prices. Prices of food increased by 5.8 percent, reflecting dearer cooked food, milk products, fresh poultry and pork, bread and fruits, as a result of price markups ahead of Lunar New Year festivities in the first week of February.

On month, the index gained 1.5 percent in seasonally adjusted terms, surpassing a forecast for a 0.6 percent rise. The index rose 0.5 percent in December from November. In unadjusted terms, consumer prices rose 1.3 percent in January from December.

Weekend's Special: Three Gorges Dam of Yangtze River, China

China's Yangtze River, Three Gorges Dam upon completion, will be the largest hydroelectric complex in the world. It is located in China's rural heartland on the third largest river in the world, the Yangtze. The Three Gorges Dam towers 182 meters (600ft) high and stretches over 2.4 kilometers (1.5miles). The reservoir created by the dam will extend nearly 400 miles upstream. The project consists of a river dam, spillway structures, powerhouse, and buildings for navigation.

The dam's construction will take 17 years and has been divided into three phases. The first phase dealt with preparations for construction of the dam. The diversion channel was built so that the river could be blocked. The second phase mainly focused on construction of the spillway, left bank power houses, and ship's locks. The first batch of generators started producing power during this phase. The third phase involves construction of the right bank's powerhouse, which will be the completion of the entire project.

The Three Gorges hydroelectric power plant contains 26 turbine generator units. Currently the generated electricity is being sent to Central and East China, Guangdong, and Chongqing. It is predicted that over one-ninth of China's electrical power will be created at the Three Gorges Dam.

The idea for the dam was first proposed by Dr. Sun Yetsen in 1918, and has been under consideration ever since. The Three Gorges Dam is a marvel of engineering, and the greatest challenge its designers have ever faced. The dam has been designed to store over 5 trillion gallons of water and to withstand an earthquake of 7.0 on the Richter scale. Ocean-going vessels of over 10,000 tons will now be able to enter the nation's interior, which will redefine how products and technology move around China.

The three gorges dam not only creates electricity, but will also control the annual floods that have devastated vast portions of China for millennia. Each year 15 million people and 1.5 million hectares of farmland will be protected from flood threats, thanks to the Three Gorges Dam.

The Three Gorges Dam project will not only fulfill its utilitarian needs, but will also serve as a symbol of pride for the Chinese people.

The Impact of the Dam

The final effect of the dam on river control is disputed. For more than 600kilometres (372 Yangtze rivermiles) upstream the Yangtze will become more lake than river, but many experts argue that a slower flow rate will lead to an even more rapid build-up of silt, especially against the dam itself, causing floods to flow over the top of it. Some say more effective flood control would be provided by replacing the more than 800 lakes, vital for storing and dispersing flood waters, which have disappeared beneath unchecked urban expansion. Despite impressive forecasts for electricity generation, some argue that a series of smaller dams would have been more cost--effective, less dangerous and more productive.

The dam is only part of a larger project to alleviate poverty in rural areas, which until now have relied almost solely on the river for transport. Local governments have been working to attract fresh investment to soak up surplus agricultural labor, and new roads and railway Iines are being built, with new bridges across the gorges of Yangtze tributaries.

Compensation of 40 billion yuan (about US$4.82 billion) has been allocated for those forced to move--as much as 3000 yuan per head in some small towns where average annual incomes are as little as 1500 yuan (US$l80). Nevertheless the mass forced Relocation has attracted widespread criticism. Relocation projects are running well behind schedule, and Chinese sociologists have criticized poor planning, falsified figures, corruption and inadequate resources.

The Environmental Impact

The environmental impacts of the project are profound, and are likely to get worse as time goes on. The submergence of hundreds of factories, mines and waste dumps, and the presence of massive industrial centers upstream are creating a festering bog of effluent, silt, industrial pollutants and rubbish in the reservoir. Erosion of the reservoir and downstream riverbanks is causing landslides, and threatening one of the world’s biggest fisheries in the East China Sea. Scientists estimate that annual catches may be reduced by one million tons due to the decline in fresh water and sediment reaching the sea.

The Three Gorges Dam is a model for disaster, yet the Chinese government is replicating this model both domestically and internationally. Within China, huge hydropower cascades have been proposed and are being constructed in some of China’s most pristine and biologically and culturally diverse river basins - the Lancang (Upper Mekong) River, Nu (Salween) River and upstream of Three Gorges Dam on the Yangtze River and tributaries. Internationally, Chinese banks and companies are involved in constructing dozens of large dams, particularly in Africa and Southeast Asia.

While Three Gorges is the world’s biggest dam, the problems at Three Gorges are not unique. Around the world, large dams are causing social and environmental devastation while better alternatives are being ignored.

Weekend's Featured: Ocean as a Possible New Energy Source

Just 15 miles off Florida's coast, the world's most powerful sustained ocean current — the mighty Gulf Stream — rushes by at nearly 8.5 billion gallons per second. And it never stops. To scientists, it represents a tantalizing possibility: a new, plentiful and uninterrupted source of clean energy.

Florida Atlantic University researchers say the current could someday be used to drive thousands of underwater turbines, produce as much energy as perhaps 10 nuclear plants and supply one-third of Florida's electricity. A small test turbine is expected to be installed within months.

"We can produce power 24/7," said Frederick Driscoll, director of the university's Center of Excellence in Ocean Energy Technology. Using a $5 million research grant from the state, the university is working to develop the technology in hopes that big energy and engineering companies will eventually build huge underwater arrays of turbines.

From Oregon to Maine, Europe to Australia and beyond, researchers are looking to the sea — currents, tides and waves — for its infinite energy. So far, there are no commercial-scale projects in the U.S. delivering electricity to the grid.

Because the technology is still taking shape, it is too soon to say how much it might cost. But researchers hope to make it as cost-effective as fossil fuels. While the initial investment may be higher, the currents that drive the machinery are free.

There are still many unknowns and risks. One fear is the "Cuisinart effect": The spinning underwater blades could chop up fish and other creatures. Researchers said the underwater turbines would pose little risk to passing ships. The equipment would be moored to the ocean floor, with the tops of the blades spinning 30 to 40 feet below the surface, because that's where the Gulf Stream flows fastest. But standard navigation equipment on ocean vessels could easily guide them around the turbine fields if their hulls reached that deep, researchers said.

And unlike offshore wind turbines, which have run into opposition from environmentalists worried that the technology would spoil the ocean view, the machinery would be invisible from the surface, with only a few buoys marking the fields.

David White of the Ocean Conservancy said much of the technology is largely untested in the outdoors, so it is too soon to say what the environmental effects might be. "We understand that there are environmental trade-offs, and we need to start looking to alternative energy and everything should be on the table," he said. "But what are the environmental consequences? We just don't know that yet."

The Federal Energy Regulatory Commission has issued 47 preliminary permits for ocean, wave and tidal energy projects, said spokeswoman Celeste Miller. Most such permits grant rights just to study an area's energy-producing potential, not to build anything.

The field has been dealt some setbacks. An ocean test last year ended in disaster when its $2 million buoy off Oregon's coast sank to the sea floor. Similarly, a small test project using turbines powered by tidal currents in New York City's East River ran into trouble last year after turbine blades broke.

The Gulf Stream is about 30 miles wide and shifts only slightly in its course, passing closer to Florida than to any other major land mass. "It's the best location in the world to harness ocean current power," Driscoll said.

Researchers on the West Coast, where the currents are not as powerful, are looking instead to waves to generate power. Canada-based Finavera Renewables has received a FERC license to test a wave energy project in Washington state. It will eventually include four buoys in a bay and generate enough power for up to 700 homes. The 35-ton buoys rise above the water about 6 feet and extend some 60 feet down. Inside each buoy, a piston rises and falls with the waves.

The company hopes later to be the first in the U.S. to operate a commercial-scale "wave farm," situated off Northern California. The project with Pacific Gas and Electric calls for Finavera to produce enough electricity to power up to 600 homes by 2012. Finavera eventually wants to supply 30,000 households.

Roger Bedard of the Electric Power Research Institute said an analysis by his organization found that wave- and tide-generated energy could supply only about 6.5 percent of today's electricity needs.

Finavera spokesman Myke Clark acknowledged that wave energy is "definitely not the only answer" to the nation's power needs and is never going to be as cheap as coal. But it could be "part of the energy mix," and could be used to great advantage off the coasts of Third World countries, where entire towns have no connection to electrical grids, he said.

Nick Furman, executive director of the Oregon Dungeness Crab Commission, said he fears the wave technology could crowd out his industry, which last year brought in 50 million pounds of crab and contributed $150 million to the state's economy.

"We've got a limited amount of flat sandy bottom on the Oregon Coast where we can put out pots and where we can fish, and the wave energy folks are telling us they need the same flat, sandy bottom," Furman said. "It's not the 10-buoy wave park that has the industry concerned. It's that if it's successful, then that park turns into a 200- or 400-buoy park and it just keeps growing."

Over $13.4 Billion in Deals Reached in Singapore Airshow

Singapore Airshow Organizers Say the Exhibition Sees Over US$13.4 Billion Turnover in Aircraft and Related Equipment This Week.

The Singapore Airshow saw more than 13.4 billion US dollars in sales of aircraft and related equipment this week, thanks to a booming aviation market, organisers have said. Another 2.6 billion dollars was generated from contracts for facilities and other services, they said in a statement issued late Friday, at the inaugural event.

The small but wealthy city-state decided to host its own airshow after organisers of the Asian Aerospace fair moved the event to Hong Kong after a long presence here. The biggest deal announced at the airshow was an order for 56 Boeing 737-900ER aircraft worth more than 4.4 billion dollars by Indonesian low-cost carrier Lion Air. Indonesian flag-carrier Garuda ordered four Boeing 777-300ERs worth 1.0 billion dollars and business jet operator BJets signed a 600-million-dollar contract for 40 Cessna and Hawker jets.

US-based Boeing's European rival said it had secured orders for five A330-200F cargo planes from BOC Aviation, an aircraft leasing firm fully owned by Bank of China. The deal is worth a total of 877 million dollars at catalogue prices.

Brazilian aircraft-maker Embraer said US aircraft leasing firm Jetscape Inc has ordered 10 E190 jets, with options for another 10 and purchase rights for 10 more. The deal is worth 375 million US dollars at list price. It could be worth up to 1.1 billion dollars if all the options and purchase rights are confirmed, Embraer said at the airshow.

Embraer also said Australia's Virgin Blue has signed a contract to exercise four purchase rights for E190 jets worth 150 million US dollars. This takes the number of firm orders from Virgin Blue to 24, consisting of six E170s and 18 E190s.

"The new deals announced at the airshow demonstrate once again that Asia is the world's fastest-growing aerospace market," said Jimmy Lau, managing director of the event's organisers. He said 70 percent of the exhibitors have already confirmed bookings for the biennial event in 2010 being held at a new seaside location near Changi Airport.

Lau promised "an even bigger and better" show in 2010, saying this year's event already had 40 percent more exhibition area than Asian Aerospace which was last held in Singapore in 2006 and saw 15.2 billion dollars in deals. More than 30,000 accredited industry professionals visited the airshow and numbers were expected to was opened to the public at the weekend.

Organisers have dubbed the Singapore Airshow as Asia's biggest aerospace event because it has civilian and defence components, while Asian Aerospace has focused on commercial aviation after its shift to Hong Kong.

More than 800 exhibitors from 42 countries, including US defence firms Lockheed Martin and Northrop Grumman, took part in the airshow that featured the latest warplanes, unmanned aerial vehicles and executive business jets.

"Asia is a vital market for us and it has been our constant endeavour to establish and strengthen our ties with this dynamic region," said Bernard Buisson, Singapore managing director for European aerospace giant EADS which owns Airbus.

Joe Song, Asia Pacific vice president for business development at Boeing's defence arm, said the presence of "sophisticated customers", emerging security threats and military air transport requirements for humanitarian operations make the region an attractive market.

Soybean Hits Record on Poor Harvests and China Demand

Soybean Futures Jump to Record on Growing Chinese Demand, Tightening Supplies.

Soybean futures continued their upward climb Friday, hitting a new record as investors bet that dwindling stockpiles coupled with growing demand in China will keep prices high. Wheat also rose. Other commodities traded mostly higher, with heating oil futures rising amid a snowstorm in the Northeast and silver reaching its highest level since 1980.

Soybean prices have surged more than 15 percent this year, driven higher by poor harvests around the globe and growing Chinese demand for the beans used to feed people and livestock. Last week, China announced that bad winter storms had severely damaged 40 percent of the country's rapeseed crop, increasing expectations that the country will boost buying of soybeans to make up the shortfall.

"You've seen a lot of headlines about China's needs lately and that's having an impact. They've got a growing demand for edible oils with their growing population and the Olympics coming up," said Elaine Kub, grains analyst with DTN. Soybeans for May delivery jumped 13.5 cents to settle at $14.3825 a bushel on the Chicago Board of Trade, after earlier rising to an all-time high of $14.40 a bushel.

Soybean prices shot up nearly 80 percent last year and are poised for another stellar performance in 2008. U.S. exporters have already sold more than three-quarters of the soybeans the Agriculture Department predicts for the whole marketing year, which ends in June. Although current supplies appear ample, analysts say the market is headed into a downward trend and that farmers need to plant more soybeans than last year -- when an ethanol boom led farmers to favor planting corn acres over soybeans.

"There's no reason to believe prices will fall significantly unless Brazil and Argentina come up with significantly more (soybean) production than expected," Kub said. Other agriculture futures traded mixed. Wheat for May delivery gained 19 cents to settle at $10.645 a bushel on the CBOT, while March corn fell 2.25 cents to settle at $5.2225 a bushel.

Japan Needs to Be Cautious on Investment Fund, Monitor US Economy

Japan Needs to Study Risks Before Setting Up Government Investment Fund, Foreign Minister Says.

Finance Minister Fukushiro Nukaga sounded a cautious note Friday toward creating a sovereign wealth fund, saying that aggressive investment was risky. "Active management of public wealth involves high risks. So we need to thoroughly study which part of government money, for what purpose and how it will be invested before making a decision," Nukaga told reporters.

His comments came as the ruling Liberal Democratic Party was to launch a panel later in the day to look into creating a sovereign wealth fund, or a government-run investment pool, similar to those that exist in Singapore, China and several Persian Gulf countries.

Some lawmakers have suggested Japan set up a fund to diversify and seek better returns on the country's nearly $1 trillion in foreign currency reserves, most of which are believed to be invested in safe but low-yielding U.S. Treasuries.

Prime Minister Yasuo Fukuda has also said recently that the government "must be cautious" in managing national assets. The wary comments from Fukuda and Nukaga suggest Tokyo doesn't plan to create a sovereign wealth fund anytime soon.

Although Nukaga noted the importance of managing the national wealth effectively, he pointed out differences between Japan and countries that are already actively investing their national wealth. "These countries that engage in active management have either lucrative oil revenues or good fiscal surpluses, but our county has neither," he said.

Economy Minister Hiroko Ota said the government isn't planning to put a proposal for a sovereign wealth fund in its upcoming economic growth plan. More discussion is needed on the size and management of the nation's reserves, but not on setting up a fund to manage them, she said. "I'm not thinking of explicitly putting in a point on SWFs in the growth strategy plan," Ota said.

In recent months, sovereign wealth funds in the Mideast, Singapore and China have invested billions in U.S. and European banks to help replenish their assets after heavy losses from the subprime mortgage crisis.

Japan Needs to Watch Slowing US Economy

Japan needs to monitor the impact that any U.S. economic slowdown there might have on Chinese exports, many of which are assembled from semifinished products and raw materials from Japan and elsewhere in Asia, the country's economic minister said Friday.

"What shape the U.S. slowdown will take needs thorough monitoring," Economy Minister Hiroko Ota said at a regular press conference. "Overall exports are still expanding, but that expansion is coming at a slower pace."

She said Japanese exports to Asia including China are in good shape, while those to the European Union are flat. "As there is a time lag, we need to closely watch how the slowdown in the U.S. will affect the Chinese economy and how that will affect the exports of Japanese and emerging economies to China," she said. About a fifth of China's exports go to the U.S., Ota said. A large share of those are assembled from components or semifinished materials from Japan and the rest of Asia.

Separately, Bank of Japan Gov. Toshihiko Fukui said the country's domestic economy is slowing on lingering adjustments in the housing sector. "Moves in the Japanese economy are slowing down for now due to the weakness in housing investment," he told a Lower House fiscal and financial panel. However, he still maintained the view that Japan's economy is in a "favorable growth cycle of industrial production, income and expenditure."

Japan's housing starts fell 19.2 percent on year in December, slightly worse than economists' average forecast of an 18.2 percent drop, but much better than declines of 27 percent to 44 percent in the previous three months.

Fed to Act if Inflation Turns Sour

US Federal Reserve is Ready to Act if Inflation Turns Worse Despite Pressure of Recession.

How stable are inflation expectations in the US? This is the key to understanding how far the Federal Reserve will be able to go in cutting interest rates to stave off recession. As this week's minutes show, the Fed views the latest inflation data as "disappointing". Inflation reached an annual rate of 4.3 per cent in January, with the underlying core rate at 2.5 per cent.

The central bank is willing to look past the inflation numbers and focus on fighting recession risk, in part because it believes that economic weakness will ultimately moderate price ­pressures. But there is a caveat. The Fed will tolerate higher inflation only as long as it believes this is not seeping into inflation expectations and fostering a 1970s-style inflationary psychology.

That is the real stagflation risk - not a few months of weak growth and relatively rapid price increases. As Fed governor Frederic Mishkin said in a recent speech: "The flexibility to act pre-emptively against a financial disruption presumes that inflation expectations are firmly anchored."

The awkward fact is that market-based measures of inflation expectations have been moving up for a while. Crude comparisons of the difference in yield between ordinary Treasury bonds and Treasury inflation-protected securities show little change.

But these measures do not take into account the jump in the liquidity risk premium since the start of the credit crisis, which increased the attractiveness of more liquid ordinary bonds. Adjusting for this, the Cleveland Fed calculates that the inflation rate the market expects to prevail over the next 10 years has risen sharply, from 2.3 per cent at the end of July last year to 3.2 per cent today.

Using a different approach, Macroeconomic Advisers estimates that the inflation rate expected to prevail over a five-year period starting five years from now has gone up from roughly 2.5 per cent last spring to 2.96 per cent today.

Some survey-based measures of inflation expectations have also edged up, although they remain much more ­stable than market-based measures. "Recent data on inflation expectations are not all that reassuring," says Stephen Cecchetti, a professor at Brandeis university.

The Fed minutes argue that the market-based measures may exaggerate the move-up in expected inflation. Changes in recent months "probably reflected at least in part increased uncertainty - inflation risk - rather than greater inflation expectations".

However, economists say this would still be worrying, as it implies that investors do not think inflation expectations are very firmly fixed. The minutes say these expectations remain "fairly well anchored". But Goldman Sachs detects a "persistent concern" about the need to monitor them.

Larry Meyer, chairman of Macroeconomic Advisers, says the move-up in market-based inflation expectations is "cautionary". He believes the rise to date would not prevent the Fed from cutting rates again in March. But a significant further increase - or an equivalent move up in the survey-based measures - would be hard for the central bank to stomach.

Fed Downgrades US Economic Growth

Fed Downgrades Forecast of Future Economic Activity.

The Federal Reserve on Wednesday lowered its projection for economic growth this year, citing damage from the double blows of a housing slump and credit crunch. It said it also expects higher unemployment and inflation.

The updated forecasts come at a time Federal Reserve Chairman Ben Bernanke and his colleagues are concerned the economy could continue to weaken, even after their aggressive interest rate cuts in January, according to minutes of those private deliberations released Wednesday.

"With no signs of stabilization in the housing sector and with financial conditions not yet stabilized, the committee agreed that downside risks to growth would remain even after this action," according to minutes of the Fed's Jan. 29-30 closed door meeting.

The Fed at that session voted to cut a key interest rate by one-half percentage point to 3 percent. Just eight days earlier, the Fed, in an emergency session, slashed its rate by a rare three-quarters percentage point. The two rate cuts together marked the most dramatic rate reductions in a single month by the Fed in a quarter century.

Under its new economic forecast, the Fed said that it now believes the gross domestic product will grow between 1.3 percent and 2 percent this year. That's lower than a previous Fed forecast for growth, which at that time was estimated to be between 1.8 percent and 2.5 percent.

GDP is the value of all goods and services produced within the United States and is the best barometer of the country's economic fitness. With economic growth slowing, the Fed projected that the national jobless rate will rise to between 5.2 percent and 5.3 percent this year. That is higher than the central bank's old forecast for the rate to climb as high as 4.9 percent. Last year, the unemployment rate averaged 4.6 percent.

And, with energy prices heading upward, the Fed also raised its projection for inflation. The Fed now expects inflation to be between 2.1 percent and 2.4 percent this year. That's higher than its old forecast for inflation, which was estimated at around 1.8 percent to 2.1 percent.

The Fed said its revised forecasts reflected a number of factors including "a further intensification of the housing market correction, tighter credit conditions ... ongoing turmoil in financial markets and higher oil prices."

The combination of slower economic growth and increasing inflation could complicate the Fed's work. The central bank is trying to keep the economy growing, while ensuring that inflation stays under control. The Fed's remedy for a weakening economy is interest rate cuts. To combat inflation, the Fed usually boosts rates.

Oil prices on Wednesday climbed to a new record -- topping $100 a barrel. Consumer prices, meanwhile, rose by a bigger-than-expected 0.4 percent in January, according to new government figures released Wednesday. While some believe inflation concerns could lead the Fed to cut rates by a modest one-quarter percentage point at its next meeting on March 18, many are still predicting another half-point reduction.

"Job No. 1 at the Fed is to right this potentially sinking ship even as inflation continues to percolate," said Richard Yamarone, economist at Argus Research. He and other economists believe the Fed was sending a message that the risk of recession outweighed the danger of inflation -- for now, anyway.

On Wall Street, the hope of more rate cuts lifted stocks. The Dow Jones industrials closed up 90.04 points. Fed policymakers were mindful that they needed to keep a close eye on inflation, minutes of the Jan. 29-30 meeting said.

And, some policymakers noted that when prospects for economic growth improved, "a reversal of a portion of the recent easing actions, possibly even a rapid reversal, might be appropriate," according to the documents.

Still, all but one of the Fed's members agreed to lower rates by a half-point at that time. Richard Fisher, president of the Federal Reserve Bank of Dallas was the sole dissenter. He preferred no change. The minutes showed that Fisher felt that the level of interest rates was already "quite stimulative, while headline inflation was too high."

For next year, the Fed expects economic growth to pick up a bit and for inflation to moderate. The unemployment rate could ebb to 5 percent or hover as high as 5.3 percent, according to the Fed's forecast.

The minutes also showed that the Fed conducted a conference call on Jan. 9 where policymakers reviewed economic data and financial market developments, which were worsening. It did not lower interest rates at that time, although most policymakers were of the view that "substantial additional policy easing in the near term might well be necessary" to help brace the wobbly economy.

As the financial situation continued to deteriorate, worldwide stocks markets plunged and recession fears intensified, Bernanke convened an emergency conference call on Jan. 21. Fed policymakers believed "the outlook for economic activity was weakening," details of that conference call showed. The Fed decided to slash rates by a dramatic three-quarters of a percentage point and make the announcement on the following morning, Jan. 22.

Demonstrating the Fed's "commitment to act decisively" to support the economy might reduce concerns about the weakening economy that seemed to be contributing to the worsening state of financial markets, according to the minutes. However, there was some concern expressed that such a bold move "could be misinterpreted as directed at recent declines in stock prices, rather than the broader economic outlook," the documents showed.

William Poole, president of the Federal Reserve Bank of St. Louis, was the lone dissenter on the Fed rate cut announced on Jan. 22. He did not believe conditions justified a rate cut before the Fed's regularly scheduled meeting on Jan. 29-30, the minutes said.

China Foreign Acquisitions Creates Unease

China Welcome on Wall Street but Foreign Acquisitions Still Provoke Unease.

Flush with hundreds of billions of dollars, China Inc. is still having trouble investing abroad, running into foreign security worries as it tries to acquire companies and resources. The latest casualty: A deal by a Chinese maker of telecom gear and an American private equity firm to buy U.S. tech company 3Com.

The bidders say they just want to make money. But acquisitions are a political minefield because many Chinese buyers are owned by or close to the communist government, feeding fears that Beijing might gain access to military technology or control of strategic resources.

"Where it looks purely commercial, everyone finds that acceptable, but where it touches on resources or security concerns, it just falls into a different basket," said William Hess, China analyst for the consulting firm Global Insight. "As soon as politics enters into the equation, it raises the risks for all parties. It's not just a business case."

The arrest this month of a Pentagon employee charged with selling military secrets to a man accused of being a Chinese spy "certainly doesn't help the political climate in Washington," he said. On Wednesday, Huawei Technologies Co. and its American partner, Bain & Co., withdrew a request for U.S. government approval of their US$2.2 billion (euro1.5 billion) bid to buy 3Com. The companies said they failed to satisfy national security concerns.

American lawmakers and officials had expressed concern that sensitive technology could be transferred to China through Huawei's 16.5 percent 3Com stake. A person familiar with the matter told The Associated Press that Bain offered to sell its Tipping Point subsidiary, which makes network-security software.

China's government said Thursday the Huawei bid was commercial and appealed to Washington to handle it fairly. "We hope the relevant U.S. authorities can deal with the case in accordance with law so as to create a fair and favorable environment for Chinese enterprises in the United States," said Foreign Ministry spokesman Liu Jianchao.

American opposition to such purchases is prompted by unease about China as a strategic rival, rather than details of individual deals, said Joseph Cheng, chairman of the Contemporary China Research Center at the City University of Hong Kong. "There is this perception that China is the most serious threat that the United States will face in coming decades, and this perception has colored the opposition to these mergers and acquisitions," he said.

Unease about China's acquisitions extends to Europe, Australia and elsewhere. It has been fueled by questions about how China's US$200 billion (euro136 billion) sovereign wealth fund, launched last year, will invest and whether its financial muscle will be used to push official policy.

European Union Economy Commissioner Joaquin Almunia said in September the EU might restrict investments by such funds if they fail to disclose more about what they invest in and why.

On Sunday, Australia issued new foreign investment rules, saying it would look more favorably on proposals by state-controlled entities that operate on a transparent and commercial basis. Such investors might "pursue broader political or strategic objectives that could be contrary to Australia's national interest," the guidelines said.

China burst onto the acquisitions scene when computer maker Lenovo Group agreed in December 2004 to buy IBM Corp.'s personal computer unit in a US$1.75 billion deal. Some critics cited possible security risks, but the sale went through after U.S. regulators apparently decided PCs were too generic to pose a threat.

The following year, state-owned oil company CNOOC Ltd. ran into a firestorm when it tried to buy Unocal Corp. CNOOC dropped its bid for the U.S. oil and gas producer after opponents said it might endanger energy security.

Since then, China has refined its strategy, trying to shield itself from criticism by forging partnerships with U.S. and other companies to make sensitive investments. Last year, state-owned China Development Bank invested in Barclays PLC and committed financing to the British bank's takeover bid, ultimately unsuccessful, for Dutch rival ABN Amro.

In January, state-owned Aluminum Corp. of China teamed up with U.S.-based Alcoa Inc. to buy 12 percent of Rio Tinto PLC, complicating a bid for the mining giant by Australia's BHP Billiton Ltd. Huawei, the 3Com bidder, exemplifies the ambiguous status of Chinese companies. The company says it is private, but its founder and chairman is a former soldier and early customers included China's military and state-run phone companies. Huawei adds to the mystery by declining requests for interviews and information.

"Even when Huawei and other companies say they're not connected to the government, no one really believes them, in Huawei's case with good reason, because it has deep ties to the military," Hess said.

China's purchases of overseas assets have soared over the past two years as Beijing encouraged companies to go abroad in hopes of reducing reliance on export-driven manufacturing. Chinese acquisitions in the United States rose to US$226.6 million (euro155 million) last year, more than 16 times the 2006 level of US$13 million, according to research company Dealogic PLC.

So far this year, another US$162.7 million (euro111 million) in deals have been announced. Most passed without comment, such as Wuxi Pharma Tech Inc.'s US$163 million (euro111.22 million) purchase of AppTec Laboratory Services Inc., a supplier of medical tests in St. Paul, Minnesota.

In December, Wall Street welcomed a US$5 billion (euro3.4 billion) investment by China's sovereign wealth fund in Morgan Stanley that helped replenish the bank's assets after heavy subprime mortgage losses.

In Europe, Chinese acquisitions last year totaled US$563.2 million (euro384.28 million), according to Dealogic. European and U.S. state governments states eagerly try to woo Chinese money. Last year, Alabama Gov. Bob Riley brought a 50-member delegation of businesspeople to China to meet potential investors.

Despite such lobbying, China's elite will take the failure of a 3Com bid as proof the United States wants to slow their country's economic and technological rise, Cheng said. "It will certainly reinforce the image that the United States doesn't want to see a strong China," he said.

Bank of England Looks for Inflation Risk

Bank of England's MPC weighs on inflation risk in considering further interest rate cuts.

The Bank of England's monetary policy committee would be considering even deeper cuts in interest rates were it not for worrying signs that inflation is likely to spike soon and stay high this year, a key member of the committee said on Tuesday night.

In remarks about the economy that appeared even gloomier than those by Mervyn King, Bank governor, last week, Kate Barker warned that the benign economic conditions that have characterised the past decade are coming to an end. The risks, particularly the implications of weaker property prices for the banking sector, could easily justify further monetary stimulus, she said.

"My chief concern is the significant possibility of a large downside risk to growth, and therefore to inflation, as the impact of the credit tightening works through the economy," Ms Barker said in a speech to the North Staffordshire Chamber of Commerce and Industry in Stoke-onTrent. "I rate this a little higher than a large upside risk to inflation over the medium term from dislodging inflation expectations on the upside."

Banks' difficulties in accessing wholesale funds could prompt them to cut back on mortgage lending in 2008. "In this case, the mortgage market could become less competitive and more expensive, feeding back into a decline in the housing market, somewhat lower consumer spending, and also into lenders' balance sheets, reducing lending capacity further."

Ms Barker is seen as neither a dove nor a hawk on rate decisions and most often votes with the majority. However, in a tacit acknowledgement of just how rapidly new data are altering the overall picture of the economy, Ms Barker appeared to concede that even the latest figures may already be out of date.

She signalled that the MPC was prepared to take a pragmatic approach to rate-setting. "Judgments about the correct policy response may need to be unusually flexible with much more uncertainty than normal around the future path of policy rates," she said.

However, she reinforced the message from Mr King last week that there is a real and immediate concern about a spike in inflation which, although probably of external origin, may seep into the expectations of consumers and workers.

Oil Closed Above $100 Then Easing

Oil Prices Retreat After Closing Above $100 a Barrel for the First Time.

Oil prices retreated Wednesday after closing above $100 a barrel for the first time as investors seized on a refinery explosion and the possibility that OPEC may cut its output. The spike in crude Tuesday rattled Asian financial markets, with Tokyo's benchmark stock index falling more than 3 percent.

Many recent forecasts have said demand for oil this year will be less than initially expected -- yet prices continue to rise. That suggests oil may continue its climb as the weakening dollar attracts new investors to the futures market.

Concerns about a falling dollar, the threat of new violence in Nigeria and continuing tensions between the U.S. and Venezuela were "adding to the bullish mix," said Vienna's JBC Energy, in its daily market report.

In a daily research note, David Moore, a commodity strategist at Commonwealth Bank, noted that "the oil price continues to be supported by concerns over oil supply," adding: "There is speculation that OPEC will either leave oil production levels unchanged, or, possibly, even reduce production following the 5 March OPEC meeting."

Some counterbalance, came from expectations of U.S. stock builds. JBC Energy predicted that the U.S. Energy Department's Energy Information Administration will announce gains of 2.41 million barrels of crude Thursday for the week ending Feb. 15, as well as increases in gasoline, diesel and heating oil stocks.

Light, sweet crude for March delivery fell $1.05 to $98.96 a barrel by noon in European electronic trading on the New York Mercantile Exchange. The contract climbed $4.51 on Tuesday to settle at a record finish of $100.01 a barrel, after earlier rising to a trading record of $100.10 a barrel. It was the first time since Jan. 3 that oil had been above $100. Still, prices are still within the range of inflation-adjusted highs set in early 1980. Depending on how the adjustment is calculated, $38 a barrel then would be worth $96 to $103 or more today.

The rise spooked global equity markets amid worries that high oil prices will further crimp consumer demand, one of the primary drivers of the U.S. economy. In addition to declines in Tokyo, Hong Kong's Hang Seng stock index was down more than 2 percent in afternoon trading. On Tuesday, the Dow Jones industrial average closed 0.1 percent lower, erasing early gains.

Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the greenback is falling. Gasoline and heating oil prices appeared to lead Tuesday's wide advance in energy prices due to the explosion Monday at Alon USA's Big Spring, Texas, refinery. The 67,000-barrel-a-day facility could be shuttered for two months, the company has said.

During Tuesday's Nymex floor session, March gasoline jumped 10.93 cents to settle at a record $2.6031 a gallon (3.8 liters), and March heating oil rose 11.45 cents to settle at $2.7614 a gallon, also a record. Like crude, both retreated in after-hours trading.

A threat by a rebel group in Nigeria to escalate attacks on the nation's crude oil infrastructure helped boost oil prices overnight. The rebels were acting in response to rumors that the government had killed a captured leader, whom authorities later said was safe and well. Militant attacks have cut about 20 percent of Nigeria's crude output in recent years.

Traders are also focused on the Organization of Petroleum Exporting Countries, which will meet early next month to map out production plans, and Venezuela, where President Hugo Chavez made conflicting statements this weekend about the country's legal dispute with Exxon Mobil Corp.

The world's largest oil company is fighting Venezuela's nationalization of an oil project, and recently convinced several courts to freeze $12 billion (8.14 billion euros) in Venezuelan oil assets.

China Inflation Hits Multi-Year High

China's Inflation Hits 11-Year High, Analysts Warn Bigger Increases to Come.

China's inflation rose to its highest level in more than 11 years in January after devastating snowstorms worsened food shortages, according to data reported Tuesday, and analysts warned there might be sharper increases to come. Consumer prices in January climbed 7.1 percent from the same month last year, driven by an 18.2 percent rise in costs, the National Bureau of Statistics reported.

Economists warned that despite efforts to ease food shortages, China faces pressure for prices to rise across the board due to higher wages and costs for coal, iron ore and other industrial materials.

February inflation "is likely to be much higher than 7 percent, and might even get close to double-digit levels," said Goldman Sachs economists Yu Song and Hong Liang in a report to clients. "Inflation is likely to have further legs to run."

High inflation could complicate Beijing's efforts to keep the fast-growing economy from overheating and add to pressure to let the exchange rate of its currency, the yuan, rise faster. China's economy grew by 11.4 percent in 2007 and is expected to expand by at least 9 percent this year.

Surging food costs are a political concern for Chinese leaders because they hit the poor majority hard in a society where families spend up to half their incomes on food. Bouts of high inflation in the 1980s and '90s sparked protests, which the government hopes to avoid repeating.

Economists expect interest rate hikes this year but say they should be modest because the key factor driving inflation is shortages of pork and some other food, rather than too much credit. Beijing has nudged up rates over the past two years to cool a lending boom. But it faces the dilemma that more rises at a time when U.S. rates are falling could attract money from abroad, adding fuel to the boom.

Economists say Beijing is more likely to let the yuan rise faster against the dollar. That could make Chinese goods more expensive abroad, reducing the flood of export revenues that are adding pressure for prices to rise. The yuan has risen by 13 percent against the dollar since 2005 but the pace has quickened in recent months.

Analysts have boosted inflation forecasts for China since the January storms, which killed at least 107 people, wrecked crops and destroyed crops across the south. Deutsche Bank says inflation could hit a peak of 8 percent for the first quarter. Lehman Bros. forecast price rises of up to 7.5 percent in February before the surge eases in March.

Investors shrugged off those worries, snapping up blue chips in hopes that fresh investment funds will boost prices. The benchmark Shanghai Composite Index gained 2.1 percent to 4,664.29.

The storms, which began Jan. 10 and lasted into February, disrupted government efforts to ease shortages of pork, grain and other goods that are blamed for a food price rise that began in mid-2007.

Snows paralyzed railways and trucking, disrupting shipments of meat and vegetables. In some snowbound cities, the price of scarce tomatoes, oranges and other goods in street markets doubled during the storms, according to news reports. The price of coal for home heating rose by up to 75 percent.

Nationwide, vegetable prices rose by 17.5 percent in January, compared with 9.5 percent in December. January's consumer price rise was the highest since September 1996, according to Lehman. Non-food prices were up only 1.5 percent from the year-earlier period, the statistics bureau reported. But other indicators suggest China faces growing pressures that might push up prices across the board.

China's producer price index -- which measures prices of goods as they leave the factory -- rose by 6.1 percent in January, its highest rate in three years, due to high commodity prices and transportation disruptions blamed on the snow, the government reported Monday.

"Higher prices at the producer level could lead to rising consumer prices as producers might be pressured to increase prices of consumer products to offset rising costs," the official Xinhua News Agency said.

Beijing is paying farmers to raise more pigs and imposed export curbs to increase domestic grain supplies. Regulators imposed price controls on food in January and have frozen the price of gasoline and other basics since September.

But economists warn that price controls could worsen shortages if they deter farmers and other producers from investing to increase output, which would bring down prices. Analysts worry that sustained inflation might prompt Chinese exporters to raise prices, possibly fueling inflation abroad.

Wages in the Pearl River Delta near Hong Kong, the heart of China's export-driven manufacturing industries, have risen 13 percent over the same period last year as employers try to attract workers amid fears of a possible labor shortage, according to a survey reported Tuesday by the official China Daily newspaper.

Chinese exporters have been hurt by the rising yuan, which has pushed up prices of their goods abroad. Some have closed while others are trying to switch to more competitive products. Among individual goods, pork prices rose 58.8 percent in January compared with the year-earlier period, while cooking oil 37.1 percent, according to the statistics bureau.

More Volatility Expected for Wall Street

Wall Street Not Expecting New Data on Housing, Inflation, Manufacturing to Give Assurance.

February's stock market so far has displayed more stability than January's, but Wall Street wants to see a stronger economy on the horizon before it trades confidently again. Investors are not counting on this week's readings on housing, inflation and manufacturing to give them that assurance. As a result, they are bracing for more volatility.

The market has been swinging higher and lower as traders sell off when disappointing economic data rolls in and then drive the market up when they snap up stocks that look like bargains. The pattern is indicative of a market that has underlying demand holding it up, but one that could have a bit further to fall if more bad news comes along.

After rallying early last week and then losing steam toward the end, the Dow rose 1.36 percent for the week, the Standard & Poor's 500 index gained 1.40 percent, and the Nasdaq composite index advanced 0.74 percent. All three indexes remain down sharply for the year, particularly the Nasdaq, which is 12.5 percent lower than it was at the end of 2007.

"We may not have hit the bottom, but people seem to be looking for things to buy rather than things to dump," said Alexander Paris, economist and market analyst for Barrington Research in Chicago. "Things might get worse before they get better, but you've got to buy stock when things look worst."

The question is whether there's any data coming in the near future that will have the power to reinvigorate the stock market back -- or whether the market is doomed to a holding pattern until the economy starts to recover.

One overriding concern is the weak housing market. Though investors have come to terms with falling prices, there's uncertainty over how long the downturn will last and how much it will affect homeowners' spending patterns. And there are worries about the financial well-being of companies with investments in mortgage-backed assets.

All U.S. financial markets are closed Monday for the Presidents Day holiday. On Tuesday, the National Association of Home Builders releases its housing industry index, which economists surveyed by Thomson Financial/IFR expect to show a decline for February. Then Wednesday, the Commerce Department reports on housing starts and building permits -- both are expected to be weak.

Because of the housing market's deterioration, many businesses are suffering. The Institute for Supply Management's January manufacturing report showed modest growth, but economists predict that the Philadelphia Fed's regional manufacturing index will register another contraction. The decline is not expected to be as dismal as the December report, which caused the Dow to tumble more than 300 points a month ago, but if it is, it could send stocks reeling again.

Another worry is the inflation that is occurring alongside the economic slowdown. The dollar's recent tumble appears to have plateaued, but it is still weak, while food and energy costs are staying high. Consumers are finding themselves unable to spend money on discretionary items because the bulk of their wages is going toward necessities like meals, transportation and health care.

The Labor Department reports Wednesday on consumer prices, which economists predict ticked up 0.3 percent in January, the same rate as in December. Core consumer prices, which exclude food and energy costs, are anticipated to have risen by 0.2 percent.

Also Wednesday, the Federal Reserve releases the minutes from its Jan. 29-30 meeting. At that meeting, the central bank lowered the key interest rate by a half point to 3.00 percent and stated that the financial markets are still under considerable stress. The Fed also said credit is tightening for businesses and households alike, the housing contraction appears to be deepening, and the job market seems to be weakening.

"It seems to be, as the data unfolds, they'll have no choice but to cut further," said Joseph V. Battipaglia, chief investment officer at Ryan Beck & Co. He added, though, that given how much policy makers have already slashed rates and their persistent worries about inflation, "they don't have much more to go."

The Jan. 30 move followed an emergency three-quarter-point reduction a week earlier, and three cuts in the latter part of 2007. Rate changes tend to take at least six months to affect the economy. The Fed meets next on March 18.

For clues about how the Fed is feeling about the economy and its monetary policy going forward, investors will listen to speeches by Minneapolis Fed President Gary Stern, who is scheduled to speak Tuesday in Golden Valley, Minn., on the economy, and by St. Louis Fed President William Poole, who is speaking Wednesday in Kirksville, Mo., on inflation dynamics.

Oil Steady Amid Talk of OPEC Production Cuts

Oil Prices Steady After Talk of Possible OPEC Cuts Amid Forecasts for Slower Demand Growth.

Oil price were steady Monday in Asia, rising slightly after further hints that OPEC may cut production if global supplies continue to rise amid forecasts for slower growth in demand. The Organization of Petroleum Exporting Countries has trimmed its demand forecasts for this year by 100,000 barrels a day, but it has also hinted it may cut production if global supplies of crude continue to rise, according to Dow Jones Newswires.

Several reports in recent days, though, have suggested that global economic conditions may not be deteriorating as quickly as feared. The U.S. Federal Reserve said Friday that industrial production in the world's largest economy rose last month in line with expectations. On the other hand, the Energy Department, the International Energy Agency and now OPEC have all cut demand forecasts.

Light, sweet crude for March delivery rose 23 cents to $95.73 a barrel in Asian electronic trading on the New York Mercantile Exchange by midday in Singapore. The Nymex crude contract rose 4 cents Friday to settle at $95.50 a barrel after alternating frequently between positive and negative territory. Oil prices have risen more than $8 in little more than a week.

On Sunday, Venezuelan President Hugo Chavez soothed American motorists, saying that Venezuela is not preparing to cut off oil shipments to the United States. The socialist leader rattled oil markets when he threatened a week ago to halt shipments to the United States in retaliation for Exxon Mobil Corp.'s success in convincing courts in the U.S. and Europe to freeze Venezuelan assets.

"We don't have plans to stop sending oil to the United States," Chavez said Sunday during a visit to heavy-oil projects in Venezuela's petroleum-rich Orinoco River basin that were nationalized last year. But he added that Venezuela could cut off supplies to the United States if Washington "attacks Venezuela or tries to harm us." Chavez has repeatedly warned against a possible U.S. invasion to seize control of Venezuela's immense oil reserves. U.S. officials have denied any such plan exists.

The United States relies on Venezuela for about 10 percent of its oil imports. Chavez's administration is locked in a legal battle with Irving, Texas-based Exxon Mobil over compensation for the nationalization of one of four heavy-oil projects in the Orinoco River basin.

Exxon Mobil, the world's largest publicly traded oil company, is seeking to freeze billions of dollars in Venezuelan assets in the United States and Europe to guarantee a payoff if it wins a decision by an international arbitration panel.

Last month, a British court injunction ordered the temporary freezing of up to $12 billion in assets of state-run Petroleos de Venezuela SA, or PDVSA. Brent crude for April delivery rose 26 cents to $94.89 a barrel on the ICE Futures exchange in London.

Weekend's Special: Saint Valentine's Day, The Legends of Love

The history of Saint Valentine’s Day is shrouded in folklore. There are legends that speak of three saints, martyred to the cause of love. By some strange co-incidence, all of them were martyred on the same day- February 14.

Saint Valentine

As early as the fourth century B.C., the Romans engaged in an annual young man's rite to passage to the God Lupercus. The names of the teenage women were placed in a box and drawn at random by adolescent men; thus, a man was assigned a woman companion for the duration of the year, after which another lottery was staged. After eight hundred years of this cruel practice, the early church fathers sought to end this practice... They found an answer in Valentine, a bishop who had been martyred some two hundred years earlier.

According to church tradition St. Valentine was a priest near Rome in about the year 270 A.D. At that time the Roman Emperor Claudius-II who had issued an edict forbidding marriage.
This was around when the heyday of Roman empire had almost come to an end. Lack of quality administrators led to frequent civil strife. Learning declined, taxation increased, and trade slumped to a low, precarious level. And the Gauls, Slavs, Huns, Turks and Mongolians from Northern Europe and Asian increased their pressure on the empire's boundaries. The empire was grown too large to be shielded from external aggression and internal chaos with existing forces. Thus more of capable men were required to be recruited as soldiers and officers. When Claudius became the emperor, he felt that married men were more emotionally attached to their families, and thus, will not make good soldiers. So to assure quality soldiers, he banned marriage.
Valentine, a bishop , seeing the trauma of young lovers, met them in a secret place, and joined them in the sacrament of matrimony. Claudius learned of this "friend of lovers," and had him arrested. The emperor, impressed with the young priest's dignity and conviction, attempted to convert him to the roman gods, to save him from certain execution. Valentine refused to recognize Roman Gods and even attempted to convert the emperor, knowing the consequences fully.

On February 24, 270, Valentine was executed.

While Valentine was in prison awaiting his fate, he came in contact with his jailor, Asterius. The jailor had a blind daughter. Asterius requested him to heal his daughter. Through his faith he miraculously restored the sight of Asterius' daughter. Just before his execution, he asked for a pen and paper from his jailor, and signed a farewell message to her "From Your Valentine," a phrase that lived ever after.

Valentine thus become a Patron Saint, and spiritual overseer of an annual festival. The festival involved young Romans offering women they admired, and wished to court, handwritten greetings of affection on February 14. The greeting cards acquired St.Valentine's name.

The Valentine's Day card spread with Christianity, and is now celebrated all over the world. One of the earliest card was sent in 1415 by Charles, duke of Orleans, to his wife while he was a prisoner in the Tower of London. The card is now preserved in the British Museum.

Other Legends

The second famous St. Valentine was the “Valentine of Terni”. He spread the message of true love, it is said that he had the holiness to perform miracles, like healing the old and infirm. Of course, these were times when Christians were persecuted and he was beheaded for his faith.

The third legend is one of the most influential in the history of St. Valentine’s; he is Valentinius of Alexandria, a Gnostic bishop. He preached the sanctity and importance of marriage, which was different from the growing asceticism of Christian thought.

Legend says that Valentine of Terni and Valentine of Alexandria or both buried along the Via Flaminia outside Rome. In the middle ages, there have been churches dedicated to Saint Valentinus. Several written “Acta” or chronicles of the church have been found about the Valentinus of Terni and Saint Valentinus, speaking of their life and miracles.

If were to look simply at the romantic aspect of the day, then the history of Valentine’s Day goes back to the dawn of western civilization – February was always the month of love. Perhaps because there is a promise of spring ahead and the signs of fertility are all over. The ancient Greeks, governed by their passionate Gods had already set aside the days between mid-January to February to rejoice the love between Zeus and Hera. Later, the ancient Romans, celebrated February 15 as “Lupercalcia” as the day of love.

The first actual renowned written romantic celebration in the history of Saint Valentine’s Day was in Geoffrey Chaucer’s “Parliament of Foules”, written in 1382. There are no well-known written anecdotes or poetry of romantic love, associated with Saint Valentine’s Day before this at all. This poem was in honor of the first engagement anniversary of King Richard II of England to Anne of Bohemia, they were both fourteen years old. Later with the advent of courtly love in the fifteenth century, the importance of St. Valentine’s Day grew, making writing and receiving love poems on this day a norm. In Shakespeare’s Hamlet, Ophelia refers to it, reflecting its growing popularity.

In the USA, Valentine Day celebrations were a part of the British settlers and it became more popular with the mass production of greeting cards. Eventually the idea expanded and consumerism caught up, until gifts including diamonds and chocolates, became a big business on Valentine’s Day.

Today Valentine’s Day is a major celebration, across the world, and it drives the economic boom for the entire month of February. Yet as we passionately give gifts, or wait for them, let us remember that the most important facet of this day is love. For any relationship to survive, whether it is romantic or platonic love, all you really need is trust and the willingness to go the distance together, side by side.