Washington Running to Stand Still

Congress is preoccupied with a doomed tax-cut package. Also, the LIFFE and the CME are reported to be linking operations.
Author:
Publish date:

With the markets looking ahead to Friday's

employment report and coping with prolonged weakness in the dollar, its comforting that

Congress

isn't going to have much of an impact on anything this week.

The hamsters continue to run on the treadmill. If we've learned one thing from the overwrought squabbling and government shutdowns of the last few years, they're good for the economy. Today, major players in the impasse over a proposed tax cut acknowledged they're getting nowhere. Republican leaders in the House and Senate have both passed bills for a $792 billion cut, which they hope to reconcile at the end of the week, right before recess.

But

President Clinton

, who says he wants no more than a $295 billion tax cut, is going to veto it and Senator John Chafee (R., R.I.) calls it "a shame. We'll be right back where we are now."

Not necessarily a bad thing: The inability of Congress to pass a major tax cut or drastically hike up spending during the last few years has resulted in a reduction of the public debt from $3.1 trillion in March 1997 to $2.8 trillion now. On the margin, that's helped lower lending rates for businesses and consumers, and left more for spending overall.

The Sunday Times

of London reported that

The London International Financial Futures Exchange

was about to link up with the

Chicago Mercantile Exchange, the second-largest U.S. futures market.

The report first surfaced after a LIFFE board member told

Reuters

earlier this month it recently sent officials to Chicago for talks on an alliance with the CME. It was viewed as a counter-punch to a link-up between the

Chicago Board of Trade and the German-Swiss Eurex. The newspaper said the agreement would fall short of a full merger but gave no further details. A LIFFE spokesperson wouldn't comment.

J'accuse! The U.S. got a taste of its own medicine today, charged with dumping domestic products on other countries. Mexico said it was slapping tariffs of up to 215% on U.S. beef imports, saying U.S. producers were sending meat across the border at artificially low prices. The tariffs will go into effect Monday.

Sears

(S) - Get Report

said it will cut up to 1,400 jobs at its headquarters by Oct. 31, in a move to trim expenses. The cuts will not affect the retailer's hardware or department stores.

Amsted Industries

, the world's biggest maker of train wheels, agreed to buy

Varlen

(VRLN)

for $790 million in cash and assumed debt. Varlen holders will receive $42 a share, an 11% premium to Friday's close of 37 7/8.

The Sunday Telegraph

of London reported that Anglo-U.S. drug company

SmithKline Beecham

(SBH) - Get Report

is close to taking a $10 million stake in British biotechnology company

SkyePharma

. The investment is reportedly part of a deal under which SkyePharma would reformulate SmithKline's

Requip

treatment for Parkinson's disease. A SmithKline spokesman said he had no knowledge of the deal, the paper reported.

British engineering group

Rolls-Royce

is expected to expand its industrial power operations through strategic acquisitions,

The Sunday Times

of London reported. The paper said one potential move would be to buy out

Cooper Industries'

(CBE)

position in a long-standing joint venture. The move could cost Rolls about $202.6 million, but the paper said it was unlikely to be the last move.

Asian bourses fell Monday morning, with Japan's

Nikkei 225

down 104.25 or 0.58%. Likewise Australia's

All Ordinaries

index was down 30.60 or 1.01% and New Zealand's

NZSE 40

was down 25.52 or 1.16%.

In the Papers:

Physician, Heal Thyself: Federal Reserve

Chairman

Alan Greenspan

often advises Congress as to the danger of using protectionism for workers that might be better served by reentering the workforce when they're younger and still considered useful. In its cover story,

Barron's

suggests Greenspan should look deep inside himself, and do the same for the "bloated" Fed, a 23,000 strong organization that should be sliced up drastically. Dump the Fed's regional banks, fire some economists, har!

(It also points out that the regional bank presidents make more money than the Fed governors: Robert Parry of San Fran gets $282,500 a year; Greenspan gets by on $136,700. Were baseball millionaire

Mark McGwire

asked, he'd probably say, "I had a better year than he did.")

The New York Times

reports the strain on the middle class, something previously only felt in large American cities like New York and Chicago, is being felt in places such as Cincinnati. The median family income is between $46,500 and $50,000 a year.