DEFCON 3 ANNOUNCEMENT

Communiqué Number Ten

Weekend Report. 11th October 1998

(Tia submitted this Communiqué with news reports relating to the Defcon 3 update. Her comments will be highlighted in red.....the editor)
 

Missiles 'To Lead Nato Attack'
     A first wave attack on Serb defenses by Tomahawk cruise missiles from American warships and submarines in the Mediterranean will lead Nato raids (Michael Evans, Defence Editor, writes).  This would be followed by intensive bombing missions if Belgrade still refuses to comply with the United Nations Security Council resolution.
The Tomahawk test for President Milosevic, the Yugoslav leader, intended as a warning of more to come if he remains defiant, is part of the comprehensive operational plan which has been approved by the North Atlantic Council. As Richard Holbrooke, the US mediator, began what is expected to be several days of last hope negotiations with Mr. Milosevic, it emerged that after the first wave of Tomahawks, there would be a breathing space to allow the Yugoslav leader to back down. Despite pledges of tough action, questions remained unanswered within the alliance. With the collapse of the Italian Government, there was uncertainty over whether Rome would still support air strikes. ( The London Times )

  The US Defense Secretary, William Cohen has ordered  six B-52 bombers to be sent to Britain, while in Belgrade the American special envoy, Richard Holbrooke, has finished his latest talks with the Yugoslav President without reporting any progress.

    Mr. Cohen said the B-52s, each of which can carry up to 20 air launched cruise missiles, were to be available for intervention in Serbia should Nato require them.  The Pentagon said that in addition to the B-52s, an RC-135 reconnaissance aircraft and an unspecified number of tanker aircraft would also be sent.  The BBC's Defense Correspondent, Mark Laity, says the object of negotiations.  He says the arrival of the planes carries symbolic significance - Nato is less likely to use bombs than more accurate cruise missiles, already available from naval forces in the region - but the B-52 is a legendary aircraft and when it appears people usually take notice.  Early on Sunday, Mr. Holbrooke, wound up seven hours of talks with President Milosevic to try to break the deadlock over the Serbian province of Kosovo. He made no comment on whether any progress had been made. However, the Serbian Government issued a statement saying the talks had created the likelihood of a political settlement to the Kosovo crisis. "It was agreed that all necessary conditions exist for the resolution of open questions through a political process," the statement said. US officials say Mr. Holbrooke has returned to the US embassy where
he is holding consultations with the authorities in Washington and Brussels.  The latest session with Mr. Milosevic followed talks in the Kosovo capital Pristina, where Mr. Holbrooke was accompanied by Britain's ambassador to Belgrade, Brian Donnelly, for talks with ethnic Albanian leaders. Our correspondent says they did not appear in the mood for compromise.
   Mr. Holbrooke is thought to be trying to negotiate a deal that would give considerable amount of autonomy to Kosovo's ethnic Albanians.  The province would abandon its bid for independence in place of an interim period of autonomy while its future political status was negotiated.  Independence is not considered an option as many fear this would increase instability in the Balkans.  The BBC correspondent in Belgrade, John Devitt, says the plan would involve deployment of peacekeeping ground troops in the province. He says one of the crucial questions is how strong these force should be and should it be a Nato force, or from another European organization or the UN.  Before beginning the latest session of talks Mr. Holbrooke said there has, so far, been no progress in Serbian compliance with UN resolutions.  Nato preparations Albania and Bulgaria have agreed to open their countries' airspace for Nato aircraft if air strikes were to go ahead, "The North Atlantic Council has today cleared all the  decisions necessary prior to an activation order, " Nato Secretary General Javier Solana said.  But Russia remains opposed to strikes and Prime Minister Yevgeny Primakov says that a decision to attack without the involvement of the UN Security Council "could destroy the entire existing international security system." Correspondents say no decision on air strikes is  expected until after the German cabinet meets in emergency session on Monday.  Diplomatic exodus Diplomats from several countries, including the US, are leaving Belgrade, telling their nationals to leave Yugoslavia immediately.  Most Western embassies there have scaled down their operations to a minimum. The charity Save the Children has withdrawn its from Kosovo, Serbia and Montenegro, saying the crisis made it impossible to continue doing its job.  The Red Cross says it will remain to help and estimated 300,000 homeless refugees forced to live in the open as the bitter Balkan winter approaches.  The UN demands  Mr. Holbrooke is insisting the Serbs meet six demands to comply with UN resolutions:
( Thanks to The BBC )

   Kosovo crisis - countdown to conflict continues U.S. Balkans envoy Richard Holbrooke reported "no change" on Saturday in the crisis over the threat of NATO force in Kosovo but said his shuttle diplomacy would continue.  "We are where we were earlier in the day, we're where we were yesterday," Holbrooke told reporters after talks with ethnic Albanian leaders in the Kosovo provincial capital. "(It's an) extremely serious situation and there is no  change there."  Holbrooke, emerging from a 90 minute meeting with the main ethnic Albanian political leader Ibrahim Rugova, said he was going back to Belgrade for more talks with Yugoslav President Slobodan Milosevic, adding: "We'll see where we go from there." He gave no indication of any progress in what is seen as a last ditch attempt to ward off NATO air strikes to stop Serb attacks on ethnic Albanians in Kosovo.  He met for more than six hours with Milosevic on Friday before going to Pristina. "Planning is continuing to move forward at NATO," Holbrooke said. "I will let NATO speak for itself. We're not here on behalf of NATO. We're here to find ways to do the best we can in a very difficult situation." Holbrooke was flanked by Chris Hill, the U.S. Ambassador to Macedonia who is trying to hammer out a political solution to the crisis, and by British Ambassador to Yugoslavia Brian Donnelly.  "I'm very grateful to Doctor Rugova for the time he took to see us today," Holbrooke said.  "He continues to represent the important moderate leadership in a situation where all sides have resorted to violence. We greatly admire and appreciate that."  Holbrooke said he continued to hope for a diplomatic solution to the crisis, brought on by Serb military attacks to crush an independence rebellion by ethnic Albanian separatists in Kosovo, where Albanians outnumber Serbs nine to one. "The three of us (Hill, Donnelly and Holbrooke) are diplomats of one sort or another and we always believe it is better to keep talking. Nobody wants to have to resort to bombing or military action," Holbrooke said.  "On the other hand, the U.N. resolution is very clear and as (British) Foreign Secretary Robin Cook and (U.S.) Secretary of State Madeleine Albright have made clear, the Yugoslav government is not in compliance with that resolution," he said.  He was referring to a U.N. resolution demanding a withdrawal of police units, an immediate halt to fighting and an end to repressive actions against civilians. "On the basis of that fact, in another part of Europe other people are planning another way to deal with the problem,"  Holbrooke said, referring to NATO preparations. "That's not what we're here for. We're here to find a totally viable, credible, verifiable, and irreversible compliance with the U.N. resolution."

( ITN News Great Britain )

  At the time that this report was wrote there was still no headway made to stop the problem from getting out of hand.  NATO is on a course that is heading towards the use of force.  Slobodan Milosevic Is also holding on to his path.  this will end with either both parties standing still and heading to the use of force or One party will back down and things will go on much as before.

 Now the Markets.

   NEW YORK (CNNfn) - Despite fledgling attempts to reach higher ground, U.S. markets will be hard pressed in the near term to fend off an aggressive bear attack as speculators struggle to shore up their damaged positions amid heightened risks of volatility, a prominent market watcher said Friday.  "I don't think that any rally that we mount in stocks or in credit markets can approach the old highs that we saw back in June or July, so we probably have a bear market coming," Jim Bianco, the president of Bianco Research, told CNN's "Moneyline News Hour with Lou Dobbs" Friday. Bianco said the slump could be significant - "as much as 1,000 points". He also predicted that that the fallout from the near collapse of a troubled U.S. hedge fund last month threatens to weigh heavily on the behavior of investors - even those formerly accustomed to taking risks. "Unless we find a new buyer, the old buyer of hedge funds will never be able to get as aggressive as they were back three months ago," Bianco said.  In recent weeks, the buzzword around world markets has been "deleveraging" as funds burdened with heavy exposure to hard-hit markets from Russia to Latin America have scrambled to unwind their positions.
 The roster of big banks and brokerages reporting quarterly losses due to hedge fund losses has steadily lengthened in the aftermath of the $3.6 billion bailout of Long Term Capital Management. Many of the largest losers have contended they have the collateral to cover their losses. Bianco suggested, however, that a large number of institutions may remain vulnerable as they find themselves unable to liquidate all their rickety positions.  "It's a much bigger problem than we've been led to believe," he said. "If you just look at the markets and you see the wild gyrations in the yen, and the wild gyrations in bonds, not to mention stocks, you have to conclude that the problem is much bigger than everyone thinks."  On the upside, however, Bianco said that, for the most part, the leverage and speculative problems that are leading to forced selling and margin calls are occurring outside the equity market. "The ray of hope," Bianco said, "is that the stock market may have found a bottom yesterday or today as it started to rally because it doesn't have the markets have or some of the other markets that have been pummeled in recent weeks." Bianco added that rising interest rates on Treasury bonds may be seen
as a "positive" since most hedge funds invested in short-term paper, which has been rallying. Nonetheless, he added, "over the long term, higher rates are not going to be that good for stocks…but right now, we're just taking it one day at a time

   (CNNfn) - It's hard to imagine that Wall Street could have another week as bad as this one, but analysts warned that investors next week could be in for more of the huge market swings and uncertainty that plagued recent trading sessions. U.S. stocks bobbed like corks in a raging sea this week as investors seemed overwhelmed by the falling dollar, overseas market shakeups and the threat of a global recession. "Some sense a climax lies ahead, and others think we're getting close to the bottom," said Alan Ackerman, senior vice president and market strategist at Fahnstock & Co. in New York. "It's likely to be a difficult week next week.

                         Stocks On A Roller Coaster
   Every day this week seemed to deliver more misery on Wall Street, especially to technology stocks.  "People are pretty exhausted," acknowledged Mike Cloherty, market strategist at Credit Suisse First Boston in New York.  On Monday, computer buy programs rescued the Dow Jones industrial average from a big dive, with the benchmark index closing down 58.45 at 7,726.24. But binge techs got pummeled, leaving the Nasdaq composite down 78.29, 4.9 percent, at 1,536.69.  Stocks went through another dizzying session Tuesday. The Dow rose 150 points and closed up 16.74 at 7,742.98. The Nasdaq gained 2 percent in the morning and then lost 25.80, or 1.7 percent, to close at 1,510.89.  Wednesday brought more huge swings. The Dow ricocheted 100 points in either direction, closing down 1.29 points at 7,741.69. The Nasdaq suffered even more, falling 48.28, or 3.2 percent, to close at 1,462.61.  On Thursday, the Dow climbed back on the roller coaster and the Nasdaq seemed ready to go into a free fall during a day of intense volatility. The Dow closed down 9.78 points at 7,731.91 after losing 273 points earlier in the session. The  Nasdaq shed 43.49 points, or nearly 3 percent, to close at 1,419.12.  That's not all. Federal Reserve Chairman Alan Greenspan warned this week that the outlook for the U.S. economy had weakened, while JP Morgan forecasted a recession in 1999. Longtime bull Abby Joseph Cohen lowered her earnings outlook for S&P 500 companies.  Abroad, the situation remained grim, as markets in Europe, Latin America and Asia took heavy hits. Investors watched the International  Meanwhile, as global investors fled to U.S. Treasury bonds for safety, the yield on the 30 year bond sunk to a new low. Bond markets were rife with frenzied trading. The dollar plummeted against the yen and the mark. Markets staged something of a rebound Friday as bargain hunters came out of hiding. The Dow jumped 167.61, or 2.2 percent, to 7,899.52, while the beleaguered Nasdaq rallied 73.37 points to close at 1,493.23.
                           Upcoming Next Week

   The bond market is closed Monday for Columbus Day, but the stock market will be open.  One preoccupation for the market next week will be whether the Fed cuts interest rates again. With each day of volatility, the likelihood of another easing has become greater, Ackerman said. Greenspan's recent comments fueled more talk of another cut.  "The world is looking for lower interest rates," Ackerman said. "Clearly, the psychology world-wide remains highly nervous."  In Germany, the Bundesbank will hold its regular monetary policy meeting on Thursday. Analysts, though, don't expect any immediate good news.  "There is no expectation the Bundesbank will ease even though eventually we believe either it or the European Central Bank will," said Ian Douglas, global bond strategist at Warburg Dillon Read in London.  The ECB is also scheduled to meet Tuesday. European newspaper reports quote the Bank's chief economist as saying the ECB would reveal its monetary strategy soon and a high degree of consensus had been reached among council members.  The U.S. economic data scheduled for release next week will play second fiddle to worries about global conditions, many analysts said. "The data is important, but it will take a back seat to concerns about currency devaluation's and recessions," Ackerman said.  Word of an IMF bailout for Brazil would be welcome news, Cloherty said. The U.S. market has a $65 billion exposure in Latin America, and  a evaluation in Brazil could be lethal. Likewise, if the U.S. Congress approves money for the IMF, it could boost investor confidence.  "It won't make these problems go away, but it certainly will help," Cloherty said. Some analysts are expecting more hedge fund fallout, which helped push the dollar down this week against the yen. And the bond market could be in for another wild ride. Cloherty said the same factors will be at work next week -- a broad restructuring in mortgage portfolios and uncertainty about the situation in Brazil. "All these fears that were in the market this week won't go away," Cloherty said. "Don't expect them to go away over the weekend."  Richard McCabe, chief market strategist at Merrill Lynch, said the market could bottom out by the end of next week and start inching towards a rally in the mid to late fourth quarter.  The tech stock drubbing this is a sign of hope, McCabe said. When stocks that have held out against a fall finally drop in price, it usually means there will be a turnaround, he said. For example, Dell Computer Corp. (DELL) had reached highs only weeks ago, he said. What's a rattled investor to do?

   Many financial advisors are decidedly bearish, even if they believe the end is in sight for the correction. "We're advising clients not to be first into aggressive new buying," said Andrew Addison, editor of the Addison Report, an advisory service based in Norfolk, Mass. "Even though there are signs pointing to the end of a bear market, we're not finished yet. Many stocks could still get clobbered with some big point losses before they bottom out." Addison is recommending clients keep at least 70 percent to 80 percent of their holdings in money market accounts.   He's also encouraging clients to sell gold holdings that he recommended they buy ten weeks ago. The Philadelphia Gold and Silver  Index, a compilation of gold stocks that trades on the Philadelphia Stock Exchange, has risen almost 65 percent in the last ten weeks. He thinks the gold rally may be losing its momentum.  McCabe is recommending his clients stay in cash for now. But for the international oil stocks, drug and medical companies, and utilities.  Susan Hirsch, portfolio manager of the mid cap stock fund Prudential Emerging Growth Fund (PEEAX), said the problem is the market has no safe place for investors to ride out the storm. "There's no place to hide…Clearly we have more negative surprises," Hirsch said.  Hirsch likes service oriented companies with good cash flow, such as Jabil Circuit Inc. (JBL), the third largest manufacturer of circuit board systems used in PCs, printers and other products.  But the problem for investors is that the outlook remains murky, Hirsch said. "1999 is somewhat cloudy," Hirsch said. "You have a very mixed view by the strategists. You have some out there that say we're in a slowdown and you have others who are talking deep recession.
 (CNNFN )

   Now what is going on in the world markets. Last week I said that they are going into a tail spin,  this still holds true. Only time will tell what is really going on.  But I see a crash coming. Well not so much of a crash but more along the lines of a great slide.  I the past it has been great crashes. But looking at the markets over the years and this looks more and more like a great slide. Not one real bad day after day. Its more along the lines of a few bad days followed by a few ok days.  So those of you waiting to see a drop in the market of a 1000 plus
points don't hold your breath.

   The US House of Representatives has authorized a wide-ranging impeachment inquiry of President Bill Clinton, making him the third chief executive in history to face the threat of being removed from office. The investigation was approved by a 258-176 vote, with 31 Democrats joining majority Republicans. "We want to get this behind us and behind the country and move on," said Judiciary Committee Chairman Henry Hyde. "It's an onerous, miserable, rotten duty, but we have to do it or we break faith with the people who sent us here." After digesting the vote, Clinton made a brief statement to reporters: "I hope that we can now move forward with this process in a way that is fair, that is constitutional and that is timely. "It is not in my hands. It is in the hands of Congress and the people of this country  ultimately in the hands of God. There is nothing I can do." "Personally I am fine," Clinton added. "I have surrendered this. This is beyond my control. I have to work on what I can do. I trust the American people. They almost always get it right. They have for 220 years."  The 31 Democrats who turned their back on the president and supported unlimited impeachment hearings portrayed their defections as a vote for
open inquiry, not a move to oust President Bill Clinton. Rep. Ike Skelton called it "the saddest vote I've ever cast." He added: "I went over it in detail and it drove me to the conclusion that there should be a formal inquiry."  Rep. Lane Evans said: "To limit in any way the scope or the time of the inquiry, I thought the American people might not have confidence in the process itself." Like a number of the defectors, Evans is in a tight re-election race.  The White House, keenly aware that a vote against impeachment could be used against Democrats by Republican opponents in swing districts, quietly gave some the go-ahead to vote against the president.  "I think there was an understanding some members of the party in particular political situations needed to vote yes," said Rep Martin Frost of Texas, chairman of the party's House campaign committee. Frost
opposed the Republican impeachment resolution. Boston University historian Robert Dallek said: "They can't afford to vote against this Republican resolution because they will end up being pilloried in their political district. They're voting to save their lives."  Many of the defectors said they would have preferred a Democratic plan to restrict the course of the investigation, but when that proposal was rejected along mostly party lines, they felt they had to back the Republican plan. The White House had worked to limit the number of defections, and held the share of the 206 House Democrats to vote for the     Republican sponsored resolution to 15 per cent. Political analyst Stuart Rothenberg said the limited number of Democrats to support the Republican plan "makes it harder for Republicans to present this as a bipartisan investigation."  Added Roger Davidson of the University of Maryland: "It continues to put a pretty partisan face on the proceedings."  The defectors included the only two Democrats who have called for Clinton's resignation, Reps. Paul McHale of Pennsylvania and Gene Taylor
of Mississippi.  McHale, who is retiring from Congress at the end of this term, stood on the House floor and spoke of his high regard for Clinton when the president took office, saying, "I believed him to be the man from Hope as he was depicted in his 1992 campaign video." But Mchale added: "We cannot excuse that kind of misconduct because we happen to belong to the same party as the president or agree with him on issues or feel tragically that the removal of the president from office would be enormously painful for the United States of America." Rep. Jim Moran of Virginia explained his vote for an open impeachment inquiry in an opinion piece in the Washington Post.  He said that for Democrats to line up in opposition would "unfairly tag our party as wanting to short-circuit what should be a legitimate search for the truth."
( ITN )

   I just wish that they would get this over and do with. Its not whether Bill Clinton had sex with Monica. What is the point is that under oath he lied. Not only once but twice. And then the Lied to the people of his country.  Then on top of that members of his own party are whining that its unfair. But its the way that its set up. Then when the GOP uses what they used on Nixon they get upset and whine that its not fair. Not fair to who?
 Bill Clinton or the people?

 Yes what Bill Clinton did is wrong. Now its time that he paid up.

Tia.