Marketplace: News Archives

Wednesday, October 17, 2001
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It's Wednesday, October 17, 2001. I'm David Brancaccio.

The U.S. House of Representatiaves and the U.S. Senate today took very different courses of action today in the face of anthrax contamination at the U.S. Capitol. The House is taking the unprecedented step of shutting down through Monday until contamination can be better assessed an eradicated. The Senate is closing three office buildings, but otherwise remaining open.

Even as policymakers urge Americans to continue to go about their business, it was clear that it was anything but 'business as usual' in Washington. Marketplace's John Dimsdale files this report:

Dimsdale: "With all the anthrax anxiety, legislators are finding it tough to focus on legislating. The most pressing piece of business is anti-terrorism legislation to give government investigators more tools to monitor and interrupt the flow of money to terrorists. The House is scrambling to reconcile differences with the Senate before adjourning for the week, but negotiators for the House complained their Senate counterparts were too busy getting tested for anthrax exposure.

Congress is still grappling with the budget for the current fiscal year, not having passed any of the 13 appropriations bills so far. The resolution that keeps the government in business expires next Tuesday. Also in the balance is an economic stimulus bill to pump between 75 and a hundred billion dollards into the slumping economy.

Senate Majority Leader Tom Daschle - whose office has received the only known anthrax on the Hill - said he would not let the scare sto the work of the Senate. And Senator Tom Harkin, a Democrat from Iowa, told a group of reporters that he called city skickers that they were overreacting to a bacterium that is found naturally in the soil in so many rural areas.

In Washington, I'm John Dimsdale for Marketplace."

From the Marketplace Health Desk at WGBH here's Helen Palmer.

Palmer: "Buying the generic version of any drug always saves money - sometimes it's as much as 80 percent cheaper. Take Cipro, manufactured by Bayer, lists a wholesale price of $4.67 PER PILL. You need 2 pills a day for 60 days to combat anthrax - that's $560. The same amount of the generic version from India costs $20. Bayer holds an exclusive patent, which expires in December 2003, but James Love, of the Consumer Project on Technology, says there are ways around that."

Love: "The United States - like most governments in the world - has the right to step in and use a patent if there's some public interest reason to do so."

Palmer: "An 'eminent domain taking' under this statue isn't even so unusual - it's been used recently for camouflage equipment and satellite technology. In return for the taking, the statute promises the patent holder, 'reasonable and entire compensation,' though in practice, courts tend not to think that includes hefty profits.

James Love says there's one big stumbling block for the Government here."

Love: "If they set a precedent here by protecting Americans when there's a patent involved, African countries will use the same approach to make AIDS drugs more cheaply available to people in their countries."

Beard: "The Financial Services Authority - Britain's main financial regulator - has cleared bin Laden and his henchmen of insider trading. There has been a widespread suspicion that members of the Al Quaeda organisation had cashed in on the US attacks, dumping airline, aerospace and insurance company shares before September 11th. The Authority says that after a thorough invetsigation it has found no hard evidence of any such deals in London. An enquiry covering the other major financial centres in Europe has come to the same conclusion.

Meanwhile, a picture is emerging of bin Laden as a kind of venture capitalist for terrorism. In an article for the Spanish newspaper El Mundo, a former British intelligence agent - Gordon Thomas - claims bin Laden has financially supported the Real IRA among other terrorist groups. Thomas says that Al Quaeda's top European paymaster - Mohammed Aich - has four homes and six bank accounts in Dublin."

Thomas: "He's used all of these to funnel money around the world to finance terrorism for bin Laden. And in all he appears to have financed no fewer than 22 separate terrorist organisations. In Ireland he had contacts with the real IRA - as opposed to the old IRA - it's an extreme terrorist group."

Beard: "The Real IRA has been blamed for the worst single atrocity in Northern Ireland - the Omagh bombing - in which twenty-nine people died. Mohammed Aich left Dublin shortly before September 11th this year. He is now believed to be in Afghanistan. In London, this is Stephen Beard for marketplace."

Greenspan: "That the economy dropped fairly sharply in the days immediately following the attack is confirmed by virtually every measure we can see. And that it has started to come back is also evident."

Greenspan has noticed that companies are having a hard time assessing the costs of the new security risks to doing business in the post-attack economy. But he says these are one time adjustments that, once made, will enable the US economy, in Greenspan's words: to "recover and prosper as we have in the past."

Greenspan also warned today that Congress approves too much spending to stimulate the economy, long term interest rates will go up, making it tougher for households to spend. That spending could approach 100 billion by some estimates.

Today the Dow Jones Industrial Average fell 151 points or 1.6 percent. The NASDAQ fell long and hard - 75 points or 4.4 percent. Greenspan was cautiously optimistic, but White House advisor Lawrence Lindsay said today it was likely the U.S. economy will contract for two quarters.

Uncertainty that terrorism breeds in the context of a slumping economy has prompted a number of brokerage houses and banks to lay off staff. Today the Wall Street Journal reported that the biggest brokerage in the US may cut up to 15 percent of its global workforce. Marketplace's Sarah Gardner has details on talk of downsizing at Merrill Lynch.

Gardner: "Business wasn’t so hot for Merrill Lynch before September 11th. The stock market was in the dumps, business was slowing, and the board of directors was growing increasingly frustrated with the company’s high overhead and narrow profit margins, compared to its Wall Street rivals. Then came September 11th - the sudden loss of business, evacuating 9,000 employees from damaged offices near the World Trade Center. Analysts predict Merrill’s third quarter profits will be 56 percent lower than the year before. According to the Journal, Merrill execs are contemplating the company’s biggest retrenchment since the market crash of ‘87. Brokerage analyst Guy Moszkowski at Solomon Smith Barney believes even without September 11th, Merrill would have overhauled the company. An example of a Merrill bet gone bad, he says, the company’s decision to open up a retail brokerage house in Japan..."

Moszkowski: "The fact is that almost 4 years later, the Japanese markets have not revived, Japanese investor interest in trading and owning securities has not revived...and as a result, the firm is losing something like 150 million dollars a year on this venture."

Gardner: "Merrill won’t comment but reportedly up to 10-thousand jobs could disappear - many of them in places like Japan, Australia and Canada. Other Wall Street firms will probably downsize as well. Some have already. The retrenchment just adds to the insecurity most Wall Street workers are feeling since their 'neighborhood' came under attack last month. I’m Sarah Gardner for Marketplace."

Now let's do some risk numbers. Lehman Brothers today announced a joint venture with an international political risk consultants at the Eurasia Group that will periodically rate countries on a scale aimed at predicting the chances of things turning ugly. The Lehman Eurasia Group Stability Index currently assesses only ten countries from Hungary to Russia to Thailand. The first survey is for October and things are looking pretty stable in Hungary, 79 out of 100. Azerbaijan is still bubbling below the top 40 at number 49. The index will continue to add countries…including Brazil and Colombia by the end of this year and the Middle East sometime next.

We'll have more on that 4.4 percent fall for the NASDAQ when we do the numbers.

Rundown

Music Bridge: Raven Mdize - Real Life

Cockpit Doors
European airplane manufacturer Airbus announced today that all of their new airplanes will feature reinforced cockpit doors, beating Boeing to the punch. Taking the lead on existing fleets, Jason Paur reports from Seattle on the efforts of Alaska Airlines to keep terrorists out of the cockpit.

Airline Restructuring
Holiday travelers who already have their ticket may get a call from their airline this week as top carriers like United and Delta restructure their schedules as a cost-cutting effort. From Delta's hub in Atlanta, special correspondent Melinda Penkava has more on the airline industry restructuring.

WTC Job Fair
The thousands of World Trade Center survivors who lost their jobs had some help getting back on their feet today. A job fair in New York City was held for out-of-work employees and Marketplace's Laura Sydell was there.

Music Bridge: Sun Ra - Tapestry of an Asteroid

Look-Ahead
Coming up on 10/18: Media critic Marty Kaplan and network veteran Van Gordon Sauter battle it out in the Media Roundtable.