Of Market Crashes, Russia, Politics, Roads

Too much is happening to ponder one issue, so here are some random thoughts on issues of the day:

~ Last week’s stock market tumble shifted characterizations from market correction to full-fledged bear status.

Once investors have a chance to digest the impact of the pitiful Russian and Far East markets on U.S. companies, we’ll see a return to reality. I think we’ll find that losses in Russia will have a limited impact on U.S. earnings and that money managers loaded with incoming 401(k) funds have nowhere else to turn but the stock market for returns we’ve grown to expect.

We have to remember that investments and expansion in the still-developing Russian market, not to mention China, present vast opportunity as well as high risk. Companies like Tyson Foods Inc. of Springdale can’t get overextended but at the same time can’t pass up the chance to expand its markets.

Maybe these developments will also hammer home to Americans how sound fundamentals in the U.S. economy aren’t enough anymore and shouldn’t lull us into a total comfort zone. It’s a world market, and we can’t escape economic downturns from abroad.

Finally, the stock market free fall presents some bargain opportunities for Arkansas issues. Fairfield Communities Inc. and Dillard’s Inc. would appear to be two of the best targets. Some of the trucking stocks are attractive at first glance, but I can’t bring myself to encourage anyone to go through my pains in trying to anticipate that industry.

~ Speaking of Russia, a column in a recent issue of Forbes summed up the country’s dilemma.

Russia’s total tax rate is just 10 percent and the government’s interest payments on national debt is drowning the economy. The options are to cut government spending by 40 percent or raise taxes by 30 percent, neither of which appears politically feasible.

Were we all foolish to think Russia could incorporate free market principles in such a short time? Probably so, especially when we consider that Communist forces continue to do everything possible to undermine Russian President Boris Yeltsin’s transitional efforts.

~ It was a little surprising to see television campaign advertising begin before Labor Day for the U.S. Senate race between Republican Fay Boozman and Democrat Blanche Lincoln.

Speculation that I’m hearing on why Boozman made an early move is that the Republican National Committee wants to see progress in the polls.

The RNC is sizing up the party’s odds in races around the country and determining which ones deserve the most effort, particularly in terms of money. He couldn’t risk being written off.

It was a smart move by the Lincoln campaign to try and minimize the impact of Boozman’s advertising. The downside is she’ll continue to benefit from saying absolutely nothing.

~ The debate over highway funding and spending will escalate in the coming months, and the battle lines are being drawn.

On one side is the Arkansas Highway Commission, whose constitutionally independent power can never be underestimated. Appointees of former Governors Bill Clinton and Jim Guy Tucker still maintain control, and they can’t be happy with the poll commissioned by Arkansas Motor Carriers Association that suggests a public desire to change the highway system.

On another side are Gov. Mike Huckabee and his Advisory Council on Highways. We await the council’s much-anticipated recommendations, which may or may not be revealed before the election. What we can probably count on is the recommendations will be ones that the trucking companies can live with because they have raised substantial money for the governor, and Lane Kidd, executive director of the AMCA, is a member.

Then there’s the Arkansas General Assembly, which must decide how much money — if any — from what sources will be raised. Under the current system, the Highway Commission tends to be very effective with promises to delivery legislators’ pet projects.

~ I’m happy to report that Jeffrey Wood, the sportswriter I wrote about previously who was fired by the Arkansas Democrat-Gazette, has been hired as an associate editor for Arkansas Business.