A Weekly Digest of The World's Financial Press

The Economist

China's latest bid to join the WTO is welcome, but US negotiators must not rush into a deal for the sake of it

PRECISELY BECAUSE China is so important, it would be a disaster if it were to join the World Trade Organisation on the wrong terms. The WTO exists to open markets through transparent multilateral rules, enforced by an impartial dispute-settlement mechanism. China's economy, on the other hand, is still largely state-controlled. China should only be allowed into the WTO if it liberalises a broad range of sectors and applies its laws in a transparent and impartial manner.

Even if US talks secure a deal with the Chinese, Congress may not approve it. The mood on Capitol Hill is protectionist and anti-Chinese. A final agreement must come from the WTO itself, in Geneva. Sir Leon Brittan, the EU trade commissioner, has warned against a `sweetheart' deal between the US and China. It would be a pity if this were another false dawn. But a bad deal would be worse than another delay. - Editorial

Business Week

The release of PC virus `Melissa' last month shows businesses that they should ensure software is protected

AS COMPUTER bugs go, Melissa is a doozie. On 26 March someone posted this new virus on the Net's alt.sex newsgroup and from there it spread across the Internet.

Embedded in the e-mail were the name `Melissa' and a list of porn Websites. Within days, Melissa had infected thousands of computers across the US, Europe and Asia.

The Net is the perfect distribution vehicle for computer viruses - connecting nearly 200 million people worldwide. Melissa instructed computers to send e-mails to the top 50 names in recipients' address books.

Thankfully, Melissa turned out to be an annoyance rather than a truly destructive force. We all got off easy. Still, it should be a wake-up call to wired organisations and individual computer-users everywhere: some day, one of Melissa's nastier relatives could come calling.

- Steve Hamm, Software Editor

Financial Times

On the recovery of the Asian economies and why improvement may only be temporary

THE IMPROVEMENTS in domestic demand are partly temporary. As the year goes on, rising unemployment will discourage spending. If consumption does slump again, there may be no other sources of growth to take its place. And substantial export-led growth will not be possible while there is slow growth both in the region and world-wide.

The weakness of the Japanese and Chinese economies means there is still a risk of a slide in the yen or a devaluation in the yuan; either could undermine regional currency stability and force up interest rates.

It will be at least a couple of years before these economies can operate normally again. Even in the best-case scenario, it is difficult to see how the tiger economies can achieve the virtuous circle of high growth, high investment and high employment they once enjoyed.

- Editorial

US News

Michael Milken, the junk bond king, has returned to the US market place with a new flotation

MILKEN SERVES as chairman of Knowledge Universe, which aims to be the first superbrand in the emerging industry of for-profit education. Just as Milken had a big idea about the bond market - that the rewards for investing in low-rated bonds would more than make up for the risks - his ideas about the importance of human capital form the philosophical underpinnings for Knowledge Universe.

Knowledge Universe is a hodgepodge of a company, with revenues of about $1.4bn. Its activities are organised into three main chunks. It's Nextera, a consulting firm, that is selling a non-controlling stake to the public this spring.

Over time, Milken may well succeed at rewriting his legend. Will parents balk at having their kids go to a school owned by a felon? If the school is good, probably not.

- Editorial

Barron's

How investors have lost faith in Coca-Cola after the announcement of a short-fall in profits

WHEN BARRON'S argued five years ago that Coca-Cola was losing its ability to achieve 16-20 per cent profit gains every year, the notion qualified as heresy spoken against a revered company. Last week, the words we wrote back in 1994 were being echoed by a choir of Wall Street analysts.

The causes of last week's shortfall announcement echo some of the points made in 1994. Namely, that Coke was relying heavily on financial engineering. We also argued that Coke was far too optimistic in projecting huge increases in consumption in emerging markets.

Though the consensus on Wall Street calls for a 15 per cent earnings rebound at Coke next year, investors' faith in that projection is currently low. Once an unquestioned favourite on the Street, Coke is now a "show- me" stock.

- Editorial

Financial News

Why the Government's plans for the Financial Services Authority need careful investigation

THE GOVERNMENT has been determined to avoid a repetition of the tortuous path through Parliament of the Financial Services Act in 1986. That ended up groaning under the weight of numerous amendments at the committee stage.

However there are two key questions: is the FSA going to be too powerful? And is it sufficiently accountable?

If the FSA is to be an effective regulator, it needs to have considerable powers at its disposal. But there would be much less concern about the extent of the FSA's powers if people felt it was genuinely accountable.

As the ministry which created the new regulator, the Treasury is an unsuitable body for complainants to go to. The idea of having a permanent parliamentary committee to which the FSA has to report is well worth exploring.

- Editorial

Wall Street Journal

On the Dow Jones index climbing to over 10,000 for the first time in its history in the last few weeks

IT HAS been a long journey. Indeed, at Dow Jones we have been taking the measure of this passage for more than a century. However, there's a view about that the market's recent exuberance all began with, say, Michael Dell and the Internet Age companies whose valuations can only be scaled with the help of bottled oxygen. Alas, no. This journey began in the early 1980s.

The arrival of Reganomics in the US in the 1980s was propitious. A technological revolution was borning and American's financial markets provided the capital needed.

We here at Dow Jones are celebrating this historic milestone, but that mighty climb to 10,007 in Charles Dow's index reflects much more than the gains in share prices. It measures work well done, by hundreds of thousands of adult men and women. Our hats are off to them.

- Editorial