Nancy Sheed <nancy_sheed@BUSINESSWEEK.COM> on 03/22/2001 06:00:18 PM
Please respond to robert_pondiscio@BUSINESSWEEK.COM
To: BWINTERNATIONAL@LISTSERV.BUSINESSWEEK.COM
cc:
Subject: BusinessWeek's International Alert: 2 April, 2001

===========================================
BusinessWeek,s International Alert
A Preview of Major Stories and News Exclusives
in Tomorrow,s International Editions of BusinessWeek
http://www.businessweek.com/
===========================================

THIS WEEK:

- Europe and U.S. Cover Story:? Alan Greenspan*Feeling the Heat
- Asia Cover Story:? Asia,s Big Chill
- Asia Is Catching The Japanese Disease

ALSO IN THE 2ND APRIL ISSUE OF BUSINESS WEEK

- Has Germany Jumped the Rails?
- Commentary:? The European Central Bank Needs to Cut Rates Too
- The White Knight, Domingo Cavallo, Rides Again in Argentina
?

Does someone forward BusinessWeek,s International Alert to you?
Get your own free copy every week: send your name, company name, title and
email address to: robert_pondiscio@businessweek.com
?

U.S. and EUROPE COVER STORY(ALAN GREENSPAN: FEELING THE HEAT
Can he fight off a new economy recession?
By Peter Coy in New York, with Rich Miller in Washington, Linda Himelstein
and Jim Kerstetter in San Mateo, Jeff Green in Detroit, Marcia Vickers and
Pete Engardio in New York, and bureau reports

Federal Reserve Chairman Alan Greenspan has guided and presided over the
longest economic expansion in the history of the U.S.? But now, the
75-year-old Greenspan faces an agonizing challenge: an abrupt economic
slowdown that neither he nor anyone else fully understands. All of Greenspan,
s training and experience have taught him how to cope with conventional
downturns. And so far, he,s dealing with this one in the conventional manner*
by cutting short-term interest rates in quick but measured steps. That may
well prove to be the right course. But there,s a risk that this downturn is
different and that far steeper cuts in interest rates are needed to keep the
New Economy from tumbling into a long and painful recession.
In short, Alan Greenspan is feeling the heat of a market in tatters and an
economy that, by some measures, appears to be on the brink. And after riding
triumphantly astride the economic boom times, his very legacy is suddenly at
stake.
?

ASIA COVER STORY: ASIA,S BIG CHILL
Caught between Japan,s weak-yen policy and the steep U.S. downturn, the
region,s fragile economies may see their recent gains swept away
By Brian Bremner in Tokyo, with Frederick Balfour in Bangkok, Michael Shari
in Singapore, Moon Ihlwan in Seoul, and Pete Engardio in New York

The U.S. is clearly worried about Japan falling into a catastrophic slide.??
But, Washington may not have a clear view of another huge problem: How
decisions in Tokyo could undermine the precarious economic state of other
Asian nations.?? In South Korea and also in Southeast Asia, the export-led
recovery of the past two years is starting to slow because of the downturn in
the U.S. economy.?? Growth in Korea, Thailand, Malaysia, Singapore, and
Indonesia is expected to slow this year to between 3% and 4%.?? The last
thing these economies need is to compete for a dwindling export market with a
Japan now reliant on a weaker yen.?? Many of the economies of East and
Southeast Asia are trying to shake off a triple blow: The U.S. slowdown is
putting a dent in exports.? Second, Japan is yanking investment from the
region, and now there,s the yen threat.? Finally, China is soaking up a
growing slice of foreign investment, a trend that will accelerate once it
enters the World Trade Organization.

?
ASIA IS CATCHING THE JAPANESE DISEASE
Commentary by Pete Engardio

It,s a terrible malady for young economies.? The symptoms: banks that have
money but don,t lend.? Lots of exports but no profits.? A teaming workforce
with dim prospects.? Politicians who know urgent measures are needed but who
won,t act. Call it Japan disease ) and it,s starting to set in across the
once-booming emerging markets of East Asia.?? Unfortunately, East Asia has
not used the nearly four years since its financial meltdown wisely.? Lulled
by a U.S.-driven export boom and a short-lived bounce in equity markets, the
region has failed to finish the reforms that could have cleansed their
financial system of billions of dollars of nonperforming assets.??? Most of
Asia can arrest Japan disease before paralysis sets in. But politicians seem
to have lost their will to force sales of distressed assets, close failed
banks, and open their markets wider to foreign investors.
?

HAS GERMANY JUMPED THE RAILS?
Germany,s stalled reforms are slowing growth
By Jack Ewing in Frankfurt, with Christine Tierney in Frankfurt and Carol
Matlack in Paris

Since its last recession ended a decade ago, the Germany economy has
struggled to get out of first gear.? Growth averaged a mediocre 1.4% in the
l990s.?? Economists, business people and politicians thought the sorry
performance was a temporary product of West Germany,s costly and badly
managed reunification with the ex-Communist East.? But what if they are
wrong?? There have been worrying economic indicators, including nine months
of sinking business confidence, an uptick in unemployment and a collapse in
car sales.? Germany,s 82 million people account for a third of gross domestic
product among euro countries.? No regional boom is possible without them.?
Optimists think its slower growth is a temporary effect of economic malaise
in the U.S., Japan and other world markets.? Pessimists think the problems
relate to Germany,s persistent welfare state, its coddled workers, maybe even
its risk-averse culture.?? Some tough times lie ahead ) for Germany, and for
the entire Continent.
?

RATES: EUROPE NEEDS A LIFT-OFF, TOO
Commentary by David Fairlamb

The economy of the 12-nation euro zone is slowing, just like its counterparts
in the U.S. and Asia. But don,t look to the European Central Bank to follow
the U.S. Federal Reserve with interest rate cuts just yet. The monetary
conservatives who dominate its 18-member governing council see their role as
fighting inflation rather than stimulating growth. So with prices rising at
an annualized 2.6%*well above the 2% upper limit the ecb says is consistent
with price stability*the central bankers aren,t in a rush to push the price
of money down below the current 4.75 But there are plenty of reasons why it
should. A cut now would give the European economy a much needed boost. Euro
zone growth peaked at only 3.5% last summer and will likely fall to 2.8% for
all of 2001.? Tax cuts worth 0.8% of the euro zone,s gross domestic product
have bolstered domestic demand a bit, but not enough to make up for the
effects of the global slowdown. The ECB insists Europe won,t be badly hurt by
the economic downturn in the U.S. and East Asia. But businesspeople aren,t
convinced.
?

THE WHITE KNIGHT RIDES AGAIN IN ARGENTINA
But can Domingo Cavallo cure what ails the economy?
By Colin Barraclough in Buenos Aires, with bureau reports

On Mar. 20, Argentines awoke to the news that the 54-year-old Harvard
University-trained economist who rescued their country from hyperinflation
more than a decade ago was back in his old job. Cavallo is the third man to
hold the post of Economy Minister in as many weeks.? To win the support of
opposition politicians, Cavallo must take a different tack than L?pez Murphy.
Cavallo has already abandoned his predecessor,s plan to push through
draconian spending cuts. Instead, he aims to narrow Argentina,s fiscal
deficit by $3 billion this year by rekindling growth, thereby boosting tax
collection. Possible measures include cuts in some corporate tax rates to
promote the reinvestment of profits, and a reduction in banks, reserve
requirements, which would free up money for loans.
?

WHO,S KILLING ERICSSON?? ITS OWNERS
Shareholders have no say under its ownership system
By Stanley Reed in London, with Ariane Sains in Stockholm

Sweden,s Ericsson has just two main owners, the Wallenberg family and a group
of holding companies and a fund connected to Handelsbanken, a Stockholm bank,
maintaining an iron grip with a minimal amount of capital.? They do so by
holding Ericsson A shares, which have 1,000 votes more than the B shares of
which foreign shareholders have a majority.?? Now that Ericsson is struggling
in global markets, a quick turnaround is needed.? The current two-tier stock
system should be reviewed.
?

THE BANK OF JAPAN,S REAL MESSAGE: REFORM NOW
Commentary by Brian Bremner in Tokyo

On Mar. 19, Bank of Japan Governor Masaru Hayami appeared to abruptly reverse
course by announcing measures that will effectively drive the overnight call
rate back down to zero and pump up the money supply to push the consumer
price index up. Markets are now abuzz with speculation that Japan will
deliberately ramp up inflation past 3%, and that Hayami is a convert to the
cause of fast reflation. But Hayami has not given up on the other part of his
agenda: to press for real restructuring inside the banks and corporations. So
Hayami is signaling that he will ease up on his hard-money ways in exchange
for some real action by the banks: &While we are doing our part, we hope the
government and the financial system will do what,s necessary on their side,8
says Deputy BOJ Governor Yutaka Yamaguchi in an interview with BusinessWeek.
?

RUMBLE OVER TOKYO
As Airbus aggressively pitches its superjumbo, Boeing moves to protect its
turf
By Stanley Holmes in Seattle, with? Chester Dawson in Tokyo and Carol Matlack
in Paris

For nearly 50 years, Boeing and Japanese airlines JAL, All Nippon, and Japan
Air System have had a fruitful business relationship, thanks in part to the
aircraft maker,s deference to Japanese customs. Boeing,s planes now account
for 84% of Japan,s commercial fleets, the world,s third-largest national air
market after the U.S. and China. From 1970 to 1998, jal alone spent $14.4
billion on those planes. But that lead is now under fierce attack from Boeing,
s archrival, Airbus Industrie. Japan has become the key battleground as the
European aircraft consortium seeks to launch its superjumbo A380 jet, which
can hold 555 to 800 passengers. The Airbus offensive will force Boeing, which
recently announced it will move its headquarters out of Seattle as part of a
major corporate overhaul, to fight like never before.
?

IS A NEW WAR BREWING IN THE BALKANS?
International Outlook by Christopher Condon in Budapest, with Ren,e Cordes in
Brussels, Heidi Dawley in London, and Stan Crock in Washington

It,s another Balkans mess, and it could prove to be a dangerous test for
President George W. Bush and the 37,000 NATO troops stationed in Kosovo.
After six days of fighting between insurgents and Macedonian forces near the
city of Tetovo from Mar. 14-19, NATO officials announced plans to bolster
patrols on the Kosovo border with Macedonia.? Both European and U.S.
diplomats hope Macedonian forces will subdue the rebels. But if the fighting
keeps up, pressure will grow on NATO to play a more active role. That could
involve a controversial decision to send NATO troops to combat rebels in
Macedonia. Washington, however, wants to avoid an escalation.? Still,
strangely, NATO troops could find themselves increasingly under fire from the
very people they were sent to protect*ethnic Albanians. With no quick
solution to the latest Balkan conflict in sight, that,s not a pleasant place
to be.
?

SWISSAIR: PINNING ITS HOPES ON +SUPER MARIO,
The new CEO will have tough time fighting the flag carrier
By Christine Tierney in Frankfurt and Carol Matlack in Paris

It has been a shock to investors to witness Swissair,s mounting disarray.??
SAirGroup,s CEO Philippe Bruggisser, who had charted the expansion strategy
that plunged the company into the red last year, has been jettisoned.? Then
Moritz Suter, the airline division chief bailed out, and then 9 of the
company,s 10 supervisory board members quit, including Chairman and interim
CEO Eric Honegger.??? Enter Super Mario.? The new CEO, Mario Corti, is the
chief financial officer of Swiss food giant Nestle and the only board member
left at the airline.? It,s not that SAirGroup,s expansion strategy was
totally flawed.? SAirGroup went wrong when it invested heavily in second-tier
partners, many of which are in trouble.??? Corti is expected to unveil a new
strategy in a special shareholders, meting in September.
?

RUSSIA: A LITTLE-KNOWN PLAYER,S GRIP ON NATURAL GAS
Gas supplier Itera,s clout extends across the old Soviet empire
By Catherine Belton in Moscow, with Dan Carney in Washington

Western investors ) especially energy giants ) are likely to be hearing more
about a mysterious Russian company called Itera.? It is the fourth-largest
holder of gas reserves on the planet with a virtual monopoly on gas trading
in two key former Soviet republics, Georgia and Ukraine, that lie at the
gateway for transporting the region,s energy resources to the West.?? Itera
President Igor V. Makarov says he holds the key to the Caspian for any
foreign energy company wanting to get a foothold in the region ) considered
one of the hottest oil plays anywhere.? &Today, we are the only company that
can turn joint ventures with U.S. enterprises into real businesses,8 he says
) and that,s quite a claim.?? But even as Itera seeks recognition and funding
from the West, law enforcement officials in Europe and the U.S. are
scrutinizing Itera's activities for possible money-laundering.?? Itera,s rise
from barter trader to global-gas giant is raising questions inside Russia,
too.
?

A SOCIALIST WHO,S BETTING ON THE NEW ECONOMY
President Lagos talks about how to keep Chile on track
Q&A with Mexico Bureau Chief Geri Smith and Chile correspondent Louise Egan

Ricardo Lagos, the first Socialist to rule Chile since the 1973 military
overthrow of Salvador Allende, recently completed his first year in office,
amid growing concerns that the country,s much-vaunted economic &miracle8 is
losing its luster. Lagos, 63, who holds a doctorate in economics from Duke
University, says that Chile, which led Latin American nations in adopting
free-market reforms two decades ago, must now bet big on attracting high-tech
industries. He also is pushing hard to seal a free-trade agreement with the
U.S. On Mar. 19, Lagos sat down with Mexico Bureau Chief Geri Smith and Chile
correspondent Louise Egan in his office in La Moneda, the presidential
palace, to discuss his plans for what remains of his six-year term.
?

INDIA: DON,T LET SCANDAL DERAIL REFORM
Commentary by Manjeet Kripalani

The Indian government stands on the brink of collapse. The event that did the
damage: a sting operation by an online magazine, which caught leading
politicians and military officials on camera accepting bribes in connection
with what they thought were military contracts. Defense Minister George
Fernandes has since quit, along with the head of the Bharatiya Janata Party.
Raucous opposition legislators closed Parliament for six days, insisting that
the government step down.? The administration should be embarrassed. But it
would be a huge mistake for the opposition to initiate a new era of political
turmoil. The principal casualty would be much needed reform.? Yet India
desperately needs to get its house in order. Last year, it took in only $2.6
billion in foreign direct investment.? Most important are the proposed
reforms of the labor laws, which for the first time would permit companies
with fewer than 1,000 employees to hire and fire without government
permission. Freed from these restrictions, business owners could invest in
promising new ventures, instead of wallowing in sunset industries. So instead
of seeking to stall change, the opposition would do well to embrace it.

---------------------------------------------------------
BusinessWeek presents:
e.biz Live: Europe
7-8 June, 2001
The Hilton Hotel, Park Lane, London

For program details or to register, visit our website at
conferences.businessweek.com/2001/ebizeu or call +44 (0) 207 251 2030.

Future BusinessWeek Executive Programs:
- Telecom Summit 2001: Broadband Connections, April 25 - 27, 2001 ) The
Fairmont Hotel, Dallas, Texas
- The BusinessWeek CIO Summit: Bridging the Technology/Strategy Divide, May
10-11, 2001 --Boston, MA
- Breakthrough: A CEO Retreat, June 27-29, 2001 -- Rancho Bernardo Inn, San
Diego, CA

For more information see http://conferences.businessweek.com/

---------------------------------------------------------
?

INTELLECTUAL PROPERTY: NEW ANSWERS TO NEW PROBLEMS
Economic Viewpoint by Jeffrey E. Garten

For more than a century, our system for protecting intellectual property
rights has fostered the creativity of artists and inventors. But now it is
being challenged by two major global forces: the Internet, which can act as a
gigantic international copying machine, and a global health crisis in which
patented miracle drugs are too expensive for developing countries. It is time
to reexamine how the intellectual property rights regime works.?? There are
many issues to be addressed. Is there a way to better codify the space for
private use and experimentation on the Internet? Should governments use their
powers of eminent domain to buy up critical pharmaceutical patents and better
distribute the underlying products? There may be much better approaches than
these, but relying only on relentless enforcement of existing laws isn,t one
of them.
?

PATIENCE INVESTORS, THE FED IS NOT DONE
But economic data, not the stock market, will dictate policy
Business Outlook by James C. Cooper and Kathleen Madigan

At nine yards long, the Federal Reserve,s oval table is too big for poker.
But on Mar. 20, policymakers entered into a high-stakes game. The pot: an
economic rebound in the second half.? At its second policy meeting of 2001,
the Fed lowered its benchmark federal funds rate by a half-point, to 5%,
eschewing Wall Street,s clamor for a supersize cut of three-quarters of a
point.? In effect, the Fed made it clear that it will not follow the stock
market,s timetable for policy decisions. The Fed,s action implicitly says
that economic conditions did not justify a larger, more radical move.?
Investors were so focused on the idea that &size matters8 that they
completely ignored the meeting,s most obvious positive: The Fed left open the
door for more cuts*perhaps even before its next meeting on May 15.? The key
remark was: &In these circumstances, when economic conditions could be
evolving rapidly, the Federal Reserve will need to monitor developments
closely.8 That language should sound familiar. It is similar to what the Fed
said after its Dec. 19 meeting, prior to the surprise intermeeting cut on
Jan. 3. It,s Fedspeak for: &We may not wait until May 15.8
?

A DEFINITE +SELL,?? GIMME 100 SHARES
Brokerage calls keep missing the mark ) and then some
By Mara DerHovanesian in New York

Who says you can,t make money by following a Wall Street analyst,s
recommendations? Just do exactly the opposite of what they say, and you,ll
make out like a bandit.? And we,re not talking about the stocks these
analysts are plugging, either. Granted, the Street has a tough time telling
investors to sell stocks anyway, but when they do, you,d think it would be a
no-brainer to pick a loser in this bear market. Instead, these calls are
defying gravity.? BusinessWeek takes a look at how Credit Suisse First Boston
has fared with its sell recommendations so far this year. First, only 11 U.S.
stocks of 1,328 stocks Credit Suisse covers are on the sell list, according
to Zacks Investment Research. The irony is that many of those stocks have
outperformed the company,s buy recommendations. Credit Suisse isn,t the only
one with egg on its face. UBS Warburg has four current &reduce8 ratings on
the 1,015 U.S. stocks it covers. Three of those*KMart, DaimlerChrysler, and
New Plan Excel Realty Trust*are up 64.2%, 9.3% and 17.9% this year through
Mar. 20.
?

DON,T BET THE BANK ON EARLY-HOURS TRADING
Conventional wisdom aside, futures aren,t crystal balls
By Pallavi Gogoi in Chicago, with Susan Zegel in New York

By jumping in early, are fund managers helping to shape market trading that
day? Not really. The small group of big investors around the world who trade
in stock index futures prior to the U.S. markets opening aren,t even setting
the stage for whether the equity markets will rise or fall in the first 15
minutes of trading. Contrary to the conventional wisdom, repeated daily on
CNBC, Bloomberg Radio, and local TV and radio stations*that the futures
predict the day,s market performances*an examination of the data by
BusinessWeek shows hardly any correlation. That may come as a big surprise to
market players who,ve been taking it as an article of faith that the futures
offer a solid guide to the day,s trading. To some longtime traders, the lack
of predictive power in the futures is not so surprising. They say the number
of investors playing the markets in the big index contracts is small.
Nonetheless, some investors swear by them.
?

NO CARTWHEELS FOR HANDSPRING
Rich rivals race to erase the company,s handheld edge
By Cliff Edwards in Mountain View, Calif.

The handheld market has become one of the fastest-growing corners of techdom.
Researcher IDC expects sales of the gizmos to soar 52% annually until 2004,
to $10.7 billion from $2 billion in 2000, far outstripping PC growth. And
Handspring is becoming a player to beat. In the past 18 months, the company
has sold more than 1 million of its Visor computers, giving it 28% of the
handheld market in February, up from zilch a year earlier. Now, Handspring
has to deliver a convincing second act*something it,s attempting with its new
Visor Edge, introduced Mar. 12. Problem is, the company may be losing its
innovation lead. Handhelds are outgrowing their roots as electronic
organizers and mutating into Net appliances and wireless communication tools.
That could tip the advantage to players using Microsoft,s PocketPC operating
system, a slim variant of Windows that makes the Palm operating system
Handspring uses look long in the tooth.
?

A GRAB FOR CONTROL OF FORMULA ONE
Upfront by Christine Tierney

Mercedes and Ferrari, the carmakers with the leading auto racing teams, are
threatening to quit Formula One and form an alternative racing group if they
can,t buy in. The brouhaha comes as control of the Formula One holding
company is about to change hands, from F1 supremo Bernie Ecclestone to German
media magnate Leo Kirch.? But the Euro racers want a stake, too. The group,
also including BMW, Jaguar, and Renault, had been talking to Ecclestone about
getting into the biz themselves before Kirch came on the scene. They worry
Kirch will try to boost his KirchPayTV network by restricting Formula One
races, which are now on commercial channels, to the pay channel. The
carmakers have invested billions in Formula One, and they insist the event be
professionally run and freely broadcast to give them maximum public exposure.
Mercedes chief J_rgen Hubbert expects negotiations with Kirch to begin soon:
&We,ve sent a clear message.8? If Kirch balks...well, there,s always the 1978
precedent in the U.S., when team owners broke from the U.S. Auto Club to form
Championship Auto Racing Teams.
?

HANDBAGS, COGNAC ) AND WATER
By Gerry Khermouch

What,s the latest trend item for your Louis Vuitton bag? Glac,au Vitamin
Water or Fruit Water. The chic-set drinks, which sell for about $1.50, are
made by tiny Energy Brands in Whitestone, N.Y. And they were the? last of the
up-and-coming &healthy8 beverages available to be snapped up after others
(Gatorade, SoBe, and Snapple) were bought by beverage giants such as
PepsiCo.? But now France,s lvmh Mo%t Hennessy Louis Vuitton is buying into
Glac,au*its first drinks foray beyond champagne and cognac. Both sides are
keen for cross-promotions linking the low-cal Waters to Givenchy fashions,
tag Heuer watches, and the group,s other luxury brands.? Neither side would
give details, but sources say LVMH put up $5 million for a minority stake and
a board seat. The cash will fund Glac,au,s expansion to the rest of the U.S.
?

U.S. NEWS IN BUSINESSWEEK,S INTERNATIONAL EDITIONS

WILL REFIS HELP REFLOAT THE ECONOMY?
Equity into Cash(So far, homeowners are spending, not paying down debt
By Stephanie Anderson-Forest in Dallas with Ann Therese Palmer in Chicago,
Douglas Robson in Silicon Valley, Laura Cohn in Washington, D.C. and bureau
reports

Thanks to competition among mortgage lenders, falling transactions costs, and
a push from the Federal Reserve to trim interest rates, mortgage rates are
way down. Rates on 30-year fixed mortgages have dropped from a five-year high
of 8.64% in May to 6.82%*near the lowest level in two years. And that,s
spurring a refinancing boom. Though there are risks in the boom*overindebted
homeowners could be taking on too much debt*for now, many economists argue
that it is offering a much needed boost to consumer spending. And that could
give a hand to the ailing economy as well. &This is the best way to get money
into people,s purses and pocketbooks immediately,8 says Mark M. Zandi, chief
economist at market forecaster Economy.com Inc.
?

SURPRISE*THE TECH INDUSTRY IS A CYCLICAL
Meltdown Redux: 1985 was bad, but this time more industries are affected
By Peter Burrows, with Jim Kerstetter and Linda Himelstein in Silicon Valley

It,s a frightening picture, all right. Hordes of brash high-tech startups,
all intent on grabbing a 20% share of vast emerging markets, getting
massacred, their dreams crashing back to earth. Even the most respected tech
companies are being forced to lay off staffers and slash spending as earnings
fall miles short of analysts, projections. The press is stuffed with scary
&end of history8 articles about the death of the tech revolution. Venture
capitalists, who just months before were throwing around money like so much
birdseed, are nowhere to be found. Sound familiar? All this happened back in
1985, in what was then the biggest tech meltdown ever. Yes, as the world has
again learned painfully, tech can be a very cyclical business.? 1985 offers a
reminder that stretches of tech prosperity have always been sandwiched
between deep, painful valleys. Thanks to the cash pumped into everything from
fiber-optic parts to huge computers in recent years, this could be the
deepest valley yet.
?

WHILE WASHINGTON FIDDLES(
Why the Beltway hasn,t gone into panic mode
Commentary by Lee Walczak, with Rich Miller, Howard Gleckman, Richard S.
Dunham, and Lorraine Woellert in Washington D.C., and Ann Therese Palmer in
Chicago

What,s Washington doing while the world,s financial fabric frays and risks of
a painful U.S. downturn grow? Debating. Mulling. Maneuvering. Even as an
increasingly urgent chorus of voices outside the Beltway insists that the
Bush Administration and Congress need to come up with a fiscal stimulus
package pronto, few in Washington are acting with anything remotely
suggestive of impending danger. Instead, Bush continues to push for a tax cut
that most agree won,t benefit the economy for at least a year, and Congress
is content to play political &gotcha.8? Bizarre as it may seem to many with
business ties, the gulf between the real economy and Washington,s insular
political culture has seldom been greater. Up to now, many of the city,s pols
seemed confident that a benign spirit*Saint Alan of C Street*would ward off
the evil of a recession. But over at the Federal Reserve, Greenspan,s halo
has slipped.?? Bush,s advisers are having intense discussions over what one
aide describes as a &rifle-shot8 rate cut that would provide quicker
stimulus. Also being explored: a one-time tax rebate that could put money
into consumers, hands fast.
?

A &FIRST FRIEND8 WITH CLOUT
Commerce Secretary Don Evans, longtime ties to Bush give him unusual access
By Paul Magnusson in Washington
?
Commerce Secretary Donald L. Evans has two jobs in Washington. The official
one comes with a government limo, a spacious paneled office, a tropical fish
tank, and a $3 billion budget. The second is a round-the-clock role as First
Friend.? That easy intimacy makes Evans, 54, potentially one of the most
powerful Commerce chiefs in many years. As Bush,s campaign chairman, he
raised a record-breaking $100 million for his pal, a job that put the Texan
on a first-name basis with many corporate chieftains. But in his first major
interview, the Commerce Secretary insists that he,s leaving the world of
political fund-raising behind. His new concerns: helping to sell the big Bush
tax cut, battling unfair trade practices abroad aimed at industries such as
steel and aerospace, and boosting the government,s long-range research
efforts.
?

END OF THE CEO GRAVY TRAIN?
Surprise! Exec pay seems to be slipping*though some underperformers are doing
remarkably well
By Louis Lavelle in New York

For many of the nation,s chief executive officers, 2000 will likely be a year
to forget. After nearly five years of double-digit growth in CEO
compensation, early indications are that their pay actually fell last year.
Of the 130 corporate proxies so far available for the biggest U.S. companies,
the compensation of the 15 best-paid CEOs shows the slowing economy has taken
a toll on earnings. When salary, bonus, and options exercised last year were
taken into account, compensation for those CEOs fell nearly 5% from 1999. The
reason: The market,s nosedive made it a bad time for many corporate kingpins
to exercise their options, often the largest part of remuneration.? According
to a proxy analysis by Standard & Poor,s Institutional Market Services, a
division of The McGraw-Hill Companies, total compensation for the 15 highest
earners averaged $88.7 million, a $4.4 million drop.
?

THE BEST SHAREHOLDERS CAN GET?
The AG-Prudential deal isn,t sweet, but there,s no white knight in sight
By Emily Thornton, with Pamela L. Moore in New York and Heidi Dawley in
London

Ever since American General Corp. Chairman and CEO Robert M. Devlin first
announced a stock-swap with British insurer Prudential PLC on Mar. 12, then
valued at $26.5 billion, Wall Street has thought that the Houston insurer,s
shareholders were getting the short end of the stick. Prudential,s stock
price has tumbled 16% since, and American General,s about 4%, thus crushing
the premium American General shareholders will receive to 5% from 22%. And
that could put the kibosh on the merger.? Clearly, this is not what
shareholders hoped for. Still, this deal may be the best shareholders can
get. When the Prudential deal was first announced, Wall Street was abuzz with
rumors that heavyweights such as Sanford I. Weill at Citigroup or Maurice R.
&Hank8 Greenberg at American International Group? Inc. might swoop in with a
counterbid. Unlikely, say investment bankers, because American General has
had informal talks with both in the past two years. Devlin insists
discussions were never serious enough to reach his board.
?

SOUTHWEST: AFTER KELLEHER, MORE BLUE SKIES
Southwest,s model shone in an embattled industry*and it looks brighter than
ever
Commentary by Wendy Zellner

In three decades of building low-fare legend Southwest Airlines Co., CEO
Herbert D. Kelleher has made nary a misstep. Until Mar. 19, the one chink in
his armor appeared to be the question of how Southwest would replace him.
Finally, the answer: Two Southwest veterans steeped in the company,s
traditions will man the controls.? On June 19, James F. Parker, 54, general
counsel, and Colleen C. Barrett, 56, executive vice-president for customers,
will become CEO and President, respectively. And as Parker and Barrett might
tell you, they are inheriting a devilishly simple playbook: Keep costs down.
Focus on customers. Keep employees happy. And keep it simple. While Southwest
has tweaked its formula over the years*adding more long-distance flights, for
instance*it,s still mainly a point-to-point, short-hop airline that uses one
aircraft type to simplify training and maintenance.
?

BUYING A NEW PC?? NOT SO FAST
Upgrading to Microsoft,s coming XP system will be such a challenge that it
makes more sense to wait until new computers come with it
Technology & You by Stephen H. Wildstrom

Microsoft Corp.,s Windows XP, which is just entering its final stage of
large-scale field testing, is the most important consumer software product to
appear since the Windows 95 operating system. The prospect of waiting for XP
poses a difficult choice for anyone in the market for a new computer. Nearly
all consumer PCs sold today are outfitted with Windows ME, the last gasp of
the Windows 95 line. It seems reasonable to buy a new computer with Windows
ME and move to XP when it,s available. But I don,t recommend it. Why? The
upgrade will be challenging. Even moving from Windows 95 to 98 was often
difficult, and going from ME to XP will be a much bigger transition.
Microsoft and battered computer makers will hate me for saying this, but I
suggest that you make your old computer last nine more months or so until XP
is ready.
?

CAN GM,S JOHN DEVINE KEEP HIS PROMISE?
The new CFO pledges bigger earnings, but much depends on building sales in a
slowing economy
By David Welch in Detroit

Only someone as confident as John Devine, the new vice-chairman and chief
financial officer of General Motors Corp., would promise that America,s
largest auto maker will earn $2.3 billion this year, about a third more than
some analysts predict. And only someone as respected as Devine would be taken
seriously.
Chief Executive G. Richard Wagoner Jr., a 23-year GM veteran, broke with
tradition by hiring Devine*rarely has GM gone outside to fill a senior job.
Devine could even become chief operating officer in the next few years,
according to GM insiders. As one board member puts it: &You don,t bring in a
guy like John Devine and expect it to be business as usual.8 Good thing for
GM. The company that once was regarded as the country,s most innovative
carmaker has been in decline for three decades. Its U.S. market share has
fallen from 33% in 1995 to 28% last year.? A lot has to go right at GM*and in
the economy*for Devine,s predictions to come true.
?

THE SEC IS TOO HUSH-HUSH
Commentary by Christopher H. Schmitt

When the Securities & Exchange Commission issued rules in January to shore up
the independence of outside directors who oversee mutual funds, some SEC
watchers were caught by surprise. Why? One reason: The commissioners didn,t
meet in public. Under former Chairman Arthur Levitt Jr., the SEC went out of
its way to shake up the status quo and avoid donning the mantle of apologist
for the industry it oversees.? And yet the SEC hasn,t changed its own
practices much. There,s more that needs fixing than the SEC,s nonmeeting
meetings. In a confusing process closed to public view, the SEC handles
thousands of exemption and guidance requests each year. It,s supposed to make
them*and its replies*public, though it doesn,t always do so promptly. Of
course, there is a need for some confidentiality*and exemptions and guidance,
too. But that doesn,t mean the SEC can,t be more forthcoming about its
business.
?

McLATTE AND CROISSANT?
Upfront by Michael Arndt

Just when it? seemed McDonald,s couldn,t possibly cram another restaurant
into the U.S., the burger giant has come up with a new way to expand: coffee
bars. BusinessWeek has learned McDonald,s will open its first,? McCaf,, in
Chicago,s Loop in April. It will sell pastries, perhaps prewrapped
sandwiches, and premium coffee.? Sound familiar, Starbucks fans? But whether
aficionados will give up their grande skim latte for a McCappuccino is a good
question. McDonald,s won,t say how many McCaf,s it plans, but based on their
success overseas, the rollout could be swift and wide. There are 300 McCaf,s
in 17 countries, from Australia and Japan to Brazil and Greece. Each sits in
or near a McDonald,s, with its own staff and equipment. In the U.S., look for
comfy couches, too.
?

The following stories have been posted on BusinessWeek Online
http://www.businessweek.com/
?
EURO-TECH: Will Americans Answer This Call?
By Stephen Baker
http://www.businessweek.com/bwdaily/dnflash/mar2001/nf20010321_069.htm
Phone service in the U.S. is good. So good that many Americans have little
incentive to embrace wireless
with Europe's fervor

REPORTER'S NOTEBOOK: What's French for Dimpled Chad?
By Carol Matlack
http://www.businessweek.com/bwdaily/dnflash/mar2001/nf20010321_277.htm
Parisians may be right to think Palm Beach can't happen here. Still, you have
to wonder why they ended up counting votes on cell phones

ONLINE ASIA: The Curse of Dr. M
By Bruce Einhorn
http://www.businessweek.com/bwdaily/dnflash/mar2001/nf20010319_935.htm
Malaysia's Mahathir has been so bad for his nation that his name has become a
verb, meaning "to wreck a country's fortunes"

NEWS ANALYSIS: Here Come Talk 'n' Toss Cell Phones
By Olga Kharif
http://www.businessweek.com/bwdaily/dnflash/mar2001/nf20010322_621.htm
Sensing a big potential market, two companies are hoping to add a new kind of
disposable to your shopping list

STREET WISE: Eight Options for Amazon
By Amey Stone
http://www.businessweek.com/technology/content/mar2001/tc20010322_039.htm
From partnering with Barnes & Noble to bringing in Jack Welch, here are some
ideas that could help the e-tailer become profitable

NEWSMAKER Q&A: Why the Fed Didn't Go Further
http://www.businessweek.com/bwdaily/dnflash/mar2001/nf20010320_645.htm
S&P's Michael Englund explains the probable reasoning behind the half-point
rate cut and says April could see more easing

NEWS ANALYSIS: A Downturn in CEO Pay, Too?
By Louis Lavelle
http://www.businessweek.com/bwdaily/dnflash/mar2001/nf20010320_205.htm
Early results for 2000 show the slumping market is slowing the growth of top
bosses' take-home, which might even decline

NEWS ANALYSIS: AOL Time Warner: Who's Laughing Now?
By Amy Borrus in Washington
http://www.businessweek.com/bwdaily/dnflash/mar2001/nf20010319_866.htm
The newly merged company is -- all the way to the bank -- while its critics
and rivals eat its dust, and a lot of crow
?

------------------------------------------------------------------------------
------------------------------------------------
For custom reprints of BusinessWeek editorial (minimum order of 1,000) please
contact Alan J. Gallo at (212) 512-3148 or visit our Web site at?
www.reprints.businessweek.com.
------------------------------------------------------------------------------
------------------------------------------------
?

BUSINESS WEEK,s International Alert is a free service.? It is distributed
every Thursday at 6:30 pm ET and may be forwarded freely.? To join this list,
send an e-mail message to LISTSERV@LISTSERV.BUSINESSWEEK.COM.? In the body of
the e-mail message write &SUBSCRIBE BWINTERNATIONALALERT8? To leave the list,
write "UNSUBSCRIBE BWINTERNATIONALALERT8

BW International Alert is one of several free e-mail previews of
BusinessWeek.? Also available are:

- TechAlert,? all Information Technology news BusinessWeek and BusinessWeek
Online
- FinancialAlert:? all financial industry articles in BusinessWeek and
BusinessWeek Online.
- AutoAlert:? auto industry news in BusinessWeek and BusinessWeek Online.
- DCAlert:? politics, policy and government content in BusinessWeek and
BusinessWeek Online
- BWAlert, a comprehensive preview of all major articles and news exclusives
in US edition of BusinessWeek

For more information, or to register for any e-mail alert, please contact
Robert Pondiscio at BusinessWeek at 212-512-6311.? E-mail:
robert_pondiscio@businessweek.com
?
?
?


Rhonda/Tana,
See information below.  I received a call from Tracy Hoey (she is actually
with New Energy) requesting and EEI agreement for Physical Power and an ISDA
Agreement for financial Deals.  She said that AES Eastern is the unregulated
side of the business.

Kim Theriot

---------------------- Forwarded by Kim S Theriot/HOU/ECT on 07/19/2000 12:11
PM ---------------------------

"Tracy Hoey" <thoey@newenergy.com> on 07/18/2000 04:38:22 PM
Please respond to <thoey@newenergy.com>
To: <ktherio@enron.com>
cc:
Subject: AES Eastern Energy

Kim,

Per our conversation regarding AES Eastern Energy, here is the information
you requested for the EEI Agreement regarding physical transactions. Also,
if you could forward this information onto your legal department which deals
with financial transactions.

1. Legal Name:  AES Eastern Energy, L.P.
2. Address:  535 Boylston Street, Top Floor, Boston, MA 02116
3.  Credit Contact:  Joseph Favaloro:  Phone: 617-859-3666x288 Fax:
617-859-2915
4.  Contract Contact:  Tracy Hoey  Phone: 617-859-3666x252  Fax:
617-536-2510

If you need anything additional, please feel free to call at
617-859-3666x252. Thanks in advance.

Tracy L. Hoey
Paralegal/Contracts Administrator
T (617) 859-3666 x252 F (617) 536-2510
thoey@newenergy.com
NewEnergy, Inc.
An AES Company

************************************************************************
The information contained in this e-mail message is intended only for
the personal and confidential use of the recipient(s) named above. This
message may be an attorney-client communication and as such is
privileged and confidential.  If the reader of this message is not the
intended recipient or an agent responsible for delivering it to the
intended recipient, you are hereby notified that you have received this
document in error and that any review, dissemination, distribution, or
copying of this message is strictly prohibited.  If you have received
this communication in error, please notify us immediately by e-mail,
and delete the original message.
***********************************************************************


Thanks for your information and words of reassurance.  Here is my email address:

work
shelley.corman@enron.com

home
cormanerb@cs.com


Jackie,

I got the call to travel to Kazakhstan for the adoption and will be leaving next Thursday, Dec. 13.  I will be in Kazakhstan over Christmas and hope to touch base with your daughter to see about the possibility of locating a Christmas eve worship.  I think I've misplaced her email address.  If you wouldn't mind, would you forward it to me again.  Thanks and have a blessed holiday.

Shelley


Ray,

Thanks for your help in reinforcing procedures with respect to RAC signoff of both acquisitions and divestitures that have been ignored in the past, to our peril.

Regards,

Dave


Just letting you know EL Paso now has another person that needs to get the
model everyday. Also, Roger has not been getting the model consistently. I
don't know if this is an email system problem or an oversight by us. Either
way it makes us look bad. Here is the new email address put it in your
address book and use it wisely:)
 kpeterso@epelectric.com, rhawki1@epelectric.com, dmilik1@epelectric.com
Thanks
Leaf


----- Forwarded by Sara Shackleton/HOU/ECT on 11/02/2000 03:51 PM -----

	Sara Shackleton
	11/01/2000 03:18 PM

		 To: Lehman Bros. forward; pfranz@lehman.com;AKarna@lehman.com
		 cc:
		 Subject: Enron Corp. forward

Attached is a blackline containing Enron Corp. comments to your latest
draft.  Please contact Clint Freeland and me to coordinate execution.
Thanks.  Sara


Rick attached please find the above referenced documents.  Note I will be on
vacation beginning next week through Labor Day.  I will forward to you under
separate cover, telephone #'s to reach me at in North Carolina as my pager
and cell phone will be out of range.


Lee,

I'll rev up the Austin facility agreement again.  Eric tells me that we are
fine with adding the additional TD of I to the facility agreement with a
scope/price change.

Ignore the insurance certificate question.  My bad.

I've heard that the LOC made it, so GE should be receiving payment in full
today.

LV Co Gen is still moving.  There are some of the TurboPark stuff which was
in the agreed form of override letter.  It is being actively worked right now.

Sorry about your trip.

Kay

lee.johnson@ps.ge.com on 05/02/2001 09:25:33 AM
To: Kay.Mann@enron.com
cc:

Subject: RE: Signatures for Certain Documents

Kay,

I don't know the answer to your 1st question since I don't recall ever
having to have insurance certificates on any of the other Facility
Agreements.  Maybe we did, but I just forgot that detail.  Jaap/Kent? do you
know?

The Retention LC was faxed this am to Greg Lang and Isabell Parker.  Jaap's
Admin Asst can fax you a copy (Carla Corly) if you wish.

Also, need to talk about Austin Tech reps being added to Facility Agreement
asap (Mike Storm says they've worked out 1700 hours with Eric Booth).  But
we need something in the interim that confirms this will be added into the
Austin Facility Agreement (e-mail to me OK).

Regards,

Lee

-----Original Message-----
From: Kay.Mann@enron.com [mailto:Kay.Mann@enron.com]
Sent: Wednesday, May 02, 2001 8:43 AM
To: Shoemaker, Kent (GEAE); Johnson, Lee L (PS, GE AEP); Smink, Jaap
(PS, GE AEP)
Subject: Signatures for Certain Documents

Good morning.

I haven't seen the insurance certificate she references.  Anyone know where
it is?

Is the retention letter of credit available yet? I know it has been
requested, but I don't recall seeing that it has been delivered.

Thanks for everything,

Kay
---------------------- Forwarded by Kay Mann/Corp/Enron on 05/02/2001 08:37
AM ---------------------------

"Chow, Susan D." <susanchow@paulhastings.com> on 05/01/2001 07:45:03 PM

To:   "'ccampbell@kslaw.com'" <ccampbell@kslaw.com>, "'kay.mann@enron.com'"
      <kay.mann@enron.com>
cc:   "Lang, Gregory F." <gregorylang@paulhastings.com>

Subject:  Signatures for Certain Documents

"paulhastings.com" made the following annotations on 05/01/01 20:45:12
----------------------------------------------------------------------------
--

NEW E-MAIL ADDRESSES AT PAUL, HASTINGS, JANOFSKY & WALKER LLP

We have changed our e-mail address.  Our new domain name is
paulhastings.com.  In most cases, our address is composed of
conventional first name and last name plus @paulhastings.com.  Here are
two examples: janesmith@paulhastings.com and danjones@paulhastings.com.
If you have any questions, please contact us at noc@paulhastings.com.

============================================================================
==

"The information transmitted is intended only for the person or entity
to which it is addressed and may contain confidential and/or privileged
material. Any review, retransmission, dissemination or other use of, or
taking of any action in reliance upon, this information by persons or
entities other than the intended recipient is prohibited. If you
received this in error, please contact the sender and delete the
material from all computers."

============================================================================
==

Attached please find signature pages for:
GE  Consent, Consent of Director for transaction.
We  will forward signature pages for
Amended LLC Agreement, Consent of Director  and Members tomorrow morning
upon receipt from Fed  Ex.

Please confirm that insurance certificates have  been received from the
insurance broker.; It is my understanding that  originals were sent to
Enron.
Thanks.

Susan D. Chow
Paul, Hastings, Janofsky & Walker  LLP
1055 Washington Boulevard
Stamford, Connecticut 06901
(203) 961-7527
(203) 359-3031 (fax)
NOTE NEW EMAIL ADDRESS: susanchow@paulhastings.com

(See attached file: ge_conse.pdf)
(See attached file: salmon_d.pdf)


The East and Upstream Origination Group Chrismas lunch will be Wednesday,
December the 20.  I am trying to get an approximate count of all employees
who will be attending.  I realize this is short notice, but in order to make
reservations, please RSVP to me today.  You can contact me via reply e-mail,
or at extension 5-3317. Later today, I will send an e-mail with the details
of the event.  Thank you for your attention to this matter.  Regards, Keegan
Farrell


In advance of the CPUC's meeting June 19 when they will consider suspending
direct access, we would like to send a letter from Ken Lay to the top
businesses, CEOs and members of the Coalition for Energy Action urging them
to weigh-in with the PUC.  AReM has already issued a media advisory alerting
the press to the PUC meeting.  Please review the attached letter, and let me
know if you have any comments or changes as soon as possible.  If we send
something out, it will need to go out first thing Monday morning.

Thank you.
kd


Send his resume to Karen Buckley.  I believe there will be a full round of
interviews for the trading track in May.


Johan Louw
Account Vice President
UBS  PaineWebber
1111 Bagby Street
Houston, TX 77002
713-654-4712
800-553-3119
713-654-1281 fax
www.johan.louw@ubspainewebber.com

******************************************************
Notice Regarding Entry of Orders and Instructions:
Please do not transmit orders and/or instructions
regarding your UBSPaineWebber account(s) by e-mail.
Orders and/or instructions transmitted by e-mail will
not be accepted by UBSPaineWebber and UBSPaineWebber
will not be responsible for carrying out such orders
and/or instructions.

Notice Regarding Privacy and Confidentiality:
UBSPaineWebber reserves the right to monitor and
review the content of all e-mail communications sent
and/or received by its employees.


Please call.  Brent and I missed you this morning.  Here's the extent of what
I was able to find out.  We called Andrea Bertone and left word.  I think
she's calling Brent (as I was on a conference call when she rang back).  Pat
Cini will join our Friday morning meetings.  Is Michael Herman taking over
Brazil financial?  SS
---------------------- Forwarded by Sara Shackleton/HOU/ECT on 11/05/99 10:50
AM ---------------------------

	Enron North America Corp.

	From:  Patricia Cini                           11/05/99 10:02 AM

To: Brent Hendry/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Sara
Shackleton/HOU/ECT@ECT
cc: William S Bradford/HOU/ECT@ECT, Sue
Frusco/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Christine
Garcia/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Bjorn Hagelmann/HOU/ECT@ECT
Subject: Re: Brazil 10 year power deal

---------------------- Forwarded by Patricia Cini/HOU/ECT on 11/05/99 10:00
AM ---------------------------

Don Black@ENRON_DEVELOPMENT
11/05/99 09:58 AM
To: Patricia Cini/HOU/ECT@ECT
cc:
Subject: Re: Brazil 10 year power deal

pat, sorry, but we did go forward with this very small deal before taking all
the normal credit provisions.  The deal is not signed yet, and is still
"technically" awaiting management approval.  Please work with Remi Collogne
and or Gustavo to get information on this company.  let me know how I can
help.  thanks

To: Christine Garcia/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc: Sue Frusco/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, William S
Bradford/HOU/ECT@ECT, Don Black/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Remi
Collonges/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Andrea
Bertone/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Gustavo
Junqueira/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Brent
Hendry/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Bjorn Hagelmann/HOU/ECT@ECT
Subject: Brazil 10 year power deal

Christine:

Let me know if you have heard about a 10 year deal that Brazil did.  Gustavo
advised that they are going to buy 1.7MW (24x7)at 40.00Real from a sugar mill
beginning in May 2000.  The purchase price is suppose to be inflation
adjusted starting 2001.  ECE will be selling this power to Elektro at a
biomass pricing that is government controlled and adjusted annually.  The
price to Elektro is approximately 80.00Real.

I believe that this deal may have been already executed, but have not
received a response from Brazil yet.  I have not had a chance to review the
sugar mill's profile and make any type of credit assessment.

Let me know if you have heard from Brazil on this and whether we have a 10
year power curve from them.

Regards,

Pat


Please find attached the latest Q&A document which incorporates the comments
that Karen Denne received by 1:00 p.m. EST today.


Here is the status of projects that I am aware of:
Enquiry into Removal Strategy for Berg Defendants
 I spoke with Rich Levy of Gibson Dunn & Crutcher who represents
SEMPRA in the Berg gas/electric class action filed in Los Angeles.  [(213)
229-7556  rlevy@gdclaw.com]  I asked him whether he would tell me if they
were considering removal of the Berg action.  He told me that he had our
removal papers.  He asked if we had any research that we were willing to
share with him.  He said they looked at preemption, filed rate doctrine,
ripeness etc. and concluded that ultimately we would be in state court.  He
also said that he did not believe there were any good motions to dismiss
that were worth making.  I told him that some of the work product was a
joint defense effort that would require permission to share (e.g. the Paul
Hastings memo) but that there was other work product we might be willing to
share that had been done on behalf of Enron.  I told him that I believed
that there was good ninth circuit authority that was helpful and we really
believed federal court was a better forum for these types of cases.  He told
me he was willing to look at whatever authorities we could give him.   I
also told him that I understood that Mike Weaver represented Sempra in the
San Diego cases and gave him Mike's contact information.  He asked for
copies of our complaints and I sent them on to him.  He is willing to
discuss the case and possibly strategic alternatives.  He told me that El
Paso had retained David Palmer, formerly of Gibson Dunn to represent them in
this action.  El Paso and David Palmer are supposedly meeting on Wednesday
January 3rd.  According to Rich, their time to remove expires on January
16th.

 He told me that the Berg case was originally filed in Texas by the
Denver law firm Astrella & Rice against El Paso.  That case was dismissed
because the plaintiff was not a direct purchaser.  The plaintiffs then
sought to have Southern California Edison agree to be the named plaintiff.
Apparently they refused.  Rich said they were meeting with SCE to find out
what else was said.

 There is a second gas complaint, the Continental Forge case.
Apparently this case was filed in September but never served.  It has now
been amended and has been served.  A copy is attached.  (We obtained this
copy from the plaintiff's website so it does not have a signature for file
stamp, but Rich Levy said it was the complaint that had been served.)
    <<Continental Forge.cmplt.pdf>>
PUC Hearings
 I do not have many of the details of the hearings other than a
report from Mike Day that Michael Aguirre, plaintiffs' counsel in our case,
argued before the PUC that the real culprits are the power marketers and the
solution to the utilities problem is for the utilities to join the
plaintiffs' class action in San Diego.  Apparently today, Aguirre was cross
examining the utility and generator witnesses before the PUC (attempting to
aid counsel for the ratepayers) trying to show that the utilities should sue
the power marketers.
Public Record Act Request
 Michael Aguirre has made a public record act request for all
information subpoenaed by the PUC and "any other documents related to
alleged wrongdoing" from the ISO.  The PUC has set January 3rd as the
response date for comments on the request.
Data Provided by ISO to the PUC
 The ISO has told market participants that they have provided day
ahead and hour ahead schedules to the PUC, Bids, actual metered operations,
RMR, OOM, and OOS calls, generation out of service information and import
and export schedules.
EPMI Data
 Jeff Richter reported today that he believes they now understand
some of the data problems with the EPMI data.  I am scheduled to be in
Portland with Jeff on Friday to resolve the data issues, and discuss
integration of ongoing data collection with pending and potential discovery
requests.
Cornerstone Teleconference
 Dave Noonan reports that Michael Keeley at Cornerstone is very
interested in being retained.  One of his partners has been contacted by
another defendant but has not yet been retained by them yet.  Dave suggested
that we try and do a telephone interview of Michael tomorrow and retain him
if we like what we hear.  His CV is set forth below.  I will try to
coordinate a time tomorrow morning.
AG Investigation
 So far the California AG has been reducing the scope of its data
retention request.  For EES, they basically wanted a snapshot and nothing
else for the time being.  As for individual computers, they want an
organizational chart to select 6-12 computers that they are interested in.
EPMI Tapes Prepared in Anticipation of Litigation
 We are awaiting specific model information about the Nicelog taping
system used in Portland.  Dan Dietrich in IT in Houston is getting that
information for us.  We believe we will have access to some technology that
will assist in the review of these materials.  We will also distribute
shortly the results of our research on the production of such materials and
any exact transcripts prepared of those litigation materials.
Current Trading Practices
 Christian Yoder, Steve Hall, Marcus Woods, Alan Comnes, Dan Watkiss,
Richard Sanders and myself discussed current trading practices in the out of
market and over $150 cap scenarios.  In short, if the ISO calls for power 20
minutes before the hour it is needed, there is no cap.  In some instances,
EPMI will have purchased power for $x and offer to sell it to the ISO at
$x+.  The plus factor being the credit risk and/or the refund risk for
having sold that power in addition to prevailing market conditions.  In the
over $150 cap situation, EPMI will be collecting its cost data to compare
with the prices charged the ISO or PX.  EPMI will be matching its ISO and PX
sales data with comparable high cost energy in its portfolio.  This is
consistent with FERC pre-existing practice.  We also discussed standard
instructions to traders.
Price Gouging Statute
 Richard Sanders has asked that we revisit the California Price
Gouging Statute in view of the current trading practices.   California Penal
Code section 396 prohibits price increases upon the proclamation of a state
of emergency by the President, Governor, or executive officer of any county
or city resulting from a natural or manmade disaster.  For thirty days after
such a proclamation, it is unlawful for any business "to sell or offer to
sell any consumer . . . goods, goods or services used for emergency cleanup,
. . . for a price of more than 10 percent above the price charged by that
person for those goods or services immediately prior to the proclamation of
emergency."  Such a violation is a misdemeanor punishable by one year of
jail time and a fine of up to $10,000.  A violation also constitutes an
unlawful business practice under section 17200.  It is unclear whether this
statute includes the sale of electricity and/ or the declaration of a state
of emergency by the ISO.
Ed Kee Engagement Letter
 Mike Kirby forwarded the form of engagement letter from Ed Kee.
Charles River Engagement Letter
 I have been in discussions with Charles River over the form of the
engagement letter.  I hope to have that resolved shortly.

Thanks
Gary

Michael Keeley Senior Vice President Menlo Park Office  1000 El Camino Real
Menlo Park, CA 94025 650.853.1660 mkeeley@cornerstone.com
<mailto:mkeeley@cornerstone.com>
Michael Keeley heads the firm's antitrust practice and helped develop its
intellectual property practice. He is an expert in economics, econometrics
and finance.  For more than twenty years, Dr. Keeley has consulted on and
served as an expert in a variety of business issues and legal disputes. He
has testified in Federal Court in several prominent cases, including the
Long Beach crude oil price-fixing case (MDL 150) and the Mercedes-Benz tying
cases. He has also consulted on, managed or served as an expert in a number
of other leading cases, including the Bell Atlantic v. AT&T antitrust
matter, the Aguilar, et al. v. Atlantic Richfield Corporation, et al.
antitrust case, Hartford House, Ltd., d.b.a. Blue Mountain Arts v. Microsoft
Corporation unfair competition case, the Lotus v. Borland and Sony v.
Connectix copyright cases, the MCI v. AT&T patent matter, the AMD v. Intel
arbitration, the Wyoming Tight Sands Antitrust Litigation and the
Exxon-Mobil merger. He has worked on numerous antitrust and intellectual
property cases, as well as on other cases dealing with issues such as
securities fraud, breach of contract, transfer pricing, fraudulent
conveyance and piercing the corporate veil. Dr. Keeley has also consulted on
non-litigation business and economic issues, such as antitrust policy, the
optimal design of regulatory programs, the reform of the welfare system,
auction design and bidding strategy, and economic development.  In the
antitrust area, much of Dr. Keeley's consulting has focused on cases
involving allegations of price fixing, monopolization, predatory pricing,
tying, unfair competition and price discrimination. He has addressed issues
of class certification, assessed the validity of damage studies, analyzed
the competitive effects of disputed practices and gauged the potential
economic effects of proposed mergers and acquisitions. Also, he authored
declarations in support of summary judgment in two antitrust matters in
which the courts granted summary judgment.  In the intellectual property
area, Dr. Keeley's consulting has focused on the proper measurement of
damages in patent, copyright and trade dress infringement matters,
assessment of damages in matters involving alleged breaches of technology
sharing agreements and analyzing liability and damage issues arising in
antitrust counterclaims. In the patent area, he has testified in a number of
cases, including AlliedSignal v. Sextant Avionique, Surety Technologies and
Telcordia Technologies v. Entrust Technologies, Harris Corporation v.
Macronix International, Level One Communications v. SEEQ Technology,
Scripto-Tokai v. Gillette and Agtek v. Spectra Physics. He has addressed
issues of lost profits and reasonable royalties as well as the valuation of
intellectual property in general. He has negotiated a software license and
is a member of the Licensing Executives Society. He authored "Estimating
Patent Damages in Patent Infringement Cases: An Economic Perspective" and
"Infringement: Valuing IP for Damages," which appeared in Les Nouvelles, a
publication of the Licensing Executives Society.  In the oil and gas area,
Dr. Keeley has served as an expert focusing on liability and damage issues
in a variety of matters involving antitrust and breach of contract. In the
Long Beach (MDL 150) case, he addressed the plaintiffs' allegations that
defendants fixed the price of crude oil and assessed the validity of their
damage claims. Dr. Keeley also addressed liability issues in the Aguilar, et
al. v. Atlantic Richfield Corporation, et al. case, a class action in which
the plaintiffs alleged that the defendants had fixed gasoline prices in
California. In addition to serving as an expert in oil and gas cases, Dr.
Keeley has served as a consultant in several matters, including the Wyoming
Tight Sands Antitrust Litigation, the McMahon case, a nationwide
class-action antitrust matter alleging the price fixing of crude oil and the
Exxon-Mobil merger.  In addition to oil and gas, Dr. Keeley has gained
familiarity with a number of other industries, including the computer
hardware and software, telecommunications, automotive and financial services
industries.  Prior to joining Cornerstone Research in 1989, he was an
officer of the Federal Reserve Bank of San Francisco, where his
responsibilities included conducting financial and economic research in
support of the Federal Reserve's regulatory activities. He also analyzed the
antitrust implications of bank mergers and acquisitions and made
recommendations to the Board of Governors of the Federal Reserve System
regarding whether or not such mergers might have anticompetitive impacts.
Before joining the Federal Reserve Bank of San Francisco, he founded and
managed Stanford Research Institute's (SRI's) Antitrust Economic Consulting
Group. In addition to consulting on a variety of antitrust matters, his work
at SRI focused on policy-oriented economic and statistical research. Dr.
Keeley has also taught courses in managerial economics and microeconomics in
the Graduate School of Business and the Department of Economics at the
University of Santa Clara.  Dr. Keeley's research has been published widely
in economics and finance journals. He is the author of two books and over
fifty published articles. Based on citations of his research, he was
selected for inclusion in Who's Who in Economics. He was also awarded the
Garn prize for his research on bank risk taking. He has also served as a
referee (i.e., reviewer) for many of the major economics and finance
journals.  Education Ph.D., M.A. in economics, University of Chicago; S.B.
in mathematics, Massachusetts Institute of Technology

 <<...>>
Copyright , 2000 Cornerstone Research

=======================================================
This email message is for the sole use of the intended recipient(s) and may
contain confidential and privileged information. Any unauthorized review,
use, disclosure or distribution is prohibited. If you are not the intended
recipient, please contact the sender by reply email and destroy all copies of
the original message.

To reply to our email administrator directly, send an email to
postmaster@brobeck.com
BROBECK PHLEGER & HARRISON LLP
http://www.brobeck.com

 - Continental Forge.cmplt.pdf


This is the draft copy of the Global Standards Report, primarily for ENA, for
September 2000.

Please review and provide comments.

Thanks,
Mike


----- Forwarded by Tana Jones/HOU/ECT on 10/11/2000 09:17 AM -----

	Susan Bailey
	10/11/2000 08:37 AM

		 To: Sara Shackleton/HOU/ECT@ECT, Mark Taylor/HOU/ECT@ECT, Carol St
Clair/HOU/ECT@ECT, Tana Jones/HOU/ECT@ECT, Robert Bruce/NA/Enron@Enron, Brent
Hendry/NA/Enron@Enron, Mary Cook/HOU/ECT@ECT, Samantha Boyd/NA/Enron@Enron,
Stephanie Panus/NA/Enron@Enron
		 cc: Taffy Milligan/HOU/ECT@ECT
		 Subject: Early Lunch

All,

I will be taking an early lunch in order to receive some new furniture at my
house and to meet with my decorator.

I will leave the office @ 11:00 am and will return by 1:30pm or earlier.

See you all then.

Susan S. Bailey
Enron North America Corp.
1400 Smith Street, Suite 3806A
Houston, Texas 77002
Phone: (713) 853-4737
Fax: (713) 646-3490
E:mail:  Susan.Bailey@enron.com


Vince, scanned through.  Looks like a good start.

Thanks

John Henderson

----- Forwarded by John Henderson/HOU/NewPower on 02/16/2001 03:32 PM -----

	Vince J Kaminski@ECT
	02/16/2001 09:56 AM

		 To: John Henderson/HOU/EES@EES
		 cc:
		 Subject: Wharton Tm #3 Presentation

John,

Did you have a chance to take a look at his presentation?

Any comments?

Vince

---------------------- Forwarded by Vince J Kaminski/HOU/ECT on 02/16/2001
09:55 AM ---------------------------

"Cummins, Marc" <marcjc@wharton.upenn.edu> on 02/15/2001 01:36:16 PM
To: "'Christie.Patrick@enron.com'" <Christie.Patrick@enron.com>,
Vince.J.Kaminski@enron.com, Melinda.McCarty@enron.com, "'Li.Sun@enron.com'"
<Li.Sun@enron.com>, "'john.henderson@newpower.com'"
<john.henderson@newpower.com>
cc: "Thorne, Heather" <hethorne@wharton.upenn.edu>, "DeGiacinto, Clayton"
<degiacic@wharton.upenn.edu>, "Lessar, Stephen"  <lessars@wharton.upenn.edu>,
"Vittal, Maheshram"  <mvittal@wharton.upenn.edu>, "Bassal, Omar"
<bassalo@wharton.upenn.edu>, "Feerick, Dennis" <dennisf@wharton.upenn.edu>,
"Cummins, Marc"  <marcjc@wharton.upenn.edu>, "'thomas@wharton.upenn.edu'"
<thomas@wharton.upenn.edu>
Subject: Wharton Tm #3 Presentation

Vince and Christie,

Here are the read ahead slides for today's teleconference.  Also attached is
the first draft of our Conjoint Analysis survey.  We'll see you this
afternoon.

 <<Enron Pres #3.ppt>>  <<NewPower Conjoint.doc>>

Sincerely,

Team 3

 - Enron Pres #3.ppt
 - NewPower Conjoint.doc


In case anyone was wondering.....

RE: Tax Refunds

 The amount of your payment is based on the taxable income shown on your
 2000 return. The amount is 5% of your taxable income up to a maximum of
 $300 for a single taxpayer, $500 for head of household and $600 for a
 married couple filing jointly. If your tax liability after nonrefundable
 credits is less than these maximum amounts, your limit is the smaller of
 this amount or 5% of your taxable income. If you did not have a tax
 liability for 2000 but do have one for 2001, you may be able to claim the
 tax credit on your 2001 return.

 This means for those of you who made at least $6000 in taxable income
 last year (2000), you will receive $300 back on the date scheduled below:

 Receive your check by:

         Last two digits of your SSN:

 July 23
           00-09
 July 30
           10-19
 August 6
           20-29
 August 13
           30-39
 August 20
           40-49
 August 27
           50-59
 Sept 3
           60-69
 Sept 10
           70-79
 Sept 17
           80-89
 Sept 24
           90-99

         See you at the liquor store!

Ryan F. Ruppert
Geologist
Saudi Arabia Gas Resources
ExxonMobil Exploration
GPP3-389
P.O. Box 4778
Houston, Texas 77210
281.423.5360 Telephone
281.885.1584 Facsimile
ryan.ruppert@exxonmobil.com


Mark
Senior Counsel, ENA
Phone:     713-345-8897
Facsimile: 713-646-3940
E-Mail:      Mark.Greenberg@enron.com
----- Forwarded by Mark Greenberg/NA/Enron on 03/30/2001 01:27 PM -----

	"Debbie T. Adams" <dtadams@cmsenergy.com>
	03/30/2001 09:49 AM

		 To: "Greenberg@dmzhpu02.cpco.com, Mark" <Mark.Greenberg",
"Abbanat@dmzhpu02.cpco.com, Stephen" <Stephen.Abbanat"
		 cc: "John S. Grube" <jsgrube@cmsenergy.com>
		 Subject: RE: CMS NDA

Steve & Mark,
My legal contact is John Grube at 713.989.7563.   I've copied him on this
message so you'll have his email address.
Debbie

"Abbanat, Stephen" <Stephen.Abbanat@enron.com> on 03/30/2001 09:34:52 AM

To:   "Greenberg, Mark" <Mark.Greenberg@enron.com>
cc:   <dtadams@cmsenergy.com>
Subject:  RE: CMS NDA

Mark,

I believe the company name listed is accurate.  My contact emailed to me
with a reply that verified the name and company listed are correct, with
the exception of the zip code.  I forwarded her reply to you.

I will also copy her on this email and ask her for a legal contact
number so you can verify this with their legal.  Debbie, would you send
Mark you legal contact's name and number. Mark's email is
mark.greenberg@enron.com.

thanks,
Steve

>  -----Original Message-----
> From:   Greenberg, Mark
> Sent:   Friday, March 30, 2001 7:05 AM
> To:     Abbanat, Stephen
> Subject:     Re: CMS NDA
>
>              Stephen -
>
>              Glad to be of assistance.  In order to ensure we
> prepare an accurate document, I need to have the complete name and
> address of CMS (or the appropriate entities).  Also, our intention is
> to put as the "transaction" the following:
>
>              "Enron and CMS are prepared to furnish each
> other with information in connection with the development and
> implementation of a pipeline portfolio management solution..."
>
>              Please let me know if this is acceptable or if
> we need to modify this generic description of the transaction.
>
>              Mark
>              Senior Counsel, ENA
>              Phone:     713-345-8897
>              Facsimile: 713-646-3940
>              E-Mail:      Mark.Greenberg@enron.com
>
>
>
>
>    Stephen Abbanat/ENRON@enronXgate 03/29/2001 02:22 PM       To:
> Mark Greenberg/NA/Enron@ENRON, Drew Fossum/ET&S/Enron@ENRON  cc:
> Stephen Abbanat/ENRON@enronXgate  Subject: CMS NDA
>
>
>              Mark,
>
>              Thanks for agreeing to help prepare this NDA.
> As we discussed on the phone, our team is now in a position to begin
> detailed negotiations with CMS for a systems solution project (CMS
> Energy - Panhandle Pipe Line Companies).  As a part of the
> negotiations we will need to disclose some detailed information about
> ETS systems.
>
>              Steve Hotte (CIO of ETS) and our team agreed
> that we should to execute an NDA that covers both ENW and ETS and gave
> me Drew's name as their legal council.
>
>              The contact name at CMS should be:
>
>              Cynthia C. Albert
>              Vice President, Regulatory Affairs and
> Information Systems
>              5444 Westheimer Road
>              Houston, TX 77210-4967
>
>              713-989-7334
>              tsmehta@cmsenergy.com
>
>              On the Enron side, I would use
>
>              David Berberian for ENW
>              Steve Hotte for ETS
>
>              for signatories.
>
>              I hope this is sufficient information to prepare
> one or two NDA's whichever is appropriate.
>
>              Sincerely,
>              Steve Abbanat
>
>
>
>
>


Marsha Schiller - ext. 3-3356


Next week is better.  Please schedule an afternoon appt. with my asst. (Tamara Black 3-5800)


Hello, Vince!

I just got this from Steve Bigalow.  Is it okay to use for Monday's
newsletter?

Thanks for the help,

Sam

---------------------- Forwarded by William Smith/Corp/Enron on 03/09/2001
12:42 PM ---------------------------

Steve Bigalow
03/09/2001 11:39 AM
To: William Smith/Corp/Enron@Enron
cc:

Subject: Re: article


Oh, Scott, I trully am sorry!  No, I'm at the office and I had only the one
message at home that the dogs had to go out when I looked.  I am so very
sorry!  Do you really think it's over?

Hang in there, as hard as it may seem, things will work out for you.

Love,
Connie

-----Urspr_ngliche Nachricht-----
Von: Scott.Hendrickson@enron.com [mailto:Scott.Hendrickson@enron.com]
Gesendet: Donnerstag, 10. Mai 2001 17:05
An: Scharnberger-Armin@t-online.de
Betreff: Re: I am sooo sorry...

you must not have got my second message....rayfael and i broke up last
night :(

unrelated to dog situation....

scott


Just a short note to let you know that I received a call from Rod Bosche of
PG&E apprising me of a meeting PG&E will be having with SW Gas this tuesday.
They will be discussing PCB issues and the sampling results from the PG&E
system.   From discussions with Louie, a media statement is being prepared by
them which Louie has a copy of.  The statement is a little harsh and makes
some statements which are incorrect.  Louie and I are planning to attend this
meeting in Las Vegas to possibly assist in making some suggestions about
rewording their statement and provide some additional insight and history on
the Transwestern system with respect to PCB's.  The results of this meeting
will be forwarded at a later date.....


i dont know   sounds good to me

Greg Whalley
02/28/2001 05:32 PM
Sent by: Liz M Taylor
To: John Arnold/HOU/ECT@ECT
cc:
Subject: Greg's Bill

Johnny,

What does Greg owe you for the champagne?  Is it $896.00?

Liz


---------------------- Forwarded by Richard Shapiro/NA/Enron on 01/12/2001
02:25 PM ---------------------------

"Starck, Leslie E" <STARCKLE@sce.com> on 01/12/2001 02:23:03 PM
To: "'robert.badeer@enron.com'" <robert.badeer@enron.com>,
"'richard.shapiro@enron.com'" <richard.shapiro@enron.com>,
"'smara@enron.com'" <smara@enron.com>
cc:

Subject: Treasury Discussions - Key documents

Sue Mara requested that I email the attached files to you.  They are:  1.
Definition of each of the four products discussed; 2.  Term Sheets for each
of the four products;  3.  Estimates of the IOU's net short position for
2001 and beyond; and 4.  Draft RFO (still being modified).

 <<Backup of Tab D - Definition of Products.wbk>>  <<demand schedule.xls>>
<<Firm RTC term sheet for FERC2a.doc>>  <<Firm RTC term sheet for
FERC2b.doc>>  <<HRO ter1.doc>>  <<product 3.doc>>  <<Calif RFO.doc>>

 - Backup of Tab D - Definition of Products.wbk
 - demand schedule.xls
 - Firm RTC term sheet for FERC2a.doc
 - Firm RTC term sheet for FERC2b.doc
 - HRO ter1.doc
 - product 3.doc
 - Calif RFO.doc


Any GCP adjustments will be highlighted in red.

Rgds.

Samuel x3-9890 (GCP)
Enron Net Works _ Global Data Mgt.

From: Walter Guidroz/ENRON@enronXgate on 03/29/2001 02:10 PM
To: Karen Lambert/HOU/ECT@ECT, Tana Jones/HOU/ECT@ECT, Samuel
Schott/HOU/ECT@ECT, Mark Taylor/HOU/ECT@ECT, Brant Reves/ENRON@enronXgate,
Debbie R Brackett/HOU/ECT@ECT, David Hardy/LON/ECT@ECT, Lesli
Campbell/ENRON@enronXgate, Cynthia Clark/ENRON@enronXgate, Enron Europe
Global Contracts and Facilities@ENRON, Enron Europe Global
CounterParty/LON/ECT@ECT, Stephanie Sever/HOU/ECT@ECT, Tom
Moran/ENRON@enronXgate, Claudia Clark/HOU/ECT@ECT, William S
Bradford/ENRON@enronXgate, Lisa Lees/HOU/ECT@ECT, Juana
Fayett/Corp/Enron@Enron, Jana Morse/Corp/Enron@Enron, Trang Le/HOU/ECT@ECT,
Paul Maley/LON/ECT@ECT, Sonya Clarke/LON/ECT@ECT, Tim Davies/LON/ECT@ECT,
Karen O'Day/NA/Enron@Enron, Tanya Rohauer/ENRON@enronXgate, Kelly
Lombardi/NA/Enron@Enron, Brian Lindsay/Enron Communications@Enron
Communications, EOL Call Center@ENRON, Bernice Rodriguez/HOU/ECT@ECT, Bill D
Hare/HOU/ECT@ect, Amy Heffernan/Enron Communications@Enron Communications,
Molly LaFuze/Enron Communications@Enron Communications, Danny Clark/Enron
Communications@Enron Communications
cc:
Subject: EOL approvals, 03-29-01

Please see attached.


---------------------- Forwarded by Vince J Kaminski/HOU/ECT on 03/27/2000
08:46 AM ---------------------------

"NW Security and Bug Patch Alert" <Security-BugPatch@bdcimail.com> on
03/22/2000 04:28:49 AM
Please respond to "Security and Bug Patch Alert Help" <NWReplies@bellevue.com>
To: <vkamins@enron.com>
cc:
Subject: Guarding the perimeter is not always enough

NETWORK WORLD FUSION FOCUS: JASON MESERVE on
SECURITY AND BUG PATCH ALERT
TODAY'S FOCUS: Guarding the perimeter is not always enough
03/21/00

Dear Wincenty Kaminski,

Today's Focus: Guarding the perimeter is
not always enough
---------------------------------------------------------------
By Jason Meserve

Oh, the irony. You build your security systems to protect internal
systems from outside intruders, then someone inside the company decides
to play cyber-vandal.

Last week, authorities charged Abdelkader Smires with launching denial-
of-service attacks against his own employer, New York-based Internet
Trading Technologies, Inc. (ITTI). Smires was upset that ITTI did not
meet his demands for a raise and more stock options. He used computers
at a Kinko's Copy store and a local university to launch his revenge
attacks against ITTI that disrupted the company's trading systems for
three days.

"He and the other programmer were involved in writing the software, so
he knew just where to attack. He was fully familiar with weaknesses in
the code," said Eric Friedberg, computer and telecommunications crime
coordinator for the U.S. Attorney's Office in Brooklyn, N.Y., in an
interview with Computerworld "Although it was a potentially disastrous
attack for the company, it wasn't a highly sophisticated attack."

Read more about the attack here:
http://www.nwfusion.com/news/2000/0317insidejob.html

Another interesting article to check out is "The service-pack shuffle
ruffles a lot of feathers" in this week's issue of Network World
(http://www.nwfusion.com/archive/2000/83305_03-20-2000.html). My
colleague Deni Connor writes that customer are fed up with the endless
release of service packs, which seem to be replacing quality assurance
at the companies developing our enterprise software.

But with no bugs, there would be no newsletter, so on with the latest
patches and alerts.

Cisco Secure PIX Firewall FTP vulnerabilities

Cisco announced that its PIX Firewall has a problem interpreting FTP
commands, allowing inappropriate access through the firewall. The
announcement covers two vulnerabilities: One when the firewall receives
an error from an internal FTP server and the second when a client inside
the firewall visits an external site and selects a link that the
firewall interprets as two commands. One of the commands inadvertently
opens a connection through the firewall.
http://www.cisco.com/warp/public/707/pixftp-pub.shtml
************

Patch available for "OfficeScan DoS & Message Replay" vulnerability

Trend Micro has released a new version of OfficeScan Corporate Edition -
Version 3.51 - that eliminates two security vulnerabilities found on
previous versions. Previous versions of OfficeScan allow intruders
within a firewall to initiate a denial-of-service attack on the
OfficeScan client (tmlisten.exe) as well as to capture OfficeScan
commands.  These commands can be replayed and used to change other
OfficeScan client configurations.
Patch:
http://www.antivirus.com/download/ofce_patch.htm
Advisory:
http://www.antivirus.com/download/ofce_patch_35.htm
************

FreeBSD releases four advisories

The makers of FreeBSD did a little housecleaning last week, releasing
advisories on a number of previously announced vulnerabilities in
various Linux packages.
mh/nmh/exmh/exmh2 ports allow remote execution of binary code
Relating to the nmh's mhshow vulnerability when reading MIME headers.
New packages at:
ftp://ftp.FreeBSD.org/pub/FreeBSD/ports/i386/packages-3-stable/mail/nmh-1.0.3.
tgz
ftp://ftp.FreeBSD.org/pub/FreeBSD/ports/i386/packages-4-current/mail/nmh-1.0.3
.tgz
ftp://ftp.FreeBSD.org/pub/FreeBSD/ports/alpha/packages-4-current/mail/nmh-1.0.
3.tgz

Lynx ports contain numerous buffer overflows
The lynx WWW browser is written in an unsecured format that contains a
number of holes. There is currently no patch available, so FreeBSD
recommends removing the package to eliminate the problem.
mtr port contains a local root exploit
The mtr program (versions 0.41 and below) fails to correctly drop setuid
root privileges during operation, allowing a local root compromise.
Fixes:
ftp://ftp.FreeBSD.org/pub/FreeBSD/ports/i386/packages-3-stable/net/mtr-0.42.tg
z
ftp://ftp.FreeBSD.org/pub/FreeBSD/ports/i386/packages-4-current/net/mtr-0.42.t
gz
ftp://ftp.FreeBSD.org/pub/FreeBSD/ports/alpha/packages-4-current/net/mtr-0.42.
tgz

orville-write port contains local root compromise
One of the commands installed by the port is incorrectly installed with
setuid root permissions. The &huh8 command should not have any special
privileges because it is intended to be run by the local user to view
his saved messages.
Fixes:
ftp://ftp.FreeBSD.org/pub/FreeBSD/ports/i386/packages-3-stable/misc/orville-wr
ite2.41a.tgz
ftp://ftp.FreeBSD.org/pub/FreeBSD/ports/i386/packages-4-current/misc/orville-w
rite-2.41a.tgz
ftp://ftp.FreeBSD.org/pub/FreeBSD/ports/alpha/packages-4-current/misc/orville-
write-2.41a.tgz
************

IE and Outlook 5.x allow executing arbitrary programs using .eml files

Georgi Guninski has found yet another flaw in Microsoft's popular
browser and e-mail program. This one allows arbitrary programs to be
launched via attached .eml files. No patch is currently available from
Microsoft, so Guninski recommends shutting off active scripting.
For a demonstration that starts WordPad:
http://www.nat.bg/~joro/eml.html
************

Sojourn search engine exposes files

The Cerberus Security Team has discovered a weakness in the commercial
search engine, Sojourn, that allows attackers to read any local file on
the file system that they have read access to (as provided by the
account the Web server is running under). As such, files such as
/etc/passwd on Unix systems can be read and files such as the
global.asa on Windows NT and 2000. No patch was available as of this
writing.More on Sojourn:
http://www.generationterrorists.com/sojourn_superuser.html
************

Problem with AIX 4.x linker

The Sendmail Consortium is warning of a problem with the AIX 4.x linker.
According to the advisory, unlike most other linkers, the AIX linker
uses the paths specified at compile time for the program's shared
library search path at run time.  Therefore, AIX compilations that use
the -L flag with the AIX linker must use extra precautions to prevent
security problems. This problem is not specific to Sendmail and can
affect other applications. IBM claims it is aware of the problem and
provides workarounds.
AIX site:
http://www.ibm.com/servers/aix/
************

Oracle Web Listener 4.0.x

The Cerberus Security Team has discovered a number of issues with
Oracle's Web Listener, part of Oracle Application Server (OAS), which
allow a remote attacker to run arbitrary commands on the Web server. As
part of the default installation, OAS creates an ows-bin virtual
directory that is a cgi-bin equivalent. According to Cerberus, this
directory not only contains a number of batch files, DLLs and
executables but also the binary image file for the Listener itself,
which could lead to malicious users executing commands on the server
with special query strings. No patch is available yet, though Cerberus
recommends removing the ows-bin directory or point to a more benign
directory.
OAS Web site:
http://www.oracle.com/appserver/
************

kreatecd local root compromise

TESO has found a vulnerability within the kreatecd application for
Linux. An attacker can gain local root-access. Halloween Linux Version 4
and SuSE 6.x are vulnerable. According to the TESO advisory, the author
of the software has been notified. The advisory recommends removing the
suid bit of kreatecd.
See the exploit:
http://www.cs.uni-potsdam.de/homepages/students/linuxer
************

'Melting Worm' slithers into the wild

From Computerworld: A new worm now "in the wild" has the potential to
shut down Windows platforms and make the operating system permanently
unusable.
Read the article:
http://www.nwfusion.com/news/2000/0316worm.html
************

Vulnerability in Microsoft SQL Server 7.0 encryption used to store
administrative login ID

Internet Security Systems (ISS) has identified a vulnerability in the
encryption used to conceal the password and login ID of a registered SQL
Server user in Enterprise Manager for Microsoft SQL Server 7.0. When
registering a new SQL Server in the Enterprise Manager or editing the
SQL Server registration properties, the login name that will be used by
the Enterprise Manager for the connection must be specified. If a SQL
Server login name is used instead of a Windows Domain user name and the
'Always prompt for login name and password' checkbox is not set, the
login ID and password are weakly encrypted and stored in the registry.
http://xforce.iss.net/alerts/advise45.php3
************

Patch available for "Malformed Media License Request" vulnerability

Microsoft has released a patch that eliminates a denial-of-service
vulnerability in Windows Media License Manager. The vulnerability could
allow a malicious user to temporarily prevent the license server from
issuing further licenses to customers for protected digital content such
as music and video.
http://www.microsoft.com/technet/security/bulletin/fq00-016.asp
************

To contact Jason Meserve:
-------------------------
Jason Meserve is a staff writer with Network World, covering search
engines, portals, videoconferencing, IP Multicast and document
management. He also oversees the "Security Alerts" page on Fusion
(http://www2.nwfusion.com/security/bulletins.html). Jason can be reached
at mailto:jmeserve@nww.com.

*********************************************************
Subscription Services

To subscribe or unsubscribe to any Network World e-mail newsletters,
go to:
http://www.nwwsubscribe.com/news/scripts/notprinteditnews.asp

To change your email address, go to:
http://www.nwwsubscribe.com/news/scripts/changeemail.asp

Subscription questions? Contact Customer Service by replying to this
message.

Other Questions/Comments

Have editorial comments? Write Jeff Caruso, Newsletter Editor, at:
mailto:jcaruso@nww.com

For advertising information, write Jamie Kalbach, Account Executive,
at: mailto:jkalbach@nww.com

Network World Fusion is part of IDG.net, the IDG Online Network.
IT All Starts Here:
http://www.idg.com

Copyright Network World, Inc., 2000


-----Original Message-----
From: Amy Monaco [mailto:AeMonaco@NYC.PETRYTV.COM]
Sent: Wednesday, November 01, 2000 10:22 AM
To: Denise Rios; Azuka Momah; Adam Monaco; Anastasia Cioni; ELISE
ZIMMERMAN; Janice Miranti; Kim Campagna; Kristine Campagna; Melissa
Diaz-Miranda; Patty_Donahue1@chase.com
Subject: FW: winnie_t

 ----------
From: Denise Rios
To: Amy Monaco; Brian O'Connell; Daphne Boyle; Dale Dietrich; Jessica
Aviles; John Egan; Linda Arrigo; Lucian Roberts; Michael Leidenfrost;
Solveig Torjesen; Azuka Momah; Carol Strother; Deb Sutfin; Debbie Goncalves;
DAVIS FIGUEROA; Francis Solis; J.Myers; 'Kathy Fino'; Magu176@aol.com;
Masumeh C Zanganeh
Subject: FW: winnie_t
Date: Wednesday, November 01, 2000 10:12AM

 ----------
From: Robert Reichner
To: Alyssa Volpe; Carolyn Steers; Diana Camacho; Dino Capuano; Denise Rios;
Jennifer Margiotta; Joseph Perrapato; Michael Leidenfrost; Chris
Marcantonio; Lauren Perilli
Subject: FW: winnie_t
Date: Wednesday, November 01, 2000 10:05AM

[[ WINNIE_T.JPG : 2618 in WINNIE_T.JPG ]]

 - WINNIE_T.JPG


Energy Systems Update for Wednesday, May 9 at 8:00am:
The California Independent System Operator has declared a "WARNING" which
will extend though the hour 2359 due to forecasted high loads and
temperatures throughout the control area.

Consumers are requested to voluntarily curtail nonessential electric load to
avoid more severe conditions including involuntary curtailments.

ISO may be required to call a Stage 2 including nonfirm by mid-morning.  The
ISO indicated a Stage 3 emergency and firm load shedding is possible today.

If outages occur they will begin with Block 1.

Communications are expected to be similiar to yesterday. Any further
specific changes in operating conditions will be communicated with
additional Grid Updates.

Please note updated web link below.
http://www.pge.com/customer_services/business/nonfirm/index.html

For up-to-date information regarding the current status of the California
Energy Crisis, please log into Pacific Gas and Electric Company's Web Site
at: http://www.pge.com/customer_services/business/nonfirm/index.html  or the
CAISO Web Site at: <<<<http://www.caiso.com/>>>>