Welcome back to the global village from Hong Kong, China. Don here. Terri will be joining us in just a moment. Our day is beginning, it's Thursday which means we have to think about leaving Hong Kong tomorrow, Friday, to go to Singapore. I think you reach a point in an experience like this where you're actually looking forward to leaving because the pace of activities, if you choose to take advantage of all the opportunities, can get to be both overwhelming and tiring. You tend to go to bed late and you tend to get up early as we are today and try to pack as much into the day as possible. We have a full day of activity today to be ended by a black tie, formal, what generally is a spectacular dinner party to conclude our CEO University tonight here in Hong Kong, China.

I add the word China when I say Hong Kong because it is a historic fact that Hong Kong, which use to be a British protectorate is now the financial, mercantile, sort of Wall Street of mainland China. And to see the Chinese flag in Hong Kong is a reminder about a quite revolution that has taken place and has gone exceedingly smoothly. To travel to Singapore is no simple task, it's five hours flying time from Hong Kong to Singapore, down the China sea to the peninsula of Malaysia. We'll tell you more about that as we undertake that journey which will be Friday morning for us.

To show the difference in time zones, we had a presentation by the editor of the Wall Street Journal who explained to use the mechanics in the logistics of printing the Asian Wall Street Journal. Wall Street in New York closes at 4 AM Hong Kong time and they have to have the Asian version of the Wall Street Journal on the street at 8 AM and they have to have it on many of the international airplane flights going out to some of the Asian capitals. So it's quite a feat to get the Asian Wall Street newspaper printed that contains all the information of what's happened on the US financial markets during the previous 24 hours. So, one has to mentally get orientated to these vast time zone differences. The global village is very much a reality because you can conduct business on many of the financial markets 24 hours a day following the sun as it moves around the earth, and indeed many people in fact do in today's financial markets. Terri's standing by eager to give her presentation which we've chosen to do at the beginning of our day, as opposed to late in the day. We find that by late in the evening, 11 - 12 PM, we're just wiped out and really can't get mentally geared up to do a good job of commenting to you about our experiences and our learning. Terri's fresh this morning, eager to get out and get going so I'm going to hand her the telephone before she departs. Here's my partner, traveler, and a good sport, good companion to be with - here's Terri.

Terri - As Don said, our days have been jammed packed and yesterday was no exception. We started early, 7 o'clock, yesterday morning with a spiritual breakfast presented by Ken Loe which was absolutely outstanding. He re-interrupted a passage from Luke and gave us all something to think about as his program was titled, "What really matters". And I think very often we lose track of that and need to become grounded again. That was the message that all of us took away from that presentation.

Later in the day women's health issues were discussed by two doctors. Some astounding things are being done in the hormonal field which we in the United States are not really privy to and it looks very promising to alleviating a lot of problems that women have had in the past.

We also attended a, what they call, Feng Shui, which is a belief by the Chinese people of the positioning and placement of things relative to their good fortune and it was extremely interesting to hear how they would interrupt the placement of buildings, the furniture, where the people are positioned, and numbers. The numerology aspect of it is an entire field of its own. They gave very insightful examples of how things had happened here. One of the examples they used in Hong Kong was a building project going on. On June 6, 1966 there were 6 men killed at 6 o'clock in an elevator. The presenter went on to say how the arrangement of the number of sixes corresponded with 666 in the bible and then tried to show that correlation and their Eastern way of thinking. So it's been a wonderful, exciting experience here in Hong Kong. As Don said, you sort of wear down after awhile and that it seems to kind of all mel together and you're sorting out the things that are important to you that you're going to come away here from Hong Kong with.

Last night we had the honor of attending a dinner party at the Ferguson's home, Douglas Ferguson is head of Prudential Asia in Hong Kong. He and his wife share a very interesting history here. She's fourth generation Hong Kong, her great grandfather came over from Scotland and her grandfather was a prisoner of war during the Japanese takeover here. Douglas also shares that history with his father being a celebrated war hero. Mrs. Ferguson's husband is now called a Regent here and sits in the box that the Queen once occupied at all of the horse races, which is one of the Hong Kong past-times. They are very, very involved in horse racing. They went on to tell how the proceeds from horse racing here, which are in the billions of dollars, go for Chinese social projects, and for that reason their taxation is kept down to 15%, which is a very interesting way of doing things. Today promises to be a very full and exciting day as well, ending with, as Don said, the culmination at the Convention Center with the formal gala. Tomorrow we'll be traveling onto Singapore. We'd like to send out, before the end of this report, our love and wishes for good health and safety to all our friends and family. Thank you for joining us.

Don - Well Terri just waved at me, meaning she's off for the morning breakfast and I'll carry on here for a few more minutes. I can just hear our children saying, "Oh God Dad, do you really have to", because Terri did a terrific job. We sure want the Jones children to know we love them and we think about them everyday. Just like you're learning, we're out here learning as well. You certainly never stop learning. I think learning is the food for the mind and that's what we're doing out here.

Let me make some broad comments about some things that I think you'll find of interest. I still receive, and probably very understandably, from my associates in the US comments such as, "Gee are things really quite bad out there?" There's a lot of skepticism as to things possibly being good. I think back in the US, it's very hard, if not almost impossible to differentiate the regions and what's happening out here in Southeast Asia and Asia, so let met try to separate for you what my sense is of what I'm seeing and observing. It's rather like different regions of the United States. Certain regions are doing well or poorly at different times, such as the Northeast, the Southeast, the Midwest. Just as there are regional differences in the United States, there is a dramatic difference between regions in this part of the world. The absolute worse case situation is in Indonesia and Thailand and the words that informed people use to describe circumstances there are dire, chaotic, they just cannot emphasize how dramatic the devaluation of currencies, food shortages and food drought, the possible outmigration of people from that region to Australia, to Malaysia and the implications on social pressures of outmigration of people. There's a lot of tension in Indonesia and Thailand and the circumstances there are very, very grime, which is another word to describe the circumstances there. In Japan, everyone is basically saying, you ain't see nothing yet. Japan has deferred its economic problems for six or seven years and does not seem able to face up to them, similar to the savings and loan problem in the United States. People are basically wondering why Japan doesn't get on with life and there are various inherent reasons, such as the bureaucracy of Japan sort of controls the thought process of the entire country and no one is able to gain consensus and the politicians are not in charge. Japan is considered to be, despite its emergence over the last decade, sort of a neutered dog, if you will. Don't mean to offend anyone with the analogy of a dog. It just doesn't seem to get a grip on its crises within its banking system and will not stimulate its economy. Enough about Japan. All of this adds up to a spectacular opportunity for China. I think that's perhaps the surprise of our visit thus far, although the problems of China are so staggering in dimension and size that people actually find it hard to talk about China in a believable way. Let me give you an example. The military of China, the PLA, the People's Liberation Army, owns and control 20,000 businesses. It is generally public knowledge that the amount of spending as a percentage of GDP in China has been declining, but the absolute amount of money has been rising as China has modernized its army and military. China admits to having a defense budget of $9-10 billion when most people believe in reality its $25-30 billion. The army itself controls 25,000 companies. So in China, you don't know quite where to begin when you have an analysis. The good news is China's army and military do not appear to be on the offensive, although China has what's called "creeping aggressiveness" in this region of the world dealing with some of it's neighbors in some regional territorial disputes. North Korea is considered to be a basket case - famine, malnutrition of children - and it's generally thought it's going to take many years, if not decades, for North Korea to figure out what its destiny is likely to be. Unemployment in China, while one can speculate that the problems of this region for China, which is exactly how the Chinese Thinkers approach the situation, unemployment is thought to be 120 - 130 million people. It's the scale of the problems, the opportunities, that are hard to comprehend, therefore people just sort of laugh and chuckle about it and move on. Well what does all this mean in the US? In the case of the deflation here and the severe competition for production of goods and services, here's an example of what it might all mean. In South Korea because of the need to generate revenues, it means that there might be a $7,000 automobile in the United States, it means there might be a $500 personal computer, because these economies need to produce products. As it relates to Hong Kong itself, all of this would appear to be nothing but sheer opportunity, and while the Hong Kong equity and real estate markets are down about 30%, it would appear, in my view, to be an excellent time to get to understand Hong Kong equities and investment opportunities in the Hong Kong area. Singapore is also thought to be similarly well positioned with Hong Kong. There's a tremendous rivalry between Hong Kong and Singapore to be the financial capital of Asia and then there's another incredible competition with a place called Shanghai, where it's said there are 1,000 constructions cranes in the skyline of Shanghai. We've talked to people who have been there in the past few weeks and they say it's just mindboggling. We had the same experience when we were in Beijing in the Fall, where thousands of construction cranes for high rise buildings filled the sky of Beijing. Some day when you have the trivia question of where is the world's tallest building, it has just broken ground in Shanghai. The most recent tallest building is in Kuala Lumpur in Malaysia. The Hancock Building in Chicago is no longer the highest building. This region has buildings that really exceed anything that we see in any of the major cities in America. Here in Hong Kong, which was a colony of a million people up to 20 years ago, has a skyline outside the window that is every bit as nice as Houston or Dallas, it's not even nicer. The density of real estate here, the shortage of real estate is a real problem. The cost of living is quite staggering. We were told last night at dinner that an apartment in a modern high rise buildings of 2500 square feet could go for many millions of dollars to buy apartments or condominiums. Perhaps with these word pictures you can get a little better sense of what we're discovering. I think I'll not dwell too much more on some of these details, it can also get overwhelming by the length of this report and by the volume of this information.

It will be my opportunity today to visit the University of Hong Kong and to see their highly automated, I'm told, library system and to learn about their use of virtual libraries, similar to the Library of Congress.

We're going to add some of the papers that we've received from the presenters here to our web site. Papers having to do with the real meaning of life and the spirituality presentation which was done by a man who is Chinese, but who has training in the Baptist faith, quite a culmination of ethnicity and belief systems. There are also papers concerning Motorola in this region, a case study, which some of our associates are going to find, in terms of its content, very, very insightful as an academic piece. So we want you to know that we're going to post, perhaps as many as six different papers, or summaries of some of these presentations so that you can get even more information if you have a desire to do that. Our friend and co-traveler here, Gary Edens has shared with us a couple of web sites so that you can learn more about Hong Kong and he tells us there are some spectacular photographs. Here is the web site: www.asiawind.com, and then there's a second web site, sunsite.unc.edu.

The purpose of this whole reporting process is to give you some insight as to what we experience and what we do. I think in looking over the material, that's a pretty good update for today. The weather here has been steamy, cloudy, foggy, drizzly, there's nothing about the weather that we would brag about. The work ethic here is unbelievable, 24 hours a day, people work very, very had to be competitive and to produce goods. End of our update for this period of time. Well be speaking to you before we leave Hong Kong, China for Singapore. And with that, we wish you the best of health and the best of times and thanks for finding the time to share this experience with us. We'll complete this report by saying so long from Southeast Asia, from the city of 6 million, the entrepreneurial capital of Asia, Hong Kong, China.

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