Apart from the similarities in economic conditions, during the run-up to the 1987 crash there was a sharp rise in share prices worldwide and weakness in bond markets, Woo pointed out. "Market patterns leading to the crash of 1987 resemble the markets today," he said.

Equity markets settled on Friday after sharp mid-week falls, with all the main American stock-market measures recording small gains on the day. But nerves remain.

Gerard Lyons, head of research at Standard Chartered, said: "The volatility is explained by tighter liquidity conditions, markets pricing in more for risk and dollar vulnerability. But people forget that this is not a case of emerging-market economies being in trouble as in 1997-8. They're in good shape."

The vulnerability of stock markets is likely to add to the case for a prolonged pause before the Bank of England hikes interest rates, analysts believe.

While one member of its monetary policy committee (MPC) voted for a rate hike earlier this month, some recent data, notably subdued labour market conditions, suggest few signs of inflationary pressure.

Base rate is unlikely to rise until next year, according to a survey of analysts by Ideaglobal.com, a financial-research consultancy. It finds a median expectation that the rate, currently 4.5%, will rise in February next year.

For the first time since the recession about five years ago, U.S. wages are catching up with inflation as the unemployment rate stays low and the work week lengthens.

"At a 4.7 percent unemployment rate, U.S. workers do have the leverage to ask for higher wages or benefits, and that's part of the problem," said Marc Pado, Cantor Fitzgerald's chief U.S. market strategist.

Case in point: The latest monthly productivity report from the Labor Department showed hourly pay rose at a 5.7 percent annualized pace in the opening three months of 2006, more than double the 2.7 percent pace in the previous quarter.

First-quarter unit labor costs -- a key gauge of profit and price pressures monitored by the Fed for clues on wage inflation -- increased at a 2.5 percent annual pace, more than economists had predicted at the time.

Furthermore, employees are working longer each week than they have in nearly four years, a detail often viewed as a sign of labor scarcity and a signal of higher pay rates.

WAGES OBSTACLE FOR STOCKS?

Analysts say mounting wage pressures are poised to squeeze corporate profits and create a new headwind for U.S. equities, which have enjoyed 16 consecutive quarters of double-digit earnings growth.

At greatest risk are small-cap companies, a sector that has defied repeated predictions of its demise, consistently outperforming larger peers for more than five years.

"As U.S. compensation costs rise this year, many small- and mid-cap firms will have little choice but to pay up, trimming revenue and profit margins," said Joseph Quinlan, chief market strategist at Banc of America Capital Management.

When the pool of available workers was large and wages stagnated, small caps didn't have a problem competing with big caps for new hires, but the relatively low unemployment now has given workers more bargaining power and put small companies at a disadvantage, he said.

The Russell 2000 index, a measure of small-cap companies, has risen 6.3 percent this year and would appear to be outpacing the big-cap crowd yet again. By contrast, the Dow Jones industrial average is up just 3.7 percent.

Since February 28, however, the Russell is actually down more than 2 percent, whereas the Dow has eked out a 1.2 percent gain despite a thrashing in recent sessions that has cost the index nearly 5 percent.

Shares of large-cap stocks, such as heavy equipment maker Caterpillar Inc. and plane maker Boeing Co., have been surging, boosted by expectations that growth in India and China will sustain demand for their products.

MORE BIG-CAP GAINS AHEAD

Now some money managers say they have begun limiting their exposure to small-caps, tipping in favor of big caps.

In recent days, the sell-off in U.S. stocks has centered around heavy industrial stocks like Caterpillar, but analysts said the market could yet see big-cap gains.

They said foreign exposure would help keep earnings of big-cap companies strong if the U.S. economy stalls after four years of double-digit growth in earnings.

The large companies would be in a better position to offset rising wage pressures at home by tapping into their operations in the far flung parts of the world.

"We are very confident that small-cap stocks are going to begin to underperform large-cap stocks because of the fact that they don't have the ability to out-source their employment internationally," said Christopher Zook, chairman and chief investment officer at CAZ Investments, in Houston, Texas.

About half of the companies in the Dow Jones industrial average have more than 50 percent of their work force based abroad, according to analysts.

Boomers have "an almost insatiable desire for real estate," David Lereah, the NAR's chief economist, said in a statement. They see real estate as "a way to build and protect a nest egg."

Boomers own 57% of vacation homes and 58% of rental property, according to the NAR. Beyond their primary residences, 13% of boomers own vacant land, 8% own rental property, 7% own a vacation or seasonal home and 2% own commercial real estate.

Why vacant land?

"For a lot of people, it's a dream to have a second home, but they really can't afford it," says Peter Francese, founder of American Demographics magazine, who was asked by the NAR to help interpret the survey. "So, they buy a lot."

At the same time, many of those surveyed say they aren't financially prepared for retirement. While 37% say they just have enough to make ends meet, 17% say they're having financial difficulty.

Real estate ownership has become a key part of boomers' retirement plans, says Alicia Munnell, director of the Center for Retirement Research at Boston College. That's largely because the national savings rate is so low, she says, and the availability of pensions is declining.

Unlike previous generations of retirees who tended to pay off their mortgages and live "rent-free" in retirement, many boomers see their homes as money in the bank, Munnell says. Many previous retirees also chose to hang on to a house to pass down to their children.

By contrast, boomers are more likely to use the equity in their homes, through home equity loans or reverse mortgages, to finance purchases or to help fund their retirements, Munnell says.

"In the old days, you knew you had your house to live in when you retired," Munnell says. But given most boomers' modest retirement savings, "You really are not going to be able to hold on to it and not touch your house. You're going to need the money in your house."

For boomers, vacation homes aren't seen as merely a chance to have fun in the sun or on the ski slope or at the lake. Four in 10 boomers who own a vacation home intend to make it their primary home eventually, the NAR survey found.

"Folks who own second homes are testing the waters to see if they want to live there when they retire," says Mark Bass, a financial planner in Lubbock, Texas.

"I don't know why they (the troops) should be stuck in the middle of a family squabble within the Republican Party," said Rep. David Obey of Wisconsin, top Democrat on the House Appropriations Committee.

The conservatives, led by Rep. Jeb Hensarling, R-Texas, used parliamentary procedures to delete some 20 projects worth $507 million from the $94 billion spending bill for military construction and veterans programs in fiscal 2007, which will begin Oct. 1. The overall bill passed 395-0.

Writers of the legislation, seeking to meet limits outlined in the just-passed budget, had taken the money for the projects from a $50 billion war reserve to fund urgent projects, a move characterized by both conservatives and Democrats as a budgetary gimmick.

Rep. Jeff Flake, R-Ariz., a fiscal hawk, asked how $18.1 million for a bachelor enlisted quarters at Camp Pendleton in California or $102 million for a brigade complex at Fort Lewis, Washington, could be considered emergency spending.

"The ink is not even dry on the budget and we are already attempting to violate it, and that's simply not right," said Hensarling.

The conservatives also noted the bill contained some 66 other earmarks, or projects requested by individual members, costing the same $500 million.

But Rep. James Walsh, R-N.Y., chairman of the subcommittee that wrote the bill, slammed Hensarling, saying, "He does not understand that we are at war."

"Please don't come out here and lecture us," Rep. Ray LaHood of Illinois, another GOP member of the Appropriations Committee, told the conservatives. "Pick another bill, not this one."

Rep. Mike Pence, R-Ind., a leader of the conservatives, told reporters this would not be the last spending battle. "I think you are going to see an ongoing effort by House conservatives to see this Congress live within our means."

Democrats also pointed out that, while the bill approves record levels of spending for veterans' and active duty health programs, it falls $735 million short because the House did not go along with a White House request for fee increases for military retirees eligible for Tricare, the Defense Department's health care system.

Rep. Chet Edwards of Texas, top Democrat on the military quality of life and veterans affairs subcommittee, said that shortfall, coupled with $316 million in underfunding for base closings and the $507 million cut from construction projects, left the bill $1.5 billion short of what was needed.

"This sends a terrible message to our troops here at home, in Iraq, and Afghanistan," Edwards said.

Democrats proposed paying for the 20 projects, the $735 million for active duty health care and the $1.82 billion increase in veterans' health care by trimming tax cuts for those making over $1 million annually. The proposed amendments were ruled out of order.

The White House, while expressing support for the legislation, issued a statement questioning some of its components. It criticized the use of war reserve funds for military construction projects, and urged Congress to eliminate the 66 earmarks that the administration had not requested.

It also opposed cuts in spending to carry out the 2005 base closing act, and urged Congress to consider administration proposals to increase copayments and enrollment fees for higher-income non-disabled veterans and for military retirees under 65 using Tricare.

The bill provides $25.4 billion for veterans' health programs, up $2.6 billion from the current fiscal year, and $21 billion for the Defense Department health program, up $1 billion. Some $5.5 billion is funded for base closing activities, $6.6 billion for military construction and $4 billion for family housing construction.

Loehmann's, which was founded in 1921, was forced into bankruptcy protection in 1999 after over-expanding and embarked on a restructuring programme. The then publicly listed company was bought by Arcapita in 2004 for 178 million dollars and turned private.

Arcapita, which also has offices in Bahrain and London, finances its deals with funding from wealthy Gulf Arab investors, according to a statement on its website.

Istithmar was launched in 2003 with an initial capital of two billion dollars, and has so far invested 1.6 billion dollars in 35 companies around the world.

Its purchase of a US company comes on the heels of the controversy that surrounded the acquisition of British shipping giant Peninsular and Oriental Steam Navigation Company earlier this year by another Dubai Ports World (DP World), a government-controlled company.

A portion of the deal would have given DP World the right to operate six major US ports, but this was strongly opposed by US Congress on security grounds, forcing the Dubai government to agree in March to cede control of the US operations to a US entity in order to avert a standoff with a major ally.

However, Dubai International Capital, another Dubai government-controlled entity, sealed earlier this month a 1.27-billion-dollar deal to take over British engineering company Doncasters Group, which owns a US company supplying parts to the US military.

Rubin Guttman, chairman of the Cleveland State of Israel Bonds campaign, agrees that investing in Israel Bonds is a sound financial decision: Since its inception in 1951, he notes, Israel Bonds has maintained a perfect record on its payment of principal and interest.

Rokakis's investment may not be an outright political statement, but Guttman believes the purchase to be a "testament to the enduring strength of the state of Israel."

State of Israel Bonds is an international organization offering securities issued by the government of Israel. The Jewish state uses proceeds from its bonds to fund infrastructure (railways, roads, airports) and other development projects. Beginning in 2008, Israel Bonds will be responsible for securing 50% of Israel's overseas borrowing needs - about $1.5 billion annually.
Katz

Cuyahoga County's $5 million acquisition marks its first foray into Israel Bonds and represents one of the largest buys of Israel Bonds in the state. With the purchase, Cuyahoga joins a club whose members include Stark, Mahoning and Franklin counties.

Rokakis was a leader in encouraging the Ohio legislature to adopt HB 168, which allows county treasurers to invest in foreign bonds. (The state has invested in Israel Bonds for many years and currently holds about $19 million in securities.) Rokakis worked for several years with the state treasurer and various legislators, before the bill was adopted in June 2004.

"Jim Rokakis has been supportive of (HB 168) since Day One," remarks Howard Katz, the county's former director of strategic planning. According to Rokakis, Katz played a "critical role" in the bill's passage.

While Israel Bonds was not the main focus behind the push for HB 168, the multi-million dollar venture represents a "good, safe investment for the people of Cuyahoga County," says Katz.