CONFERENCE CALL: Higher rates? Higher oil prices? Who cares?

Looming interest rate hikes and rising oil prices failed to cast a pall on the third annual global finance conference of the Milken Institute. Some 120 big-name economists and business leaders got together in Beverly Hills, Calif., and talked shop over tofu salad, a recipe from shamed junk bond king Michael Milken’s health-food cookbook series.

The non-profit think tank, named after the former Drexel Burnham Lambert shogun who is barred from the securities industry, held the soiree earlier this month.

“The thing that’s making this expansion unique is that we have much stronger productivity growth [because of technology],” said Martin N. Baily, chairman of President Clinton’s Council of Economic Advisors. “And that’s really the case for the New Economy.”

Jerry J. Jasinowski, president and CEO of the Washington-based National Association of Manufacturers, says an economic breather is inevitable, and even without interest rate hikes by the Federal Reserve.

“Real interest rates are over 6%, the highest in 18 years,” he noted. “Add high energy prices and we’re poised for a slowdown. And that would be good. But we don’t need a rate hike. It will take care of itself.”

He said the effects of rising oil prices will be nominal.

Mr. Baily called high energy prices no more than a “bump in the road,” because oil is less important than a quarter-century ago. He also expects a price peak this year, with oil finding its long-term level at about $20 a barrel.

Alluding to Fed Chairman Alan Greenspan’s often-criticized 1996 warning about the dangers in the economy, Milken Institute president Donald H. Straszheim said: “Well, we are irrationally exuberant by another 4,000 points [on the Dow Jones Industrial Average].”

In fact, said Mr. Straszheim, the current bull market has not only continued but it has been much less volatile than in previous booms, he said.

Characterizing Mr. Greenspan’s challenge on cooling the market, David Jones, vice chairman and chief economist of Aubrey G. Lanston & Co. Inc. asked: “How do you stick a pin in a balloon and let out just a little bit of air?”

Mr. Jones, a veteran of the Federal Reserve Bank of New York, also related a lunch conversation he once had with Mr. Greenspan. When asked how he got his ideas, the chairman replied that at 5: 30 every morning he immerses himself in the bathtub, Mr. Jones said.

“That’s what he calls liquidity.”

Other things besides interest rates and oil affect the economy, noted Henry Cisneros, the former secretary of Housing and Urban Development, who now is president and CEO of Univision Communications Inc.

“Immigration will be a big issue this year,” he added.

The current boom could be threatened by a lack of skilled workers as the population ages and unemployment stays low.

“There’s a real consensus among all parties, including labor,” for loosening immigration laws, Mr. Cisneros said, “because labor sees immigrants as possible sources” of working-class employees while Americans take over high-tech jobs.

After all, workers are still needed for hotels, hospitals, restaurants, textile manufacturers and meat-packers. The poultry industry, for instance, has made Latino immigration in Arkansas the nation’s fastest growing, he said.

In a different session, “Mike and the Nobels,” Mr. Milken and Nobel laureate economists discussed the troubles of life insurers. Offering his own observations was Myron Scholes, who knows from trouble — he was a partner in Long-Term Capital Management LP, the hedge fund that had to be bailed out in 1998 to the tune of $1.3 billion.

The market is telling publicly traded insurers that they should consider working at a smaller scale, should buy back their own stock and even consider going private.

Now that so many more people are investing in 401(k) plans and individual retirement accounts, there’s much less need for high-cost insurance policies, he said.

“As the population ages and its wealth is so much greater, insurance just isn’t that valuable anymore,” Mr. Scholes said.