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Yah, those liberals want to strengthen the economy to re-elect Bush? Not logical. Moreover, sorry to tell you, but economic history shows that war is NOT good for business.

No liberals don't want to strengthen the economy not that there is anyway they could. Unless you know of some secret fix, I'd say that the libs are simply making hay out of pointing out the obvious.

I also suspect that the ruling class elite (all politicians) see themselves in jeopardy of being thrown out of office if things get really bad. If the best they can do is give us recession and economic uncertainty, then maybe all of them need to go.

War, unless you are building tanks, probably does little to stimulate economic activity overall. It does provide the public with a big distraction and at least in the short run, provides a form of single mindedness and societal "glue." The politicians want us focused on Saddam and not Senator Dipshit. It is terribly unfashionable and UNPATRIOTIC to criticise our government when we are at war.

Richard W.

Companies must pour billions into retiree plans after betting on stocks

Amid the wreckage of the worst bear market in at least three decades, hemorrhaging corporate pension plans are rapidly becoming Wall Street's biggest new worry. They have lost hundreds of billions of dollars, and now companies face the end of their long-running holiday from writing checks to the plans. Over the next 18 months or so, companies ranging from General Motors to United Technologies face having to pump billions into their plans to comply with federal laws to protect pensioners.

Even if plan investments somehow manage to eke out 5% returns this year, companies in Standard & Poor's 500-stock index will be $40 billion short of their projected pension obligations, according to Morgan Stanley estimates. If plans lose 5%, they'll be $150 billion in the hole. Either way, it is a world away from 1999 when the plans had a $292 billion surplus and a 30% cushion over their commitments. "The squeeze on U.S. pension funds has the potential to be the defining U.S. financial crisis of the 2000s, like the savings and loan squeeze of the 1980s," says Bob Prince, director of research and trading at money manager Bridgewater Associates.

A bit about the possible Middle East War:

Although the market has probably put it a temporary low in the past few weeks, and despite the odds that are increasing that we're now in a climbing market (although slowly), the Oil Patch Gang will probably get the two things it needs in order to prevent a massive global economic meltdown. The two things? A rate reduction and a Middle East War. Why, you ask? Ah! Here's how it works.

The rate problem boils down to some pretty simple stuff, if you know where and what to read. The Financial Times of England ran a wonderfully enlightening piece this weekend with the title "Debt fuels US gas and power bankruptcy fears". Besides pointing out that there is $500 Billion of bad debt in the energy sector, the article quotes one time Enron European trading boss Karl Miller, who's now turned to consulting:

"We are past the point of no return on significant levels of debt default in the energy industry, which will dwarf WorldCom and Global Crossing," said Mr Miller. "There is no doubt we will see multiple bankruptcies shortly."

Well, yes, and no.

Let's pretend for a few minutes that you are the President of the most powerful nation in the history of the planet and that despite your sometimes clumsy image, you really remember some of the pieces from your MBA studies. You with me? If you were facing massive bankruptcies in the energy sector, what are two moves you could make that would tend to keep the failing energy traders alive long enough so you could structure a workout, or better, avoid bankruptcy altogether?

The first move would be to lower interest rates. Although Chairman Greenspan certainly doesn't want to lower rates, because it has let some of the air - OK, a lot of air out of the bubble - the President's argument to the Fed (and it will be confirmed by the in-house Fed Research Department) is that if rates don't come down, the energy traders will blow up and that as the Financial Times notes, will dwarf everything we've seen to date. The trouble in both Citi and JP Morgan have been related directly to the energy problems of the energy group.

The bottom line is simply this: The energy group must have the rates lowered and their debt briefly restructured in order to make it through the coming three month "window of pain".

The second step is to get that damn Middle East war going as quickly as possible, but again, not against the Saudi's because there are moves afoot in the Kingdom that may work out in favor of the oil patch gang. Here's how this one works to serve the needs of the energy traders: As we get closer to a war with Iraq, the prices of energy will be bid up worldwide. Under the cover of a war, energy traders will be able to bid up their prices to the point that they will be able to make profits - damn big profits - and keep everything under the covers. There will not be a public hue and cry about gas prices going back to $2.00 a gallon. The reason? Simply because people expect that gas prices will go up and it will all be because of that Saddam Hussein guy.

From urbansurvival.com

My note on the above, I don't know about the debt, will ask around the oil field.

I seem to remember a little war called VIETNAM that totally screwed the economy---not just later, but AT THE TIME. It did nothing for the politicians then in office---Johnson, ultimately Nixon.

Moreover, the combination of an unneeded war, and a bad economy, is pure political death.

On the other hand, a NECESSARY WAR, which I think Iraq is, does wonders to stablize markets worried about the future. Nevertheless, I do NOT think that the "war on terror" is driving the current economic issues one way or another, except to say that the vast destruction caused by 9/11 was deeper than most have thought. Whatever is going on, it is being driving by 1) a total restructuring of corporate asset accounts based on stock options estimates; 2) public perceptions of corruption; and 3) both REAL and media-driven concerns about profitability. (I don't think #3 has the analysis of why these companies aren't profitable right, but it doesn't really matter for our discussion).

I think to try to link the war with this, one way or another, is a mistake.