[fogarty]

Interesting analysis. Of course, when it comes to war, everything is up in the air. But one thing which still needs to be corrected even if Iraq is a quick campaign - and that is the implosion of the credit and debt bubble in the US. This bubble will take years to unravel, and we are just seeing the start of the steep slope now. JPM has TRILLIONS in derivaties. Household debt has reached a greater point than any time in economic history. The market is still awash in easy credit and FED pumped liquidity. Until this burns off - possibly leading to a deflationary environment like Japan - we are not going to recover.

I would say the smartest thing Bush could do would be get rid of Greenspan. Unfortunately, he needed to get rid of him two years ago. The Fed is about to do to GW what he did to Bush I.

[razorback-bert]

JPM has TRILLIONS in derivaties.

What you haven't learned that this is not a problem.

Don't worry, some WS whizo will be along shortly to post the lesson.

[Zebra]

I agree with you on the prospects for a deflationary period and blame the Fed. The ONLY chance to avoid that scenario is for fairly drastic spending cuts (unlikely). Managing the economy by monetary policy only goes so far and we are at that point when rates are where they are now. Unless a fiscal policy fix is implemented, as well, the best investment will be cash or cash-tied investments, and fixed debt will be ruinous. If this happens, all bets are off, and it is even possible we will have to devalue the dollar.