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.
What vast destruction? We suffer through natural disasters 100 times worse than 9/11 (property loss, not life) and do just fine. Any economic problems that we are having now weren't caused by 9/11.
The war on terrorism or the upcoming one with Iraq is just a distraction. It will take the publics mind off the economy and provide political cover for the ruling class. Otherwise, someone just may try to hang them. You know how unfashionable and UNPATRIOTIC it is to criticise the government while the country is at war. As I have been saying, listen to the drumbeats of war. The louder the beat, the more bad economic news we can expect.
Richard W.