Monday, June 02, 2003

If you thought the pathetic ever-renewable proclamations (always hailed on page 1A and then debunked on page 46E) of uncovered WMDs in Iraq was tiresome, the General offers you the "now that the Iraq war is over (never mind that it isn't), the US investor can finally feel his oats" mantra.

The latest entry is Stephen Stanley, senior market economist at RBS Greenwich Capital. In light of the third consecutive month of manufacturing decline in the US (although May's contraction was slightly smaller than April's), Mr. Stanley crowed from the rooftops, "If you're the Fed, you have to be pretty happy about this. They've essentially been promising us all along that the economy was going to recover and there just hadn't been much evidence of it. This is the first number they can point to and say 'Aha!'"

This is the most irrational exuberance on the US economy mustered since the February 2003 US trade deficit numbers came in 2.1% below the January 2003 figures. Too bad the March 2003 figures were 7.6% higher than February, and the 2003:I trade deficit now stands a whopping 30.8% above the 2002:I numbers! With figures like this, a US$700 billion current account deficit for 2003 is actually within the realm of possibility. And the house of cards teeters . . .

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