Financial Summary on North America, Europe and Asia-Pacific Regions

• So, what does a fragile labour market portend for consumer spending? Optimists will say that even with a 6% unemployment rate it still leaves 94% of the labour force employed. True, but the employed are going to find that income growth this year is likely to be more modest than they had initially expected. Certainly, the President wants to give them more disposable income via tax breaks, but in an uncertain economic and geopolitical environment households may want to save part of any extras that they are going to receive.

• With his eyes fixed firmly on the next presidential elections, Bush is absolutely determined to puff up the stock market and snuff out Saddam Hussein. The stimulus package, announced last week, is sure to get watered down in Congress but may still have enough of a kick to fire up the economy in 2004. However, its impact on activity, this year, is likely to be more muted. Note that there is no attempt to fine-tune fiscal policy, which, in truth, can’t be delicately manoeuvred anyway. Same goes for the Fed, which is free from all the stodgy morality holding back the Bank of Japan. Short of throwing out money from helicopters, Greenspan is willing to do whatever it takes to avoid the slightest threat of deflation.

• Everybody was getting dressed up for the Iraqi theatre of war and, suddenly, the main event is being upstaged by a show put on by the North Koreans. What looked like a countdown to fireworks in Iraq now seems a bit up in the air - - at least in the eyes of the international media, though the Pentagon war machine is proceeding at full speed. Seeing their chance, every amateur theatre director on earth is now busy writing different scenarios for the Iraqi denouement. Anything goes: from a staged palace coup in Baghdad, with Saddam playing dead while lying low, to a sudden Saddamite conversion to truth, honesty and justice.

• So, are the Bushmen ready to do a deal with the Evil One - - or even a substituted strongman to their liking? Well, in the past several decades, American policymakers have been willing to strike a deal with every kind of dictator and Islamic fanatic in the Middle East. The arrangements never lasted long, as both sides were inclined to engage in backstabbing and acts of duplicity. Maybe, just maybe, the Bush administration has finally decided that it is a far better bet to back democratic, secular, modernising governments. The benefits are many: no megalomaniacs, no religious fanatics and no lunatic desperados. Meanwhile, in a statement straight out of the theatre of the absurd the Saudi government is calling for more openness and reform in Arab countries! Let’s just recall that Saudi Arabia hosts a regime that can be classified as obscurantist and reactionary, even on a charitable interpretation.

The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.