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To: Lizzie Tudor who wrote (144748)	8/5/2002 1:08:07 PM
From: GST	Read Replies (2) \| Respond to of 164684

Liz -- remember last year? Remember the tax cuts? Remember how everybody was thinking about how to spend the trillions in government surplus? Well look again. This year the government will run a $400 billion dollar operating deficit. $400 billion. That is without adding on another $80 billion to go to war. On top of that we are running a current account deficit of between $400 billion and $500 billion. The dollar is shaky and there is not another country in the world that doubts that a war with Iraq could set the whole region on fire -- it is close to that point already. Attacking Iraq now would be the best thing that ever happened to all terrorists in the Arab world. We would prove their case -- we would prove that for oil, the "infidels" are willing to do anything and will invade and occupy all the Arab lands. What a perfect backdrop for a half a century of terrorism. Good for the economy? Good lord.

To: Lizzie Tudor who wrote (144748)	8/5/2002 2:58:14 PM
From: Oeconomicus	Read Replies (2) \| Respond to of 164684

L, it's basic Keynesian economics. Military spending increases to support a war and, just like any other increase in government spending, it is said to be stimulative. But the issue now, IMO, is sabre rattling, which, to my knowledge, has never really sat very well with the markets or consumer and business sentiment (except for defense businesses). If Bush wants to calm investor jitters and give a boost to consumer and business confidence, he needs to stop rattling sabres and resolve the situation one way or another. Now, some rattling may be necessary in order to get a peaceful and satisfactory resolution with Iraq, but the longer this goes on, the worse it is for the economy and the markets. And even in the Keynesian model, peaceful resolution is better than a military one if you believe that private spending is more stimulative than government spending. JMO, Bob