ONE THING HAS NOTHING TO DO WITH THE OTHER

war and the economy have nothing to do with each other. not a popular viewpoint but the fact of the matter is its true. so far there hasnt been a shot fired yet almost every company and economic report has cited the war with iraq for causing uncertainty that has resulted in poor business performance and outlooks. nice scapegoat but the facts do not support that reasoning. let me try to elaborate.

computer sales are not down because of the war, they are down because we all have enough computing capacity to surf the web and balance our checkbooks and businesses have only recently finished upgrading their hardware. there is no 'killer app' and there is over capacity in every area of the technology industry which may take many more years to work off.

auto sales are not being affected by the war, in fact they have continued to stay strong in spite of the war. what is causing auto sales to slow is the deteriorating jobs market and almost two years of 0% financing and other gimmicks that pulled demand forward. in addition, cars on the road are 'younger' and better built than 5 years ago so they do not need to be replaced as often.

the airline industry may have been somewhat affected by the war issue, but they have had almost 2 years to adjust and still the bankruptcies will continue due to over capacity and high fixed costs. the airline industry has needed a complete re-organization for many years and todays enviroment will force that to take place.

advertising is always cyclical and we are in a down cycle currently.

telecommunications is a mess regardless of the war. can you say "over capacity", "debt" and "chapter 11"?

insurance is dealing with its own problems including guarantee loss benefits and poor actuarial management.

homebuilding has been positively effected by the FED, cant blame problems here on the war.

entertainment should be doing great as its an easy and inexpensive escape from the war news...so dont blame the war.

defense is certainly not being adversely affected by the war, more bombs and military equiptment should be a boon to this industry but other factors are having a more detremental effect on their busines than the DOD orders are helping.

banking is being affected by higher credit loss rates and lower demand for loans.

brokerage is being affected by the bear market, conflicts of interest scandals, fraud, corporate malfeasence and lousy advice to clients.

retail is being effected by the employment market and its own over capacity.

restaurants are being affected by higher costs of labor, healthcare and energy plus how many new stores can be opened without canabalizations.

oils should be doing better with the war concerns as they should be benefiting from higher energy prices and firm demand.

transportation is being hurt by higher costs and lower rates combined with too much capacity.

capital goods are being affected by higher costs and lower revenues.

commercial property is suffering form 'phantom' tenants, rising vacancies and lower lease rates. these problems are a result of the boom time when companies over leased planning for further expansions. in addition, companies are downsizing to meet more realistic needs.


what will affect business and the economy is if the war spreads outside of iraq or becomes a "real" battle within iraq. then every industry and the world economy will be affected in a very bad way. for now though its just a plain old recession-like economic enviroment that is causing business to be difficult. that will not change by defeating saddam hussein or capturing osama bin laden. most americans have not changed the way they live or spend due to the war or the 'high' terror alert level. thats what makes us great, i guess. to blame the economic malaise on the war is just a bad excuse and once the war is over, which it will be shortly, the real issues that are effecting the economy will rise to the surface. then we may hope for a war with north korea so we can blame the economic problems on kim jong il.

have a grateful day!

larry