AMERICA...WHERE NOTHING CAN GO WRONG, wrong, wrong...

when i was a child i saw a movie called "westworld", which was about a vacation land where the visitor could create a fantasy for themselves with everything happening in real life but with predetermined outcomes which would always be what they wanted. those outcomes were controlled by the people who ran the resort by computers and the outcomes were all designed to fulfill the desires and dreams of the visitor. sounds pretty neat, huh. the movie was great. yet, the best part was when the computer operated clones in the fantasies went out of control and things started to go very WRONG.

lately, that is how our great nation, and the stock market, is being portryed. "AMERICA, the strongest most resilient nation in the world with an economy that is fundamentally sound". our leaders have convinced everybody that they are in control of the world and the economy and basically, nothing can go wrong.

with that as our national slogan, retail and institutional investors alike are pouring money back into the stock market as if that is a foregone conclusion. and its not only in the stock market where the fanatsy is alive. the terror alert system is all but defunct, even with the 2nd anniversary of 9/11 approaching; last year the alert level was raised due to the fact that terrorist organizations attempt attacks to coincide with previous attacks, not a mention of terror issues in this country. terror attacks in iraq, indonesia and elsewhere are seen as far away and of no consequence to the US. news reports of soldiers being killed and wounded are now a given, and it is seen as a part of an ongoing operation(war) to democratize iraq. did someone say "vietnam"?

since these issues are not effecting the US, it certainly feels good and makes most of us act like 'good' americans and shop with all the credit at there fingertips and equity in their homes, thanks in no small part to the bush/greenspan bubble blowers. even with jobs continuing to be shipped overseas we continue to hear that the recovery will produce new jobs, it'll just take some more time. during that time, we will hear lots of upbeat news about the great productivity gains we have made during the 3 year downturn, and how that will help the economy grow even stronger. but, very little will be said of how those productivity gains continue to hurt employment and weakens our jobs market. but once again, the 'controllers' of this westworld will assure us that nothing can go wrong and jobs will be available for all americans soon.

the stock market seems to have no problems with the rosy outlooks and forecasts for continued growth and in turn higher stock prices. bulls and bull believers continue to bid up prices while the bears and disbelievers continue to reluctantly get in, despite valuations and reliance on 'hope', rather than hard data, for the recovery to continue. with so many on one side of the boat, lots of people could fall in if things don't go as planned or if the computers that control all the credit reports and bank transfers break down for some reason, i.e. an unexplainable blackout, a terrorist attack in the US, a bond market blow-out, or some other unforeseen breakdown. a very lonely position to take, yet one that seems prudent considering what has happened over the past few years.

corporate america isn't quite as complacent and seems a bit more leary of all the optimistic talk coming from washington and wall street. don't get me wrong though, corporate leaders are thrilled with the upbeat mood and may very well take advantage of new tax laws and the corporate downsizing wave in order to keep profits coming in. that being said, capital spending still has not picked up and layoff announcements continue. corporations are taking full advantage of the low interest rates to lower borrowing costs and are issuing equity to raise capital at a brisk pace. yet, ceo's and cfo's are very reluctant to say that things have improved markedly. i think stabilized is the word of choice with some mention of slight improvement, with hedges about if the improvement can be sustained.

the controllers of the outlook and propaganda machine have their hands full. this westworld is at full occupancy and the computers are keeping things humming along just fine for now. president bush has the bulley pulpit to operate from and the FED chief is in his pocket. wall street is loving the support and looks forward to its first round of bonus checks in a few years. the general public is happy to believe after 3 hard years. my fear is that just as in the movie, when you think that nothing can go wrong, watch out for what can!

have a grateful day!

larry