QUERETARO, Mexico, Nov. 20 (UPI) -- Your correspondent went to court Wednesday. The proceedings baffled him but he reports exactly what he heard.
"US economy, you stand accused of heading for deep recession. How do you plead."
"Not guilty."
"Pardon. Speak up! Are you sick?"
"My client is a little short of breath, your honor. A temporary problem."
"Quiet, Wall Street, let the defendant enter his plea for himself."
"Not guilty, your honor."
"OK, thank you. Now, Wall Street, what fresh evidence do you have to present for the defense?"
"Two pieces of evidence, your honor, which have come to light only today, Tuesday: the trade data for September and the Leading Indicators from the Conference Board."
"And what do these show?"
"The Leading Indicators were very positive, even our most optimistic analysts were positively surprised by our client's performance. The Conference Board's Leading Indicators went up 0.3 percent in October compared with September, your honor, showing that the defendant's weakness was temporary and will soon be over."
"I see, and are these leading indicators a reliable guide to your client's future behavior?"
"The conference Board is a most esteemed body, your honor, and the indicators a most reliable guide; and of ten different factors considered seven were positive about my client."
"Your honor, if I may speak?"
"Yes, Mr. Dismal, counsel for the prosecution."
"These Leading Indicators are, with respect, your honor, utterly misleading. Of the seven positive factors, at least two are generated by the very loose monetary policy of the Federal Reserve Chairman, Alan Greenspan; to wit: the money supply and interest rate spreads. Another of the positive indicators on our client is stock prices. Your honor, with all due respect to the distinguished council for the defense, rising stock prices should not be seen as any indication that the client is heading for prosperity."
"Yes, but what about the other indicators that were positive?"
"They were mainly related to rises in sales and activity from a disastrous month in September."
"When my client was cruelly attacked, your honor."
"Yes, about that I know. But neither of you has informed me of the three negative indicators. Prosecution, what were they?"
"These indicators were, might I say, far more solid testaments to the defendant's true character: initial claims for unemployment benefit, average weekly hours worked in manufacturing, and building permits. Unemployment is rising, firms are working less hours and the construction boom has finally ended: I think these numbers are far more revealing of the defendant's future behavior than money growth. Indeed, it is also a negative sign, your honor, that interest rates..."
"Thank you, counsel for the prosecution. Don't go on. What is the other evidence that the defense has to show."
"September trade figures, your honor. My client was, I admit, guilty of some excesses in the past, a tendency to over-consumption, to spend freely on imported goods, to run up a perhaps overly large trade deficit and stock market gains that were a little over-enthusiastic but he is now a changed man: in September his trade deficit dropped by $8.4 billion to just $18.7 billion. May I point out, your honor, that this is barely half his record deficit a year earlier. The Nasdaq has fallen; so has the Dow. Stock prices are now cheap. My client has corrected and is ready to grow again."
"Prosecution, I dare say you will disagree with this interpretation?"
"Your honor, reinsurance claims following the unfortunate attack in September utterly distorted the numbers. Imports of services, which reflect these insurance claims, fell by $13.5 billion from August to September, much more than the drop in the total trade deficit. The defendant's deficit continues to be too high. The stock market continues to be at extraordinarily high valuations, particularly if one takes a reasonable view of earnings prospects next year."
"Your honor, I beg to interject: it is very difficult for my client to get out of trouble when the rest of the world is slowing, and buying less of his produce."
"Wall Street, is that an argument for the defense or the prosecution? Can your client avoid recession in a slowing world economy."
"Yes, your honor. He will recover in 2002. He is less in deficit and barely in recession and a reformed character and ready to grow again, delivering, by the way, huge stock market gains."
"Dismal, please wrap up for the prosecution."
"The defendant is getting worse not better, your honor. Interest rates have been slashed yet the economy keeps slowing, house sales and house prices are starting to fall, exports have been dropping and unemployment is getting worse. I do not think the defendant reformed. On the contrary, he is only in the early stages of recession and will stay there for some time to come."
"I can make no sense of this. You are giving entirely contradictory interpretations of the same evidence. I order a retrial next week. Meanwhile, I suggest all of us enjoy our Thanksgiving."
(Comments to [email protected])
