April was strange, and now May starts unexpectedly with rain. This may be one of those years in which the weather gods transpose months. They traded March for April. Now, maybe they doubled their bet, trading May for March again. This has happened before in El Nino years, most notably 1982 when there was scarcely a 90 degree day all summer.

Although I suffer from the heat, my plants want it. The rain has already knocked down my early tomatoes, and rotted a cucumber or two. I was surprised to see a marigold’s leaves chewed to the stalk, which means someone is hungrier than usual. So, for my plants’ sake, I hope we’ll get past the rain soon and see normal weather.

Meanwhile, the plants which usually have a tough time here are doing well; e.g., poppies and zinnias. The California state flower grows all over, but not very well in our super-hot valleys. It or its seeds tolerate poor soil, flood and drought, multiple bad years and even frost and freezing. But, poppies just die confronted with central valley heat, even when well watered. I think they get fatally sunburned. The same thing can happen with other tropical and evergreen plants around here, including citrus.

So, it is a topsy-turvy year already. This causes me to limit myself to short term expectations, and to trust only those things under close control. Or, maybe this is just the result of aging. In 3 years, I’m an inch shorter and everything else is shrinking too, except the belly. But, leading with the stomach is not my idea of forward projection. Whatever the cause, my outlook has become short-term cautious and long-term negative.

In a strange month, I had a strange dream which precipitates some steamy thoughts. I need to say a word or two about the economy, investing and Iraq, and triage.

Some of you dislike or even vehemently reject the outlook I’ve given for 2003. One old acquaintance - a supporter of many Republican policies who wishes to remain anonymous - has just about been yelling at me about my dunderheaded stupidity. Despite that, and a strong stock market rally in April, I haven’t changed my views.

I could be wrong; after all, I’ve lost my grip. Nonetheless, I still think we’re in for a flat to down year in the equity markets. Note: FLAT TO DOWN is my previous and present prediction; i.e., not a good year to "buy and hold".

CAVILS: This could be a good year for TRADERS. I believe this is still a BEAR market, stuck in a trading range. You can make money buying and selling within the range; i.e., by short-term trading. This strategy applies until there is a breakout from present conditions. I have no idea when such a breakout is likely to occur.

Now, it is true - the CRITICS ARE RIGHT - that we are having a tremendous stock rally following the conquest of Iraq. I predicted there would be a rally when the war started, then a slump when the war dragged on, and then a rally when the war ended. I never doubted the United States could and would "flatten" Iraq in short order. I was wrong, however, in thinking the war would last a few months, not weeks. I expected more Iraqi resistance. I did not expect as big a rally as we’re having now. I didn’t think the Wall St folks would lose their heads altogether, even if retail investors went into euphoria over Iraq and King George II.

And so, things look much better than they did just one month ago, but appearances are often deceiving.

Even though it is a lagging indicator, unemployment has been rising, to 6% as of May 2, 2003. There is nothing indicating new jobs are being created. The President’s tax cut policies will not create jobs or stimulate the economy, as even newly-restructured CBO (the Congressional Budget Office) concedes. [The "restructuring" is that Republicans have put their own people in charge of CBO, so as to allow "dynamic," "supply side" scoring.] The President claims his package will create 1.4 million jobs in several (I don’t know how many) years, but 2.2 million jobs have already been lost since January, 2001. On the face of it, even accepting the President’s rosy scenario, unemployment will probably be much higher than it was 2 or 3 years ago; probably more than 5% for years. Please note the only reason the official unemployment rate has not soared: people have stopped looking for work because there are no jobs to be found (so are not counted "unemployed"). The REAL "ground level" unemployment rate is somewhere between 8-12%. Skeptics should consider the official unemployment rate in Oregon is already 7.6%.

Information Technology (IT) spending has NOT picked up, despite the recent boom in IT stocks. Of course, markets are a discounting mechanism, so we should take it "the market" is predicting an IT recovery. We’ve heard "the experts" predict recovery in the last half of the year, 3 years in a row. Then they predict recovery next spring when it doesn’t happen in the Fall. Now we have the same predictions sprouting in this 4^th year of recession. Sooner or later, the prediction is likely to be correct. It’s just that there isn’t any more evidence for a late 2003 recovery now than a month or two ago. Predicted growth rates have been reduced. What is true, however, is that most Wall St savants and market movers are big Bush supporters, who are hyped about the conquest of Iraq.

We’ve had a series of really bad economic numbers until just recently. While consumer confidence rose in April, judging from the Fed’s Beige Books, Greenspan’s Congressional testimony, and Fed policy, we are not out of the woods. The most Dr. Greenspan allows is that the economy is "positioned" to expand. It is not a foregone conclusion the economy will do so. A key indicator will be the Fed’s decision about rates and bias next week.

The actual effects of recent Fed policy need consideration. Low rates stimulated a housing boom and a hot car market. Mortgage refinancing has been a hot business, and it has put money into households. This has been a boon to the auto industry, since upper income recipients of reduced mortgages used the money to buy an SUV. Increased new car sales have been mostly luxury models sold to the top 1/3 of incomes. The middle 1/3 have been buying used cars, and the rest hanging on for dear life. Recently, car sales have fallen, despite the return of incentives, as buyers are "saturated."

Low rates also created an incentive for many upper income households to buy or build a new home, or second home. Low rates have not created incentives to build "affordable housing" anywhere. They have caused real estate bubbles in parts of the country, most notably the San Francisco and Boston areas.

Low interest rates have not stimulated business investment or other spending, or the economy generally. As a corrective measure in this business cycle, Fed policy did little to counteract the recession. I believe this point is conceded even by the notorious monetarists now in charge of our government, which is why Bush is trying to pass off his tax cuts as "stimulative." In other words, this is a back hand admission that the Keynesian critics, such as myself, were right all along: appropriate FISCAL policy is required to end this recession.

Are tax cuts the "appropriate fiscal policy?" My answer is plainly NO! The well-to-do have already had 3 years of stimulus, and the economy continues, at best, going nowhere to downhill. The main beneficiaries of Chairman Greenspan’s generosity have been the top 1/3 (or fewer) of incomes. In addition, the President and his wealthy supporters gave themselves healthy tax cuts for 2001, and every year through 2010. Under this regime, the poor generally have had their costs of living rise, while incomes fall. The middle classes are breaking even. On the whole, households under $35,000 gross income are worse off. Households having over $100,000 income are radically better off - about 14-20% better off last year alone.

Good old Harding-Coolidge-Hoover TRICKLE DOWN didn’t work from 1921-1932. George Bush gave it another 2 year trial, and it still doesn’t work. What does work is what FDR did, and Keynesian policy prescribes: DIRECT FEDERAL SPENDING on high employment programs and projects, and DIRECT GRANTS TO POOR PEOPLE.

Before we leave this discussion of dismal predictions, let us remind ourselves of a few statistics. This, despite the Mark Twain heuristic, that statistics are worse than damned lies.

The third Presidential year is often the best year of a first Presidential term. Probably, this is as good as it gets.

"Sell in May and go away." This is because large number of stocks simply go down or nowhere from now through October. May is a weak month. Things often deteriorate after the first week. Next week is the first week.

The Baby Boomers haven’t gone away. They’re nearer retirement than ever. Right now, their earning and tax paying abilities are peaking. This means national incomes and tax receipts are likely to start falling in the next few years. Then, in just five - THAT’S RIGHT 5 - years, Boomers are going to start collecting big time. The bottom line is this, even if Dr Greenspan believes otherwise: when you take money out of the bank, your account goes down. Boomers bought a lot of stocks, which are just pieces of paper expressing belief in something or other. Just like MONEY. When the money flies out of the vault, out of the market, that’s just like printing it, so its value declines. Just how soon will the DOW reach 30,000? 3,000? 300?

The last secular bear markets lasted from 1929 until 1949, and 1961 through 1982. It’s about 20 years a throw. A more optimistic view is the last bear market lasted from 1973 through 1982, or 9 years. The present bear market started in the last half of 2000. Something could happen; things could improve. Not all bear markets last 10 or 20 years; just the ones most like the present one. Is the Japanese disease catching? Many say no; I’m not sure.

The stock market stopped falling after FDR was elected in 1932. Most of the time, stocks rise when Democrats hold the White House and fall otherwise. This is probably a false correlation. The real significance is that stocks rise when interest rates are falling, and sink when rates go up; i.e., the value of stocks and bonds are linked. In the past, Democrats favored low rates whereas Republicans liked "tight money." We are about to enter a period in which equity in bonds will fall as interest rates rise, if the economy improves. It is conceivable that stocks will rise, too, despite rising interest rates, if profits rise at an even faster clip. This might happen for a while, but sooner or later rising rates should sink new investment and profits. All this favors short term traders, not long term investors.

Get real. The ultra-capitalism we’ve all been sold for the last 20 years doesn’t work. It never worked, except for the inside operators. The inside operators are also in charge of Washington. In case you still prefer not to believe my commie-pinko-Berkeley radical line, find out what’s happening with Campaign Finance Reform lately. Or , how about made-for-TV Presidential junkets to Navy carriers? Or the $100+ million put in the President’s pockets?

All the Empires I read about were corrupt, starting with Mesopotamia. Mesopotamia was Iraq about 5,000 years ago. Of course, now that the US Military has let the historical records slip away, I’ll never be able to prove my contention: the regents invented recording on clay tablets to prevent stealing from the Treasury. You see, I am quite sure, as soon as there were Kings and Contracts, Sgt Bilko found his way into service. I am sure it is the fact, not my learned cynicism, that makes me say it is so.

There are those who say the $680 million Bechtel contract was fairly bid, even though they had the inside track on this goodie. (Since when?) I am not sure, but I think VP Cheney still gets some benefit from Haliburton that, indirectly, depends on profits from such contracts. Dick Cheney’s pals on the Defense Policy Board also benefit from Pentagon contracts and activities. According to Richard Perle, people are on that Board because they’re defense experts, and the only way to be an expert is to do defense work. Which came first, the Board or the work? Sounds like a song in the Mikado about the Lord High Executioner.

The new Viceroy of Iraq, Jake Garner, is out as soon as he’s in. That’s because Iraq is going to be split 3 ways, among the British, the Americans and the Polish. The Poles! How come the Poles get some vigorish? What woodwork have they been hiding in? The great fun in colonialism is that you can never tell who’s on the payroll. There’s always another way to get a piece of the action; and the natives graciously pay for it all.

Meanwhile, Iraqis here and there keep protesting the US military presence. Our boys have been showing the ungrateful wretches a thing or two, last week dispensing quick justice to about 15 Iraqis. Soon enough, Iraqis will learn America’s policy, in Caligula’s words: ‘The people may hate us, but they will fear and respect us.’ I wonder when more modern studies will unearth the immortal phrase of Casablanca, ‘Round up the usual suspects.’

President Bush says he is determined to make Iraq into a secular Islamic democracy. No wild-eyed Ayatollahs will be allowed. Of course, a central teaching of the Qu’ran is that the government of the faithful must be instructed by the Holy Teachers (immans) in the will of Allah. Theocracy is a central tenet of Islam. In finding his new, still unpublished, interpretation of Islam allowing secular democracy, the President truly has cut the Gordian knot.

While Congress has appropriated $75 billion for military operations Iraq, it has yet to appropriate money for Bush’s Iraqi democracy. Of course, Ahmed Chalabi and the other Iraqi exiles who’ve been mentored by America in ruling the country have not yet submitted their invoices. At least, this time, they’re not on the CIA payroll.

It be great for the Brits, down on their luck for over 50 years, to be back in the Empire. It’s a hell of a feeling, when you can lord it over the world, knowing the sun never sets on your flag, and that every hair on your head is worth more than any colonial’s life. Yes, a hell of a feeling, when all’s right with the world. Rudyard Kipling anyone?

Triage is the medical procedure of choosing who will be treated, who not, when not all can be treated. The premise of triage is that not all can be served. It’s what happens in one of the few lifeboats after the Titanic sinks.

What if who can be treated is a function of who will be treated?

Suppose that nearly everyone who has a medical need in the United States could be treated. Suppose there are enough facilities and personnel to meet those needs. What would that cost? My answer: very little more than we are already paying. Those who are being treated are those selected for treatment.

America produces more food than we can eat in almost every category; certainly in the basic categories. There is no reason why anyone in North America should have anything less than an adequate, fully nutritious diet. There are some who refuse food, or who cannot be reached by distribution. There are far more who do not eat well because they are not selected to eat.

America produces or can afford imported clothing far in excess of need. Nonetheless, some people wear rags.

In most places in America, there is sufficient housing. Where there is not, there are certainly the resources to build it. Yet, in our neighborhood, in many neighborhoods, people live in sleeping bags and push shopping carts.

Some people have poor clothing and no housing, because they are not selected to have any.

Now, let us reach a more controversial subject: education. How many children are untutored because they want to be ignorant? How many are ignorant because they are not selected to be taught?

The great neo-classical (conservative) school of economics follows Adam Smith and David Ricardo in that basic Malthusian hypothesis: want is endemic. They also assume that resources are scarce. These are premises, not proven facts; even if, several hundred years ago those assumptions were more reasonable. These are also unquestioned guiding principles of Republican, monetarist policy-makers in Washington.

The Chicago School’s neo-classical mathematical models, and what everyone is taught in Economics 101, depend crucially on the two foregoing assumptions. But, if, for example, resources are available at a constant, not increasing, cost, then the classical supply-demand curve cannot be constructed. The same is true if demand saturates; i.e., if demand is not unlimited. You can only drive so many cars and eat so many hot dogs.

When I took Economics, I got very high grades in the tests. I wrote a term paper criticizing the classical economic models from a neo-Marxist point of view. The professor gave me an informal "A" for the paper, but scored it a "B" and gave me a "B" for the course. I was downgraded, he told me, because my views were just wrong. I don’t resent that bit of hypocrisy any longer, as I learned that professional economists police economic thinking as a matter of course. JK Galbraith discusses that conformity in his books about the history of economics and money.

We’ve actually had Galbraith’s Affluent Society nearly ½ a century. LBJ’s Great Society programs almost wiped out poverty. But that wasn’t good enough: it didn’t fit the assumptions, so it was impossible. Since Ronald Reagan’s election, our government and the propaganda artists have been busy creating want and insufficiency. For humans, the absolute certainty of belief is far more powerful than any impression of reality.

In America, we could go out into the community to find out who needs treatment. We could afford to build the facilities and provide the required services. But we don’t. Instead, we have facilities and services designed for those we deem worthy of treatment. It is impossible to lead a privileged life, if privilege is granted everyone.

We have a Triage Society because we believe in triage, not because it is necessary. Otherwise, we would have to see ourselves, others and our relationships differently. We would have to change our minds.