The turmoil in the worldwide markets and the response of central bankers, notably in Europe and the USA, leaves me sounding like a consultant, "On the one hand, on the other hand..." It is indeed the responsibility of central bankers to instill order, but I fear too much inducement will keep the markets from doing their most important tasks: punishing inefficiency and ineptitude. We must not create the expectation of bailing out every mistake; else we promote a level of risk-taking that will make the "irrational exuberance" of the '90's look like child's play. Hopefully the bankers are playing it just right.

There is much talk here in the USA about the country's politics moving to the left, with the expectation that next year's presidential election will bring a Democrat to power. I would submit that the two primary parties are not that far apart on major issues and another force at work these days is much more important as far as economic issues in particular are concerned. Look at the last two administrations: President Clinton pulled off a tremendous record in fiscal discipline due to his ability to reduce the military as a percentage of the overall federal budget following the end of the Cold War. President Bush moved the USA closer to universal health care with the prescription drug plan for the elderly (while losing the fiscal discipline of his predecessor). The changing conditions that will drastically affect the economic health of the federal budget in the near future are again military. If the technological advantages on the horizon lead to further capabilities in robotic instruments of war, which are predicted to be widely in use by 2015, the need for a human military will decline even further, and along with it the relative cost of the military as compared to the whole budget. The next president may very well see the military budget advantage that President Clinton had once again materialize.

One thing I fervently hope no political party will do is succumb to the tantalizing promises of increased trade tariffs. The protective tariffs of the late 1800's and the 1920's and 30's led to universal disaster and are lessons of what not to do that we should repeat as a mantra daily. On the surface, tariffs appear to be a seductive balm of soothing oils, but in reality, when applied liberally, are full of the burning sensation of turpentine on raw skin.