GOOD MONEY AFTER BAD :

UK economy barely growing (BBC, 28 June, 2002)

The UK economy was barely growing during the first three months of the year, according to new figures from the Office for National Statistics (ONS).

(The economy) still looks slightly weak and the services sector growth, in particular, is weaker than survey evidence would suggest

David Page, Investec The ONS said UK gross domestic product (GDP) was up just 0.1% in the January to March period, and had risen by 1.1% over the year as a whole.

Growth in the last three months of 2001 was also revised up to 0.1%.

It had previously said that GDP was flat in the first quarter, after also recording zero growth in the last three months of 2001.

The revision means the economy is not officially in recession, but it has recorded its lowest growth for two successive quarters since 1991.

So we've got money fleeing the U.S., which grew at 6+% in the First Quarter to go to places like Europe, where there is no short term growth and the future appears bleak. We like to think that markets are rational, and that may be the case over a significant period of time. But at any given moment they are just as irrational as any human institution. Today's panic over the U.S. economy--which continues to grow despite the destruction of a major financial center and our solitary pursuit of a global war--is such a moment. It's hard to see the flight to European markets and the eurocurrency as anything but a function of psychology--the EU is supposed to matter and the unified currency is supposed to do well so folks pursue the theory and ignore the reality. Posted by Orrin Judd at June 28, 2002 8:16 AM