Zbigniew Piekarski observes how geopolitical uncertainly continues to shake the markets.

"War is harmful, not only to the conquered but to the conqueror. Society has arisen out of the works of peace; the essence of society is peacemaking. Peace and not war is the father of all things. Only economic action has created the wealth around us; labor, not the profession of arms, brings happiness. Peace builds, war destroys."

- Ludwig von Mises (1881-1973)

Thus wrote the Austrian-Polish economist born in Lwów, (at the time Lemberg) who, in turn, was a disciple of Carl Menger, an economist who held a doctorate from the University of Kraków and was a founding member of the Austrian-Polish School of Economics. Thus, history is rewritten once again and the country has a little slice of the action.

"Geopolitical uncertainty" continues to unsettle the markets. Initially, the Jabberwockies saw themselves as participating in a Rambo movie with the memories of Operation Urgent Fury (Grenada, 1983), Operation Just Cause (Panama, 1989) and Operation Uphold Democracy (Haiti, 1994) replacing the indignity of Vietnam (1954-1975), whose problems were initiated by 100 years of colonial misrule by the French.

Now the war in Iraq is going to take "longer than anticipated," but "victory is assured." Whose victory? Will the cowboys set a new record in friendly-fire kills? Will the 40,000 media personnel drink Kuwait City dry? Will there be one human-shield casualty before the war is over? And the final imponderable - which team of officers trained at Sandhurst and West Point will win the game? Ours or theirs?

Worldwide, we now have a "soft" economy, a "sub-par" economy, a "skittish" economy, an economy "weighed down by weak expenditures," an economy of "persistent weakness," or, my favorite, an economy facing "formidable barriers to vigorous expansion." Call it what you will, but don't call it a recession. As for the D-words, depression or deflation, don't even think about them.

As the war approached, the American markets rose for a Fibonacci 8 straight up from a low on March 12, including the largest weekly gain in a Fibonacci in 21 years (both 8 and 21 Fibonacci numbers constitute the mathematics of nature), and peaked on March 21, as too did the WIG and WIG-20. There may be another short-term peak before the resumption of the bear market to new lows.

Just before the bombs started to fall, WorldCom provided a stark reminder of what the term "misallocation of resources" implies as it successfully turned every $1 invested into 25 cents. France Telecom has the accolade of being the most indebted company in the world, and this quarter it raised the same amount as six years ago but at half the price. TPSA will survive, as it is a form of indirect taxation and a major source of "consultancy fees" to the establishment.

The banks are reasonably resilient to date, but only because they have passed on their liabilities to the insurers. Münchener Rückversicherungsgesellschaft (Munich Re), the largest reinsurance company in the world, peaked on March 10, 2000 at E397.73 per share. It reached E59.12 at the end of this March, a fall of 85% with a loss of more than 12% in one day.

Closer to home, how about "Royal" Ahold, with 165 stores here, including Albert, Max, Szalony Max and, my favorite store from times past, Sezam? Its share price in July 2001 was E37.39; its share price on February 26, 2003 was E2.39, for a loss of 94%. Flatland grieves, and the elite of that country is now involved in either defending or prosecuting.

The Bank of Japan held an extraordinary meeting and Toshihiko Fukui, chairman of the Fujitsu Research Institute and a former deputy governor of the BOJ, was appointed governor. The Nikkei 225 was supported again, so that Japanese banks could survive. Land and property prices have fallen for the twelfth year in succession.

In its twice-yearly World Economic Outlook, to be published on April 9, the International Monetary Fund will cut its 2003 global growth forecast from 3.3% to 3% and trim its forecast for the euro-zone from 1.3% to 1.1%. The World Bank has already lowered its global forecast from 2.4% to 2.3%. Despite the shrinking projections, more than 80% of the U.K.'s "top-rated" fund managers expect a significant recovery in the stock market this year. Well, it's not their money as their bonuses are paid despite performance.

As for the local slithy toves, regardless of party or position, they still gyre and gimble in the wabe and treat the faltering economy, and the electorate, with disdain. They assume that our membership in the European Dis-union and their turn at the trough is certain. They seem to forget that the forthcoming referendum is non-binding and the EU's existing members still retain the right of veto.

On a more optimistic note, I have found one thing on which the Christians and Muslims agree, and that is that the year 2076 will mark the end of the world.

According to the historian Bede the Venerable (673-735), the greatest scholar in Anglo-Saxon England who was the first to date events, Anno Domini Jesus was born 3,942 years after the world's creation, and the world will end in its 6,000th year. 2071 will also be the 1,500th year in the Muslim calendar, which, according to some Sufi sects, will mark the end of the world.

On All Markets: The capitulation is yet to come with a temporary top on April 11-15, and then new lows in May. The outlook and forecasts are still too bullish. The quest for "intrinsic value" has ended, replaced by a quest for "fair value." The next stage will be "any kind of value." Before the bear market ends, the quest for "value" will be abandoned.

Zbigniew Piekarski is a portfolio manager based in Warsaw. He can be reached at zbigp@bipnet.pl.