appalling

distractions, including additional tragedies in the Middle East and

the odious and mounting pile of evidence of genocide in the Balkans

at the hands of Mr. Milosevic and his cohorts.

Closer to home, in a professional sense, the sleazeratti have emerged

on the business scene. These individuals, through their malfeasance,

in the delicate phrasing of Chairman Greenspan, have mugged the

American

capital markets along with many stakeholders. The market is punishing

these companies severely, although it remains to be seen to what

degree

the key perpetrators will suffer.

Politicians on both sides of the aisle are aggressively moving

punitive

legislation forward while trying, at the same time, to avoid killing

the golden business goose. The only thing we can be certain of is

that those supportive of business and market solutions and those who

would rely on government intervention to cure the excesses of market

capitalism will both emerge from this melee unhappy. However, I am

reasonably optimistic that the pull and tug of our system with its

many disparate power centers won’t fundamentally harm the economy

and, on the margins, may help to restore confidence.

The basic U.S. economic engine continued to chug along at an amazing

pace, particularly in the light of the September, 2001, horrors,

compounded

by the self-inflicted wounds caused by some of our

ethically-challenged

corporate leaders.

I think there are four factors of which three will recede in

importance

over the coming months. First, we are still experiencing a retreat

in pricing from historic high and unsustainable levels that peaked

in March of 2000. Second, the corporate felons have wreaked havoc

by undermining confidence in the markets, which has been exacerbated

by media sharks with talk of systemic structural problems. Third,

despite the improving macroeconomy, a number of highly visible

companies

have failed to meet their operating objectives for the year-to-date.

The fourth "wild card issue" is the birth of preemptive strike

foreign policy and its possible implementation against Iraq. Putting

aside the question of the folly or wisdom of such a move, markets

like certainty and the specter of war is hugely destabilizing.

But Milestone’s business is good. Deploying capital in troubled times

in capital-scarce markets has always bred opportunity. We are

encountering

many energetic entrepreneurs who focus on the task at hand in their

respective micro-markets and don’t do too much hand wringing about

macro conditions and the state of the world.

Corrections or additions?

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