The new war on terror isn't going to be of much use in combating the present plunge in America's well-being. Well before the twin towers fell to earth the country was entering a fierce decline, and it is assuredly going to get worse.The fall in growth and investment from early 2000 to early 2001 was the fastest since 1945, from 5 percent growth to zero. So fast, indeed, that people are only now catching on to the extent of the bad numbers, and battening down the hatches as bankruptcies begin to rise.

How did we get from the Merrie Then to the Dismal Now? The bubble in stock prices in those last five years sparked an investment boom, as corporations found mountains of cash available, either from the sale of overvalued stocks or by borrowing money from the banks against the high asset value of those same stocks. And as the Lewinsky years frolicked gaily by, there was a simultaneous consumption boom as the richest fifth of the citizenry--the Delta Force of national consumer spending--saved a lot less and spent a lot more.

The shadows were there for those who cared to look for them. In 1998, 1999 and 2000, when the boom was reaching historic proportions, when annual borrowing by US corporations had reached a historic peak as a percentage of GDP, when Fed Chairman Alan Greenspan was vaunting the power of markets, the rate of profits was falling in the nonfinancial corporate sector, significantly so in manufacturing.

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