Tax Cuts, Iran and Wishful Thinking in Europe....

"Euro Economy Growth Doubles," the headlines read this morning.

Donnerwetter, I thought. That'll get the euro-philes all worked up. And sure enough, the euro clocked in at $1.2846 around noon, a level I believe to be $0.10-0.13 overvalued.

So how did the EU create such impressive growth? Well, that depends on what you call "impressive.” Economic growth in the 12 nations that use the euro "accelerated" to 0.6% in the first quarter, according to the European Union statistics agency, Eurostat.

Yes. That's it. Zero-point-six percent.

There is a special term for this kind of growth that we use in America; it's called a rounding error. Chances are, that the first quarter GDP number for the United States will be upgraded retroactively by a number right around this vicinity.

Despite this growth rate being miniscule by comparison with the United States, China, India and even the “sleeping beauty” Japan, European Central bankers are seeing inflation all over the place.

They're probably right.

But that inflation is not caused by rampant economic growth at all. Still, the European Central Bank (ECB) will be raising interest rates at its June 8 meeting, with most analysts expecting a quarter-point increase.

Meanwhile, back at the ranch, the usual suspects are still trotting out the U.S. budget deficit as a reason to be bearish on America.

And as the Bush administration is accomplishing the difficult PR task of having the strongest economy and job market in a decade be eclipsed by late night pundits, Hollywood television writers, and perennial chants of "tax cuts for the rich," we have to dig deep in the news to find that tax revenues are not only up, but setting historic records:

The government's income tax receipts rose to the second-highest level in history last April, producing a hefty surplus for the month.

According to the Treasury Department, revenue for the month totaled $315.1 billion, pushing total receipts up by 13.4% from April 2005.

This is the largest one-month receipt total since the government collected $332 billion in revenue in April 2001, which then reflected a torrent of capital gains from stock investors cashing out before the bursting of the stock-market bubble in early 2000.

Of course, a growing revenues base reflects a working population. Is a working population creditworthy?

A passage from Benjamin Franklin comes to mind:

"The sound of your hammer at five in the morning, or at nine at night, heard by a creditor, makes him easy six months longer; but if he sees you at the billiard-table, or hears your voice at a tavern, when you should be at work, he sends for his money the next day."

According to the Middle East Times, Iran may be adding another point of interest to its many tourist attractions: The former U.S. Embassy in Tehran could be turned into a "Great Satan Park."

"We would be able to nicely show off the American crimes to citizens strolling in the park," said one General Mir-Faisal Bagherzadeh, who heads the Sacred Defense Foundation propaganda apparatus.

The property, where American Embassy staff were held hostage in 1979 and 1980, is currently used for military training by Iran's version of the SS, the Revolutionary Guards.

J. Christoph AmbergerExecutive PublisherTaipan Group’s Dynamic Market Alert Team