Looks like president Bush is in a negotiating mood and may be preparing for a more "can-do" type conversation with Congress. I was discussing corporate financial reporting with a colleague when I saw this story, which made me wonder whether there was a proper accounting of the war on the part of the government. I know the war is "off budget" and just lurks in the shadows of Washington D.C. while contributing to our national debt and ever increasingly having an inflationary effect. But is there a proper accounting?

This seems eerily familiar. Was it not Enron that in recent years fell from grace (once the 9th largest public company) because, in part, it juggled its books when the numbers did not look favorable? Strangely, it too had many "off budget" items not properly accounted for, hidden from shareholders -- are we not shareholders in our nation?

Like Enron, we find ourselves falling from grace. Not to be to bleak about the subject, but it concerns me that if the true figures were known to the public in a way they could relate to, we might lose more people to heart failure and depression than our military has lost to date fighting in Iraq. See: National Priorities Project Cost of Iraq War Notes and Sources for some figures and discussion on the subject.

Haliburton Co. (NYSE:HAL) is the latest U.S. company headed oversees for friendlier tax laws.

The company is relocating its corporate headquarters from Houston to Dubai, which the Associated Press points out has some of the world's most liberal tax and residency laws. Haliburton said its moving because of the growth opportunities in the region and analysts say its smart strategically. The company also is eager to jumpstart is stock price which has barely budged over the past year.

Though the stated reasons are financial, there's obviously a political dimension.

The Democrats who control Congress are going to make Haliburton's life miserable. Last month, federal investigators claimed that Halliburton was responsible for $2.7 billion of the $10 billion in contractor waste and overcharging in Iraq, the AP said.

Not surprisingly, bigshots in Congress were outraged.

Sen. Patrick Leahy (D-VT), chairman of the Judiciary Committee, called it "an insult to the U.S. soldiers and taxpayers who paid the tab for their no-bid contracts and endured their overcharges for all these years." House Oversight and Government Reform Committee Chairman Henry Waxman (D-CA) may hold a hearing on the issue, an aide told Reuters.

There's been a hubbub over similar moves by Tyco International Ltd. (NYSE:TYC) and other companies. In reality, there's little the Congress can do. In fact, I bet some Democrats would be happy to help Haliburton box its stuff up.

Lockheed Martin Corp. (NYSE:LMT) and Northrop Grumman Corp. (NYSE:NOC) today posted solid fourth quarter results today, helped by the huge increases in defense spending from the War in Iraq and Afghanistan. Both companies also raised their earnings guidance.

Lockheed's profit was $729 million, or $1.68 per share, versus $568 million, or $1.29 a year earlier, the Bethesda, Maryland-based company said in its earnings release. Sales rose 6 percent to $10.84 billion. Analysts had been expecting profit of $1.46 and sales of $10.77 billion, Thomson Financial said.

The company raised its profit forecast for the year to $5.80 to $6 per share, from its previous guidance in October to reflect improved performance in its aeronautics business. Revenue is seen at $40.25 billion to $41.25 billion. Analysts had expected profit of $5.87 on revenue of $41.6 billion.

``We've had very consistent program performance and execution,'' Lockheed CFO Christopher Kubasik told Bloomberg News. ``One thing we're striving for is perfect execution on all 3,000 of our programs. When you meet your deadlines and deliver products and services on time and on budget, you see the contribution to the bottom line.''

Northrop's profit rose to $453 million, or $1.28 per share, compared with $331 million, or 92 cents, the Los Angeles-based company said. Revenue jumped to $8.02 billion from $7.67 billion. Profit from continuing operations was $1.29, beating Wall Street expectations for profit of $1.26, according to Thomson Financial.

The company's guidance for 2007 was $4.80 to $5.05 per share on sales of $31 billion to $32 billion. Analysts had expected profit of $4.85 on sales of $31.8 billion.

Yesterday I was raked over the hot coals by several readers that feel we are doomed by a housing bubble that I would not accept. See: Housing Truth from Main Street; which turned out to be quite a controversial post.

I stand by most of what I wrote. However, there were plenty of valuable insights that are worth reflection among the ranting and raving. A particular comment by David Gross, although not very deep is important for its simple summary of many comments. It stimulated a response from me that I thought was worthy of a separate post and further discussion.

David's Comment

China may be kicking our collective butts regarding our colossal trade deficit, but it is also doing its fair share of spending too. Spending by China has affected commodity prices (metals, concrete), energy prices (oil & gas), construction service prices (design, planning, engineering, management), shipping, housing, clothing, electronics, you name it. The Chinese have been spending with reckless abandon -- all the time buying our treasury notes and expanding their economy at the rapid pace of 8% to 10% GDP annually. Read the Economist for more, China forecast

Growth in China has spurred the U.S. and the global economy. Reading the comments I have received to yesterday's post Venice Beach as economic indicator: Consumer spending slows, there seems to be plenty of negative sentiment out there about the U.S. economy. Making the case for recession is not hard to do. One could simply look at our run-away trade deficit and Federal spending. With a minimum of economic understanding, you could get scared to death.

My "favorite feature" of the U.S. budget (deficit) is the cost of the Iraq war which is an "off-line" item -- meaning they do not count it in their figures. That's hysterical. Let's all just take our mortgages and rents and put them off-line. Then we won't have to worry about them and no one will notice. The Feds should have a "Department of Pretending". EVERYONE WOULD UNDERSTAND THAT PERFECTLY.

I think the Federal branch learned this trick from Wall Street. It's called a "one-time expense" and since it's not a "recurring expense," analysts just set it aside when determining the value of a company. That stinks, but it will have to be the subject of another story. The problem is we have had this one-time expense (Iraq) for several years and we can anticipate several more.

But I have digressed. The main point I wanted to make here is that we can all make the case for a recession. Trade, debt, spending, energy, housing and numerous other areas support the case. Commenter's have raised these issues and see bad times in the next few years.

While I agree that is a possibility, I think that global recession will be postponed at least until the Chinese have their BIG OLYMPIC SHOW in Beijing, regardless of any other factors. I believe the Chinese government has been postponing numerous "pipers they have to pay" because of the upcoming Summer Olympics. This has been a major focus since they won the right to be the host in 2008. Some of their early and rapid economic expansion can be traced to this effort. When it is over they will utter a collective (leftover communist term) sigh of relief. When that happens, spending will slow, interest rates will be allowed to rise and only firms specializing in the clean-up of the environment will be popular.

China has not only been slow to curb its unsustainable growth, but one of the pipers they will have to pay will be for cleaner water, air and city streets and farmland. The first part to any clean-up campaign is to stop doing those things that are causing the problem; which is everything, in this massive national expansion.

I do not see the same doom that many see. But when China takes that HUGE sigh of relief, then we may have a recession.

Sheldon Liber is the CEO of a small private investment company and the vice president for Design and Research of an Architecture & Planning firm.