From the Editor

You would have thought that, with the Chinese being kind enough to finance huge slugs of the US trade deficit, George Bush would be grateful, or at least want to keep them on side. Far from it. Instead, his administration has announced its second action in just a few days against Chinese imports. First it was textiles. (It's a "bra brawl", says Barron's.) Now it's TVs. But Bush doesn't really appear to have a leg to stand on with his shift to protectionism. He can't say he's temporarily protecting America's TV industry. What's left to protect? As Jonathan Allum at KBC points out, the complaint against Chinese TVs came from Five Rivers Electronics LLC of Greeneville, Tennessee, who assemble, rather than manufacture, TVs for "those stalwarts of US manufacturing, Royal Philips Electronics and Samsung Electronics".

And nor can he in all fairness use the sudden and hence destabilising rise in imports argument. Not when only a few weeks ago a member of his own Council of Economic Advisers pointed out that "our imports from China replace imports from other countries rather than add to total imports in the textile and apparel industries, for example, China's increased share of US imports since the mid-1990s has been more than offset by decreased imports from Hong Kong indeed, although the share of US goods imports from China has increased since 1990, the total share from the Pacific Rim (including China) has actually fallen". It seems Bush isn't listening to his economic advisers any more than he is to Alan Greenspan. ("It is imperative that creeping protectionism be thwarted and reversed," says the Fed chairman.) This might make him more popular at home, but it won't do anything else that's positive: protectionism hardly ever does.

In sector of the week on page 7 we have taken another look at the tech sector, just in case we've missed something. We haven't. There's still no real evidence that corporate spending on IT is going to hit the levels the bulls expect, and even if it did the sector would still be grossly overvalued. (Lastminute.com fans note that in the wake of its maiden profits its shares now trade on a real p/e of over 2,000 times, according to Dailyreckoning.com). So ignore those who tell you to buy. I would say it's close on a certainty that none of the fund managers who recently told the Investors Chronicle that "undervalued, limited-risk tech stocks that can be bought and held until their values are discovered" are still available are holding many in their personal portfolios. This is a mini-bubble and everything in the sector will be hit when it bursts. I don't know when that will be, but I won't be holding any tech stocks when we find out.

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