Gekko.

IN ONE of those bursts of effort that falling-down drunks can come up with, the economy showed a little more strength in the first quarter than people like me expected. This has provoked hope (among Democratic officeholders) and fear (in the bond market).

But there is less to the notion of an economy in "sustainable growth" than meets the eye. The higher-than-expected consumer spending that has got the credit markets spooked was driven by a couple of special circumstances. First, the erratic schedule of income-tax refunds, which pretty much go to people who need to spend them immediately, favored February and March. Weekly refund payments in those months were running 25 to 45 per cent above the levels of a year ago. That helped. But the Clinton tax increases on higher-income people will hit in mid April, and by May retailers will be looking elsewhere for cash for the register.

Retailers have also been depending on consumers' willingness and ability to borrow. And once again, the beginning of the year showed double-digit increases in consumer installment debt over levels of a year ago. But the consumer, especially the middle-income consumer, can't keep adding debt at an annual rate of more than 14 per cent when hourly earnings are going up at a 3 per cent rate. Before there's any strong revival in buying power, some of this debt has to be paid down. And remember that this debt carries a variable rate that has been rising since the beginning of the year.

The consumer will also be paying more for energy and food, which has the same effect as a tax increase. And while inventories of grain, oil, and oil products are low, which is driving the first phase of the coming commodity inflation, inventories of manufactured goods -- such as personal computers, semiconductors, steel, and paper -- are up. Those will have to be worked off before demand can revive.

And the growth rates of capital spending, which has been heavily weighted to computers, are dropping from double digits down toward -- and in some cases below -- zero. Exports to our still-anemic rich-country trading partners are slowing down. This won't go on forever, of course. Politicians and the monetary authorities who are employed by politicians will go for the fool's gold of monetary inflation. Before then, though, there will be a very disappointing economy. Republicans ought to be positioning themselves as the pro-growth cutters of taxes and spending. You can see the tax-aggravated slowdown coming. Why not sound the warning?

If a paradise on earth could be created by philosopher-planners, then France would be the beacon of enlightenment. I just spent a few days in Paris, and I have to say that if you've made your money elsewhere, that is a great city in which to spend it.

And for the moment, the bond markets are saying that France is an only infinitesimally worse credit risk than Germany -- yields on French bonds are within 10 basis points (one-tenth of 1 per cent) of yields on German bonds. If you believe the swap market -- and I don't -- French interest rates will decline below German rates within three years.

Do you remember, in the stage version of Peter Pan, when all the children in the audience have to clap to keep Tinkerbell alive? Well, think of European Monetary Union as Tinkerbell and European bureaucrats and their allies in the bond markets as the children. True, Peter Pan was fiction -- but so is EMU. The idea is that by tying fiscal and monetary policy to Germany, the French government elite will impose Teutonic order and discipline on the French workforce and public.

Maybe. Well, no.

Unemployment is over 11 per cent officially, and God knows what percentage in reality. If you are a senior civil servant spending your expense-account francs during a monetary conference in Germany, Spain, or Italy, everything looks pretty good. On paper, your state budget is moving toward "convergence" with that of Germany, and even the pesky English Conservatives look as if they'll be tossed out.

But that civil servant is kidding himself. However much the tax collectors lay on their whips, it's going to be hard to balance the budget with more taxation. As for cutting spending -- the government is forgetting that its Faustian bargain with the voting and working (or striking) public requires it to provide something for nothing. Social spending and government jobs must be preserved, taxes can't increase, and the currency must remain strong. Oh, and inflation and interest rates can't go up. This will all be made possible by the best government planners in the world.

I listen to expat Americans who have been hired to lecture on venture capital in the state's elite schools. They have the frustrated aspect that you can imagine besetting the first Jesuit missionaries among the Indians of Paraguay.

Sell French bonds against their German counterparts. The Germans aren't happy either, but they're not as deeply into self-deception.

If you care at all about Asian finance, you should pick up Grant's Asia Observer. Jim Grant's skeptical analysis of credit-market excesses has been invaluable since he started Grant's Interest-Rate Observer in the early Eighties. He and Jeff Uscher, who worked for years in the Japanese markets, have shown in the first two issues of the Asia Observer that they're keeping up to the standards set by the domestic edition.