By Timothy Hagy, Paris Editor

PARIS, November 8 - No sooner had the blue ink dried on Jacques Chirac's congratulatory statement to George W. Bush, than the French President slipped and said what was really on his mind. "Europe would be well advised," he warned a gathering of leaders in Brussels last Thursday, "to consider what consequences (the falling dollar) could have on economic activity and especially on exports."

The plunging US dollar, weighted down by the nation's rising deficit spending, has had the undesirable effect of pushing the price tag of designer labels higher than cost of crude oil. Take a look at the fall collections, and you start to get the whiff of what is on the way for Spring 2005. Not only are European labels skyrocketing, but American designers, dependent on imported Italian textiles, have watched retail costs blast off into the stratosphere.

But that's not the only reason fashion may soon be singing the blues. The fact is that John Kerry lost the election in part because he was perceived as a jet-setting élitist, and his wife a connoisseur of Chanel - shoes and camellia pins at least. That reality might be enough to make even Anna Wintour take off her sunglasses. If the glamour she's made a career promoting is only marketable in blue pockets - New York, Portland, San Francisco and West Hollywood among others - might that not affect her own purse strings? Lets face it, most of what goes down the runways is not destined for Sunday morning services.

But the problem runs deeper. It's been a long, rough road since the high-flying 90s when current trends were born. Tom Ford resuscitated Gucci Group, in part, by showing skin and peddling sex. Just thumb through the archival publicity ads reprinted in his new book to find more than you probably ever wanted to see. The delicate line that separates sensuous allure from soft porn gets blurred. And whatever you think of Tom Ford as a designer, from an historical perspective, his ideas have come up against a crimson wall of modesty.

Ditto for Donatella Versace, whose financial problems have been compounded by personal ones. Her company was already in the red before she blew off to detox.

The French, for their part, have always approached sex differently. It's all about coquetry and seduction. Tom Ford's ill-conceived show for Saint Laurent Rive Gauche for Spring 2003, which featured penis-pendants, vagina slit dresses, and at least one model's breast ornamented with nipple painting, went over like a lead balloon.

To the contrary, Alber Elbaz said just last July that he did "everything possible to cover up skin", including banishing any transparent material, and avoiding skirts short enough to require matching underwear. Or, you could take a look at Dior Homme under Hedi Slimane, where the idea of dissent translates into long-haired models sporting low cut jeans, their shirt tails trailing under layered vests. That look is red hot, not movie blue.

But then again, there is huge difference between fashion as art, and fashion as merchandise.

Fashion, on the whole, seems as befuddled these days as the unusually quiet Donald Rumsfeld. On the cusp of the last New Year, Marc Jacobs all but predicted the outcome of the US election with his men's show for Louis Vuitton, a collection of Reaganesque business suits, worn by models looking as pristine as South Dakota's new junior senator, John Thune.

For Spring 2005, The New York set tried turning back the clock to the 1950s, sending out pieces that were seemingly inspired by the wardrobe of the present day Laura Bush.

In Paris, John Galliano came up with T-shirts printed with the slogan "Dior Not War". Those are not likely to sell well in the Red Zone, unless of course it's China, where most luxury Houses are increasingly focusing attention anyway. And who says Fashion people are dumb? It's the Asian rim Central Banks that are loaning the US Treasury enough green ink to hold back the swelling tide of red.