It’s a little early for Christmas, but Wall Street is hymning ‘Joy to the World’ just a month after the sudden meltdown that the smart guys said no one could possibly have seen coming while losing tons of our hard-earned money. Bells are ringing, cash is flowing, the Fed is doing what it’s told, and all’s right with the world.
Except.
‘The housing bubble has burst, prices are going to collapse, and sales are going to fall through the floor.’ That’s a housing economist quoted by AP Tuesday as the Dow average was floating back above the 14,000 mark.
Now, explain to me how stocks can be climbing toward Everest while one of the most important industries in our consumer-dependent economy is tanking. Every single statistic coming out these days dealing with mortgages, housing prices, new home sales, existing home sales and the like repeats the same litany: buyers have disappeared, and those few who could buy and want to can’t get financing.
The goofball securitization process by which worthless mortgages got pretty bows tied onto them and resold as arcane investment vehicles blew a massive, gaping hole into the whole system. But now it’s all fixed—except that it isn’t. Nonetheless, all the geniuses are swooping back into stocks.
These are the same geniuses who didn’t see the August double hurricane coming and lost a bundle. But now they’ve got it right. Right?
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2 comments:
No. The DOW recovered way too quickly on the first rate decrease. And, as actual earnings get posted there's been wobble. There will be more. I think the current activity is testament to, "As long as the music keeps playing, you have to keep dancing." (Charles O. Prince III, CEO of Citigroup)
Your assertion that this is one of the most important industries is probably wrong, if we look at the world from a Wall Street perspective. I believe private housing belonged to an uninteresting small business sector, featuring actual competition and few opportunities for big business.
It I'm correct big investors couldn't care less what happens, as long as the financial companies manage to stay afloat.
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