Wednesday, November 12, 2008

Is Hank Paulsen the Stock Market Fairy?

Yeah, okay, I'm not the only one who got burned by the credit slash mortgage crisis. But I hate being suckered twice. The first time was when housing prices soared thanks to the wealth spreading generosity of Fanny and Freddie Mae. Needing to move and therefore to buy another house, we bought when prices were high and the market for housing was brisk and competitive.

The second time was when I believed the B.S. that Hank Paulsen and Ben Bernanke were feeding Congress and the public about the currently titled "TARP" but which was then known by its more accurate term: the bailout.

So you have to see how this plays out in the Post-Bush era. With the ascendance of Barack Obama, we're all supposed to be in the hopeful phase, a wonderland where everything can be solved with good will and right thinking. And like an economic giant MacGyver, we think we can fix things with a little duct tape, some pliers, and a string. Even gravity.

The weird thing is that the markets keep falling through a series of false bottoms, all the more since Obama's election. Steve Leisman of CNBC was arguing with a skeptical Italian guy I like a lot (but whose name I can't remember) and the Italian guy was saying that "the market" also didn't believe in what Paulsen and Bernanke were telling Congress.

Leisman was kind of angry, and making little attempt to hide it, when he told Italian Guy (now I got it--Charlie Gasparino) that "the market is not an entity." Get it? No, not an entity but it is a leading indicator and the smart guys and dolls who work the street aren't buying what Paulsen is saying.

Meanwhile, they are being very generous with taxpayer dollars and the profits gets no higher and neither do the stock prices and neither does it seem to "free up" the credit markets.

So WTF is going on? Don't ask Paulsen and Bernanke, they're likely to tell you to wait for the tooth fairy. But meanwhile, we'll bail out the car companies.

Which brings us back full circle to the wonderfulness of it all, and Barack Obama, and how everyone wants to believe.

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