We are in the eye of the hurricane right now.
The birds are chirping, the sky is blue, it is eerily calm.
The stock market is rallying off the March low, thanks to Bernanke's umpteenth market intervention i.e. the Bear Stearns bailout. It's a ragged, low volume, narrow (breadth) rally, but enough to get the Wall Street Bulls believing that the next great Bull Market is well underway.
Just this week, Henry Paulson told us that the worst of the credit crisis has passed. We are told that even though the 'real' economy is getting worse (job losses/inflation/housing) that the financial markets have already priced in ('discounted') all of the bad news and are rallying in anticipation of the coming economic expansion. Listening to the perma-optimists you would believe that all debts have been paid, the trade deficit has been eliminated, both wars have ended, oil is plentiful, the housing market has stabilized, inflation has been tamed i.e. it's a 'Goldilocks' economy - not too hot, not too cold.
So if you STILL trust your elected officials (Bush & Co.) and their over-rated-Wall Street-country-club-advisors (i.e. Paulson), then by all means you too should indulge your denialistic fantasies. I will take a pass thanks, as I am not inclined to believe the ever-sunny predictions of those who didn't foresee this crisis in the first place.
Getting back to the hurricane analogy, it's the front of the hurricane that weakens the structure, but it's the back of the hurricane that destroys it.
If I am right, Papa Bear is on his way home.
