Remember April 2, 2009. The events of yesterday are unique and world-changing.
They are:
change in mark-to-market accounting rule;
attendant rise in the S&P 500 (or "Dow" if you wish to follow that) with the assurance that the market is now no lon-ger a "Bear" market;
Geithner and Obama wow the world and actually accomplish things at the G-20;
Cramer said the unthinkable -- we now are out of "the de-pression." The depression, what??? Nobody ever said that we were in one. But,
as Cramer says, when you have a 60% decline in steel orders that's a depression. (I think I heard him right.)
The following Krugman article highlights the "China Dollar Trap," which may or not relate to the events of yesterday, but the article is worth a study:
http://www.nytimes.com/2009/04/03/opinion/03krugman.htmlBy the way did you notice that the tone of the advance the last couple of days was much more even across the S&P 500? Not just the banks. That indicates that the mutual funds are jumping back into the water.
For a brilliant analysis and compendium on the two theories of how we got where we are, see David Brooks today:
http://www.nytimes.com/2009/04/03/opinion/03brooks.html
I am of the Simon Johnson "Greed" Camp, and the Wall Street Stupidity Camp.
The greed narrative leads to the conclusion that government should
aggressively restructure the financial sector. The stupidity narrative is
suspicious of that sort of radicalism. We’d just be trading the hubris of
Wall Street for the hubris of Washington. The stupidity narrative suggests
we should preserve the essential market structures, but make them more
transparent, straightforward and
comprehensible. Instead of rushing off to
nationalize the banks, we should
nurture and recapitalize what’s left of
functioning markets.
