Latest Delusional Market Behavior

The latest "sugar rush" to keep the market pumped has been the implicit promise of Big Daddy Fed coming to the rescue of the United States' economy and financial system. The concept of lowering interest rates to make credit, and consequently liquidity, more available is an idea which would have more play in an environment where solvency issues were not the context in the background.

The chorus of more sober voices highlighting the serious underlying economic issues are, as usual, being drowned out in favor of the voices of hyperbole espousing more faith based investing themes such as "stocks always go up in the long run", the worst of the credit crisis in behind us, etc. These spinnings, by and large, invite a "trust me" perspective in the absence of a more evidentiary decision process.

What remains largely unsaid is that we appear to be at the later beginning stages of a collapsing housing market, rather than at the end stages. The consequences are likely to be felt in job losses, decreased consumer demand, and increasing insolvencies and foreclosures. These latest exhuberances of the financial markets are likely to end poorly after having sucked in a multitude of additional naive investors impressed by its glitter.