Friday, May 2, 2008

ECONOMY TANKS--DOW-JONES BREAKS 13,000

Even though the world has somehow lost untold trillions, each individual piece of bad news juices the stock markets yet another notch (Business Week) Make sense of this one. On Apr. 30, General Motors (GM) reported a $3.25 billion loss...and investors saw a buying opportunity. By day's end, shares were up 9.4%, based in part on analysts' assertions that if you subtracted $2.9 billion in one-time charges, GM beat Wall Street estimates--read entire article-- (Fox Business News) Exxon Mobil Corp. (XOM), the world's largest publicly traded oil company, said Thursday record crude prices helped its net income grow 17% in the first quarter, but the results came in below Wall Street forecasts . . . shares fell $2.32, or 2.5%, to $90.75 in premarket trading--read entire article-- (Forbes) Standard & Poor's Ratings Services said mortgage lender Countrywide Financial Corp.'s 'BBB+/A-2' counterparty credit rating remains on positive watch, after Countrywide reported an $893 million net loss for first-quarter 2008, its third consecutive quarterly loss--read entire article-- (Washington Post) The country is bracing for more bad news on the jobs front. In advance of Friday's employment snapshot from the Labor Department, economists were predicting that employers cut jobs yet again in April. That would mark the fourth straight month of job losses. The unemployment rate, now at 5.1 percent, is expected to edge up a notch--read entire article-- ____________________________________________________________________ Ordinarily, when a bubble the size of the Sub-Prime Mortgage fraud bursts, when jobs are disappearing faster than foreclosed homes, major investment banks have written down (another more comforting word than lost) $trillions--which is thousands of billions--one would expect the market to drop. Perhaps even dive. Certainly to tremble just a bit. Nah. The Dow Jones just broke through 13,000 and life is just a bowl of cherries for investors. The rest of us can't afford to drive to work and back. Prices at the grocery store are moving in the general direction of upward so fast that Starbucks coffee is beginning to look like a good deal. The foreclosure rate for conservative mortgages is outta sight. There seems no end to our capacity to absorb loss;
  • Trillions gone in Iraq
  • More trillions to the wealthy (while we got $300)
  • Trillions in abandoned, moved-out-of, looted homes
  • Trillions just plain lost by L. Paul Bremer, the Pentagon, the banks, corporate America and the funnel-of-funny-money we call the United States Congress.
Anywhere but OZ, that would affect Wall Street and American attitudes. But no, we would rather debate Obama's supposed 'elitism' and Hillary's divinatory right to answer 3am phone calls. I suspect that, no matter how shrouded in manipulation they have become under our current Secretary of the Treasury and Fed Chairman, the basic rules of economics have not yet been disproved. There are still two nails on the national wall--one for what we earn and one for what we owe. A quick glance in that direction, by even the simplest conjecture, would convince a fair mind of the fact that far more things than chickens can come home to roost.