Happy Days Are Here Again

Quite a week, no? If nothing else it was a testament to the power of happy talk.

Think about it, the markets soared and bank stocks led the way. There was some good economic news if you think that flattening rates of decline for various indices is good news. The optimists say look at the second derivatives. The realists or pessimists depending upon your point of view say that it just proves that economic activity won’t go all the way to zero.

So if it wasn’t fundamental economic performance what goosed things up?

How about a bunch of bankers crowing about all the money they made in the first two months of the year. Citi, JP Morgan Chase and Bank of America informed us that they were virtually printing money. Earnings, um make that net interest income is going through the roof. Hallelujah and grant some bonuses. The main stream media was all over this like you know what on a stick. No questions asked. Problems solved.

When a few souls said yes, but what about losses, Congress stepped in and made it perfectly clear they had a solution for that niggling problem. An accounting rule change was pretty much guaranteed so the banks won’t be bothered with recognizing any losses when it isn’t convenient. That works well since they have all discovered that they didn’t really intend to sell all those securities they created and intend to hold them to maturity. Everyone to Level 3!

So you see how easy it is to turn around a recession and financial crisis. You just have to turn your frown upside down and tell the world that the sun came out. Hey, the stock market bought it.

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