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Wall Street Joy

Jos. Warren

Why not? The Dow has edged upward beyond any prior records, and periodically hops, skips, and jumps still higher while a non-cautious optimism rules the Street. It still hasn’t kept pace with inflation, but that’s not a concern of those smaller investors who currently ride the daily ebb and flood.

Why is it of little concern? Because this is a new generation of smaller investors: those whose life savings or free investment capital fed the machine that fueled the rise up to April 2007 are long gone. They were part of the massive foreclosure and bankruptcy wave that followed, and that continues to today.

Smaller investors are what fuel the market, systematically transferring their money to the larger investors, like at a Las Vegas casino. Larger investors – those who control the movement of the market and sustain its existence (quite literally in 1929 and 2008) – rarely go bust on a downturn. Our government and the Fed are always there to maintain their investments and compensate for their failed management practices.

To have kept pace with inflation the Dow ought to be at about $15,900 (Read, They’re Dollars, Not Points, elsewhere in this issue). Of course, it’s not, but once again, those who pumped their hard-earned capital into the Market, with very rare exception, aren’t around to care anyway. It’s a new day and a new generation, ripe for the plucking.

Still, a record is a record, just as it was on September 3, 1929 when the Dow stood at $381. That is, until April 17, 1930 when, at “294” it began a long downward slide finally resting at “62” until recapturing its “381” high in November 1954.

Right now, Congress is establishing a default payment system re-establishing its priorities for payment of obligations whereby US Bondholders and Social Security recipients will be paid before anyone else in-line should the US Government not be able to fulfill its full debt obligations later this year. Remember the Fiscal Cliff? Yeah…we didn’t solve that problem: we put it off.

Unemployment figures released by the BLS have been manipulated in new and unusual ways digesting state-provided data in such a way as to eliminate those who have completely given up on finding meaningful work. Why would a market driven by international viability think that unemployment in Europe, setting records in France, Spain, Greece, and so on, be any different here in the US? It’s a Global economy.

America has not completed the intake of homes currently in foreclosure proceedings. According to a recent Forbes article, “In the first quarter of 2013, 11 states experienced increases in foreclosure activity compared to a year earlier. Maine experienced the most dramatic jump: a 327% increase in filing activity. Other states where foreclosures surged by triple digits were Arkansas (150%), Maryland (123%), Washington (126%), and New York (114%).”

2012 Personal Bankruptcy filings generally declined nationally, but continue to trend much higher than at any time in the past fifty years. California’s filings continue at the rate of more than 5 people per 1,000 residents. Nevada, nearly 7. Utah and Colorado at about 6.

So, as Winston Wolf said in Pulp Fiction, alluding to how the joy of the moment can sometimes blind us to the greater, looming threat that is being largely ignored, “…before we start sucking each other’s dicks…” perhaps Congress and the President need to spend a little more time developing long-term solutions, rather than pandering to the moment.