As the morons on Fox News were denigrating our soldiers, four of them were dying in Afghanistan. It’s a conflict plagued with questions. Even our prime minister now says the Afghan war cannot be won. But he’s not there. Nor are we. Nor Fox News.
Sometimes, however, worlds collide. That happened this week as those four, who sacrified everything, arrived in their hearses bearing flags at the coroner’s office in downtown Toronto.
William Stratas, the webmaster of this site and a man with whom I have shared many unique experiences, was there as the long journey ended. “Everyone is familiar with the highway overpass scenes,” he says, “what happens within arm’s reach of the motorcade as it arrives at destination is far more intimate – plus the emotive walk-about of their comrades after the cars have passed.”
Global stock markets surged on Monday. Were they delusional?
Many people believe the financial system is essentially toast. Banks spent more time selling each other garbage assets than assessing risk. Rating agencies traded principles for fees. Investment bankers traded caution for compensation. Hedge funds ran amok without supervision. The world’s biggest insurer gambled hundreds of billions, and lost. Equities and commodities were fuelled by speculation and leverage. Banking became a bubble and the system was so corrupt, unprincipled and unregulated that a bloodsucker like Bernie Madoff could feast in the open.
Shame. It’s a system deserving failure.
But it won’t happen. The markets know this, even as revulsion grows over AIG bonuses. And so, a buying frenzy.
Governments will not let one single more major bank fail anywhere in the western world. Unlimited billions in public money will go into propping up even the most questionable of the financials. More proof of that came this week, with the latest Obama bailout – another trillion to buy up toxic assets (they used to be called ‘mortgages’) from banks who should never have been dealing in them.
You may not like it. This may be patently unfair. Millions of people may lose their homes while insolvent banks are showered with money. But it’s gonna happen anyway. And this is why the first and most serious money to be made as the Great Recession enters the next phase will be equity investors.
I first said this some weeks ago, to great howling from the blog dogs. Equity markets are leading indicators, just as real estate markets are lagging ones. The Dow and the TSX will regain their 2007 levels years before house prices get anywhere near their former frothy levels. The gains will not only be on the prospect of enhanced corporate profits as the economy improves, but they will come on the backs of subsidizing taxpayers. Like right now.
The Canadian market is ahead 18% since March 9th, and about where it was when the year began. Financials have gained 34% and, in the wake of the Suncor-Petrocan deal, energy companies have also surged.
News from the US real estate market was positive, with sales jumping 5% last month as first-time buyers gorged on a feast of foreclosures and cheap mortgages. Retail sales are higher, too. Even enough inflation to please economists. And, of course, there was $1 trillion Obama put into bonds last week, and other trillion into banks this week. Whatever it takes.
Whatever the debt mess that may await us in a decade, there’s no question current governments could care less. Nobody in power today is willing to have a depression on their watch and, besides, it ain’t their money. It’s yours.
Of course, the current rally could end up being a bear trap. The odds of that are overwhelming. But the sharp advance proves the market is now willing to focus on good news more than the bad. And why not? More crap will simply prompt more government spending – more assurance the system will not fail, more lubrication for a society which got too much avarice stuck in its gears.
