So here’s where we are at:
- Almost two weeks ago the market soared when late on a Thursday word broke that Congress would soon see a U.S. plan to help solidify the financial system. It continue to climb the next day.
- The market then fell on the first three days of the following week as it became obvious that doing such a plan was far from a lock, and as Congress squabbled and fought over it.
- The market then climbed for two days on signs that Congress was behind the bill, that it was taking it seriously, and that it would get completed over the weekend.
- The market tanked yesterday, as the House voted down the current plan, saying a host of things, many of which were petty, silly and personal.
- The market is soaring again today on news that plan isn’t dead yet, and that some in Congress are saying a "bill get done".
- We’re back to hearing that something may come together by the weekend.
Congress needs to put or shut up (and heaven help us if it’s the latter),and Treasury’s Paulson needs to become less of a liability. First, these oscillations are doing even more damage to equity markets, with investors withdrawing more capital in the face of record volatility. Similarly, it keeps credit markets locked, as no-one knows what to expect so cash is kept on lenders’ balance sheets, not given out. And I’m not just blaming Congress here, but a tone-deaf Hank Paulson who misplayed his hand badly here.
At the same time, ass-hat politicians misinterpret these moves. Yesterday the world didn’t end, as some had thought Paulson had suggested, so they maintained a world-weary sang froid about the whole thing, arguing that the markets should be left to sort themselves out. Similarly, today’s climb in the markets has these same people saying, Look, the markets are already on the rise, ignoring that the only reason markets are climbing is because they think there is a chance a plan will be passed.
So now we’re back to where we were a week ago, with hopes rising that by next weekend we will have some sort of plan that can make it through the U.S. House of Representatives. If it feels to people a little like Lucy, Charlie Brown, and the football, that’s because it should. Too bad we’re all the football.