I Want to Believe.

The powers that be have made their gambit to save the economy, and they have really put it on the line this time. The Fed, for example, is accepting collateral it has never before accepted, and when one looks closely at the deals they have engineered of late, i.e. Bear Stearns being sold to JPM, it is clear that the Fed are not so much loaning money as effectively giving it away. The stock market has responded to the the Fed's moves and talk of government purchases of distressed mortgages by moving furiously higher, and a substantial number now believe that happy days are just around the corner.

Perhaps, but recall that in order for the U.S. economy to thrive, consumers must spend. Will they? Can they? Will the drastic measures by the Fed to salvage the banking system translate into meaningful economic activity that will provide ballast for Joe and Jane consumer? Where will the jobs and income growth come from at this point to ease debt burdens and provide extra money to buy, buy, buy? Because that is what must happen going forward. American's willingness to borrow, let alone access to credit is not going to be restored to anything like what is was not so long ago, and that is what allowed, among other things, the present desperate situation to occur in the first place. Obviously we don't want to return to that state of affairs, which means a much more healthy set of conditions must emerge to pick up the slack.

I, for one, don't see what has transpired over the last few days and weeks as changing anything fundamentally for the consumer, and so this rally, spirited though it may seem, will be a gossamer affair. Make no mistake, I want to believe the happy talk crowd, but unfortunately I believe they are engaging in a heaping helping of wishful thinking.