great inconsistencies in world history

if you missed it, world stock markets did well yesterday. while a 5% jump in the dow is good, it's largely meaningless, except when pundits and other commentators need an excuse to lay pipe into each other's predictions. i expect a rash of counter-disaster articles to sweep us all back to rosy optimism and unrepetant freewheeling until sunday. in the meantime, i just wanted to point out, if you aren't tired of it yet, another great moment in finance irrationality. as reported by the ft this morning, markets are set to rally for a second day in a row, thanks, it is said, to reassuring remarks made by timothy geithner about the government's plans for the economy. what were those remarks, and in which gilded hall of national prestige did he deliver them?

Mr Geithner, speaking in a late night interview on PBS’s “Charlie Rose Show”, said he would “do what is necessary” to stem the recession. He also said the government would use the promise of federal loans to entice investors to buy distressed assets from banks, while offering the sellers capital injections for completing the transactions.

Besides making a slot that competes with Conan into a venue for delivering gomorric revelations in monetary policy, Geithner has also, somehow, managed to turn his talking points into confidence-building gold. when did that happen? wasn't it just a month ago that this kind of talk was used as a public lavatory? look at the headlines: geithner plan wide in scope, short on detail; geithner's plan falls flat; geithner plan: it's not transparent and it's still a bailout. unless i missed something, the treasury secretary's parlee with charlie rose contained only recycled material. so why, all of a sudden, is it leading markets higher? forget the fact that yesterday showed just how desperate things really are--an internal memo circulated by citibank containing projections of its own profitability hitting investors harder than an afternoon cocaine social; finance is so completely inane that the dow is liable to collapse on word that yes, madame obama is too buff.

(physicists think the stock market is crazy, too, by the way)

the only thing left for me to say is something vitriolic about people whose viewpoints i loathe, and nothing fits that bill quite like the economist. i had the opportunity to peruse an issue of that gentlemanly periodical devoted entirely to rational, scientific predictions about 2009 not two days ago. to my indescribable relief, this economic crisis stuff, it turns out, is not really a big deal. the united states economy may be a bit "wobbly" or "shaky," but it is in no way fundamentally impaired, the economic crisis itself being no more than a "slight fluctuation" which could only conceivably get worse if regulations became "excessive and stifling." you're still nervous, you say? you have doubts about the economist's inferential consistency? well, admittedly, mistakes have been made, as they always will be. in its 2008 year-to-come issue, the magazine did predict a soft landing to the slow deflation of the housing bubble, a mild dip in growth by the end of the year followed by a strong recovery in 2009, and the continuing resiliency of the well-capitalized american financial sector. it did not say anything about credit default swaps--only left-wingers hate speculation, and they just never seem to understand the importance of financial innovation--and did not breathe a word about a credit crunch in america or europe. they also appear to have missed the, uh, economic chernobyl which would ultimately call into question all the values that they have held so dear.

these might seem, to the layman, somewhat substantial grounds for criticism, but he or she should really be more generous and ask: what did they get right? well, they knew that the housing bubble would have to give way, at some point. they also knew that, at some point, the american economy would slow down. they even saw that bank of america would be in a strong position to expand by year's end; but, we should be clear, they didn't predict that BoA would also be expanding while on a fed feeding tube. i guess what i'm trying to say is that they provide a very valuable, but very subtle, service. if you're the kind of guy who's never heard the end of the phrase "what goes up, must ..." the economist is the magazine for you. it's there to fill in the blanks. the end of that statement, by the way? it's 'come down.' things come down. and that's why the e-team gets paid the big bucks, mac.