The very gent who coined “irrational exuberance” in the late 90s, upon finding himself in the eye of the tech-bubble-bursting-storm of the early 2000s, embarked on a monetary stimulus campaign that, for a time, won him rock star status on Wall Street. A campaign that, ten years later, many credit for creating an irrationally exuberant real estate market and a credit bubble for the ages…
As I type the Dow’s down triple digits… I suspect that had Mr. Greenspan’s successor, in yesterday’s post FOMC comments, suggested that QE3 (QE’s 1 and 2 having trumped Greenspan’s decade-earlier effort in terms of dollars spent) was in the offing, the Dow would be up triple digits…
I once heard that Wall Street traders have a shelf-life of something like 3 years… And I suspect that goes a long way in explaining why, when they should know better, they’re such short-term thinkers… I.e., they’re either drinking Keynesian (the theory that the economy can’t survive a contraction without government intervention) Kool-Aid or they just can’t see past the end of their careers…
In essence, as has always been the case, reactionary traders rule the market – short-term… In the long-run however, it’s corporate earnings that count…
Stay tuned…