What A Week

The Dow Jones Industrial Average finished the week down 33 points, but unless you spent the week hibernating in a cave, it was anything but a yawner. If you had told me a week ago that within seven days, Merrill Lynch would be sold, Lehman Brothers would declare bankruptcy and AIG would teeter on the edge of oblivion, I would have suggested a stint in rehab. Shows what I know. And these firms were merely the tip of the ice burg that(excuse the twisted metaphor) emerged as a near meltdown of the entire financial system. Enter the Feds with syringes full of government funds and the patient has stabilized, at least for the moment.

Seems like there was a time when a lot of us could stand aloof during financial crises and marvel as the financial pundits would scramble to explain the unexplainable. But when it starts to impact on our 401(K) accounts and IRA's, it gets real up close and personal in a hurry. And you still might be able to act as a bystander, as long as you, or a loved one, don't have a house to sell, or buy, or any other transaction that requires a mortgage. Of course, if it was your newly-unemployed daughter pictured carrying her possessions out of the Lehman Brothers building, it will be that much harder to be philosophical.

The current financial crisis has just about pushed the presidential election off the front page and relegated the campaigns to touting their prescriptions on page seven. Just as well. If the U.S. Treasury, the Federal Reserve and the SEC are making it up as they go along, Barack Obama's main contribution is ironically his call for hope; as in, I sure hope these guys figure this out. In all fairness, John McCain isn't able to offer a whole lot more, but he is our candidate, so he gets a pass.

Those Wall Street observers with longevity are quick to point out that this is far from the first financial crisis we have been through. Free markets are powerful engines of wealth creation, but they can be wild beasts at times. Market Corrections work with a brutal efficiency that belies their innocuous name. As we hopefully get to the beginning of the recovery phase, the chorus of cries is already rising for increased Regulation to stave off future downturns.

And so, stay tuned for the hand wringing during the inevitable congressional hearings, when financial wizards like Barney Frank will call down curses on Wall Street Greed. "Regulate the Bastards" will be the hue and cry. Let's just hope that they are smart enough to avoid executing the Goose that lays the golden eggs. Everyone hates Wall Street, except when it creates capital to finance companies providing jobs and opportunities. Everyone hates the stock market, except when it provides the returns to allow a comfortable retirement. Everyone hates hedge funds, except when they are cranking off high returns and then the hate is directed at fund managers are slow to accept new money from investors. Everyone hates big corporations, especially when they show eye-popping profits, except they like the taxes that they pay and the jobs and products that they provide.

We have ambivalence about free markets and rightfully so. When they work, we wallow in our good fortune, convinced it stems from our own shrewd abilities. But when corrections occur, and they always occur, we feel victimized by what is suddenly seen as the embodiment of the world's evil greed. The truth, of course, lies somewhere in the middle and on balance, it beats whatever socially-engineered scheme is in second place, by a lot.