Our Man of Year Is Mr. Market!

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". . .huge new amounts of borrowing are unlikely to cure an economy already suffocating from debt."

Time magazine chose Helicopter Ben as "Man of the Year," supposedly because the financial system would have collapsed if not for the unprecedented emergency actions pursued by Mr. Bernanke's Federal Reserve. We'd say the jury's still out on that one, as Phase II of the central bank's ingenious recovery plan (i.e., pray that the mountain of worthless debt still held by the banks eventually rises in value) has yet to bear fruit.

We're skeptical ourselves that this can or will ever occur because there is no way the mortgage collateral that underlies much of that debt will ever return to anything remotely approaching the boom levels obtained before the subprime lending market collapsed in 2007. Our skepticism is based on a more general concern as well—namely, the not unreasonable suspicion that huge new amounts of borrowing are unlikely to cure an economy already suffocating from debt.

However things turn out, we'd like to nominate our own Man of the Year: Mister Market. Usually this personification implies an all-seeing, all-knowing force that works sort of like Santa Claus in reverse. Whereas Santa makes a list, checks it twice, and knows which kids have been naughty or nice, Mr. Market plays no favorites. Indeed, regardless of whether an investor has been as wicked as Ahmadinejad or as virtuous as Mother Theresa, Mr. Market will see to it that he gets the kind of screwing that we usually associate with the nether reaches of the Nine Circles of Hell. And don't dare show the smallest sign of nervousness about any speculative outcome, because, when Mr. Market smells weakness, he will take special pains to single out you, first of all, to pay the price.

This is Mr. Market's proper role, and we can be certain he will return to it with a vengeance and in spectacular fashion when this mind-boggling bear rally has run its course. But until then, he can be counted on to give Bernanke and the spinmeisters excellent cover whenever they tell us the economy is recovering. With Christmas less than a week off, it is Mr. Market we should thank for this dangerous illusion, not Ben Bernanke.

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