'Seinfeld stock rally'? Early warnings about empty market chatter, credit-card delinquencies
Displaying wit not usually seen from the skilled but serious troops at Bloomberg News, columnist David Reilly warns today about taking the current stock rally too seriously.
"While hot air got markets off the ground, it isn't enough to sustain them," Reilly writes. Here's his Seinfeld angle:
Over the past week or so, the president and his minions, members of Congress, and a host of bank chief executives have made a concerted effort to spin the market. The message has been clear: It's time to get on board with Team America where the glasses and bank balance sheets are officially half full.
It's "temporary magic," Reilly says, and "investors should be on guard."
One big reason for worry, despite the optimistic chatter, is something that Reilly mentions only briefly: the looming problem of widespread delinquent payments on credit cards. We've been told to buy, because it will supposedly help the economy. But we could be buying more trouble.
NYU economist Nouriel Roubini notes that U.S. credit card defaults are at a 20-year high. One of "party-boy economist" Roubini's "spotlight issues" on his lively RGE Monitor is bannered "U.S. Credit Card Delinquencies At Record Highs: Same Dynamics As Mortgages?"
Also see this earlier Financial Times (U.K.) piece: "US credit card delinquencies at record high."
Back to Reilly's piece: Among the things he's worrying about is that "American Express Co. reported higher delinquency rates for credit cards in February."
Even without the Seinfeld riff, and despite his consigning the grim credit-card news to only a brief mention, Reilly makes other good points and provides a well-reasoned instant history and analysis of the recession. Worth reading from the beginning to the end.
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