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The Economic “Recovery”

You can feel the “irrational exuberance” in the air.  That was the famous phrase Alan Greenspan used as the internet bubble was about to burst at the dawn of the millennium.

Wall Street is feeling kind of giddy at the moment as it appears an economic recovery is underway. But have we really done anything to stop the “boom and bust” practices that very nearly took down the whole house of cards last year?  No, not really.  Billionaire George Soros is the latest to remind us.

Talking at a meeting this week sponsored by The Economist at London’s Haberdasher’s Hall, Soros said this- and mark his words:

Unless we learn the lessons, that markets are inherently unstable and that stability needs to be the objective of public policy, we are facing a yet larger bubble. We have added to the leverage by replacing private credit with sovereign credit and increasing national debt by a significant amount.

That doesn’t mean there isn’t a nifty little recovery ahead of us, one that offers the promise of a little profit-taking over the short-term.  But some time this decade, I, for one, will try to find the appropriate time to liquidate my 401K and get the hell out of the stock market and put my pennies in something safe- say, cash under my mattress.

Another warning sign; many of the same geniuses who couldn’t see the freight train coming even though they were fully bathed in the oncoming headlights two years ago, are saying everything’s just fine now.

Here’s CNBC’s Jim Kramer according to The Street.com; the same fellow who said Bear-Stearns was “not in trouble” less than a week before the March, 2008 collapse that took out the company, and almost the entire American economy, down with it:

“The turn in the economy is happening,” Jim Cramer told the viewers of his “Mad Money” TV show Tuesday.

“It’s right here, right in front of you,” he continued, and while it may not be visible to everyone, the time to profit from it is now.

Cramer said he understands why investors don’t feel like things are getting better. People are still worried about their jobs and the value of their homes, he said. People are still seeing lots of local unemployment, and are fretting over the need for tax increases to balance both state and local budgets.

Yet Cramer warned that while things might not seem better to your individual economy, the stock market is looking ahead. He said the markets are never late, they’re always early. He said if investors wait to make their move, they’ll miss the move.

Jim “Mad Money” Kramer may actually be right about the short-term.  That’s what Wall Street’s all about; all short-term and no foresight.  All I’m saying is enjoy the coming bubble, be smart, and get rich if you can.  Just don’t pretend it’s going to last forever.  Next time the bubble bursts, there won’t be a sovereign government in the world that will be able to stop the misery.

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