The Street This Week: Our Inner Depression

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Be strong, we say. Be angry. Be brave.

Last week the markets knew what fear lurks in the hearts of men. Five sessions, three bottoms, several deaths of hope. The selling stopped Monday, rationally; Wednesday, inexplicably; Friday, because GE had lost Jack Welch and itwas going to be OK. But it all added up to the worst week for the Dow since the Great Depression, with the Dow tumbling a points-record 1,369.70 to 8,235.81. In percentage terms, the 14.26 percent decline was the forth worst ever. The Nasdaq had its third-worst week ever, falling 272.11 points, or 16.1 percent, to end at 1,423.19. And let's not forget the S&P 500, which narrowly avoided its worst week ever, falling 127.54 points, or 11.6 percent, to finish at 965.03.

[an error occurred while processing this directive]Three times the selling stabilized, the big money took a deep breath and bought into the damage. Twice the selling started again, and by Monday morning, who was betting on Friday's late-session rebound holding into this week?

Traders were. The opening bell rang with "buy" calls, and the Dow by midday quickly recovered four percent of those losses from last week, surging ahead by more than 300 points. The Nasdaq was similarly goosed, up 71, and is it possible that at long, long last we might be ready to call this the bottom?

Some say yes. "As horrendous as it looks, I'm beginning to feel we're not that far from a bottom," David Blitzer, chief investment strategist at Standard & Poor's, told CNNfn over the weekend, and plenty of economists, pundits and other seers are whistling that same tune, never mind the gravestones. Bottoms. Fed rate cuts finally taking effect. Fiscal stimuli riding to the rescue. V-shaped recoveries.

Early 2002, tops.

Listen to the politicians say, buy an American car, go out to a restaurant, get another mortgage. Above all start flying again, don't cancel that vacation. It's patriotism. It's war, and while the men in uniform to whom we outsource our killing do what they do so well, let's us on the home front do what we do, and that's spend. The last world war we won, the Cold one, we celebrated with a peace dividend, ten years of boom in which the markets simply paid us off for spending and not worrying. Now the markets — which lead the economy, which leads us — are the way Americans are supposed to fight back.

The problem with investing our fighting spirit back with stock markets is that stock markets don't fight. They watch. They see that the soldiers and hunters have their work cut out, that a truck bomb in Columbus, Ohio could put the fear for real into the rest of us, that our enemies have a savage commitment we have never known. The markets have always been our inner child, the pit of our stomach, the barometer that reads us despite our protestations. And now it is plumbing that great bottomless thing called uncertainty, global and domestic, and some of us are uncertain whether blind consumerism, as leaps of faith go, is a sucker bet at a time like this.

Fear of flying — fear of buying. When the big money, the institutional investors to whom we've outsourced our mutual-funded way of life, are still selling hand over fist, what can one investor do? Why should any of us buy —a car or house or a stock — before they do? And why should any of them buy before we do? Their mamas didn't raise no fools.

We're strong. We're angry. We're brave. But maybe we don't really feel like shopping right now. Is that so wrong? Has that really become so un-American? Will the American Way really grind to a halt if we take a little breather, marshal our soggy finances, pay down a little debt? Can we ever stop, even for a minute, without the terrorists winning? Not according to what the politicians say. That's symbolism — the graphs of the Dow and our secret fears, hugging each other all the way down. And that's a scary thought.

Anybody want to call a bottom? Anybody?