It has been about 13 years since Alan Greenspan talked about Irrational Exuberance in reference to stock market prices. At the time the Dow Jones Industrial Average had just marched past 6K.
As the DJA struggles to recover the heavy losses over the last year I am bracing today because the stock indexes point to a lower day. Why? The report was we are seeing lower than expected housing starts.
Was it irrational exuberance that made anyone think there would be any thing but disappointment in those reports? Foreclosures on a roll, credit at a standstill and unemployment higher than it has been in years. And someone with their finger on the pulse of things felt housing starts would not drop last month.
We live, I think, in a society that is totally irrational. There is from what I have heard and read (yes, sources unspecified here) a puzzlement why we as a society did not take precautions earlier than we did to prevent problems in the economy. Most of us knew the housing bubble was going to burst, credit was too easy for too long and there was too much of it and stock prices were really high and had been for little apparent reason.
Perhaps this is the result of our growing more and more dependent on soundbites for our news, filtering out what we don't want to hear. We hear, we like, and we get all excited and run with it.
That is what I would call irrational
Of course if the DJIA jumps today, I was wrong about at least a part of this post.
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So I wrote the post after hearing the doom and gloom report that may have come from AP about housing starts being the lowest since 1959. I think I need to stop listening to the radio on my commute to work.
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