Why the YoY profit numbers would have any RATIONAL impact at all on markets?

I fail to understand why the YoY profit numbers would have any RATIONAL impact at all on markets - it’s been known for many months that just based on having stabilized, profits would be up at least 100% - as noted, just because of major improvements in the artificially supportedthe auto sector and banks, if nothing else.

Doesn’t mean WS won’t take the “ball” and run with it - only that the team from Reality hasn’t taken the field yet.

In any case, the biggest potential story involves the various rumblings that there is some huge plan in the works for housing - either to reduce principal payments or otherwise re-surface underwater home”owners”. Perhaps just floating a trial balloon, or WS putting pressure on to force such a move, but if it occurs, and there is another $500+ billion program, the implications are huge: for markets and politically.

Markets, assuming some other surprise, could be expected to take off like last January, when the Stim was clinched - even more so in the very near term. But how markets digest this after the initial reaction is another question entirely.

On the political side, this amounts to a desperate gamble, i.e, that the economy will decisively turn before 2012, and that if it does, the two thirds to three quarters of people not underwater will essentially foot the bill for people, who are not disadvantaged, living in homes they simply should not be in.

Leaving aside whether or not it “works” (can kicked until next debt implosion - say 2013-2014) my own view is that the gamble is just too big to take politically - it would both have to work within the timeframe and not send the large majority of homeowners/taxpayers into frenzied orbit.

We will see - so far Obama has done everything WS/big business and the Pentagon have told him to do. It remains to be seen if the public is ever going to really respond, or if the bet that most people could care less about anything outside their immediate lives continues to be a winner.

- BedRock

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