Today it was reported that the U.S. Consumer Confidence Index fell to a record low of 38.0 in December from 44.7 in November, that the U.S. holiday shopping season has been the worst since at least 1970, and that U.S. single-family home prices fell a record 18.0% in October from a year earlier (see Yahoo News – ‘Consumer confidence and home prices hit grim records’ posted at approximately noon Eastern time).  62 economists had forecast a range of consumer confidence from 40.0 to 51.1.

The U.S. Government announced a $6.0 billion support program for GMAC – as a practical matter putting the U.S. National Debt potentially a further $6.0 billion in the hole.

The U.S. Consumer in recent years has accounted for approximately 70% of U.S. GDP.  The U.S. Consumer is not spending now.  What does this mean to U.S. Government tax revenues – presumably nothing good.

One would have every reason to believe that all the smart people on Wall Street would know the foregoing numbers and the likely consequences of them, yet as I write this at 2:15 p.m. the Dow is today up 119 points or 1.4% (now at 4:00 p.m. up 186 points or 2.2%).  I must be missing something.  Why would the Dow go up in the attendant circumstances?

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