My Mortgage Blog

One of the more surprising aspects of the recent election was the plunge in the stock market indexes. I read all I could find on the subject and was left in the dark by the majority of the stock market analysts who dared to say something about this phenomenon.

Why did share prices fall? The nearly unanimous answer: Who knows?

This is a bit disconcerting, especially since I don't know, either. Ordinarily, we would expect share prices to have fallen because something surprised the stock markets, leaving them with an overabundance of fear and uncertainty to work through. The obvious, but probably very flawed assumption, therefore, is that equity market investors were tremendously keen on seeing Romney elected, and very surprised that Obama prevailed instead.

The trouble with this idea is that we can find little evidence in the pre-election activities of the equities markets that they were likely to be terribly surprised if Obama won. Perhaps, therefore, there was something else that made the markets worried.

There was, and is and here, therefore, here is my two-part guess.

Part One: Investors all over the globe are very worried about the so-called fiscal cliff and the apparent likelihood that, if Congress doesn't resolve this problem before we all fall over this cliff, our economy will find itself in another recession before very long.

The impression I get is that investors over the world were, and are, looking for some viable safe harbor where they can park and shelter their wealth from the ravages that may wreak havoc on our stock values if wise and sober moves aren't made soon in order to forestall the cliffs potential damage.

Part Two, then: The sound of feet, as they run for the alternatives to stock ownership, may best be heard as angry voices demanding that the authorities, the members of Congress, and the president take this problem seriously. (Perhaps this is wishful thinking on my part, but it is easy to imagine that we share a potential anger about this problem, which can most certainly be avoided. But it’s a tug of war, a poker game, a political argument that often veers too far from the sensible realm of reality. We should not be surprised if many of us have less and less patience as the possibility of more and more economic problems becomes more apparent.)

I therefore cannot help but imagine a crowd of people who are declaring, with increasing urgency, DO SOMETHING AND DO IT NOW!

Reaching for optimism here, it seems that Congress has more to gain than to lose by negotiating its way through the looming problems. Indeed, if you like poker, you'll probably be rather fascinated by the way this plays out.

Nonetheless, I have to wonder how this difficult negotiation found its way on to the national stage at the same time that several of our most respected military leaders became embroiled in scandal. How? Why?

All things must pass, the sage philosopher Heraclitus said centuries ago. He was right then; hell be right now. But, like those trying to figure out which stocks to put their money into, I would be hard-pressed to find a bet I like at this poker table. Ill wait, thanks and so will a great many investors. And as a result, everything including the real estate market will move quite slowly for a few weeks or months, as it has been in the recent past.