I wish I could write like that

At $5.00 an issue, Barrons is a guilty pleasure, but I usually pay it every Sunday I can find it to enjoy the insights and unbelievably clever writing of Alan Abelson. Mr. Abelson is as old as Daniel Schorr and easily as wise. Here's this weekend's issue, and an astute prognostication as well as terrific turns of phrase.

MONDAY, APRIL 28, 2008
UP AND DOWN WALL STREET
Great Expectations
By ALAN ABELSON


IT'S SPRING, THE TULIPS ARE IN BLOOM AND THE SAP IS RISING. Which may explain why the whole world seems to be going around the bend.

Here, in this blessed land, for example, we're supposedly engaged in the momentous quadrennial quest for a leader. So instead of a reprise of the great debates between Lincoln and Douglas when they were in solemn pursuit of that role, we have Hillary and Obama putting on their traveling Punch-and-Judy act, with John McCain playing the happy spectator, urging each, with a fine display of nonpartisan gusto, to bop the other. (There's some suspicion John, imbued with an old-fashioned sense of chivalry, whenever he gets a chance has been stealthily slipping Hillary a pair of stylish brass knuckles.)

Hillary is proving beyond cavil the validity of the adage that hell hath no fury like a woman being denied a shot at the presidency. And Barack, for all his transformational and transcendent claims, is giving a pretty good imitation of a crybaby because that nasty little girl is intent on taking away his rattle. For gosh sakes, if he thinks those powder puffs being tossed at him in what strikes us as a disappointingly tame dust-up are rough, let him just wait until, if and when the clones of Karl Rove are unleashed.

Meanwhile, the present occupant of the White House, whose lease is unremittingly running out, again last week insisted there's no recession. Of course, we haven't been able to get a verbatim account of his remarks so he may have been talking about Saudi Arabia. Any day now, we expect Dubya to unveil a novel plan to whittle down that looming half-trillion dollar budget deficit by selling New York City -- Bloomberg included -- to a consortium of sovereign wealth funds headed up by China and Abu Dhabi. If it came down to it, to close the deal, insiders assure us, he'd throw in Rudy Giuliani.

We don't want to imply the sap is rising exclusively in the U.S. Far from it. Fact is, there's a veritable pandemic of goofy goings-on all over the blamed map. China, for example, is earnestly seeking to repair the damage done to its global image in advance of the Olympics by Tibet and all of that. More specifically, eager to do a good deed for an old friend, it has tried to send ammo and arms to Zimbabwe so Mr. Mugabe -- the country's eternal president, in grave danger of losing the recent election -- can be assured of winning a recount by eliminating, and we mean that literally, the opposition. As Confucius said, you can't make lamb stew without breaking chops.

In Congo, meanwhile, according to a Reuters dispatch, rumors of penis theft, supposedly the dastardly work of sorcerers, spread like wildfire and has touched off an outbreak of attempted lynchings of the suspect perps. The country's call-in radio programs have been filled with descriptions of the thefts (the FCC wouldn't like that at all), and listeners have been warned to keep an eye out for men with gold rings on their fingers. Don't laugh -- the other morning we noticed quite a few guys fitting that description in just one subway car.

Why, hard as it may be to believe, even Wall Street -- yes, the very same Wall Street that's normally, as everyone knows, a paragon of reason and rational behavior -- has lately become a hotbed of quixotic episodes. By way of illustration, consider Ambac Financial Group (ticker: ABK), which insured municipal bonds and made a pretty if rather unglamorous penny from doing so, ventured into the jazzier precincts of insuring less stodgy paper and was rewarded by capturing investor fancy.

Came then the credit crunch, the death spiral of subprime mortgages, a sizable chunk of which Ambac had glommed onto, and its stock suffered a bit of a setback, shriveling, virtually without let, from $96.10 a share a year ago to less than $4 last we looked. It won't surprise you that the blame for this precipitous descent was laid at the door of those nefarious short-sellers. We harbor a dim suspicion that Ambac's loss of $31.56 a share in '07, and an additional loss of nearly $12 a share in the first quarter, may have contributed to the stock's sad fall from favor.

But the truly odd thing about Ambac is not so much its gargantuan losses or even the extraordinary shrinkage in the value of its stock. Rather, it's that despite all this, its principal insurance subsidiary retains its triple-A rating. With all due deference to the kindness of rating agencies, man, that strikes us as really wild.

LAST THING IN THE WORLD we want to do is give the appearance of picking on Ambac or its equally blighted counterpart, MBIA. For, in truth, perhaps it's merely spring and the hope of rebirth and promise the season traditionally inspires in all of the human race as we trudge through this vale of tears. But Wall Street is aburst these days with a growing conviction that the storm has passed, the dark clouds are scurrying to wherever dark clouds scurry, and happy days will soon be here again.

This heartening upswing in optimism is all the more impressive in view of the recent less-than-ebullient forecast by one of the worthies at the New York State Department of Labor -- that the Street will cut its payrolls by some 36,000 over the next couple of years, a sizable bite out of the rolls of the 182,000 folks who now earn their daily bread in the canyon of capitalism.

It could be that banks and brokerage houses are populated by a much more altruistic bunch than we ever dreamed, splendid souls who are more concerned about the market than themselves. Although, we guess, it's at least conceivable that the 182,000 still employed shrug off those prospective firings with such estimable calm because they haven't a scintilla of doubt it'll be the gal or guy in the next cubicle who gets the ax.

In any case, the sharp reversal of mood among investors from gloom to rising expectations of good times is reflected unmistakably in the market's recent revival in the face of some pretty dreary communiqués from the economic front. Apart from equities, consumers don't seem to want -- or find they simply don't have the scratch -- to buy much of anything, as the latest lame numbers on durable goods orders point up. And their level of confidence continues its melancholy slide, as evident in the most recent survey by the University of Michigan hitting a 26-year low. Moreover, housing is in free fall, with new-home sales down by about 40% from a year ago and prices off some 20%. The only things pushing resolutely higher are foreclosures and inventories of unsold houses, which have swelled to an imposing new peak (it would take 11 months to work off the pile).

The credit crunch, despite the strenuous exertions of Bernanke & Co, shows little sign of easing, much less ending. Yet, financial shares have risen from the grave and are enjoying a dandy whirl. As Stephanie Pomboy, the perspicacious proprietor of MacroMavens, points out, this pop amid dauntingly ugly corporate reports by the banks and the rest of the financial gang is something we've seen before, and often.

"Since the wheels first started falling off last summer," she relates, "the financials have posted no fewer than 12 rallies of 5% or more.... It bears note that none of these stints, separate or combined, have precluded the financial sector from shedding 28% over the stretch."

Maybe 13 will prove the lucky number. Stephanie, though, sounds more than a bit skeptical, and so are we. At some point, we suspect, investors are going to sober up and stop popping the cork to celebrate the latest lender to take a multibillion-dollar bath.

OUR FRIENDS DAVID AND JAY LEVY, the astute duo who put out the insightful Levy Forecast, dismiss all the talk about the worst being over as wishful thinking. The worst, they insist, is yet to come, and real recovery might take its own sweet time in making an appearance. And they wouldn't advise anyone to hold their breath awaiting a propitious moment to go bottom-fishing.

The time for bottom fishing, they declare, "will be after a long, deep recession, when employment is down sharply and still falling, commodity prices have plunged, the scent of general price deflation fills the air and global financial and economic conditions are in turmoil. The risk pendulum, which reached extremes of complacency in 2006 before starting to swing back, will be near the other extreme, paranoia, not just in mortgage-related markets, but in asset markets generally. Fire sales to meet liquidity needs will abound."

We're not there yet, and there are many days, sleepless nights and wearing miles to go. And, the Levys counsel, stoutly resist the temptation to take the plunge prematurely, for even when we start scraping that magic bottom, there'll be no great rush. On that score, they reckon "the period of great opportunity," which they envision coming out of "fear, uncertainty and illiquidity," will likely last for a few years. But when it finally dawns, they're firmly confident, it'll prove very much worth the wait. All the more so since investments in what they dub "exciting long-term growth areas" such as natural resources, alternative energy and rapidly developing markets in emerging economies are likely to be there for the taking at "great long-term entry points."

Meanwhile, do yourself a favor and batten down the hatches.