Signs of economic bottom, a wild stock market and relentless Treasury borrowing combined to send long-term rates to six-week highs: The 10-year T-note jumped 30 basis points to 4.7 percent, and no-point mortgages reached 5.5 percent.

A crowd of spinners in expensive suits (Larry Kudlow in front) tried to sell bottoming data as recovery, preying on hopes for an end to the Great Recession. The authentic debate is about the shape of recovery: will U.S. gross domestic product "V," like old times? Are we stuck in "L" or "W" futures? Or "V" with a limp and wandering right-side?

Stocks took off again on news that sales of existing homes had risen for a third-straight month, to 4.9 million annual from 4.5 million bottom. At 2005 peak, 7.5 million homes sold, essentially none distressed; at least one-third of today’s sales are distressed, the fraction rising.

We will soon get some news of rising prices, but that will merely reflect downside overshoot. Las Vegas prices collapsed 40 percent in 2007 and again in 2008; a modest rise from its current $125,000 median … that’s bottom, not recovery.

For every "V" datum there are two or three "L" pieces. Stocks got silly on some positive corporate-earning reports and ignored the centerline — especially businesses reflective of the overall economy.

Microsoft earnings were off 29 percent, and its chief financial officer spoke of "tough economic conditions" not getting better, but "some sense we have hit bottom." UPS second-quarter income fell 49 percent, trends "stabilizing," no rebound in sight, and the nation’s two largest railroads offered near-verbatim confirmation. If it ain’t sellin’, it ain’t shippin’.

The index of leading indicators is up, but based on prior cycles not resembling this one. For the best snapshot of Main Street, visit and click on "Small Business Economic Trends." Sales, compensation, prices and earnings are all in record-low "L."

This week, as with last week, it’s still silly season. The depth of August is ahead.

The newest stock-market road to suicide: "high-frequency" trading (see this enlightening New York Times piece). It’s an utterly mindless computer competition in which you must get your machine to Lower Manhattan, trades from New Jersey too slow to arrive.

Micro-nano-leapfrog gives new meaning to irrational exuberance, and may be the driver in this whole rally. We did learn about the hazards of amoral financial innovation? Newly alert SEC on it, right? Uh-huh. Sure. …CONTINUED

Other regulators are busy in turf fights, "foggy bottom" echoing in the constant thunder of doors slamming on empty barns. The Fed doesn’t want a new consumer protection agency to usurp its authority. Hence its Truth In Lending revision yesterday applying to HELOCs (only), a 4-megabyte file at, 660 pages of this:

"Proposed SS226.5b(b)(2)(vi)(E) provides that when a creditor is required to disclose certain payment terms under proposed SS226.5b(9) in a format substantially similar to the format used in any of the applicable tables found in proposed Samples G-14, G-14(D) and G-14(E) in Appendix G, the creditor must provide in bold text any terms and phrases …"

Of course we need new regulation, but there are limits. Many people cannot be saved from their own foolishness by any amount of rules or disclosure. On the other side, it should be clear by now that Goldman Sachs is so much smarter than the rest of us that it’s a waste of time to try to stop them from whatever they’re going to do.

Then, another week striding into health-reform "Big Muddy" (see Pete Seeger’s "Waist Deep in the Big Muddy.") The nation’s hopes rest on neck-deep President Obama, and the good and bright around him. The Wednesday press-conference flopped, incomprehensible and anxiety-raising. "Plan" abuses the word.

The crucial attribute of an effective executive is a sense for the heart of the matter. People as different as Harry Truman, Dwight D. "Ike" Eisenhower, Ronald Reagan and Bill Clinton had it; these people do not.

The worst moment Wednesday: Obama’s plaintive, "We inherited a $9 trillion deficit for the next 10 years and we’ve got it down to $7 trillion." Borrowers paid higher rates this week because the Treasury will hit markets for $115 billion next week — in one week four times California’s devastating total 2009 shortfall.

We’re spending one-sixth of GDP on health care, twice the ratio of the rest of the modern world. Cut cost there and then elsewhere or enter a fatal debt trap. The people are aware, afraid, ready to deal, and would be relieved to head to solid ground.

Not leadership. Not yet.

Lou Barnes is a mortgage broker and nationally syndicated columnist based in Boulder, Colo. He can be reached at


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