I think of the stock market as
a) a crowd of Suits who together keep a flurry of goosefeathers airborne with lung power. It's a team with no opposing side. Sure, an investor will catch a feather and cash it in once in a while, and then it's real money. The collective hot air keeps the rest afloat.
b) a similar crowd running in tight circles with its hands in the air, shrieking.
The past week sure hasn't changed those pictures. Some feathers got trampled when some stunned team players forgot to puff, and a couple of trillion dollars vanished. And now the Suits are all running around in circles, hysterical, and trampling each other--not to mention more feathers.
It didn't have to be this way. The writer James Grant called credit "money of the mind." The optimists' invisible dollars went into housing, consumer goodies, and overvalued stocks. Talk about inflation: There were too many dollars chasing goosefeathers.
Stock-market feathers are "money of the guts." The Suits now running in circles lost theirs.
So Lehman's gone. So's Goldman Sachs. So's investment banking itself. Guess what? The sun will still rise on the overbuilt suburbs of Los Vegas. Those buyers did get something for their money.
So where is that money, the money that was in the stock market? We may have to get another goose. The one the suits just trampled was their golden one.