The Daily Beast
Aug 16, 2011
By Zachary Karabell
In the past three trading days, U.S. markets recovered everything they lost last week. In the wake of S&P’s disastrous and ludicrous downgrade, the major indexes lost about 8 percent; since then they’ve gained that entire amount back and then some.
But no. The fears of last week and the hand-wringing occasioned by the downgrade have not been magically replaced by a surge of hope and optimism. This is illogical—if, that is, you accept the logic that the markets are economic-forecasting mechanisms. After all, if they are accurately forecasting turbulent economic times on the way down, they ought to be forecasting rosy days on the way up. But two things prevent three good market days from inverting the pyramid of doom.