The Daily Beast
By Zachary Karabell
February 21, 2012
The Dow Jones industrial average briefly flirted with 13,000 today, marking the first time since May 2008 that the august index has reached that level. The number is purely symbolic, of course, but the steady rise of stocks this year (with the major indices up anywhere from 5 to 10 percent) has taken many by surprise, none more than Wall Street professionals who have assumed a Greek default and the ensuing financial catastrophe to be a near certainty. Instead of a Europe-led meltdown, we are witnessing a melt-up.
The last time the markets were at their current levels—the tech-heavy NASDAQ index is also at its highest since the Internet bubble burst in 2001—sentiment was radically different. In May of 2008, Bear Stearns had nearly collapsed, only to be bought on the cheap by J.P. Morgan, and the bankruptcy of Lehman Brothers was a nightmare scenario that had barely been contemplated. The housing bubble in the U.S. was clearly deflating, but unemployment had not yet spiked. And while many believed a recession was looming, few forecast a financial crisis. Still, the outlook was cloudy at best, and a descent from 13,000 seemed likely.