SOME MARKET MADNESS TO CONSIDER

Of all U.S. mortgage holders, about one quarter, or 11.3 million households, are underwater. In California, 35 percent of mortgage holders are underwater. Why is this important? Because strategic defaults, which occurs when people simply walk away from a home that is worth less than what is owed, are happening more and more. Here's why. These charts from New Observations help explain why this will probably continue.

From Financial Armageddon we get this: In December of 2007 for every 1 job in America there were 1.8 unemployed workers. At the end of last year, the ratio was 6 to 1, a jump of nearly 240 percent. No wonder so many Americans remain pessimistic.

 
There's more bad news out there, so what should be worrying for most people is why the stock market is climbing. Here's six "theories" from nakedcapitalism.com why this is happening.
 
My view? It's cheap money (low % rates), bailout buzz (money pumped in), continued game playing (fraud?) by the usual suspects, and the fact that you've institutions that can't move out of the market (pensions) for reasons tied to inertia. Put this together with one theory that sticks out in the post - the role of the Federal Reserve in purchasing equities (outlined in greater detail here) - and you have the perfect storm of .... drum roll please ... another bubble. At the end of the day, you can't can't underestimate the role of dumb money.
 
- Mark