Summers and Heroin
(Originally published on Real Money's Columnist Conversation.)
NEW YORK (
) -- This morning I tweeted: "Face it -- Market's knee-jerk reaction to Summers news is removal of the fear that someone would lock up the heroin."
Within minutes it took on a life of its own in the world of retweets, and I think I know why.
Away from political uncertainty, spurred by what Summers himself called the likely "acrimonious" nature his confirmation process would take, the
over-riding concern of Summers wasn't political at all.
It was concern that Summers, bull in a China shop that he tends to be, would not be a friend to investors.
Put another way, under Summers rates would rise, and possibly not in a tapering kind of way.
Low rates are wonderful for almost everybody but savers and retirees. They spur housing sales. They keep stock prices elevated. And, well, they make us feel good.
Oh, and they also give an illusion that things are better than they really are.
In some ways they're really no different than the aggressive accounting that companies use in hopes of helping them get from here to there.
That's why, if they stay around too long, they're like a drug. Once you're hooked you're hooked. And breaking the habit is no fun.
Reality (for now): Party on.
--Written by Herb Greenberg.