How sweet is it?

Investors, after taking somewhat of a pause the past few days, piled into stocks like they had no other place to spend their money. Of course, some of them just don't know any better. Some just follow the crowd. Others are desperate for gains and some just like gambling, and that's what this market has turned into - one big, fat, dumb casino.

Dow 13,236.13 +145.27; NASDAQ 2,552.80 +31.50; S&P 500 1,464.07 +16.95; NYSE Composite 9,477.13

Some readers may complain that I have been too negative concerning market realities, suggesting that the US economy is in good shape and that the government will save us from any economic calamity.

While the general economy is not yet a shambles, and the government will make various attempts to stave off meltdowns in the stock market, there are underlying circumstances which cannot be overlooked easily. The swooning housing and mortgage market are going to have serious consequences. Already today, the AP is reporting that more than 40,000 jobs have been lost in the mortgage industry in the past month. More than half of those have been announced in the past two weeks, and there are surely more to follow.

What will those 40,000 white-collar types do for work. Many are used to relatively high incomes and lifestyles, as the housing boom spoiled many of them and, like home buyers and house flippers, they thought the boom would never end.

Well, it has, and all of these people are up against a rising tide of debt. The mortgage industry layoffs alone will push the unemployment numbers higher next month and, be reminded, the mortgage meltdown is still in its early stages. The actual peak for repricing of 2/28 loans doesn't occur until March of 2008.

So, do you still think we're out of the woods and today's gains in stocks are a sign of more good things to come? Don't be fooled by the headlines and smiles on the faces of the likes of Maria Bartiromo and others in the financial press. Remember that these people are reporters, or in the case of the precious Ms. Bartiromo, nothing more than talking heads. Most don't have degrees in economics, but maybe in journalism. That and a willingness to tow company line will get you a job at CNBC or the forthcoming FOX Financial Network. They are not experts, though they do play them on TV.

Today's markets are merely a reflection of a temporary oversold position, not indicative of a rally formation. There is more trouble on the horizon, and you can bet that as soon as it becomes apparent, there will be a rush of selling. The Fed will have to step in and calm markets - oh, by the way, the Fed did add $2 billion in liquidity this morning - though their efforts can only easy pain temporarily, like putting a band-aid on a knife wound. It holds for a while, but soon, the bleeding overwhelms it.

But today was a day of bargain hunting. Advancing issues clobbered decliners by a 3-1 margin, but new lows continued to hold sway, 153-84, over new highs, though those numbers are nowhere near the extremities exhibited two weeks ago, at the height of the credit squeeze panic.

Oil was down again today, with futures for October delivery off 31 cents to $69.26. Since there have been no disruptions to supply, and demand is only moderate at best, paying a premium at this juncture could be a fool's game. By November, the price for a barrel of crude could be closer to $55 than $65 and gas in the US could average something along the lines of $2.40 per gallon. The world economy simply cannot sustain growth with energy prices dragging it down. The oil barons are beginning to awaken to a new reality.

There was some nibbling in the precious metals. Gold rose $2.50 to $668.70, while silver gained 6 cents to $11.73. Both may seem like bargains, but they have to work off the excessive selling from the past two weeks before making serious gains. If they continue to trend higher in the short term, latch on for a nice ride.

Behind the scenes there are major machinations going on at the Fed, the Treasury, in board rooms of central banks and even on Capitol Hill. We're not sure exactly what their plans are, but we can safely assume they will be based on alchemy and black magic rather than serious economic planning.

You do know that economics is taught in colleges as a liberal art, don't you?