“The patient is in a coma.”

bernankedec08I suppose it could be good news, in some circumstances, if the doctor comes out of an operating room and says your loved one is in a coma. The patient hasn’t died. But most of us wouldn’t cheer.

So the Federal Reserve cuts its target Fed Funds rate to near-zero (good story in The Economist). The Fed is saying the patient is comatose. The doctor administers a maximum dose of the primary tool for restoring vitality to the economy. The nurses are trying to keep the patient breathing. Specialists are all saying “Hmmmm.”

And the stock market … goes all ecstatic. Up 5% yesterday, gives back 1% today. One of these days, positive vibes on an auto industry bailout may trigger another round of exuberance.

As an old Econ major, I know life moves in cycles. And I’m all for Dr. Fed and Nurse Treasury and even the Capitol Hill quacks doing what they can to revive business when the cycle takes a dire turn. We need the medicine.

What doesn’t make sense, entirely, is the wild enthusiasm the stock market unleashes at each new stage of the bailout. Maybe it’s escapism: A one-day binge of silliness takes us back, ever so briefly, to the good old days of 2007 or 1999 – or whenever we remember as a stock-market nirvana.

Those of us who communicate the financial prospects of companies (public or private) need to try to keep an even keel. We shouldn’t give in to doomsayers on bad-news days. Nor should we break out the champagne when the Fed adopts an interest rate of zero.

Clearly, the doctor is not smiling. This patient has a long recovery ahead, and we must be realistic. Discussions with investors should reflect real data on our businesses – not the market’s mood.

© Copyright 2008 Johnson Strategic Communications Inc.


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