WHY THE STOCK MARKET IS DOWN AND THE ECONOMY IS UP: An interesting piece from the Christian Science Monitor. Judging by how un-anxious home-improvement contractors seem to be to actually show up, there’s not much of a recession out there at the moment. Some folks are doing badly after the bursting of the tech bubble, but overall the economic news doesn’t match the stock market’s performance.

The market (at least on a P/E basis) has been overvalued for years, and much of this drop probably just comes from people catching on.

It’s certainly not the case, though, that the accounting scandals indicate that the tech bubble was a gigantic con. I think that most participants knew that it was a bubble at the time: I remember my Silicon Valley friends joking about it in ’98 and ’99. People kept putting money in because they figured a greater fool would be left holding the bag later. Sometimes they were right. Sometimes they were the fool.

I think that Coca-cola’s new accounting changes indicate that the market is now expressing a strong preference for good numbers. If history is a guide, it’ll be that way for a while, until people forget again. And in the meantime, some of the things that only wildly optimistic or deluded investors would have funded will flourish, and lay the foundation for the next boom.

Query for TAPPED: In headlining a post on the stock market “The Bush Economy Goes South,” do you mean to imply that the good times were part of the “Bush Economy”? I thought Clinton was taking credit for those.