Are the Good Times Back?

The good times must be back.

Porsche SE, the luxury sports car maker, announced this morning that its profit went up sevenfold in its first fiscal quarter ended October 31, 2010. Porsche reported a profit of 526 million dollars in the quarter on a 63% increase in car deliveries. (Interestingly, one-third of Porsche's car deliveries in its last quarter were made in its home-base, Germany.)

I never was a Porsche fan because those "bubble" looking "911s" really haven't changed much since they first went into production in 1964. But with the introduction of the company's "Panamera" four-seat sports roadster this year, I'm converted.

But it's not just Porsche that is doing well. Mercedes, BMW and other luxury brands are doing very, very well. Demand for these luxury cars is very, very strong now.

Just look at companies like Goldman Sachs Group Inc. (NYSE/GS). Goldman announced 110 new "partners" for 2010. The partners reportedly get a $600,000 salary and participate in a compensation pool. Goldman has set aside $13.0 billion this year for employee compensations. (I'll bet Porsche will find lots of buyers in the Goldman group alone!)

Tiffany & Co. (NYSE/TIF), a well-known luxury retail brand, announced this morning that its latest quarterly profits surged 27% on quarterly sales of 682 million dollars. Tiffany took the step of increasing its total 2011 earnings forecast.

So the good times are back for the luxury market, my dear friend.

At the depth of the Great Recession, Washington decided to bail out Wall Street. But the little guy, the blue-collar worker, he got practically nothing from the government. Just do a Google search on U.S. home evictions and you'll read many a sad story of Americans being forced out of their homes because they can't afford their mortgages. These people are not buying Porsches or shopping at Tiffany stores. They are trying to put food on the table. (Thirty million Americans are receiving food stamps.)

So, Wall Street conjured up the idea of syndicating mortgages to investors. Banks were more than happy to give people (who really didn't qualify) mortgages on homes they could not afford, because Wall Street would pool and syndicate those mortgages to investors.

Wall Street made a fortune peddling syndicated mortgages. Then, when it got into trouble, Washington came to the rescue. Now the good old times are back for Wall Street, as it just gets richer again. And where are the customers' yachts? There aren't any.

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