The recent unpleasantness is really a needed give back from last years odd election year moonshot bull market...which was totally without any basis in real economics.
Bernanke was flooding the market with liquidtity to support the house bubble which was crashing...and the stock market took advantage of the available money to run up to unsustainable levels...
Now there is a need to devalue the dollar to reflect the hyper-liquidty of last year... Bernanke is trying to drive down gold...and save the dollar on the cheap. But likely the FED will simply have to raise rates sooner or later this year...to keep foreigners buying US Bonds... The US Bond being the sine qua non of the current globalism and free trade regime.
More gloom and doom to come...the picnic is over on the Street...the hyper-liquidty daze will likely not repeat in 2007. And assets have a long long way to fall before they are fairly valued given the dismal macro economic state of the US economy.
