Essentially, the markets are "rationalizing" the rather insane run up in the last half of 2006 wherein the Street tried to influence the US elections with a "happy talk rally" that got a bit out of hand and self fullfilling...
Also, the Berenanke FED made the huge mistake of stopping the rate hikes TOO EARLY. Then, following on with a massive flooding of the market with cash to mitigate the expected housing crisis.
Saddly, and as usual, all the money went to speculation in commodites and stocks...and little of it is actually helping the house bubble deflate...
HYPER LIQUIDITY IS NOT A "CURE" FOR A HYPER LIQUIDITY INDUCED BUBBLE...
WHAT IS THIS HOMOEPATHIC ECONOMICS...!!
YOU CAN'T CURE A DISEASE BY "CAUSING" A LESSER FORM OF IT IN OTHER WORDS...
