It appears that the spring Sucker Flush is over...
And that the recent unpleasantness was in truth simply a seasonal tradition on Wall Street...to correct the over-bought condition that arises in the first quarter with retirement account funding.
There are also mechanical market factors that account for this type of "crash."
So, perhaps it wasn't FEAR AND LOATHING OF THE FED... Maybe Bernanke's coming 25 BP hike will not be an epiphanic moment...that enlightens us all to the way ahead.
Still all of the problems that lead to the gold and oil run up are still in play...
Little has been resolved concerning the twin deficits...the unfunded and expensive war...and the hyperliquidity overhang of the Greenspan Bubblenomics Years.
The housing bubble is still deflating... And the dollar is structurally weak longer term.
NET NET THE PANIC SELLING WAS SIMPLY A NEEDED ADJUSTMENT BY THE MARKET MASTERS TO MAKE SURE THAT "MOONSHOTS" DON'T DISTORT THE MARKETS...
MOONSHOTS AND PANICS GO HAND IN HAND ON WALL STREET...
STILL BERNANKE HAS HIS WORK CUT OUT FOR HIM...HE SIMPLY MUST KEEP RAISING RATES NOW...PROBABLY A BIT HIGHER THAN THE STREET EXPECTS...SAY, 6% ON FED FUNDS WHICH WOULD BE "HISTORICALLY" NORMAL FOR AN ECONOMY THAT IS OVER EXTENDED AND BURDENED WITH TOO MUCH DEBT...
Likely this will be the situation until the Democrats can get back in office and make the needed tax hikes to correct the toxic imbalances that always arise when you let the "rich" run things for too long...
And AMAZINGLY, once the tax hikes kick in... and the economy is rebalanced...the rich will start to prosper again too!
This is one of the great fallacies of politics...the very rich and the very poor should never be allowed to run things for too long...
We should be able to limp into 2008...with a little paradigm shifting in 2006 to pave the way.
