What We’ve Lost

The bear market in American hegemony is not a new topic to Contrarian Corner readers. What is lost in the slide is harder to pin point. Triploli fell this afternoon and the SP future responded to the news with a no volume 11 handle nose dive. Whatever Arabs have fought for in 2011, it's  not on display here at home.

The Fed rendered the front of the yield curve irrelevant at the meeting but the bond blitz has little to do with them. Oddly, we find ourselves in the optimistic camp.  I don't know what people mean when they say Europe but EU problems are not another "Lehman" for  the US. The secular bull market in bonds is ending. The nominal world will creep forward. Austerity as policy will fade faster than leopard skin pill box hat wearing dictators.

Our problems are not "liquidity" based. The thin air in Jackson Hole may breed QE delusions but we are in a structural trap. IS/LM curves shift downward and lower output results at any given interest rate. Unfortunately,  one of the fundamental freedoms MENA civilians are fighting for is the right to be wrong about their decisions. Americans seem oblivious to the irony.

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