We’ve simply experienced a horrible and severely devastating set of events that have transpired over the past few days…and it’s not about the direction of the markets.

The past week has marked an event that has probably never transpired in the history of the US financial markets and economy…simply put, it’s the extension of socialism into one of the greatest capitalist structures in existence.  So why the disturbing turn of events?  Well, over the past few days, the finger pointing has gone awry, but the bottom line is, it entails poor judgment from government agencies, a lack of integrity of private sector leaders, greed and lack of accountability for those how have achieved destructive results in the corporate spectrum.

To begin with…the idea that everyone should own a home and the promotion of such was sheer nonsense.  Monetary policy that maintained market rates in the negative real rate zone throughout much of the new millennium along with inappropriate lending practices helped propel a real estate bubble.  The demise of this bubble by real market forces has uncovered this pyramid of outrageous events to the point of nearly breaking the financial system as we know it.  Now we have increased US debt to insurmountable levels and introduced uncertainties as to “who owes what”, “who gets paid what”, “what are certain things worth” and “what entities will survive over the medium to long term”. 

The ultimate result of all this should probably involve a significant devaluation in the US$ and undermining of confidence in the US system in the international market place.

Yes, a short term hole seems to have been plugged, but the ship is still sinking.