sstocks down monday, page-5

The thing you have to remember is that the stock market is forward looking. This is why such huge losses have been seen - the system is predicting a huge bout of debt deflation. Whenever there has been debt deflation, asset prices have fallen precipitously - in the 80-90% range.

I know this is hard to swallow, but due to the financial alchemists on wall street trying to spin lead into gold, there has been a lot of innovation that, whilst allowing for individual institutions to hedge their risk, have made the entire financial system unstable. We are now facing the ramifications and it most likely will not be pretty and will not turn around as easily as others hope it might.

This could quite literally be the straw that broke the US's debt ladened back. Stocks have sold off in the last few days. When this happens, normally Treasury yields go down as money seeks safety in Treasuries. Instead, yields on Treasuries have gone up. The international community is saying "We no longer have faith in the US's ability to repay its debts at the highest levels". People who understand this are scared of what this means - including myself. I am not so worried about my financial situation. I am worried about the political situation and the structure of the western world going forward.

If we move towards isolationism and protectionism, watch out below because it will be rough ride - unfortunately it is highly likely. Much more than a few dollars on the stock market are at stake here which is why politicians are looking so nervous. Politicians may well try to convince the general public that they are more powerful than the market and will be able to intervene to sort all of this mess out. I can tell you this with certainty: they are not. What the market wants, the market will get. This is why great leadership - both here and abroad - will be required going forward. It won't be easy and that is why we will need strong leaders.

For those who have been saying "It is different this time" they are correct. It is very different this time, but not in a good way.