Risk aversion has re-entered the investment equation with risky assets such as equities and commodities bearing the brunt of the selling orders, while gold bullion, government bonds, the US dollar and the yen are attracting safe-haven money.

The global stock market pullback seems to be gathering momentum with three markets on my radar screen now trading below their 50-day moving averages, indicating a reversal of the secondary trend. These markets are China, Hong Kong and Chile, with most others uncomfortably close to this intermediate support level (see table below). I am of the opinion that more markets will fall below the 50-day lines and that we will at least see some degree of reversion to the key 200-day moving averages (often used to distinguish between primary bull and bear markets). The table provides the key levels, as well as the declines since the recent highs.

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You get a sense that America’s chickens have come home to roost. Instead of learning from our past mistakes though, as the idiom above is meant to suggest, the nation appears intent on compounding them. The Great American Bailout of 2008 is simply more of the same — more debt, more easy money, more moral hazard, more taxpayer responsibility, and more government intervention. Quite literally, the government has once again applied a band aid, papered the problem over and delayed once more what will certainly be an even worse day of reckoning. Yes, the chickens have come home to roost, but for all the roosting all we have gotten is more chickens.

Wall Street Goes on the Dole

Post-bailout, there remains a sense of unease at the juncture of Wall Street and Main, a feeling that the other shoe is about to drop. “If money isn’t loosened up,” warned the president …