"Well, risk is decidedly off again but then we’d say it was never on in anything more than the most superficial of terms anyway. Global equity indexes are down across the board with the benchmark S&P holding just fractionally above its August low and all the while the world’s wealthiest people gather for champagne and caviar in Davos Switzerland to discuss how to keep the poors from organizing a revolution. The catalyst for our current downturn is unrealistic valuations, twenty years of false growth in China, the 2008 bailouts and the endless sea of free money pumped out by the world’s central banks. Market analysts and pundits would have you believe it’s all because of crude oil, that we’re “awash in it” but what the world is awash in is debt. The ridiculous mortgage-backed hot potatoes that Wall Street’s mathematicians created back in the aughts, that were insured because of improper ratings, that encouraged reckless lending, that were repackaged and sold off to the masses without consequence in one form or another after the creators and backers were bailed out are coming back to roost in their own way. Financial recklessness can’t go unpunished. That’s not how free and open markets work. But apparently recklessness can be transferred and that’s what happened when borrowing costs dropped to zero. In a nutshell economies thrive when workers are well compensated and become consumers. What we have now is a world where compensation has been replaced with cheap credit. And that can only thrive for as long as the money can be handed out for free. And intrinsically we all understand if something is free, it’s worthless. And here we are. The world has gorged itself on free, worthless money. And built projects for the sake of building. And put valuations on Burrito franchises that were once reserved for innovators and inventors. The headlines can blame crude oil, persistently low inflation or a Chinese slowdown but it’s fair to say most people realize inflation is much higher than officially acknowledged. That low crude prices have a beneficial side to the coin too. And that a Chinese “slowdown” is actually just officials there coming to the realization that you can’t just build empty 70 acre malls forever and call it growth. We’ve been warning for years here that things can’t just keep going the way they have. That there has to be a reckoning, in particular for what we’ll diplomatically call, inappropriate monetary policies. Our concern in particular has always been that the longer the pain gets delayed, the more intense it will be. We might finally be feeling the pain."