Faith In Wall Street And The Fed Has Eroded

The Debt-Junkie Market has been pulled from the pool, gasping for breath, but nobody thinks he's healthy: faith in the Fed and wall Street has been irrevocably lost.

Oversold rallies notwithstanding, the Debt-Junkie Market just stumbled into the pool and was barely saved from drowning. The stock market party isn't over for strictly technical reasons, though the technical damage is severe.

The party's over for a much deeper reason: faith that the Fed can fix the economy has faded, and participants no longer believe Wall Street's self-serving hype about the recovery and rising markets. Oh sure, people go through the motions of expressing faith in the market, in corporate profits rising forever, in official pronouncements of the Fed's omnipotence, and in whatever snapback rally is in play at the moment, but it's all for show; nobody really believes any of it, they just don't want to be the odd man out by confessing their loss of faith in the false idols. America Is Just Going Through the Motions [3](November 19, 2010).

The financial Status Quo has an unsolvable problem: reality isn't swayed by propaganda. Does anyone really believe another couple years of low interest rates and a snapback rally or two will fix what's broken in the U.S. and global economies?

Hasn't it been made abundantly clear that super-low interest rates only fuel speculation and malinvestment?

This loss of faith is not a temporary phenomenon but rather a sea change in the zeitgeist, somewhat akin to the loss of trust in a partner caught cheating: you can never go back to what existed before, even though you go through the motions of a return to normalcy.

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