Right and wrong...

But never "correct" (in the epistemological sense of the term), the REcapitulator is looking back on the last week.  Red is everywhere on financial data websites.

Volatility has indeed spiked over (in VIX terms) 20.  I was wrong about the short-term prospects for the dollar/Yen, as everyone has blamed the yen carry trade for contributing to the decline.  

And what a decline it was.  The S&P declined from 1458 to 1398 in a matter of 4 days.  Analysts at major banks (of course) bleat on about the "fundamentals" being "positive" and such.  How would they know?  Do the fundamentals change when massive selling causes inflation, stagflation, or deflation?  The Recapitulator reminds his audience that the accuracy of forecasts by bank analysts is no better than random.  Their compensation structure is entirely based on how convincing their forecasts are, not upon ex ante or ex post accountability.

So risk spreads are beginning to loosen.  Other risks are also coming to fore.  Insider trading is one such risk.  Not everyone will be caught, but it will have a chilling effect on the more "aggressive" trades.  Legal risk, like volatility in the markets, tends to cluster. Recall the flurry of activity Spitzer inititated in the early part of this century. (This is not unlike many revolutions.  The new government presents offending parties to the 
gallows.  The public enjoys an emotional catharsis, which is short-lived.  The now established
government then proceeds to do precisely what the old "evil" government did.)

So risk is increasing everywhere.  Not as serene an environment as those bank "equity strategists" would have you believe.