I JUST HAVE TO OUTRUN YOU.

Two campers have an encounter with a bear.

The same phenomenon is at work as stock indices correct and former Fascist countries teeter.

The United States is "the least dirty shirt in the bag," [Scott] Minerd [of Guggenheim Partners] concluded. "We have a very good chance of seeing equities up maybe another 10 percent [over the next six months] from where we are."

Never mind the Pacific Rim.

There is simply no other market that makes a plausible substitute for US securities.  China is big enough, but its capital markets are primitive, and subject to heavy government intervention.  Japan has lost its AAA, and has a massive debt overhang, to boot.  None of the other AAA countries--or even all of them together--are big enough, and debt-hungry enough, to absorb the amount of capital flowing into the United States.

Ultimately, some of the world's investors are going to have to wean themselves off of the illusory security of AAA debt, because obviously, we cannot keep issuing a trillion worth of AAA debt every year.  Either we'll issue less debt, or we'll lose our AAA.

The good news is that slowing down our issuance will raise the premium paid for the AAA that's left.  So as we start putting our finances back in order, we'll enjoy lower interest rates that will help us do it. There aren't many virtuous cycles left in the world, it seems, so that's something to be happy about.

'Twould be better, though, to speed up the cycle.

Apparently, the resolution of the debt ceiling restored the dollar's status as a safe haven in the eyes of the world's investors. That accelerated the flight from European sovereign debt and European banks. That in turn raised fears in financial markets, driving down stocks, including in the United States.

They told me if I did not fall in line for a debt ceiling increase the stock market would tank, and they were right!

My instinct with the Eurozone crisis is the same as my instinct with the U.S. housing crisis. If it were me, I would want to make folks take their losses as soon as possible and try to move on. The European attempts to "manage" the crisis remind me of the U.S. attempts to prevent foreclosures. In my view, those sorts of interventions only keep the crisis in front of you rather than behind you.

If I understand the analysis, the raising of the debt ceiling induced investors to sell stocks in order to buy government bonds, and the Treasury has now borrowed a sum equal to the annual gross domestic product, at an interest rate of approximately zero.  Doesn't sound like much of a solvency risk premium at the moment.