Extreme Event Risk

The amount of complacency at this juncture, is staggering. The Idiocracy at large have literally been stewed in their own juices. Whereas the "fiscal cliff" debacle just 8 weeks ago was cause for non-stop angst and hand wringing, including a week long market sell-off leading up to the event, today, the fiscal "sequester" went into effect, which includes an automatic reduction in U.S. government spending equating to apparently .6% of the economy. Yet, it was completely ignored even though fourth quarter GDP growth was a mere .1% (recently revised from negative .1%). And on top of the sequester cuts, the impact of the recent tax increases resulting from the fiscal cliff clusterfuck-o-rama have yet to be factored into GDP...

So it's abundantly clear, that despite all of the economic risk, the markets, the public, and the media, have been stewed into oblivion by Central Bank dopium. Just this week, the "greedometer" composite indicator that I wrote about recently, is now flashing extreme risk across nine separate indicators. This composite risk index has a perfect record of predicting market collapse, going back to 1999 - with no false positives... Still, Wall Street of course is oblivious, heads down in the Central Bank feed bag. Up until now, my thesis has been that the markets would eventually wake up to the fact that the underlying economic fundamentals are eroding, which would trigger the "Minsky Moment", leading to asset liquidation. However, we are well past the point at which normally the markets would have reacted on their own. So  while markets may still reach that endogenous point of recognition, whether they do or not, suffice to say, there is now no room for error - any exogenous "event" could trigger the meltdown, any time, anywhere, any reason...