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Todd Harrison: When it's all said and done, U.S. won't be the leader



I'm not prone to hyperbole, but I’ll offer that we’re traversing one of the most important junctures in financial market history. Yes, history.

The bulls will point to corporate credit and “The Misery Index,” which hit a 28-year high this week, as a contrary indicator. They'll use technical terms like “stochastics” and "put/call ratios" and “oversold” to support their view, and they would be right — in a vacuum.

In the real world, we're dancing on the head of a pin and few seem to appreciate how precarious our position is.

After the panic of 2008, the government punished the savers by jacking the market 100 percent. They morphed fear into greed, as the psychological pendulum swung from one extreme to another.

They were “successful,” insofar as the rally allowed corporations to roll debt, issue stock and shore up their balance sheets. In the process, risk was transferred from the private to public sector, and tension in the geopolitical sphere heightened.

Again, there were, and are, two distinct paths:

1. Drugs that mask the symptoms (throwing trillions of dollars at the problem), which triggered unintended consequences such as societal acrimony (Goldman Sachs, BP), social unrest (Greece, Egypt, Libya, Yemen, Syria, Tunisia, Spain), and geopolitical conflicts (yet to be determined).

2. Medicine that cures the disease (debt destruction and/or reorganization), which will be a bitter pill that ultimately facilitates a legitimate outside-in globalization (the U.S won't lead, but will participate — and that’s OK!).

The latter path is where the market was heading before the government injected its synthetic stimuli, and it's where the market will ultimately go.

As a small business owner, an American, and most importantly, as a father, I want to leave a better world for future generations. The problem is, now that we’ve dug that hole, there are only two options: reverse course or dig deeper.

In many ways, the recent European drama encapsulates the stateside evolution: A chain is only as strong as the weakest link; when the going gets tough the tough take care of themselves, or at least that’s the direction we seem to be headed.

There are numerous ways to put lipstick on that pig, none of which are particularly pretty — and none of which changes the fact that we’re left with ... a pig.

There will be profound opportunities on the other side of this process of price discovery; our goal is to get there safely.

Todd Harrison is the author of “The Other Side of Wall Street” and founder and CEO of Minyanville, an Emmy Award-winning financial media platform. Read him daily at

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