Napoleon is alleged to have said, "Never get in the way of any enemy, who is destroying himself'." In the 'great deleveraging battle' of this post-turn-of-the-century 'reflation' fight, the antagonists came to greater loggerheads than monetarists thought likely, partially because rules changed mid-way during the game. It became a very challenging confrontation with (as forecast) the housing bubble bust a microcosm of bigger issues, as assessed over two years ago.

If I may omit humility for a moment, one of the least noticed of our calls was the most important: that in 2006-'07, early-on, money would first slosh over to Wall Street from Main Street's housing bust, before those boys -buoyed by far fatter wallets- would feel the pinch (from housing derivatives in particular). However, they would.

It was this concept of rotational money seeking a place to go, that restrained caution towards the market during 2005-2006. This happened because we thought bears seeking immediate follow-through of housing by stocks, were premature, simply ignoring money's rotation and fluidity. Just for a while.