Kass: Bernanke Can't Bail Us Out

Importantly, I expect in the days and weeks ahead not only for U.S. growth expectations to be reduced but also for a downgrade in European growth forecasts. Accordingly, I added to my European index shorts last week.

This blog post originally appeared on RealMoney Silver on Sept. 17 at 7:36 a.m. EDT.

A Long, Painful Recovery

Inside, on the trading desks, the days have been so very nice as equities have rebounded from the brink and the lows of July. Main Street, however, tells a different story.

The story of whether the summer of 2007 was a bump in the road (euphemistically called a midcourse correction) or an important economic inflection point that will grow ugly will not be known for months. What we do know for sure is that it will take some time to get the sand out of the gears of the easy money machine and that more (perhaps spectacular) fallout remains likely.

I recently dismissed the Fed's likely impact on financial institution balance sheets and income statements (and their willingness to lend) and disagreed with the developing bullish consensus on a number of other fundamental grounds.

It seems logical not to expect the multiyear surplus of cash, which had led to a shortage of sense in the quest for yield and return, to be favorably resolved in short order by a combination of market forces and Fed intervention.