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This blog post originally appeared on RealMoney Silver on June 24 at 7:49 a.m. EDT.

A still deteriorating credit market, ever higher energy and food prices coupled with renewed evidence of moderating worldwide economic growth, a loss of confidence in U.S. policy decisions and in the management decisions of our all-important financial corporations, and a steady drop in business and consumer confidence have all combined to accumulate a great deal of weight that has contributed to a series of worldwide margin calls over the past week.

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If one were forced to isolate the one policy error that has been the single most debilitating contributor to the recent slide in equities, it would be Fed Chairman Bernanke's early June threat of higher interest rates. As a sage observer mentioned to me this morning, despite the excellent process of creating various auction facilities, Bernanke's hawkish tone has been an important contributing factor to a 6% swoon in the

S&P 500

, in general, and in financial stocks, in particular. Meanwhile, mortgage rates and energy prices are moving higher, and the yield curve has flattened.

And markets rarely behave as poorly as they have recently without the negative follow-up of poor profit results.

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I have long felt that U.S. earnings expectations remained too elevated. But not for long, as those inflated expectations are now being reduced and are being deferred from 2008's second half and into 2009-2010. Indeed investors' aspirations of superior returns on capital are now being replaced with the fear of whether their capital will be returned.

Doug Kass writes daily for

RealMoney Silver

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Doug Kass is founder and president of Seabreeze Partners Management, Inc., and the general partner and investment manager of Seabreeze Partners Short LP and Seabreeze Partners Short Offshore Fund, Ltd.