Third, we've been about to lose the prop of housing. We know that the homebuilding stocks have been telling the truth about this market for months now, with their lackadaisical rallies and very large selloffs. But the real tell of how troubled things were going to get was the selloff in Home Depot ( HD) shares after the company reported a very good quarter. That was a sign that you have seen the last of the housing comeback -- and the housing comeback, not worldwide growth that's pulling America with it -- was central to Bernanke's chances to create sustained growth.

Remember, we are only one-third of the way back when it comes to single-family home construction. Last year the U.S. built units at a rate of about 500,000, which is dramatically lower still than the 1.5 million we averaged between 2004 and 2006. That's nowhere near where Bernanke wants those numbers to be and, given the decline in mortgage applications, we all know it's reasonable to think we have seen a high for the cycle. It's hard to see through all of the obfuscation of the industry, as no homebuilder ever wants to come out and say that they aren't selling. That's bad for business. But if you look through the linearity of all of the homebuilders' numbers, you will see that's what has been happening.

So, in that environment, why in heck does the Fed have to taper quantitative easing? If Bernanke studied the 1995-1996 tapering, he would know that gross domestic product growth will be fairly likely to see a very big decline in the fourth quarter because of the coming government shutdown.

I know I spoke to a lot of people yesterday who were mesmerized by the stock market into thinking that all was well going into the meeting. That's wrong. It is entirely possible that the stock market could be misreading politics, as it has done every time in the Obama era. Just because the market isn't yet reacting to a shutdown worry doesn't mean it won't still do so. Just because they were all buying opportunities doesn't mean that they won't go down first. We have established endlessly that this market has no memory. So why should it remember the huge declines ahead of the 2011 debt downgrade, the fiscal cliff and, to a lesser extent, the sequestration?

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