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Today’s financial Euphoria is Unique. It involves asset price bullishness generally and globally. It is an especially emboldened Euphoria, nurtured from repeatedly overcoming various types of market and economic adversity. It is a Euphoria built upon the resounding confidence in the power of new technologies and the resiliency of contemporary economies. It is a Euphoria underpinned by extreme confidence in the competence and capabilities of the Federal Reserve and global central bankers. It is a Euphoria bolstered by the faith in contemporary finance and the capacity to effectively recognize, quantify and manage risk.

Today’s financial Mania is also Unique. You don’t see individual Americans flocking to speculate in the stock market. There’s no discernable manic crowd behavior akin to what we’ve read in financial history books. The stock market rises, yet there’s nothing too crazy (Internet-like) with respect to the nature of trading or outward excesses. And stock market gains aren’t all too outrageous, while increasingly outrageous home price inflation has largely settled down.

I’ll wrap up this rather uninspiring Bulletin this evening with a proposition for the pondering: What makes this period Unique and especially dangerous is that the current Mania is in sophisticated private Credit instruments, most having little or no transparency and issued outside the traditional purview of central bankers and financial regulators. Unprecedented gains in financial wealth come not predominantly from stock or asset prices shooting openly (and "vertically") to the moon. Instead, the Mania Unique to this extraordinary phase of "Financial Arbitrage Capitalism" involves the enormous (and highly concentrated) accumulation of "small" spread profits on tens of Trillions of "dollars" of highly leveraged "structured" Credit instruments (expanding insidiously and "horizontally"). Pricing isn’t a critical issue and they don’t even need to trade, as gains are accumulated with the receipt of "payment in kind" spread profits through the issuance of only more debt instruments.

The heart and soul of this Credit Mania is Uniquely electronic and largely "over-the-counter". It is operated chiefly by the powerful international "banks"/securities firms, largely to the betterment of themselves and a relatively select group of clients. It remains invisible to most. I’m not saying this is some conspiracy, and I certainly don’t want to imply that it is operated with malice intent. I’m just suggesting to think in terms of a Unique Mania that has evolved over years and under extraordinary circumstances to the point of becoming deeply entrenched. Today, it’s incredibly powerful but at the same time supported by increasingly fragile underpinnings. For one thing, the associated financial flows are becoming increasingly unwieldy and its "reserve" currency an accident in the making. We should expect its eventual unraveling to be similarly exceptional. In the meantime, this Mania is an imbalance exacerbating and "currency"-debasing behemoth. And that concludes my bout of "defiance" for this week.

Doug Noland is a market strategist at Prudent Bear Funds. Their website is www.prudentbear.com.