Al-Zawahiri Is A Genius

Charts: At Midday on August 2, the S&P 500 has crashed through its 200-day moving average in heavy volume. This is not good.

Fundamentals: Nobody is fooled by Congress's phony budget deal. China, European bond investors, average voters on the street, everyone is seeing through the smoke and mirrors. The black hole of America's roaring debt machine is sucking up the world's capital, diverting it away from productive uses and into Uncle Sam's gaping maw.

Long War: The only real cuts in the recently voted budget deal is to the Pentagon and CIA. The only way America can tax the world with its debt is if we clobber the bad guys. This is hard to do with budgets getting slashed.

Meanwhile, out on the Long War battlefields, it is getting hairy. China's Al-Qadea linked Islamic insurgency is exploding across the mineral rich west. If it gets much worse, China will not be able to access vital mineral resources and the world's only big growth machine will falter.

Stepping away and looking at the big picture: Al-Qaeda's new leader, Al-Zawahiri, has a policy of attacking everywhere except in the American heartland. He understands the Tea Party and knows they will give up the rest of the world if America itself is not threatened.

But America is dependent on overseas oil and markets. The only GDP growth we are seeing is coming from exports. If not for exports we would be in a second recession. America cannot give up its global empire and sail blissfully along by itself.