Wall Street's Savage Reckoning: Clouds Gather Over G-20 Summit

Fundamentals? What fundamentals? Global central banks have purchased more than $10 trillion in various distressed assets since the end of the recession in 2009. Do you think that that reduction in supply might have a affected the price of stocks and bonds a bit? Maybe just a titch?

Investors know its all a mirage. They know that soaring stock prices are strung together with chewing gum and duct tape. That's why they're on bailing out at the first sign of trouble. And that's what makes the G-20 confab a such momentous occasion, because the finance honchos and bank brainiacs brought nothing to the table. They basically told Wall Street to "pack sand." They even shrugged off an emotional appeal from the IMF to take "bold action" to stimulate growth and avoid more damage to the fragile financial system.

Here's what the IMF said: "The G20 must plan now for co-ordinated demand support using available fiscal space to boost public investment and complement structural reforms...a comprehensive approach is needed to reduce over-reliance on monetary policy. In particular, near-term fiscal policy should be more supportive where appropriate and provided there is fiscal space...The global economy needs bold multilateral actions to boost growth and contain risk."

That's quite a turnaround for the austerity-promoting IMF, don't you think?

But the fund is just being pragmatic. Now that monetary policy is kaput, fiscal stimulus is the only game in town. That's just the way it is. Either the finance ministers accept that fact and push for additional government spending on infrastructure programs and the like, or stocks and profits are going to face a savage reckoning. It's that simple.