The explanation for every market move in recent months has been "risk aversion." If risk aversion rises, as symbolized by declines in the Dow and S&P 500 stock indices, the dollar goes up as traders buy into the U.S. currency as a safe haven. If risk aversion falls because of some new government initiative to fix the financial sector or the economy, the dollar falters.

While it’s true risk aversion is a powerful force, it’s really another way of saying "fear." There was "irrational exuberance" on the way up, and now we have fear on the way down, with some people claiming this time the fear is rational and based on authentic risks of additional wealth destruction.