There Is Too Much Risk Tolerance in the Markets

I have been surprised by week after week of higher stock prices even after the 15% run-up during 2012. Investors seem to be discounting the adverse economic ramifications of reducing government spending by $1.2 trillion and the the President's signal he means to increase taxes by closing loopholes. The most absurd sign of this new optimism is PIMCO's resident genius, Mohammed El-Erian's prognostication that "The New Normal" -- his very own personal warning about an age of low growth and high une...