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Complacency is a tempting, yet dangerous, emotion for investors. It's easy. It feels good. And it's self-justifying. As in, if stocks keep going up, why bother trying to explain it? Why bother looking at such things as earnings fundamentals, technical strength or macroeconomic trends?

But complacency is what fuels bubbles in their final stages, enabled by the "cure-all" of cheap money. And when bubbles pop, the first indications of trouble are an increase in market volatility and a drop in commodity prices.

In the 1830s, real estate in America's newfound West was a sure thing, thanks to surge of cheap money and easy lending that followed the closing of the Second Bank of the United States. But it all ended as commodity prices, mainly for silver and wheat, crashed.

It was the same story with the panics of 1893 and 1896. And, most recently, the 2008 financial panic, which really didn't get going until commodity prices started to melt down in the second half of that year -- setting off a wave of stop-loss triggers, margin calls and forced selling.

Something similar is happening now. The PowerShares DB Commodity Index Tracking (DBC) fund has collapsed to levels seen during market scares in 2011 and 2012. But this time is different. Not only are overconfident investors unprepared for a dose of bad news, but the hard data suggest the decline will be more persistent this time. Here's why.

Back to reality

Image: Anthony Mirhaydari - MSN Money

Anthony Mirhaydari

First, it's worth reviewing how quickly investor complacency is fading. The CBOE Volatility Index ($VIX) on April 15 posted its largest one-day surge since the mid-2011 market meltdown. And before that, it was associated with the end of the downtrend in volatility seen in early 2007, as the extent of the subprime mortgage mess became clear and many lenders filed for bankruptcy. A few months later, the stock market topped out.

Specifically, the VIX jumped out of a multiyear downtrend in February 2007 after former Fed Chairman Alan Greenspan noted that a leveling-off of corporate profit margins (as is happening now) was a sign that a recession could be coming.

Back then, stocks performed one last upward rush before volatility turned higher into a new, persistent downtrend that didn't end until late 2008, as stocks neared their bear-market low.

The takeaway: A surge in the VIX of the type we saw on April 15 was enough back in 2007 to shatter the bull market/housing bubble tranquility. No longer was housing a sure thing. No longer was pushing subprime loans, mortgage-backed securities, credit default swaps and all the rest a sure moneymaker for bankers.

That's what the April 15 decline felt like, punctuated by the horror of the bomb attack in Boston: The end of the tranquility.

Selling pressure has finally hit

Now, the selling pressure has finally hit the once-sheltered U.S. equity trade, with small-cap stocks, in particular, receiving the brunt of the damage -- the Russell 2000 Index ($RUT) has fallen below its early April lows and is trading below both its 50-day moving average and its lower Bollinger Band.

For months, financial markets have been too quiet. A flood of cheap money from the major central banks had squeezed out volatility and risk aversion, creating conditions for equities' slow-motion grind higher.

Sure, there were blemishes, including narrowing participation and pitiful volume. Emerging-market stocks have been sliding lower all year. But investors didn't care, preferring the lull into a dreamy state of complacency. Measures of market risk -- from the VIX to the credit-default swaps on eurozone bonds -- suggested all was well.

That's ending now. And it's not pretty.

Commodities lead the way

The recent dramatic plunge in silver and gold prices suggests that liquidity is tightening within the financial system.

Rumors as to the true cause abound.

Perhaps it's related to the Cyprus bailout and possible sovereign gold reserve sales. Or maybe Japanese banks, suffering from a dramatic increase in price volatility on Japanese government bonds, are selling gold to bolster capital reserves. Maybe a hedge fund is imploding, like Amaranth Advisors did in 2006.

But it's not relegated to just precious metals. Similarly dramatic pullbacks are underway in crude oil, copper and many of the industrial metals. The iPath DJ-UBS Aluminum TR Sub-index (JJU) exchange-traded fund is back to 2010 levels. Agricultural commodities are well off of their 2012 highs.

While we've yet to learn the cause of the acute sell-off, commodities have been under pressure as global industrial production has slowed. Economic data, both at home and overseas, have been disappointing lately. The pullback in China has been especially worrying for commodity traders, jeopardizing the main pillar of the resource-scarcity story that's driven raw material prices higher over the past decade.

Credit Suisse economists, who maintain the Credit Suisse Basic Materials Index, are worried that we're on the cusp of another global slowdown scare -- not unlike those that contributed to the midyear pullbacks in 2011 and 2012.