A number of themes seem to have emerged for investors so far in 2012. One that I have mentioned already is the powerful and positive psychology that has taken over markets worldwide, thanks to money printing. I have also suggested that said psychology has gotten way ahead of fundamentals, which in reality aren't that great. But nothing demonstrates the prevalent good mood better than the headline on Barron's cover one week ago: "Dow 15,000." (You can read the cover story here.)

Clearly, the European Central Bank's long-term financing operations and promises from Federal Reserve Chairman Ben Bernanke to hold rates near zero for practically an eternity have done wonders.

The degree to which any scrap of good news is pounced on lately was also demonstrated Tuesday evening. Standard & Poor's 500 Index ($INX) futures shot up about 0.75% in five minutes after Chinese Premier Wen Jiabao said China would be willing to get more deeply involved to help the eurozone.

That does not necessarily mean China is willing to buy sovereign confetti in size, ad nauseam, as it seems more inclined to acquire hard or productive assets. Nonetheless, the response was as I described: rabidly positive.

Just imagine if they priced it by the pound

The barely contained euphoria was on display Wednesday with a 3% morning rally for Apple (AAPL, news). (That stock has begun to act like an Internet stock of the 1999 vintage.) At its peak that day of $526 per share, the market capitalization of Apple -- a consumer product company that currently also enjoys a certain faddish component -- equaled that of Microsoft (MSFT, news), Google (GOOG, news), and half of Cisco Systems (CSCO, news) combined. (Microsoft owns and publishes MSN Money.)

However, that price turned out to be unsustainable, and around midsession Apple shares declined about $30 in an hour (turning a 3% gain into a small loss, and ultimately closing in the red by 2%). That slide took the entire tape with it, and I could easily see how we may have set a top in the market for some time.

Image: Bill Fleckenstein

Bill Fleckenstein

King for a day

A second theme is that, as fears of a deflationary crisis in Europe subside and morph into tentative concern about inflation, central bankers will continue to espouse their omniscience. To illustrate how completely out to lunch they are, Mervyn King, governor of the Bank of England, made headlines on Tuesday when he said that he sees reaching his inflation goal in 2012, with "downside risk." In other words, even though inflation is running above his target of 2%, he is pretty sure it will collapse to a lower level, although he will make sure it doesn't get too far below where he wants it.

That's the level of delusion we are dealing with from these monetary madmen. Even when inflation -- which is understated, thanks to bogus methods of calculation -- is higher than expected, they tell us it is going to collapse, thereby giving them room to print more money.

History is going to look back on this period and say, "What were the citizens of these countries thinking as they allowed these lunatics to do what they did?"

Club Dread

Lastly, while I haven't discussed it much lately, there does seem to have been a slight shift in the attitude toward Europe's main problem child, Greece. Specifically, the powers that be inside the eurozone appear to have decided that -- perhaps, maybe -- a Greek default could be a good idea, and manageable, too.

There also seems to be more serious consideration of Greece leaving the eurozone. I think it is a slam-dunk that there will be a Greek default of some sort, and I would not be surprised at all if Greece were forced to leave. Although the eurozone is a club whose rules no one obeys (which is part of the reason Europe is in its current predicament), Greece really didn't belong in the first place.

The concept that all these disparate countries were going to agree to do what was needed in tough times was always the biggest flaw. But that really doesn't matter now, since that is obvious to everyone. The major question is, if Greece is forced to leave, what will happen to the rest of the PIIGS countries (i.e., Portugal, Ireland, Italy and Spain) and ultimately to the European Monetary Union itself. While the LTROs have certainly allowed markets to forget about that question, that doesn't mean that it is anywhere near resolved.

The knowledgeable and anonymous friend I call the Lord of the Dark Matter believes that the European Monetary Union as we know it is finished, and it is just a matter of exactly how and when. Of course, to those investing in markets, how and when are the only points that matter. And unfortunately right now, the answers aren't clear. What happens to Greece, the size of the next round of LTROs and the reactions in various markets will offer some clues.

Unilateral money printing by the ECB could allow the EMU to hold together. On the other hand, the Germans would most likely not want to go along with that, making them want to exit. Thus, one way or another, it seems that the EMU is toast.

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'Timing is everything,' said the grenade maker

That is not exactly a novel thought, but as I said, the when and how are the questions that will have the most serious investment ramifications. For now, it is impossible to know the answer to either. For now, it is impossible to know the answer to those two questions. What we do know is that the live grenades are still rolling around on the floor even though -- thanks to irresponsible central bankers worldwide -- markets have levitated.

At the time of publication, Bill Fleckenstein owned shares of the following company mentioned in this column: Microsoft.

This column is a synopsis of Bill Fleckenstein's daily column on his website, FleckensteinCapital.com, which he's been writing on the Internet since 1996. Click here to find Fleckenstein's most recent articles.