American tourists in London have become objects of pity. The poor people - they've come all the way over here, say the locals, and now they don't have the money to enjoy themselves. Monday, the dollar touched a 26-year low against the English currency. The dollar has dropped well below 2-to-the-pound. Tourists go about in a state of shock and awe. When they buy a hamburger they find that it costs as much as a rib-eye steak at home. They hop in a taxi and wish they had refinanced their home before making the trip. At the Savoy or Claridge's, before giving customers their bills, bellhops are positioned directly behind them, to catch their wallets as they fall.

America's markets were closed yesterday for the 4th of July celebrations. But America's money was marked to market all over the planet. Wherever it showed up, it was greeted warmly - but not quite as warmly as a month ago.

While dropping below the 2-to-the-pound level in London, on the continent, the greenback lost ground too. At $1.36 to the euro, it is near its all-time low.

The dollar seems to have the weight of the entire world financial system on its shoulders. And what a system it is!

We are amazed. We are flabbergasted. We don't see how it can continue.

And yet, as a dear reader, tells us below…we've been saying that for a while…and the Great Reckoning may not come for another 40 or 50 years!

Or sooner…

But there is a day of reckoning in financial markets every day, too.

Take the boom in deals, one of the most remarkable features of this market. We have never seen so many deals…or such rich ones. On Tuesday, KKR announced that it would try to get $1.25 billion out of the public's pockets. Och-Ziff Capital Management, a hedge fund group, earlier said it was looking for $2 billion.

Meanwhile, the Carlyle Group is taking Manor Care private for $6.3 billion and Hilton Hotels is being bought by Blackstone for $20 billion. And the biggest private equity takeover ever is underway in Canada, where Bell Canada Enterprises is going for $32.6 billion in cash, plus $15.9 billion in debt.

The hedge funds and private equity firms are not only doing deals…they're BECOMING deals themselves. "Hedge funds continue public path," says the NY TIMES. They're moving into the public markets for a simple reason - there's money to be had there. But what kind of system is it where the public investor thinks he can profit from funds that make their money by outsmarting him? 'Never give a sucker an even break' is like the Lord's Prayer at KKR, Blackstone and Och-Ziff. They repeat it in unison at board meetings. They put it on their business cards. They have it printed on their securities and I.O.Us.

Of course, when these companies file to go public they are forced to open their doors so we can see what they've been up to. In the case of Och-Ziff, we find that their performance for several years has been about the same as the S&P. Why would an investor pay '2 and 20' (2% of capital and 20% of performance is standard hedge fund pricing) to get the same thing he could get by throwing darts at the S&P listings? Because it is less "risky." Och-Ziff got the same numbers as the S&P but with substantially less volatility.

Wall Street cannot really measure risk. It doesn't know any better than we do when the "black swan" is going to appear. Our friend Nicholas Taleb has made the black swan famous - pointing out that just because every swan you've ever seen has been white, it doesn't mean the next one won't be black. Wall Street looks back and counts swans. If it counts 20 white ones and 1 black one, it puts the 'risk' of a black swan appearing at 5%.

Counting the swans in the S&P performance and comparing them to Och-Ziff's record may or may not be meaningful. Maybe it is worth paying a premium to get the whiz-kids' lower-volatility performance. But our guess is that when a real black swan comes along both the S&P will go down…and Och-Ziff along with it.

Bill Bonner is the President of Agora Publishing. For more on Bill Bonner, visit The Daily Reckoning.