"It's the sort of crash, the sort of failure that you see that tends to market bottoms."The Kool Aid is overwhelming.

Again it is very easy to sit there and call bottoms for the last year - especially if you don't run money. I keep asking where is the INSIDER buying by the banks themselves if they are so confident of things? Where are the huge CEO purchases (they have sucked the system of money so wouldn't it be nice if they showed some confidence and bought shares of the entities they know best?)? So "we" are to believe in the bottoms that the pundits scream at us about - when the executives who see what is on their balance sheet refuse to buy? Right.

Myself? I'm sticking with Meredith Whitney (Aug 4: Meredith Whitney Continues to be Negative on Financials (and Housing)) however this behavior really showcases the dependency of "free market capitalists" on government bailouts - it really is quite sick to watch and moral hazard has once again run amuck. But I certainly could see a "happy time" for market participants when the nanny state steps in - since they like to do their work on weekends, I'd say we have to be very careful holding excess short exposure going into weekends at this point because the euphoric buying that could ensue when mommy and daddy come to fix the problems greed and malfeasence created. It is hard to model "interference" and "socialism" on a spreadsheet. And then when THAT "high" wears off, we'll return to face reality (Alt A mortgages, option ARM mortgages, prime mortgages, credit cards, consumer loans, student loans, commercial loans) sometime later down the road. Until the next "bottom is in" event happens (some regional bank failure I assume). And we'll keep repeating this. For many quarters to come. And you'll be told - over and over - by the same folks mind you who told you the bottom was in August 2007 when the Federal Reserve first came to the rescue - that it's safe to get into the water.

Let me leave you with one comment from exactly 1 year ago:

“It is not the responsibility of the Federal Reserve — nor would it be appropriate — to protect lenders and investors from the consequences of their financial decisions.”

Who would say such a thing that turned out so vastly inaccurate? Who would say a thing that proved to be nothing but a joke - that was abandonded at the first signs the babies on Wall Street had turned their golden goose into an era of pain for all of us with their lack of regulation and utter greed. Why none other than Mr Ben Bernanke. That was almost 1 year ago to the day.