The Bail Out Mentality is Alive and Well, Thank you

Why does the market hold above the January 22nd lows in spite of increaingly bad news.  It’s simple, the bmarket believes that it will be bailed out when it gets bad enough.  Bear Stearns on Friday was another piece of that scenario that started in 1987 with Greenspan and has continued through another 20 years with the same result to each crisis, bailout.  Why would it change, why would investors be called to pay for their mistakes and change the mentality: a change to at the margin risk assesement for every investment; why would it when all Washington Politics is about glass mirrors and the perpetual boom? 

At this very moment 90 % of the Republicans are out to lunch, the Ron Paul contigent the only one that has a solid economic basis, and 45 % of the Democrats are out to lunch believing in the Clinton continuation program. 

As we have said before, Bernanke and Paulson have a chance to take a stand at the next FED Meeting: a  .25 percent drop in Fed Funds. a real commitment to a strong dollar, and let the cards find their place.  It would be a miracle and the odds are strongly against it happening.  So the dead cat bounce to 1460 in the S&P 500 is still in play in our opinion.

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