Imagine my surprise when I woke up to see Dow futures up, the dollar up, and oil prices marginally down. 

What is the great news that sparked such a potential bull rally?  The same exact news that I expected to tank equity values:  increase government intervention to remove risk for financial sector investors and the derivative assets; replacing it with inflation and taking it out of the consumer. 

The problems with Freddie and Fannie haven't gone away, but the Treasury's promise to provide liquidity and cheap credit (and a vote of support) is fostering another small bubble in financial markets.  The flight to government protected securities shows a collective sense of safety in assets having easy access to anything potentially backed up by intervention and non-dilutive cash injections.

Of course, the taxpaying "investors" won't see a penny of the returns on capital they're providing, and if there's any benefit to the general population its the good news that the banks foreclosing on our American homes don't have to be fully responsible for their own debts. 

Wait... this is the good news? Its yet another sign of the times and the out-of-touch nature on Wall Street and Washington D.C. 

Analysts are calling for government intervention now, but they're being smart and specific.  They want the money now, up front - no strings attached.  When our money provides enough of a reserve for these companies to return to profitability, they want the government out ASAP before the people who financed the bailout demand their cut of the returns.   

Socialism versus economic gravity - how long can we fly, how close to the sun can we soar? 

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Copyright (C) 2007 Alain Georgette / Copyright (C) 2006 Frantisek Hliva. All rights reserved.