Only In America

The statement used to have a positive connotation that America is a land of opportunity -- a unique place and a paradise.  Nowadays, however, It comes with a lot of bagage.   

Consider this, even though the president of the USA is  the most powerful position in the planet, the race for the presidency is becoming a personality contest, a la cart american idol show. It certainly makes this political season interesting to watch, it is also scary to think that the winner of the contest will have his/her fingers on the switch to launch the neuclear missles.

Also this, in most countries, the ponzi schem is illegal, and any one caught playing the game probably will be hanged by the neck.  However, the latest financial scandals of US corporations are nothing but a ponzi game, the only difference is that the scale is unprecedent. Cases in point, Fannie Mae and Freddie Mac, the biggest morgage related debt issuers, simply took the new investors' money to pay off old investors.  Now that, the new money are dried up, yet the only ones are punished will be the tax payers.

What does all these mean to the market?

Based on the pre-market data, it seems like the investors like the idea that the government taking over Freddie and Fannie.  we may see a bounce tomorrow.   And thus far in this crisis, every time when the market are sinking, it takes some actions from government to salvage the market.  last time, the bottom of the market was marked by the government's action to buy out Bear Sterns.   Maybe this action of taking over Morgage giants will mark another turn of the market. 

However, is this bounce a short term or the fundatmentals of the market are fundamentally changed ?

I would suggest caution and will pay attention to how market perform overall.

The first question has to ask whenever the market is going up is that who will lead the market higher? financial or home builder or the retailer?  these are the strong sectors lately.

The second questions is how the soft spots can be repaired:  it is a given that the economy is slowing, so, even if the commodities stop sliding down from here, it is hard to argue that the commodities will rise anytime soon.   Also, the news from tech land are so bad that all the bellweather names in that sectors (goog, rimm, ibm, intc, dell, csco, orcl, crm...) are all underperforming.   

So, it is probably more prudent at this point to sell into the strength until the market tell us otherwise.

When talking with many Americans, it is said that if American become a secondary world power in the next 100 years, people probably will look back today and will point out the decline beginning with the presidency of Geroge W. Bush.  yet, the following is what WSJ said about the economy under Bush's term.

http://online.wsj.com/article/SB122039890722392873.html

It is, indeed, can only happen in America.