… for full documentation of the discussions that took place between Paulson, Bush, & Co. in New York War Rooms in the fall of 2008, check out the movie.

The one flawed argument by the bears, though, is the claim that the market is all driven by government money. Well, that may be true, but who cares? Up is up, that’s all that matters as far as your trading P&L is concerned. There are no beauty prices for stock gains that are “justified by economic strength” vs. stock gains that “come from government-induced asset inflation”.

It is our conviction that in 2010, the current suggar bubble will collapse. But for the time being, giddiness rules. And one should also not forget how long a correct macro argument can exist before the market catches up to it. Example: In 2005 and earlier, some pundits warned of the coming real estate collapse, but it did not happen till 2007!

• With Wall Street eagerly upgrading each other‘s institutions;
• With Bernanke declaring the recession over;
• With short interest falling and falling;
• With a return of massive risk taking courtesy of the Fed-induced  moral hazard;

It’s a true love fest of Bulls out there, and we do not expect this to reverse out of nowhere. But when it reverses, the drop is likely to be all the steeper.

“As a country, we must demand that our politicians stop serving those whose business models are based on systemic theft and start serving those who seek to create value for others — the workers, innovators and investors who have made this country great.” – Dylan Ratigan

Well said, Mr. Ratigan. Clearly shows that you are unfit for CNBC.

Poverty hits 1 in 8 Americans: About 2.5 million Americans slipped below the poverty line line as recession and layoffs hammered the economy last year, driving poverty to its highest level since 1998, the U.S. Census Bureau reported Thursday. The annual survey showed that more than one in eight U.S. residents – 13.2 percent – are living on less than $10,991 for an individual – slightly more than $200 a week – or $22,025 for a family of four.

… ah, not to worry. Wall Street’s well I heard and you know how they say: “Wall Street’s well, all is well.”

It is no secret at this point that banks have been making their earnings courtesy of (a) changes in accounting rules, and (b) their proprietary trading. In fact, the latter has been extremely proftable for banks with well-run trading desks. The problem is that it is much harder to make huge amounts of money when markets flat-line as they recently have. So, some market movement seems desirable, and if it does not come by itself, then next quarter’s bank earnings may disappoint and thereby trigger said movement. Alternatively, realizing that they need some “market action”, banks may just kickstart it themselves.

Now, if market movement is necessary and indispensable, then the question is which direction the market is going to move …

On September 11th, George W. Bush was presented one of those rare and horrible historical moments. The terrorist attacks united the country and the world around the President: His approval rating skyrocketed to 90%. Even the French Prime Minister announced, “Tonight, we are all Americans.”

The historical opportunity was laid at the feet of the President. With a unified country behind him and a sympathetic world willing to cooperate with him in just about every imaginable way, he could have achieved monumental greatness: He could have asked for great sacrifices from the populace, and they would have willingly made them. At that moment, any reach across the aisle would have been fruitful on a number of vexing issues. A bipartisan approach to any political problem at home – cutting pork out of domestic policies, reforming Social Security, renovating the tax code – could have been accomplished in a bipartisan spirit of strengthening the economy and defending the country. He might have even done something about our education system so, in truth, no child would be left behind.

One would imagine that a man elected under what can be charitably described as “inauspicious circumstances” – with nary a mandate in sight – might have taken the 9/11 tragedy as an opportunity to move to the center, putting aside partisan political differences, and governing “all the people.” To be, in fact, truly a “uniter,” not a “divider.”

Alas, it was not to be.

A Perth man has contracted the first known Australian case of swine flu that is resistant to the main antiviral drug Tamiflu.

Full story here.

“The current financial crisis is unlike any others,” says the Bank for International Settlements. Lasting damage has been done. The “cumulative output loss” is likely to reach 20pc of GDP in the major economies.