The list of companies receiving US Government financial assistance is a who’s who of companies that have screwed up the most.

How nice it must be to be in the ‘in crowd’ with Washington. Large corporations left and right are being rewarded with tax payer funding because the corporations sought to become reckless with their management and financial risk aversion. Yes, companies that screw up the most get to reach into our pockets to only keep doing it again and again.

The United States has become a “Bail Out Nation“. Never in the history of the United States has there been so much money poured into the private sector to rescue companies from themselves, and at our expense.

Companies that engaged in foolish, poor, and outright reckless behavior became ‘too big to fail’ according to the Government. Are they really too big to fail? My answer is no.

Not one private corporation is ever too big to fail. The Government has achieved a new level of selective “live or die” decision making. Any company that has become financially ‘in trouble’ got there on their own devices. And they should live or die by their own devices. The only Government financial assistance should come in to provide assistance to individuals impacted by a large corporate collapse and nothing more.

I’ll say it once again… no corporation is ever ‘too big to fail’. The only thing that is too big is the corporate connections to Washington. I am disgusted with the risk being placed upon the American tax payers for the purpose of keeping companies that have made the largest mistakes alive. The more I read over the details on the Citigroup (C) bail out the more disgusted I become. And the tag line the Government keeps trying to put over on the American people is “We will reap a profit on these bail outs” will turn out to be “The Great Lie of 2008“… mark my words and check back in 10 years and lets see just how much profits were made.

My honest evaluation is that there will never be any profits made for the tax payer. It will just end up being a huge cancer eating away at the nations balance sheet and placing the United States at further risk of a systemic collapse.

And I will add that I am very disappointed in President Elect Obama’s pick for Treasury Secretary. Timothy Geithner of the New York Fed Office is just another Wall Street insider. Like Paulson, Geithner has been looking out for the corporate interests and not what is in the best interest of the nation. I give Obama a big “F” for his choice. The nation needs a real economist at the helm of the Treasury… not just another Wall Street “buddy“.

While we were away on our cruise the markets continued to sell off and established fresh lows. All kinds of technical indicators are lit up like a Christmas Tree on December 25th. And most of them are conflicting.

Some analysts are quick to point out once again that the market is “too oversold“, “valuations are too cheap”, or “such and such stock is trading at 2x book value and a great time to buy“. All of this means nothing in times of a genuine risk of systemic collapse.

This is not your average bear market. This is not the ‘run of the mill’ bear markets, this is a bear market that is likely to last for many years. This does not mean that stocks will just keep dropping in a straight line. No market ever does that, bear or bull. What it does mean is that ‘buy and hold’ investing techniques will be pointless and exposes oneself to even more losses over time. It means the chances of a Japan style market here in the US is more likely.

Japanese Nikkei 225 Index from 1990 to 2006

And it means that everything that has been previously ‘assumed’ about valuations, P/E ratios, and yields will mean very little going forward. All that matters now is capital preservation. Trades must be kept in close check at all times. Any position (swing trades) must have stop losses or trailing stops at all times. And never buy and stock (long or short) and just walk away from it. Buy and hold is dead… this is the ‘new‘ market reality and to profit from it one has to be quick to make decisions, don’t let greed dictate your trades, and keep skimming profits from any position be it a day trade or swing trade.

I’ll have much more charts coming this weekend with individual stocks and possible plays to be on the watch for with suggested entry points (long or short).

Bear market rallies are always a normal process of the greater bear market picture. Don’t get fooled into thinking it is time to buy everything just because the price is very cheap. These remain extremely uncertain times and your money should be guarded at all times.

Charts…

Tonight I have short term hourly charts for the major indices that show what I am monitoring for potential price interaction levels. Events unfolding within the macro economic picture are changing at an increasing pace. And analyzing the trends and support/resistance levels is a task that is becoming increasingly difficult to perform when there is so much uncertainty in the markets. To say the market is ‘jittery’ would be a huge under statement.

All charts are shown in hourly scale:

S&P 500

Nasdaq 100 Index

Dow Industrials

Financial Sector (XLF)

NYSE composite Index