Here I thought I owned the trademark “Flip It”, but it seems that maybe I woke up in a Flipped country lately.  Explain this:

I thought the Democrats were supposed to be for the “little guy” whom we’re going to tax/borrow from his grandchildren and they were supposed to be against the big corporations/Wall Street crowd that will be the only direct beneficiaries of this bail out package…YET THE DEMOCRATS VOTED FOR THIS WALL STREET BAILOUT PACKAGE OF 2008!

I thought the Senators, what with just two from each state thereby making NM senators as powerful as NY senators, were supposed to be a balance for the less-populated middle American states whom we’re going to tax/borrow from his grandchildren and that the House was supposed to be a benefit for those populus states on the coasts that stand to directly benefit from this bail out package…YET IT’S IN THE HOUSE WHERE THIS BILL GOT VOTED DOWN WHILE IT FLEW THROUGH THE SENATE!

I thought Steve Forbes and Warren Buffett and my old friend on CNBC were free marketers who believed that the best way to true prosperity is through free market principles…YET THEY ALL ARE BEGGING YOU FOR THIS BAILOUT PACKAGE!

I read in the NY Times that Hank Paulson is a Christian Scientist, which means he believes that it’s best to use as little medicine as possible and to let the system take care of itself…YET HE’S PRESCRIBING ALL THIS POISON TO FIX THE POISON IN OUR SYSTEM!

What side is up around here?

PS.  So I’m in my hometown of Ruidoso, NM taping some spots for “My Hometown: Opportunity in America” and I’ve had many a conversation with the locals here.  For the record, it’s a small business-centric, tourist-driven economy in a mountain oasis town in the middle of the desert with a 12,700 foot peak Ski Apache ski resort and the Texas-oil-economy-driven summer Ruidoso Downs Racetrack.

And I don’t know a single person here who is for the bailout.  A well-off elderly couple even laughed today when I asked if they thought they’d have trouble getting a loan from the local bank if Wall Street isn’t bailed out.  This was as the market was down 600 points on the day.  I said what’s funny.  They said their local bank hasn’t overextended itself and has prepared itself for the just-started local real estate downturn and that they’ve got capital to put down if they wanted to.  Fair enough, I suppose.

I am shocked that our democracy might work after all.  Capitalism and private ownership (in this case of losses) still matter in this country after all.

As I wrote last week – 

“We probably hit DJIA 10,000 in a heart beat if we don’t pass this bill. We probably spike 500 or 1000 points in the near term if we do pass this bill….and then we’ll eventually see DJIA 9,000 or lower because central allocation of capital is always politically-driven and not profit-driven…and only profits make stocks go up. These guys who think this destruction of capitalism and the right to profits is a bullish thing are dead wrong.”

And the market is indeed crashing on the news that this Wall Street Bail Out Bill of 2008 isn’t looking like it’s going to pass.   Which means I’m going to be getting bullish again, because in the long run, the only thing that matters to the stock market and this economy is how much profits are running through the system…and we just ensured that our profit-driven system (that does indeed cycle and create both booms and busts as it has always done, but that over time has created the most wealthy nation in the history of the planet) remains intact.  

I’m sure not going to be in any rush, because the bad times that were coming because the virtuous cycles had turned to vicious cycles anyway and no matter what we’re going to be in for some more pain in the near-term in this economy (and therefore also likely in the markets)…

But I’m going to be getting much more bullish (and probably start buying stocks again) much sooner than I would have if this bill had passed.

1. Bail Out Will Cause A Crash

2. Frank and Frank: Liar and Idiot

3. Winners Fade the Consensus View!

1. We probably hit DJIA 10,000 in a heart beat if we don’t pass this bill. We probably spike 500 or 1000 points in the near term if we do pass this bill….and then we’ll eventually see DJIA 9,000 or lower because central allocation of capital is always politically-driven and not profit-driven…and only profits make stocks go up.

2. Actual quote from Barney Frank just a couple years ago as his friend Frank Raines was taking home tens of millions while lying about the fundamentals at now nationalized Freddie Mac – “”These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis” But now he wants me to believe he’s right about impending doomsday if this extortion doesn’t pass?

3. Markets have a way of surprising the most amount of people the most amount of the time. Somehow I’m supposed to believe these idiots in Washington and the cronies they listen to are RIGHT about what will happen to these markets? If they weren’t stealing my money I’d be a buyer against their bearishness.

Hey you thieving Republicans and Democrats who are trying to “educate” Americans about why you supposedly need to take a trillion dollars out of the private market and give it to the same guys who created this debacle, I have one main question for you, and it cuts straight to the only thing you care about at all –

What the hell are you gonna do in forty days if you redistributing wealth from middle America to Wall Street doesn’t help?    If the DJIA is at 10,000 on November 4, 2008 AFTER you’ve extorted all this money from the only people who have any?  

Redistribution of wealth from hard-working non-bank-related people to the richest people in this country who already own everything isn’t going to fix what’s ailing this economy.  But it will upset any freedom-minded US citizen and rightly so.  And we’re gonna vote all of you commies/socialist pigs right out on your butts.

Good riddance, thieves! 

I really am worried about the potential of class warfare if these fear-mongering politicians actually pass this bill.

PS. Some rich dude just told me that my sister doesn’t need money anyway, since she’s not in debt.  Wow.  Extrapolate that thought out and you realize that apparently the only people who “need” money are those who owe it to others.  My sister doesn’t need her money?  WTF?

I’m gonna do a special edition of Power Rankings when I’m a guest on David Asman’s fantastic America’s Nightly Scoreboard (ooh, they should make that the official name!  “Tune into David Asman’s Fantastic America’s Nightly Scoreboard tonight at 7pm on Fox Business Network…”)

Anyway, here’s my Scoreboard Power Rankings of The Top 5 Biggest Winners from this Wall Street Bail Out Package:

5.  Bill Gross – he already pocketed $2 billion in a single day when they nationalized FNM and FRE the day after he wrote in his newsletter about “The bill for our collective speculative profligacy” and today he’s calling for $700 billion more.

4.  Warren Buffett – I used to love him to death, but he just bet $5 billion on Goldman Sachs and then came on our network begging you for your money to help his bet work.

3.  Obama/McCain – Whoever wins the White House is going to get to pretend he’s helping middle America in four years when he tells them he’s suspending the need for any indebted homeowner to bother paying the government back.

2.  Hank Putin/Paulson – He’s going to be our president and will run Bankprom, his financial equivalent to Putin’s energy monopoly Gazprom in Russia.

1.  The rich white kids at Caine every night of the week til 4 am buying $500 bottles of vodka with your tax dollars – They can keep the party going for a few more months now!

Laws not working for the guys who took on too much risk and now are losing their shirts? Just change ‘em mid-game.

The Treasury Secretary and his lover, the head of the Federal Reserve, suddenly get bearish AFTER the market’s down 30% and the credit markets have ALREADY stopped working? Throw out all contract laws and bankruptcy laws and anything else that resembles the Constitution and create ad hoc policies like outlawing the right to privately borrow someone else’s stock and sell it to someone who wants it because you believe the stock might go down. Oh, and also making shorts who got this debacle right get formal approval and scrutiny so they have to cover.

Oh, and let’s also extort a trillion dollars out of the system from my mom and dad because they obviously have no idea and therefore no right to decide how to allocate that capital effectively anymore.

Those two lovers got bearish, remember? And if they don’t come to your house and take your money with a gun to your head, then you’re going to really regret. Trust the guys with guns. NOT!

Then the politicians who see a major opportunity for the greatest power grab ever tell me and Rebecca on Happy Hour last night that my mom and dad just need to be educated and then they’d definitely want the guys with the guns to come take their money.

Look, these guys with guns who want to take your money ain’t on your side. If Warren Buffett and Bill Gross truly believe that there’s money to be made by buying up these distressed assets from these formerly very rich financials, then buy all means I think they should go for it. But not by cheering on the guys with the guns who want to come to my mom and dad’s house and take the money they’ve saved running their small town veterinary practice for the last 35 years.

Pimco’s got $800 billion in assets. If you, Mr Gross really believe those assets are a great buying opportunity, then dude — take your $800 billion and make the bet! Don’t do it with my parent’s money unless they choose to give it to you.

To summarize these bankers and bureaucrats and politicians position then:

(While holding a gun to your head) “Buy these assets from us. We promise that it’s a great time to buy them.”

We probably hit DJIA 10,000 in a heart beat if we don’t pass this bill. We probably spike 500 or 1000 points in the near term if we do pass this bill….and then we’ll eventually see DJIA 9,000 or lower because central allocation of capital is always politically-driven and not profit-driven…and only profits make stocks go up. These guys who think this destruction of capitalism and the right to profits is a bullish thing are dead wrong.

Back in October 2002, the Nasdaq was down 75% from its highs just a year a half prior and there were hundreds of tech stocks trading down 90% plus from their highs.

See, in the late 1990s, any company with the word “communications” in their business plan could raise billions of dollars in debt and/or equity financing. But after the bubble popped in early 2000, nobody with the word “communications” could raise any capital at all. The virtuous cycle of booming growth turned to the vicious cycle of contraction (sound familiar? Did we have to bail out all the telecom companies to make sure the Internet kept working? No, of course. We let them recapitalize according to the contract laws that our Constitution used to guarantee until Hank Putin/Paulson changed that this week and last).

Indeed, one of the best moves I made in 2002 and 2003 was buying a basket of stocks that traded with negative enterprise values, which means the market was valuing the stock for less than the company had in their checking account. You could buy, say, Valueclick for example for, say, $80 million even as they had no debt and $100 million in net cash while the company was generating positive cash flow.

On the other hand, one of the worst moves I made in 2002 and 2003 was betting against any company that had excessive debt ratios. Companies like American Tower had billions of debt and were running out of cash and not generating any new cash. I figured they’d never be able to tap capital again without having to recapitalize the company…but I was wrong. The company was able to continue to finance their operations as capital started flowing fast and free again (in large part because 1% interest rates in a steady economy creates bubble dynamics) and AMT turned itself around. I think I was short from $5 to $7 before I covered it for a nasty loss…I should have covered and gone long, because the stock eventually climbed several hundred percent as the company bought enough time to really get earnings cranking.

The reason for this little flashback is because I don’t expect history to repeat this time. That is, I’m not sure we can fix whatever is ailing these credit markets any time soon. Sorry, but despite Gross/Buffett/Paulson/Bush/Pelosi/Obama/McCain/Bernanke and the rest of you who would directly benefit from this extortion trying to convince me that taking a trillion dollars out of the private, profit-seeking economy and giving it to the in-over-their-head politicians to dole out to greedy Wall Streeters is somehow going to magically solve all our economy’s problems…well, I think you’re all either idiots or thieves and you’re destroying private property rights and that’s not a bullish thing. EVER.

So I’m thinking you can probably run a screen searching for stocks with the highest debt ratios you can find. And especially those companies that have a lot of debt coming due in 2009 — you probably can get short and buy puts on those puppies. Because dilution — a la, the Goldman Sachs/Warren Buffett deal — is probably the best case scenario end game for most debt-laden companies in the next couple years. Bankruptcy would be another possibility (here’s hoping we don’t simply bail out any company that needs it in the next two years, a la the Ford/GM/Cerberus $25 billion bail out package that the Democrats and Republicans in power passed yesterday).

It’s not as if Lehman and Bear are going to lead a junk bond issuing for Caterpillar next year, no matter what happens with this bail out package getting passed or not. Lehman and Bear don’t exist anymore! And, btw, extorting a trillion dollars from my mom and dad won’t bring them back and it won’t bring back Main Street’s ability to tap capital either.

P.S. Click here to receive the latest edition of our monthly stock market newsletter, The Cody Report, and get exclusive access to this month’s four stock picks.

in the quest for the test to fulfill an achievement
everybody’s only in it for themselves
when the fact of the matter is they just don’t care
to extend a helping hand to anyone else

so tell me why, did you have to lie
and try to make me all confused about the U.S.A.
when the fact of the matter is you just don’t care
to comprehend or understand a single word I say

I don’t want to have I go against I
oh let me tell you
the same old story, no factual glory
I against I against I against I
and I say I don’t like it, and I know I don’t want it
I against I against I against I
almighty watching, almighty watching
I against I against I against I
and I say I don’t like it, and I know I don’t want it
I against I against I against I

I said who’s gonna tell the youth about the drugs
about the drugs, mugs, bugs, and the police thugs
about the rotten stinkin’ rackets and the fantasies
around the nation, around the nations
oh baby what you gonna do
I tell you the truth is looking straight at you

I got a brass continental with a 300 Z,
two color t.v.s,now a video too
I got a rest home in Jamaica for my fantasty, for my family
around the nation
around the nations
what you gonna do. — Bad Brains, I against I

Warren Buffett, for whom I’ve always had the utmost respect and admiration for but who has a fresh $5 billion in cash and millions of warrants of vested interest in the firm that the Treasury Secretary used to run and which just coincidentally happens to be the same firm that will benefit the most from taking a trillion dollars from my mom and dad and giving it to Wall Street, is for the Treasury’s Wall Street bailout plan.

I was hoping beyond hope he’d prefer to respect the rule of contract law and the private property rights built thereupon than to lobby the public for their hard-earned tax dollars for his own firm’s direct benefit. Fear-mongering indeed.

The bailout won’t change anything, but it’ll certainly enrich Wall Street and its cronies. Only profit-seeking capital can create virtuous, productive cycles, not politically motivated capital, which is exactly what extorting a trillion dollars from Main Street for Wall Street is. That trillion dollars exists and wants to get back into the system. But there’s no way it will when Wall Street and Washington are colluding to extort it from the system.

This ain’t trickle down economics, which entails giving tax breaks and incentivizing large private investment with profit-seeking participants. Taking a trillion dollars from the bottom of the system — the renters and savers who never benefited from the boom at all or those wisely sold out of the markets at the top — and giving to the same guys who broke themselves with greed at the top of the system isn’t going to somehow create a multiplier effect. No, it’ll get sucked out the system by the same backdoor dealing and cronyism that always comes with governmental spending.

Talk about fear? The fear-induced knots in my gut and in my back and in my neck grow ever-larger as the socialization of our country seems ever more fait accompli.

I’m worried about class warfare if Wall Street and its Washington cronies pull this thing off. Illuminati indeed.

Long-time reader (from even back in my TheStreet.com days actually) emailed me the following this morning:

My answer is pretty straightforward. If you can get in on the greatest brand in all of finance at a guaranteed 10% annual return with warrants that give you full upside exposure to the common stock with essentially no downside exposure to the common stock…then, yes, by all means, get to work buying some preferred shares from Goldman.

But unless you’re actually Warren Buffett and you actually have the ability to negotiate terms like the above…then I’d suggest not buying the broader market or many individual stocks. Heck, I even happened to have put my toe in the water in some Goldman Sachs common myself last week…and while I’m happy Warren’s got warrants that align his profit-seeking self-interest with mine in many ways, I’m sure not going to delude myself into pretending he’s stepped in and is buying the market.

He’s not. And he’s the best.

If you keep your capital dry — whether you’ve got the tens of billions that Buffett does or if you’ve got tens of thousands like most Americans do — you’re going to get the opportunity to poach as the vicious cycles now gripping our economy force prices lower.

Don’t buy common stocks yet. Warren isn’t.

P.S. Click here to receive the latest edition of our monthly stock market newsletter, The Cody Report, and get exclusive access to this month’s four stock picks.

1. Send Me Your Money!

2. All Real Estate Is Local? LOL

3. Trade Like Buffett Not Lynch

1. “In a moment of clarity, a vision last night, I was told that if you don’t send me all your money you’re going to lose EVERYTHING. Really, I know exactly what to do with a billion dollars a thousand times over and if you don’t do give it to me right now, you’re all going to die!” That’s not a direct quote from Hank Paulson, but it’s close. Extortion anyone?

2. Remember when everybody used to tell you that all real estate is local? How about we local people like Hank Paulson himself to bail out Wall Street then? Can we at least take $250 million of the $500 million of Goldman Sachs (GS) stock that this guy sold tax-free last year? That’d be a better way to start paying for it than to take from my mom and dad in New Mexico!

3. I think you’re going to have to be more like Warren Buffett than Peter Lynch in your approach to investing for the foreseeable future – that is, wait until they are truly giving stocks away with the odds stacked in your favor before committing capital to this market. Patience is a virtue.