A market for window-shoppers only

I think market participants have concluded that the Obama administration is not capital- or Wall Street-friendly.

That is not meant as a political statement. (The Bush administration was awful, and I detest all politicians.) I'm just here to relate how all of this impacts financial assets.

Given the economic background we're dealing with, and the viewpoint of the current administration, I feel that the environment we're heading into could make the no-growth 1970s look like the booming 1990s.

View from the dugout

With the government's stress tests and the bank restructuring (aka nationalization) to come, I believe we are on a path to getting the pure financial crisis behind us -- just as we put the liquidity crisis (which was the scariest portion of the financial ballgame) behind us.

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Of course, the funding crisis will be a problem as we try to finance the work we're doing.

Right now the economic crisis is front and center. That will feed back into the crisis at financial institutions, because the economy is worse than the projections on which they valued their assets.

But the single biggest economic problem is: How are we going to create real jobs, since those spawned by the last economic expansion were so heavily skewed to real-estate speculation?

Though I discussed the fact that shock and awe turned out to be aw shucks, I was still thinking (hoping) that there would be "more." I'd been looking for a rally early in the year as people got excited about what might be coming from a fiscal/monetary policy standpoint.

But rather than help, the government is in the process of making matters worse. Thus, the market continues to sink.

'High' price of the valuation restoration

I bring this up to underscore the tremendous damage that's been done, as the value-restoration process continues apace. Someday, stock prices will be reasonable again.

Video on MSN Money

Beware bear-market rallies
Wall Street Journal personal finance columnist Brett Arends explains why investors should keep cool heads and not be fooled by sucker rallies.

On the other hand, somewhat perplexing are signs of continuing speculation: Witness the sky-high valuation of Research In Motion (RIMM, news, msgs), Amazon.com (AMZN, news, msgs) and certain other tech stocks.

Continued: Prepare, but don't be pulled in

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