The Dow Jones finished the week at its 52 week high. The stock traders have cheered recent corporate earnings indicating that the recession has eased and the economy is in recovery mode. We still want to caution although earnings beat expectations they were still significantly weak considering the massive amounts of layoffs coupled with the government stimulus spending.

Jim Rodgers, famous for his success as a commodities investor, laughed when asked about his thoughts on the U.S. recovery in a recent interview this month. Rodgers point was that the U.S. has been in a decade of excess with mounting debt. The idea of combating the problem by creating more debt is asinine. He citied Scandinavia as an example of the same situation handled in a different way. Scandinavia had large levels of debt and a credit crisis in recent history. The government did not have the authority of the U.S. Fed to print money so they did the logical and really only thing that could be done. They allowed their citizens to file bankruptcy and have two to three years of hard times. This was a time of de-leveraging, while people learned to accept they lived in a lifestyle that should never have happened in the first place. One this de-leveraging was finished the economy was able to start up organically and this was followed with a great decade of growth and prosperity.

It is very possible that without the bailouts there could have been a run on banks and people could have lost everything in the process. For that the bailout has very significant and critical implications to the health of the U.S. Economy. However, once the banking sector was able to start lending again and the FDIC could secure the banks it was foolish to extend the bailout package further. The creation of programs such as cash for clunkers, the new home tax credit, and cash for clunkers creates only a near term solution at the cost of a long term debt. It would be far better to accept the inevitable that the grand decade of excess is over and prepare to consume less. The government has allowed ample time for this transition at a cost of longer term pain and suffering. The real effects of this debt may not truly be felt until 2012 or later, but there is no question the U.S. Dollar is going to lose its status as the reserve currency and the country as a whole is going to be in a precarious position.

As an investor or trader it is tough to be long U.S. stocks, gold, and treasuries. The government has propped up the stock market so far that it is trading at a 20% premium to its long term averages. It makes my head spin trying to figure out how investors could deem it worthy to pay a premium to own stocks in the most severe recessions since the depression. Bank savings rates and Treasuries are yielding less than 2% and gold is already trading at its all time highs. In times like this there is no choice, but to try different investment strategies. Check out the Fade Machine for an opportunity to profit in the current market turmoil. The Fade machine has been backtested for over 8 years and has consistently returned 50% per year with low risk.