The financial markets are wandering and wondering these days. As the stock market digests corporate earnings, higher oil, and the food crisis there is little to get too excited about.

We are a global world today but don't let anyone on Wall Street know. They still think that bad earnings are good. They expect banks to continue to lose money but that is also very good. And finally, with a food crisis developing around the world, they won't hear about it when they have their power lunch at the Four Seasons!

Until things turn around we are invested with a 15% net long position for our moderate portfolios and 11% net short for our aggressive portfolios. We are maintaining tight hedges right now until things change.

We expect to see a signal soon. Stay tuned!

We learned last week that the war in Iraq has some major problems. For example, the cost to American taxpayers is skyrocketing by the day. On the other hand, things look great in Iraq. They are seeing oil exports climb exponentially. In fact, with the high price of oil, things have not been this good for over five years.

Imagine this: Iraq is flush with cash! They have so much cash that they have parked $30 billion in US banks. Now that is very interesting. Taxpayers bail out Iraq and they return the favor by investing in our banks.

Here is my take on the whole matter. There is something that is called the velocity of money. Basically this is how much the money supply can expand based on a bank's reserve requirement. Here is how it works in very simple terms.

Someone deposits $100,000 into a bank. The bank currently needs to keep 15% or $15,000 in reserves. By the way, if the bank (in this case) did not have the 15% in reserves at the end of the day then it must borrow from another bank or the Fed and pay overnight lending rates. The target rate that the Fed sets is the rate that banks charge each other for maintaining reserve requirements. But we digress.

Now the bank can loan the other 85% or $85,000. When they loan the money, the money will be put into another bank. That bank can now lend out 85% and so on and so forth. By the time the original $100,000 has gone through the money supply chain, low and behold, $700,000 has been created! This is the velocity of money. Now Virginia, you know the truth: Where does money come from? Money is created!

Back to oil money in banks. Since Iraq has posted $30 billion in our banks, most likely Citigroup, Bank of America, JP Morgan Chase and others, we have basically created $210 billion ($30b times 7) thanks to Iraq.

While taxpayers are paying the cost of war and supporting Iraq, they in turn have grown flush with cash but due to possible creative banking practices, it appears that Wall Street once again is getting a different kind of bailout. There is nothing like an infusion of capital from Iraq to put some money into their pockets.

So now the question is this: are Bush, Cheney and Paulson guilty of treason for selling American taxpayers down the river while stimulating growth for the big cats or is this just another cost of war?

For weeks now we have heard from the white knights of Congress and their proposals to bail out the big boys, er, uh the poor homeowners. Barney Frank and Christopher Dodd are leading the charge to shore up the crumbling housing market.

They want to raise limits so FHA can insure more loans, give tax breaks to homebuilders, give money to local governments to buy foreclosed properties and tax credits for people who buy foreclosed homes.

The purpose of this blog is not to dispute the proposed bills but to simply follow the money. Here is what I found and I ask you Barney and Chris, "what in the world are you two doing?"

Hey Barney and Chris, it looks like some unsavory folks with conflicts of interests are contributing to your election war chest.

Barney, your top contributor is Brown Brothers Harriman & Co. Did you know they are the largest private bank in the world? They do deals for private equity firms and they work with mergers and acquisitions. Did you also know that they were founded by none other than Prescott Bush, the grandfather of President Bush and the father of the first President Bush?

How about this one: Your third largest contributor is the American Society of Appraisers. They stand to do quite well in all of this. Homes will need appraising when the bail out comes and they will benefit when the FHA gets involved. No matter what, your bills will help these folks.

I also noticed Barney, that three of your biggest contributors are check cashing stores. These people collect up to 300% (or more) in interest from the poor folks that need to cash checks to pay the sub-prime mortgage. Does't it seem odd that you take money from these dispicable crooks that should be banned? You even get funds from collection agencies! Now that is a novel one. You get funded from all directions. Oh by the way, you can feel good about this one: your buddies from the check cashing stores (remember they are among your major contributors) will be happy to cash those rebate checks for a mere 1.9%

Of the top 20 industries that contribute to Barney's election dreams, the top one is Securities and Investments followed by Lawyers and Law Firms and Real Estate. Insurance and Commercial banks are next. The odd thing is you are so blatant in courting these industries. Did you just assume no one would notice?

It's your turn Chris. You don't look so pretty yourself. You too have seen the biggest checks by far from Wall Street. The same big 5 that fund Barney are funding you. The only difference is the percentages are higher for you.

Tell us about your top contributors. The #1 is none other than Citigroup! Number 3 is Bear Stearns. Hmmm, that is odd. Did you have something to do with the bailout of Bear? SAC Capital, arguably the most high profile hedge fund in the world is #4. They need your help and they pay dearly for your services.

Americans, wake up! Your politicians are not representing you. They are representing the big money and the bigger the money the better they represent. All this nonsense about helping little people is just that...nonsense. Forget for a moment about bringing democracy to Iraq. Let's bring democracy to America! Let's find decent politicians (oxymoron?) who truly represent all Americans and not just the rich.

The problem with old age is you start to figure out some things you accepted as gospel truth really aren't. For example, Congress has a mission to help the poor schlubbs aka homehowners that got themselves in trouble with bad loans.

A few points to consider. First of all, the problems as I see it is a lack of trust in the banking system. Lenders are afraid to loan money. The Fed is pumping billions into the system but if lenders won't lend then the Fed is wasting time. The pendulum has swung so far the other way that it is all but impossible to get anything but a conventional 30 year fixed loan. The problem for most people is cash flow. The conventional loans are the most expensive loans, hence cash flow remains an issue. Congress is powerless on this one.

The second issue to consider is some of the new proposed legislation. Talk is being bandied about to give people who buy foreclosed properties a $7,000 tax credit. My question: why do they deserve a tax break just because they choose to buy a foreclosed home? What if there are no homes in foreclosure that are desirable? Is that fair?

Then there is talk about tax breaks for the homebuilders. They made lots of money so why do they need tax breaks? Should taxpayers be forced to pay for all the problems? Shouldn't their greed hold them accountable to whatever happens?

Then we hear about the truckers. Statistics show that $50,000 is a pretty normal yearly income for the group as a whole. Turns out that many of them will be lucky to make $20,000 to $25,000 this year. Instead of helping them we are arresting them for driving too slow when they protest.

What about the students trying to get student loans. Many companies are refusing to do them. We may be in for a crisis this fall as schools get underway. Have you heard of anything to help them. For my money I would rather invest in education which is the future of America.

This is my take away: Capitalism is socialism for the rich! If you are a "big boy" and (this is important) you are a campaign contributor you can rest assured that help is on the way. The gospel truth that has been challenged is that capitalism is good. I have spent my whole life as a die-hard Repub and capitalist. My country and the politicians have let me down. Capitalism is different now. I need to save money so I too can fund my local politicians. Maybe then I can feed at the pig trough and be rescued from my greedy financial sins.