Stop worrying about the Armageddon, be rational. Remember, the core underlying assumption for the future should be the simple fact that government we'll do everything in its power (it includes printing the money) to move nominal prices of real and intangible assets up once again. They will be successful eventually, simply because they control the printing press!

The question on everyone's mind today seems to be whether or not the US recession will ever end? Once again- this is a wrong thing to worry about. The fact of the matter is simple- creative destruction and ingenuity of capitalism will persevere- it always does - the only real question should be when? I think the main factor determining this will be whether the domino effect of the financial sector write downs is going to be mitigated fast and aggressively enough. And it seems as if Fed and Treasury are going to pull all of the possible stops to make sure no more major bank failures happen in the mean time which should go the long way to stopping the decline. Will recession end tomorrow? Most definitely not, but it will end someday...

So now here comes the logical sequence behind my latest purchases at Strat Lab- preferreds. Banks' earnings have been terrible but behind the huge write-offs is hidden an incredible earning power that is driven by loose monetary policy. Government does not want to run banks forever by nationalizing even the single sickest one of them- Citigroup.

Forcing even a single large bank to defer/eliminate its preferred dividend in this environment will be equal to nationalization of the entire sector, because no bank will be able to raise any more private capital if security of preferreds is in question. Britain's experience should have proved that easily last week.

In addition, most of the insurance companies throughout the world will go out of business if preferred stocks/hybrid debentures are wiped out. Look only at what happened to Aflac after their preferred's disclosure week. So Feds have now learned their lesson with FNM, FRE and AIG's and know the potential implications. It is thus very likely that they will do everything in their power not to repeat the same mistake.

So with that in mind, I am now once again dipping my toes into prefs of large banks that have been slammed over the last two weeks. As most readers remember, I've made this bet before, but sold out during the previous rally. Does it mean it will work again this time? You can never be sure, but it makes sense to me so it's time to try it again.

Stay safe I hope to see some of you at Money Show next week.