These Congressional Hearings Are Almost Unbearable To Watch.......

I rarely worry about the end of civilization as we know it, our planet being destroyed by global warming (we could be destroyed by poor stewardship of the environment, but I don't think the earth is going anywhere), or the sun flaming out in our lifetime.

I think those types of sentiments are hyperbolic at best, and purposefully ignorant at worst.

And while I think Paulson could have done a MUCH better job, the grilling he is taking on Capitol Hill, for his actions, or lack thereof, during the economic crisis is frightening in the extreme. One after another representative is putting on full display, to the American public, his or her ignorance of economic and market issues. This is ridiculous; how are we going to get good people to serve if any and every move they make is scrutinized to the nth degree?

And it's not just unfamiliarity of complex subject matter that they are displaying; it is willful ignorance of the very areas of the economy they have been elected to oversee. It makes me worry that the "American empire" is in its death throes when I see Democrats and Republicans alike express phony outrage over Paulson's tax-deferred sale of Goldman Sachs (GS) stock when he left the investment bank to become Treasury secretary.

Ronald Reagan's right-hand man, James Baker, got the same treatment when he left a Texas bank to go into government work 29 years ago. So has every other Treasury Secretary since.

Other representatives are appalled at the profits being earned by commercial and investment banks, after they were bailed out by the government. Are they in favor of the banks losing more money so that the entire system fails?

While the profits are, indeed, surprisingly large, I for one am thrilled that banks are being recapitalized (and yes I own FAS and BAC), and no longer threatening to topple the U.S. financial system, or the global economy either.

That's exactly what the bailout program was designed to do, and it has worked in near record time, relative to the enormity of the problem.

Further, our representatives don't understand that the warrants the government received, in exchange for bailout funds, allow the government to reap a profit from the renewed good fortunes of the banks, however they have been attained, earning the taxpayers hefty returns on their sizable and risky investment.

It is almost unbearable to watch! I was highly critical of Paulson's handling of the crisis, an ad hoc, bungled affair that was instituted far too long after the crisis began and with far too little understanding of the complexities of the situation.

Only the Fed's massive and historic efforts to restore normality to the system offset the Treasury's ham-handed efforts to fix what went wrong.

Despite that reality, Congress - both parties - was far more complicit in creating the environment that led to the credit crisis than almost any other single actor.

Who allowed FNM and FRE to get so big? Who created the "Enron loophole" that allowed derivatives and off-balance-sheet "special-purpose vehicles" (SPVs) to grow in a completely unregulated environment? Who allowed the "shadow banking system to grow unchecked? Who repealed the 1930s-era Glass-Steagall legislation and thereby allowed commercial and investment banks to merge? Who failed to supervise the very areas of the economy that for which they had direct supervisory oversight?

Congressman Barney Frank, Senator Phil Gramm, Senator Chris Dodd, Congressman Charlie Rangel and Senator Chuck Schumer, to name a few.

Certainly, the executive and regulatory branches of government had a big role as well, as did the Federal Reserve, but it is beyond galling that our elected representatives feign outrage over a situation that they are directly responsible for creating and exacerbating.

They were as asleep at the switch as anyone they criticize. And their commentary and questions just prove their ignorance, arrogance and utter lack of accountability on all matters financial.

Forget about pay caps for bankers or prosecuting former CEOs, let's just vote these folks out of office and put in the guys and gals who know how to make money. If I have to choose, I'll take greed over ignorance any day!

The stock market, meanwhile, has handled the expected bankruptcy, or possible failure, of CIT with remarkable equanimity today.

That tells me the financial system is in better shape than we know. CIT does not pose "systemic risk," as the FDIC and Treasury correctly surmise, and the market is now separating winners from losers in the financial system in a way that is healthy for the market and the economy.

Six months ago, a run on CIT would have knocked us over the precipice upon which we so tentatively stood. Today, not so much.

It again speaks to the remarkable job the Fed has done in restoring confidence to the markets, recapitalizing the banking system and preparing the way for an economic recovery.

Bernanke, yeah, under fire from Congress, has done a good job lately, and a little credit to Geithner and Bair as well.

The VIX continues to fall. It is now at its lowest level since before the collapse of Lehman Brothers. Is this a good sign?

While I am extremely encouraged about the market's recent advance, which is within striking distance of the "important" target of around 950 on the cash S&P, I am growing concerned about how quickly we have gone from oversold to overbought in equities.

It may be time to protect the 'ole portfolio through the use of index put options, or ETFs, against a potential seasonal slide into September and October. However, recent strength could also portend and "upside breakout," rather than a "downside breakdown." If the VIX falls too far, maybe that would be flashing signs of investor complacency and would be a yellow flag for the market, other fundamental and technical considerations aside.

At this point, I have no intention of selling the stocks I own, but given the explosive run-up in banks, materials and other stocks I recently purchased, I want to take precautionary measures to lock in those gains....