I can see a sense of complacency setting into the markets. Anyone who expresses a negative view is derided as unpatriotic or chicken. The general view is that the worst that could've happened has already happened and that from here things only get better.

Selling today and keeping cash is not fighting the previous war. Clearly investors should've kept cash in 2008. But investors should keep cash today as well.

While in 2007 and 2008 there was a problem in the financial system, the real economy was doing fine. However, in 2010, the real economy is broken.

Government action is creating unintended consequences and dislocations. The 30 year trend of deregulation that started in the 1980s has turned 180 degrees. Governments saved the world from collapse, governments are the new heroes, now they can do whatever the hell they want. It does not matter if they pay solar power producers $0.40 per unit of electricity (compared to $0.05 for thermal power), because they have to save the planet, just like they saved the financial system.

Government has to save healthcare, jobs, prevent inflation, maintain currency stability, prevent war, safeguard against terrorism and create equality. They have to do all this while lowering taxes and keeping homeowners in their homes.

For those who recognize the problems in the US, Europe and Japan, emerging markets are the panacea. The Chinese however are in worse shape than the Americans. In the US, it is a problem because the government is getting into the private economy. In China, the government is the economy. They are on a leaking boat that is springing new leaks continuously, and they are running out of hands to block those leaks.