Lehman failed, Merrill Lynch gone, and AIG needs 40 billion from Fed. That all happened from Friday to Sunday. Dot com companies didn’t even fail that fast. But US financial companies are breaking world records. Well, I only have one word for all these failures: FRAUD.

These US financial companies simply have NOT written down the asset values properly. One moment it’s okay. The next moment, it’s not. And why don’t they write down the values? Because they cannot. If they have done that, they should be effecitvely bankrupt. The leverages that they took were so great that a couple of percentage gone wrong in the reverse direction simply wipe them out. So by postponing the ultimate death, they keep putting out fairy tales, hoping to find more fools (foreign central banks?) to take over the toxic nuclear credit products.

As Warren Buffett have said, that this is the poetic justice for these financial institutions. Of course, Warren Buffett also has a big substantial stake in AIG, which is in a surviving mode. AIG with a market cap of 32.6 billion on Friday now needs 40 billion in cash. Of course, it doesn’t stop Ford and GM with 18 billion market cap to ask from Fed for 50 billion dollar loan either. Well, if Fed bails out Fannie Mae, GM and Ford, AIG, etc., pretty soon we will have a democratic and capitalistic government running every industry in our life. Wow, where would be the difference between communism and capitalism in that case, when private industries cannot fail according to capitalistic market mechanism?

Markets are expected to be down big on Monday. I’m guessing that Federal Reserve may throw another curve ball on Tuesday. So I think markets this week will suffer from tremendous volatility. A really big down wave in stock market is probably going to be imminent. I expect that whatever curveball Federal Reserve puts out there this Tuesday, it is just another opportunity for you to sell into the rallies.