Back on the soapbox.... A thought occurred to me this weekend as I was trying to keep tabs on the European financial summit in between football games - the pressure is really on these guys to come up with a plan that's not only fantastic, but also believable. In fact, it's probably more important the plan appears to be believably fantastic than it actually be a rock-solid plan. See, the crisis here isn't one of numbers. Never has been. This is a crisis of confidence. Even a mediocre plan we all can get excited about is better than a great plan nobody has faith in. Now, I doubt I told any of you something you didn't at least subconsciously know. But in the same vein, I can't help but wonder if all of us realize to what extent we've been mentally hijacked over the last year, and to what extent we've mentally hijacked the institutions we so-intensely watch for even the tiniest of hints about what's coming. Frankly, it's gotten more than a little out of control, reaching unhealthy proportions in early August. It matters, because as long as we - along with our institutions - keep on responding to each other's irrational logic, we're going to keep on getting counter-productive results. Here are the biggest hijackings of the past few months, in no particular order. The media has hijacked you. I've said it before and I'll say it again... fear is good for ratings. The media and its favorite pundits have been pounding the bearish drum since late July, first citing the fallout from the debt-ceiling debacle as a reason to lose faith in the American economic system, and then assuring is that its resolution meant nothing after the country's debt was downgraded anyway. Simply put, there would be no way the U.S. government could afford to pay the inevitably-higher interest rates that would follow a debt downgrade. Well, rates on almost every long-term Treasury bond now are lower than the interest rates they were trading at back in early August. The debt downgrade hasn't changed a thing in terms of costs. That fear sure did drive the stock market lower though. It wasn't just the media's spin on the debt ceiling debate that torpedoed stocks though. The perma-bears were almost giddy about the possibly that Q3 earnings would be weak. As it stands right now, earnings have improved (on a yoy basis) by more than 14%. That's less than the initially-expected 17% improvement, but it's still very good. Folks, just because someone on TV says it on a very well-polished way doesn't make it true. You've got to be skeptical of all these assumptions you hear. We've hijacked the Fed. Sorry, but it's true. If the Fed does - or even hints at doing - anything that may not create instant gratification for stock owners, we throw a fit, protesting by selling stocks so intensely that it even starts to worry the people who don't (and never will) own stocks. Never mind the 'right' thing to do for the long haul, and never mind the action that's best for the broad economy. Never mind the fact that inflation is starting to reach levels where we need to be worried; the annual CPI growth rate is just under 3.9% now, which is just about all we can tolerate. Anything that makes borrowing one iota tougher to do is simply unacceptable, and we make that known by dumping our stocks, which may become less valuable as a result of even marginally-higher interest rates. Guys and gals, if we don't take our lumps now and let the Fed raise rates, we WILL pay the price later. Yeah, the flip side of that coin is housing - higher borrowing costs are going to stifle an already-flimsy housing market. I wish I had a solution for you. I don't. It's just a lesser-of-two-evils scenario. It seems like inflation is less troubling than a weak housing market. In the big picture though, I'm not so sure it isn't the other way around. Either way, the Bernanke/Obama duo is now operating with a mindset of "how will equity markets respond to this?" It's a problem because the equity market can only see the here-and-now money on the table, not caring about the bigger treasure that may came just by being patient. Greece has hijacked Europe (though Germany is fighting back). See if any of this sounds familiar.... a small number of people spend more than they take-in, their leaders refuse to see the warning signs, and then when things fall apart they extend their open hand and ask other people who didn't cause those problems to bail them out. Welcome to the party Europe. Again, this isn't a monetary crisis as much as it is a crisis of confidence - one default would trigger a chain reaction of them, not because there's not a choice, but because a strategic default is simply cheaper than paying the bills. Eastern Asia has hijacked North American investors. Think we need China's growth to keep our multi-nationals' top lines increasing? We're still buying more stuff from them than they are from us. That surplus is shrinking, but the imbalance remains very lopsided to their advantage. Fact is, they need us more than we need them. So how come the apparent slowdown in China's growth a few months ago hit U.S. stocks so hard? Great question. To be fair, the country does buy a lot of our goods. We sold the country $91 billion worth of stuff in 2010. On the other hand, we bought $364 billion worth of stuff from them, and all told in 2010, we exported $1.8 trillion worth of goods all over the world. China's portion of that sales total was only about 5.0%... not exactly earth shattering if the demand were to dry up. So to answer the question about why China is seen as such a big deal, the answer is, perception. Somewhere along the way someone has done a great job of convincing American investors that China's the only path towards earnings growth. Not so. Bottom Line People, at the end of the day there are only two things we really need from the media, our government, and ourselves - accountability, and the truth. Anything else is just noise. The truth is, the media doesn't always know what's going on, but we don't hold them accountable for when they're wrong. Most government officials are more interested in being re-elected than doing the right thing for the long run, but as investors, we celebrate the short-term strength they promise while not worrying about the long-term consequence. We assume what we're being told about Greece's place in the global economy is being explained accurately, and we assume China's importance to the U.S. is what the media implies it is. The facts don't always jive with the idea though. The truth is, we, the media, corporations, and the world's financial institutions are stumbling over one another, and no one has yet said 'Halt' and gotten us all back in a line again. Each group is trying to outsmart all the others in the meantime, because nobody wants to be left without a chair when the music stops. That's it. It's a recipe for insanity. The real victim? Stock values. No stock is actually trading at what it's 'worth' anymore; most haven't for months. Anyway, sorry to go off on a tangent/rant today, but it needed to be done. I've just been watching the same stuff unfold that you've been watching for the last several months, scratching my head trying to figure out how all these misdirected ideas (and more) are still propagating themselves. It's happening because none of these groups trust any of the others. Yes, we'll get back to small caps and stock-picking stuff tomorrow. I just had a sermon I wanted to get off my chest.