Government programs (whether you like them or not) helped keep the dream going, ones like Federal Deposit Insurance Corp for banks where a depositor's money was insured up to $100,000 came into being. So did the WPA (Works Projects Administration) which employed everyone from artists to bricklayers (some of whom were artists in their own right). Sure, these weren't "market" driven jobs, but they employed people long enough to help them until normal market cycles returned.

And did they return. After the war, the boom exploded. Not a bomb boom, but an economic boom. The U.S. experienced growth that lasted for decades. Once the boom was off the growth, regular economic cycles returned. The most recent boom was in the 90's. Now we're going through the downside, a normal occurrence when exuberance becomes irrational.

Still, there are already signs of small lights in the vast darkness. When the news came out that house prices were down 15% compared to a year before, housing stocks like luxury builder Toll Brothers and KBH (entry level builder) went higher. Why? Because some investors believe the bottom may be nearing or in fact, may be here. They want to be on board when the good news starts hitting, the news that says sales are heading higher, inventories lower, with backlogs building. Those headlines will come. Don't know when, but they're closer to being here than three months ago.

The same can be said for banks. After the second quarter earnings are released in July and new capital raised, look for bank stocks to stop going down. They may not rally right back because the potential for more losses is still a threat. Some banks won't make it. They shouldn't. But the regulators are all over them right now. If they determine a bank isn't well managed or has too much risk, they will talk with stronger banks to buy the weak one. The regulators are not going to let any large banks go under. The smaller ones that do, will be in such bad straits that no other bank would buy them. They won't have enough good loans or deposits for an acquirer to pay any amount of money for them. Those are very few. Most banks, especially community banks, have a deposit gathering base in many neighborhoods that other banks want and are willing to pay for them. Banks won't be allowed to fail to any degree that would create a crisis of confidence.

The U.S. has lived through much, much worse times than we have now. Investors are beginning to sense that, even among all the gloom and doom in headlines. Maybe the bottom has been reached. Or maybe we're only very close to it. In either case, smart investors are coming back into the most battered industries and buying.