Sometimes during a crisis the United States rushes toward a solution, only to find that the action was not only not a panacea, it was, in fact, ill-conceived and harmful.

The late British Prime Minister Winston Churchill alluded to this when he noted that, "In the end, America will do the right thing . . . after she's exhausted all other possibilities."

That may very well be the case with corn-based ethanol.

Initially heralded as a renewable fuel that reduces foreign oil imports, it now appears that a powerful coalition is building against corn-based ethanol -- a problematic energy source, in economist Glen Langan's interpretation.

A ' tax dollar not well spent'

The U.S. Government (which means you, the taxpayer) heavily subsidies ethanol from corn production via payments to farmers, Langan said. "The tax dollar is not well spent, either from an environmental standpoint or an energy policy standpoint," he said.

UnitedHealth (NYSE: UNH) shares are in the red today even though a bill that would have reduced Medicare reimbursements to health insurers was defeated in the House of Representatives yesterday. However, shares of UNH are declining this morning with other insurers on news that Congress will likely pass a different bill with slightly smaller cuts next week. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on UNH.

After hitting a one-year high of $59.46 in December, the stock hit a one-year low of $31.49 in May. This morning, UNH opened at $30.30. So far today the stock has hit a low of $30.00 and a high of $30.88. As of 1:25, UNH is trading at $30.70, down 31 cents(-1.0%). The chart for UNH looks neutral and improving, while S&P gives the stock a neutral 3 Stars (out of 5) Hold rating.

For a bearish hedged play on this stock, I would consider a September .bear-call credit spread above the $35 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 9.9% return in three months as long as UNH is below $35 at September expiration. UNH would have to rise by more than 14% before we would start to lose money. Learn more about this type of trade here

UNH hasn't been above 35 since May and has shown resistance around $34.50 recently.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in UNH.

It's Uncle Ben versus the Ferocious Fundamentals.

The dollar rose more than 1.7 cents against two other major currencies Tuesday -- a large move in the currency market -- after U.S. Federal Reserve Chairman Ben Bernanke said the world's most important central bank will "strongly resist" any dip in public confidence in stable prices, Bloomberg News reported.

Traders interpreted Bernanke's comments as renewed Fed attention to oil-induced, rising U.S. inflation, and bought the dollar, sending it higher Tuesday at mid-day. The dollar strengthened 1.7 cents to $1.5477 versus the euro, 2.1 cents to $1.9540 versus the British pound, and almost 1 yen to 107.19 versus Japan's yen.

A 'dollar skeptic'

Further, although Chicago Board of Trade futures calculate a 55% chance of a Fed quarter-point interest rate increase in its benchmark rate when it meets next on August 5, currency trader Andrew Resnick remains a doubter.

Altria (NYSE: MO) shares are trading higher today, getting a boost from news that menthol is getting special protection in a new bill as Congress attempts to regulate the tobacco industry. Menthol brands, which make up about one-fourth of the US tobacco output, is getting an exemption from a ban on cigarette flavoring like cinnamon and clove. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on MO.

After hitting a one-year high of $79.59 in January, the stock spun-off Phillip Morris International (NYSE: PM) in March and hit a one-year low of $19.95 early this month. MO opened this morning at $21.57. So far today the stock has hit a low of $21.50 and a high of $21.94. As of 1:00, MO is trading at $21.85, up $0.27 (1.2%). The chart for MO looks bearish and steady, while S&P gives the stock its highest 4 Stars (out of 5) strong buy rating.

For a bullish hedged play on this stock, I would consider a September bull-put credit spread below the $20 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 19.0% return in just four and a half months as long as MO is above $20 at September expiration. Altria would have to fall by more than 20% before we would start to lose money. Learn more about this type of trade here.

Lehman Brothers (NYSE: LEH) shares are falling today as an SEC official has warned that future investment banks that get into trouble may not get the same bailout that Bear Stearns (NYSE: BSC) did. Director of Trading and Markets at the SEC Eric Sirri told the House Investment and Insurance Subcommittee that the liquidity help given to BSC may not necessarily be repeated if another bank has trouble. These words have dragged down LEH in trading yesterday afternoon and so far today. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on LEH.

After hitting a one-year high of $82.05 in June, the stock hit a one-year low of $20.25 in March. This morning, LEH opened at $44.19. So far today the stock has hit a low of $41.67 and a high of $44.19. As of 12:40, LEH is trading at $42.67, down 0.97 (-2.2%). The chart for LEH looks neutral and improving, while S&P gives the stock a neutral 3 Stars (out of 5) Hold rating.

For a bearish hedged play on this stock, I would consider a June bear-call credit spread above the $50 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 14.2% return in six weeks as long as LEH is below $50 at June expiration. LEH would have to rise by more than 17% before we would start to lose money. Learn more about this type of trade here.

LEH hasn't been above $50 since mid-February and has shown resistance around $47 recently. This trade could be risky if the company's earnings (due out in mid-June) are a positive surprise, but even if that happens, this position could be protected by resistance HSY might find from its 50-day moving average, which is currently around $45.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in LEH or BSC.

The Wall Street Journal recently reported (subscription required) that the Securities & Exchange Commission wants more money from Congress to invest in the oversight of investment banks and credit-rating agencies. Given all the problems that have emerged there, it seems like it might be necessary.

But the problem is that many of the Chris Cox-led SEC's failures have not been a result of a lack of funding, but rather a lack of a political will to stand up to the Business Roundtable that no amount of additional funding can compensate for.

In a glaring betrayal of the investing public back in December, Cox and the GOP-controlled Commission took steps to insulate poorly performing directors from dissident shareholders.

Separately, investigative journalist Gary Weiss charges that, rather than cracking down on serious problems in the securities markets like the rating agencies and investment banks, Cox has devoted an inordinate amount of time to the topic of naked short selling. Weiss asked the question "Why is naked short selling the only `fraud' that has no victims and no perpetrators, only a bunch of crackpots yammering about conspiracies?"

Maybe the SEC does need more funding to protect the interests of investors. But it could do a lot more without any additional money if Cox and company actually took their duty to the American people seriously.

So our all-wise representatives in Congress got together to try to come up with some kind of response to the housing crisis -- this is an election year after all -- and here's what they came up with: tax breaks for home builders.

The $6 billion package will let homebuilders use losses from 2008 and 2009 to offset income in the previous four years, rather than the usual two.

It's hard to know where to begin in describing how incredibly idiotic this is but I like a good challenge. First of all, we're giving tax breaks to companies that got into this mess because of massive over-investment and oversupply. Aren't we supposed to use tax breaks to encourage investment in areas that need further investment, not the opposite? This just makes no sense.

Why this is stupid, part two: These handouts may allow builders to avoid distressed sales which could have presented a fabulous, once in a lifetime opportunity for first-time home buyers to gain their piece of the American Dream. Instead of allowing regular people to capitalize on big business' blunders, our government has stepped in and used taxpayer money to keep the builders happy. That's stupid, and it's also wrong.

KB Home (NYSE: KBH) shares are rising with other homebuilders after US Senators from both political parties agreed to draft legislation that could deliver billions of dollars to homeowners facing foreclosure. The Senators hope to bring a bill to the floor as early as this afternoon. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on KBH.

After hitting a one-year high of $48.67 in May, the stock hit a one-year low of $15.76 in January. KBH opened this morning at $26.74. So far today the stock has hit a low of $26.50 and a high of $28.86. As of 12:30, KBH is trading at $28.48, up $1.55 (5.8%). The chart for KBH looks bullish and steady, while S&P gives the stock a negative 2 STARS (out of 5) sell rating.

For a bullish hedged play on this stock, I would consider a May bull-put credit spread below the $17.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in just 7 weeks as long as KBH is above $17.50 at May expiration. KBH would have to fall by more than 38% before we would start to lose money. Learn more about this type of trade here.

U.S. lawmakers are going to get their chance today to ask executives from five of the world's largest oil companies what their take is on current gasoline prices.

Executives from the top three American oil companies -- Exxon Mobil (NYSE: XOM), Chevron (NYSE: CVX) and ConocoPhillips (NYSE: COP) -- will be present at today's hearing, as well as executives from BP (NYSE: BP) and Royal Dutch Shell (NYSE: RDS.A). While the executives are predictably going to blame the current high gasoline prices on surging oil, it will still be interesting to see just how hard lawmakers hit the executives.

For the executives, it can't be a good feeling to be walking into today's hearing. The hearing is being called "Drilling for Answers: Oil Company Profits, Runaway Prices and the Pursuit of Alternatives." The hearings will be chaired by Rep. Ed Markey of Massachusetts, who in the past has been a vocal critic of the oil industry.

Ruling that it's not in their jurisdiction an appeals court rejected a New York state law that would have required airlines to provide food, clean toilets, water, and fresh air to passengers stranded on a plane that's been delayed. The NY law came in response to last winter's fiasco at JFK airport when multiple airlines, most notably JetBlue Airways Corporation (NASDAQ:JBLU) were stuck on the runway for 10 hours and passengers had no food, or clean toilets.

According to an AP report: "The court said that while the goals of the law were "laudable" and the circumstances prompting its adoption "deplorable," only the federal government has the authority to pass such regulations.

"If New York's view regarding the scope of its regulatory authority carried the day, another state could be free to enact a law prohibiting the service of soda on flights departing from its airports, while another could require allergen-free food options on its outbound flights, unraveling the centralized federal framework for air travel," the court wrote.

On Saturday, President Bush warned that the government must guard against going too far in trying to fix the troubled economy. "If we were to pursue some of the sweeping government solutions that we hear about in Washington, we would make a complicated problem even worse -- and end up hurting far more homeowners than we help."

"Democrats know that wait-and-see is not a responsible strategy for an economy that is teetering on the brink of recession," said Senate Majority Leader Harry Reid. "The president continues to convince himself that inaction is the cure-all for the economic problems hurting hardworking Americans." Democrats intend to strengthen the economy with measures dealing with housing, energy efficiency, and renewable energy.

President Bush said the recently passed program of tax rebates should begin to lift the economy in the second quarter of the year and have an even stronger impact in the third quarter. But he urged caution about doing more, particularly about the crisis in the housing market.

U.S. Rep. Barney Frank, D-Massachusetts and Chairman of the House Financial Services Committee, Thursday introduced legislation to enable the Federal Housing Administration to insure and guarantee mortgages that have been written down banks and other mortgage holders, Rep. Frank announced in a statement.

Rep. Frank's proposal would permit the FHA to provide up to $300 billion in loan guarantees which could potentially result in the refinance of 1-2 million at-risk mortgages, preventing foreclosures, "protecting neighborhoods and help stabilize the housing market."

In case you missed it, Congressmen Henry Waxman of California and Tom Davis of Virginia, the Democratic and Republican leaders on the House Oversight Committee, have sent a letter to the Justice Department asking them to investigate whether Roger Clemens "committed perjury and made knowingly false statements" when he told the committee that he had never used steroids or human growth hormone.

The letter also said that "We are not in a position to reach a definitive judgment as to whether Mr. Clemens lied to the Committee. Our only conclusion is that significant questions have been raised about Mr. Clemens's truthfulness and that further investigation by the Department of Justice is warranted."

Newsday reports that the Justice Department "may already have decided to begin its own investigation prior to this recommendation, considering its continued involvement with this case."

As Jonathan Berr wrote on Friday, Former Merrill Lynch & Co. (NYSE: MER) Chief Executive Stan O'Neal, former Citigroup Inc. (NYSE: C) CEO Chuck Prince and former Countrywide Financial Corp. (NYSE: CFC) Angelo Moziilo will make their much-delayed appearance before Congress this week.

The topic of conversation will be their outrageous pay packages -- especially 8- and 9-figure severance packages -- and how they can justify packages that seems so blatantly excessive.

Here's the problem: executive compensation consultants generally present compensation committees with the pay packages that executives at companies of similar size in the same industry are earning. Here's the beauty of that: by that standard none of these guys is overpaid because all of them are overpaid! Isn't that beautiful?

If that sounds circular it is, but that's how executive pay has spiraled out of control. Hopefully, Congress will keep the focus on the raping of shareholders, and not make this into a sound-byte spectacle full of rah-rah populist rabble-rousing.

American President George Bush announced his new budget spending plan today, and the package came out to a total of $3.1 trillion.

Today's federal budget proposal marks the first time in America's history that a budget plan has been in excess of $3 trillion. Bush claims that his budget is "good" and "solid" and that the passing of this budget will help keep the troubled American economy growing.

All in all, this budget looks to lift government spending by 6% during the fiscal year 2009, and it will probably come to no one's surprise that defense gets a nice little boost from today's budget. Bush is looking to allocate 8.2% of his spending on security, and the budget is looking to stake a $70 billion "placeholder" for war costs during 2009. The Pentagon should be pleased with its figures, as Bush is looking to allocate $515.4 billion its way... the highest allocation since WWII (and represents a 7.5% jump).