"It is a popular myth that financial markets are based on principles of capitalism," observes Ron Rowland in his All Star Investor newsletter, adding, "but the opposite is closer to the truth."

Assessing what he calls the Federal Reserve's moves to "buy Wall Street," he offers a straight-forward overview of the current situation and a "peek behind the curtain" of free markets and Wall Street.

"Banks, brokers and insurance companies are assisted and protected by a wide variety of governmental mechanisms.

"Wall Street propagates the myth of 'free markets' because it serves to obscure the truth, which is that their profits are earned at the expense of those with less sophisticated and well-funded Washington lobbying operations. You are now getting a peek behind the curtain.

"Yes, it is true that Lehman Brothers (NYSE: LEH) was denied government assistance and is being allowed to fail. In fact, Lehman is now serving as a kind of scapegoat that allows those in power to appear firm in their resolve not to put taxpayers at risk.

"If it were more than mere appearance this would be good news, given that taxpayers have already taken on plenty of risk with Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE). The reality, however, is that the bailouts are continuing through other, less obvious means.

Ted Allrich is the founder of The Online Investor and author of the recently released book: Comfort Zone Investing: Build Wealth And Sleep Well At Night. In this weekly column, he'll offer advice to investors who are just getting started.

It's not all bad out there. Some stocks are doing much better with individual results carrying them higher. Others are being carried by a sea change in the industry. Here are the news and stocks that provide some of the light in the current darkness.

(please note, this column was written Wednesday, Feb. 27).

On Monday, the rumor that started the rally on Friday continued. Several banks were going to form a consortium to save the insurance company AMBAC. On top of that there was a renewed bid for Take Two by Electronics Arts, this time with a higher price tag. Take Two rejected the new offer, but it sparked a rally. The market went up over 100 points. That was on top of the almost 100 point rally from last session, one that saw a 200 point turnaround in an hour.

Welcome to the new and less profitable world of lending. Countrywide Financial's (NYSE: CFC) September lending dropped 44% to $21 billion which helps explain why it announced plans to cut its workforce by 12,000 jobs, or 20% of its workforce, according to a report in today's Wall Street Journal.

Not only are there fewer loans, but the type of loans Countrywide is making now and selling offers lower gains. Countrywide no longer makes the riskier loans that were so profitable because they can't find investors to buy them. New loans now being made are the type that can be sold to government-sponsored investors Freddie Mac or Fannie Mae or loans Countrywide wants to hold itself for the long haul.

Bruce Harting of Lehman Brothers estimates that the gain Countrywide made on these safer bets is about 0.48%, while those riskier loans generated an average gain of 1.09%. That difference is going to hit Countrywide's bottom line hard. Lehman Brothers told the Journal it expects Countrywide to show a third-quarter loss of 95 cents a share or $618 million. Moshe Orenbuch, an analyst at Credit Suisse, expects the loss of $1.3 billion loss or $2.17 a share.

Don't know whose right and Countrywide is staying mum on the issue until it reports earnings on October 26. Stay turned for follow-up, but don't expect any good news out of Countrywide.