The housing bubble and subsequent "Great Recession" have tarnished the stars of a good many of the world's financial wizards, such as the former heads at Lehman Bros. and Merrill Lynch. But one respected image remains -- perhaps unsurprisingly -- on top: Warren Buffett, chairman and CEO at Berkshire Hathaway Inc. (NYSE: BRK.A).

That's according to a recent quarterly poll of investors, traders, and analysts who subscribe to Bloomberg terminals, those somewhat cryptic news and data computers that are ubiquitous on Wall Street. Buffett, who received favorable nods from 25% of those participating in the poll, walked away with a plurality of the vote, Bloomberg News reported.

Why would the government want a weak dollar? To get some perspective on the dilemma facing the Fed, let's go back to the Clinton years. During the 1990s, we had a booming economy. That booming economy fostered a strong dollar policy (i.e., strong economy equals a strong dollar).

Now the tables are turned and we are in the worst recession since the 1930s. We are mired in debt and our unemployment keeps rising. The housing market, while improving somewhat, is still in shambles. Banks are short of money to lend, keeping a lid on expansion, and on and on. So then we have the reverse of the 1990s.

Don't be confused by the rhetoric you read and see in the media. We are definitely in a deflationary spiral. Who says so? And what data are you looking at?

Let's read a few quotes from leading traders and analysts:

• Nobel laureate Joseph Stiglitz said: "Deflation is definitely a threat right now."
• Charles Evans, Federal Reserve bank president says: "Disinflationary winds are blowing with gale force effect."

The U.S. Federal Reserve's quantitative easing and Congress' record $786 billion fiscal stimulus package run the risk of re-igniting inflation, in the interpretation of the inflation hawks. But not PIMCO's Bill Gross: he's concerned about deflation.

Gross, who heads the world's largest bond fund, said he's buying longer-maturity U.S. Treasuries as protection against deflation, Bloomberg News reported Tuesday.

"We think that junk bonds -- bonds rated BB+ or lower by S&P or Ba1 or below by Moody's -- are worth considering as part of a diversified income portfolio." says Carla Pasternak.

In her High Yield Investing, she asks, "If you agree with us that one's person's junk may turn out to be your treasure, how do you invest?" She answers by offers a pair of junk bond fund ideas.

"SPDR Barclays Capital High Yield Bond ETF (NYSE: JNK) has a $2.2 billion portfolio of 140 junk bonds. Its holds junk bonds in only three sectors: industrials (75.8%), utilities (12.16%) and financials (8.72%).

"It pays a monthly distribution comprised entirely of earnings. JNK is best held in a tax-advantaged account as distributions are taxed at your marginal income tax rate.

So you finally get to see some growth figures from the ISM and then the market sells off again. We have enjoyed a heck of a run-up and now trading desks are lightening up to boot as we get closer to the 3-day weekend. Today was such a poor result on the market internals that even all the defensive stocks were dropping. Even inverse-leverage ETF's were getting traction again. Bill Gross's bleak outlook probably only added insult to injury today.

Here are today's unofficial closing bell levels:

Dow 9,310.60 -185.68 (-1.96%)
S&P 500 998.04 -22.58 (-2.21%)
Nasdaq 1,968.89 -40.17 (-2.00%)

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In February I interviewed Bill Gross back when the Dow traded at 7,182. Gross's message? Equities are dead. Or more specifically, in light of his expectation that there would be no economic growth for the foreseeable future, there was no point in risking an investment in common stock since it stands in line behind all sorts of debt for a piece of the cash flows of a company in the event of a bankruptcy.

Interestingly, President Obama spoke to reporters not long thereafter -- on March 3rd to be specific when the Dow was at 6,726 -- and during that talk, he mentioned that buying stocks might be a good deal. Since then, the Dow has risen 21.5% and since Gross recommended staying away from stocks, they've gained 13.8%. The Dow is at 8,175 as of this writing.

Just when I think I have heard it all, they come up with something even more eye-poppingly incredible. That's right folks. First they sucked you into the dot-com boom; then wiped out your tech stocks. Next they urged you to buy houses with money you couldn't pay back -- and those houses plunged in value while the global stock markets lost half their value -- further decimating your net worth.

Now they want to give you the once in a lifetime opportunity to buy the very toxic waste that is sinking the entire global financial system. And if you have a job in state government, your pension fund may be enticed into this financial sludge as well.

Bill Gross is a big deal in bonds -- with $747 billion under management in his PIMCO. Gross emailed me yesterday because he was a bit put off by some of my recent media comments about him. I responded to him by asking him some questions about PIMCO and the general market. He thinks that equities are history and people should buy bonds instead.

Gross is obviously talking his book but in my interview with him, he made a very interesting point. He suggested that since bonds and preferred stock are senior to common stocks in the liquidation hierarchy of a company, in a slow growth environment, there is no upside to stocks, only downside.

While Bill Gross is big-time bond trader for Pacific Investment Management Co., he also has some interesting takes on the equities markets. Unfortunately, his views are fairly pessimistic.

According to Gross, the stock market can be somewhat nuanced. In fact, he compares it to a "fragile flower where price is part perception, part valuation, and part hope or lack thereof."

In his analysis, Gross takes a look at several well-known market metrics. For example, there is the "Q" ratio, which compares the stock market to the replacement costs of the net assets. If below 1.0, then stocks are cheap. Interestingly enough, the ratio is now the lowest since World War II.

Next, there is the P/E ratio. And yes, this is also at historically low levels.

So, it is time to buy up shares? Perhaps not.

Basically, Gross says that we need to account for a myriad of trends. First of all, there is a massive deleveraging of the economy. In other words, there is much less financing to boost valuations.

Another problem: expect much more regulation of the economy, which will likely slow things down.

Oh, and it's a good bet there will be higher taxes.

For the most part, Gross thinks that these trends are "transgenerational." Essentially, the US is moving away from being a financed-based economy and becoming more enmeshed in government meddling (keep in mind that 20% of bank capital is now owned by the US government). The upshot is likely to be slower growth, and in turn, muted stock valuations.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Streetsmart Guide to Short Selling: Techniques the Pros Use to Profit in Any Market. He is also the founder of BizEquity, a valuation website.

During the Great Depression, Franklin Roosevelt established the Work Projects Administration (WPA) to create work -- such as constructing public buildings, projects and roads and operating large arts, drama, media and literacy projects -- for Americans of all stripes.

Now the W Administration has its own WPA -- but this one only applies to the very wealthiest of Wall Street who are looking for more to do. The three million homeowners who are going through foreclosure won't get that $810 billion ($700 billion is earmarked for buying financial toxic waste and the other $110 billion went to buy the additional votes -- through tax cuts -- needed to get the House to pass the bill).

How will W's Wall Street WPA (WSWPA) program work? It will hire firms such as Bill Gross's PIMCO and Blackrock (NYSE: BLK) to manage a reverse auction to buy that toxic waste. Bill Gross bought $500 billion of Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) bonds at distressed prices, "advised" the administration on its $200 billion program to nationalize Fannie and Freddie, and then profited handily when the bailout boosted the value of Gross's bonds. Blackrock is already enjoying our tax dollars as the manager of the $29 billion in Bear Stearns assets which the Fed took on back in March. In total, WSWPA could generate $7 billion in fees (1% of the $700 billion to be spent) for Wall Street.

After last Thursday, when the Dow lost 345 points, I speculated that another bailout plan would emerge over the upcoming weekend. As I posted, there was no obvious reason why the market fell so much that day. But one of the possible clues of trouble was that Bill Gross, who manages the $800 billion Pacific Investment Management Co. (PIMCO), was making noises about how the government needed to spend $500 billion to save the housing market.

Coincidentally, Gross -- whose holdings include $500 billion in mortgage-backed securities (MBS) -- is rumored to have "helped" the Treasury with its bailout plan for Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE). And he has profited handsomely from it since he bought the MBS during the panic-- which have risen in value post-bailout.

The reason I felt that a bailout was coming is because this administration has a solid track record of responding to stock market plunges with weekend rescue plans. Evidently it is concerned that Asian markets -- more specifically China's which happens to own $340 billion worth of MBS -- need a weekend bailout plan so when their markets open on Monday they will have something to celebrate. The Big Picture has provided a helpful service by listing the six Sundays in the last 14 months that the government has announced a new bailout plan for the financial markets.

To understand why as much as $800 billion in taxpayer money could be at risk in this bailout, it pays to look at its winners and losers. Last month I appeared on CNBC's Power Lunch discussing the potential winners and losers from a bailout of Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE).

The bailout has been announced -- featuring a government takeover of their operations, receipt of senior preferred stock worth $1 billion paying 10% dividends, the promise of buying up to $200 billion more worth of senior preferred each quarter to keep their net worths positive, $5 billion worth of open-market mortgage-backed securities (MBS) buys, and a demand that they reduce their MBS holdings by two-thirds over the next several years.

It is clearer today that this takeover was triggered by a report from Morgan Stanley (NYSE: MS) that Fannie and Freddie needed $50 billion in capital "to offset the companies' combined losses," according to the New York Times. They had reported $84 billion in capital at the end of June, $12 billion more than the minimum required to trigger a government takeover. The Morgan Stanley report suggested that overly optimistic accounting understated their capital needs.

In the last year, Washington has been shoveling our tax dollars out the door to bail out the money mistakes of multi-billionaires.

It cut interest rates from 5.25% to 2% ,which sent inflation soaring, yet mortgage rates remain higher than they were a year ago. It spent $29 billion to finance the merger of Bear Stearns and JPMorgan Chase & Co. (NYSE: JPM). And now it's about to spend as much as $800 billion to bailout a few huge investors who own mortgage-backed securities (MBS) issued by Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE).

I find the reasons why this latest bailout shouldn't happen to be far more compelling than the reasons it should. (Here's some background on the mortgage giants.)

Here are five reasons I think this bailout shouldn't happen:

• Punishes the innocent and rewards the guilty. Why does it make sense for taxpayers -- most of whom are paying their mortgages on time and working hard to support their families despite declining real wages and higher costs -- be asked to dig into their pockets to clean up the errors of a few large institutional investors? Why not let the people who made the bad decisions pay for their own mistakes?

Three weeks after Barron's reported that a senior administration official -- my guess is it was Hank Paulson -- leaked details of a "rescue" plan for Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) -- Bloomberg News reports that its implementation could be imminent. And in after-hours, shares of both companies are down 20%. If what Barron's reported -- wiping out common shareholders and slashing preferred dividends -- proves prescient, both stocks have further to tumble -- as in all the way to 0.

Bloomberg reports that Paulson met with Ben Bernanke and the CEOs of Fannie and Freddie and the head of the Federal Housing Finance Agency which oversees the two. And they have catering set for the entire weekend. I wonder what they are serving? I think PIMCO bond guru Bill Gross knows. He said, "There's probably a 95 percent chance that the moment that something will happen is Sunday or Saturday," according to Bloomberg.

Yesterday Gross called for the government to use $500 billion to bail out the real estate market. As I posted yesterday, this bailout is for the benefit of people like Gross and China's central bank which owns $340 billion worth of Fannie and Freddie mortgage-backed securities. If you happen to be among the holders of their common or preferred stock -- you are going to lose it all. As I suggested this morning, after the market lost 345 points yesterday, the government needed to announce another rescue plan by Sunday night.