I’m really happy for those Wall Street fat cats who have been saved once again by our philanthropic Federal Reserve, but the recently announced bailout will do nothing to help the recession on Main Street.

In fact, one could make a serious argument that the emergency action to infuse $200 billion of liquidity into the credit market will only make things worse for the average recession-plagued investor.

While the market rallied (can anyone say DEAD CAT BOUNCE?) after the news, oil prices continued their ascent. We hit $110 per barrel, and that price will hit you and me right where we can least afford it.

If you are not up in arms about all of this, you should be! The government is being run by a bunch of dopes that want to steal your money.

Here’s Some Solid Investing Advice For Now:

Whether it be that ludicrously expensive war in the Middle East (for the record I love and support our troops, but our government has failed them in Iraq), outrageous subsidies for oil companies, tax cuts for the wealthy (will someone please listen to Warren Buffett on this issue) or easy money policy of the Federal Reserve, we are in a heap of trouble.

As investors, we all should know by now that capitalism is ruled by the business cycle. There cannot be, artificial or real, perpetual ascents forward. Economies rise, and economies fall.

Efforts to smooth out that cycle only put the pain off into the future. Well, folks, that future is now, and we are about to pay the piper.

I’m reminded of that great National Lampoon movie, Animal House. In the final scene when the Deltas ransacked the town parade, Kevin Bacon attempts to sooth the now panicking crowd by stating, “All is well, all is well”.

Of course his attempt was futile as the crowd flattened him on the sidewalk. The same thing is happening with our economy, and despite efforts to, “fix” the problem those efforts will ultimately fail.

Forget the rebate checks (what an unbelievable waste of money) and further interest rate cuts. They will do nothing to fix the fundamental issues with the economy.

The middle class has spent beyond its means, incomes have fallen on an inflation-adjusted basis, and balance sheets are in disarray. The only things that will fix these issues will be time, hard work and belt tightening.

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The good news is that this too shall pass. Over time, pent-up demand, stronger balance sheets and higher incomes will propel us forward once again.

So what is an investor to do while this drama is playing out?

As bad as it may seem, there are opportunities in the current action to minimize the downside or even better make profits. For those who actively manage their portfolio using some of the tools here at InvestorPlace, this crisis may be just another walk in the park.

Let’s start with one of my favorite vehicles for dealing with a declining market, exchange traded funds. Tim Middleton lists a plethora of funds that can be used to short the market in the ETF Insider.

If you read my Rational Investor blog over at InvestorPlaceBlogs you will note that I am using the ProShare’s Ultra Short China Fund (FXP). If you are believer that global markets will follow the United States into recession selling one of the hottest markets shorts makes a lot of sense to me.

You can use the FXP fund as a hedge for your own positions or as an opportunity to make some money. Be forewarned though that this fund is not for the faint of heart. It is both risky and volatile.

Another tool that can be used in an actively managed portfolio is options. If you are new to options you most definitely should check out InvestorPlace’s FREE options webinar right here.

Options are a great way to obtain short exposure to the market with minimal capital. The leveraged nature of options allows for investors to hedge large portfolios with minimal capital requirements.

Again, due the level of risk, options are not for everyone. There are two great options-based services here at InvestorPlace that might be of interest.

Ken Trester’s Options Tactics and Fast Options Profits can help guide you during these volatile times.Or you could go with Dr. J., Jon Najarian’s ChangeWave Options Insider.

I’m on record for believing that we may see lower lows and recovery rallies like what we are seeing this week for the next 6 months. The next great buying opportunity may not occur until October.

Ultimately good times will return and the greatest economy in the history of the world will return to its pre-eminence. While we wait, InvestorPlace will be right by your side to help you make sense of it all!

Free up your investing capital and your peace of mind with a trial subscription to Ken Trester’s options trading service, Fast Options Profits. With two trade recommendations every week that you can get into for less than $2 a piece, Ken aims to take the stress and the guesswork out of options trading. Start your RISK-FREE trial subscription to Ken Trester’s Fast Options Profits today!