As the U.S. government spirals toward Soviet-style economic practices, the American capitalism we once knew and loved is becoming as endangered as a bald eagle…or a GM car dealership.

I’m happy to turn the page on 2008. We had a great streak of profitable trades in Strategic Short Report, but it still was a stressful, painful year to be an investor. Even if you’re far more patient and disciplined than most investors, you still were punished in 2008.

The biggest challenge for President elect Barack Obama is to stop Congress turning this recession into a depression, says Adam Lass. Reckless government spending and “crony capitalism” got us into this mess. And throwing endless credit at non-productive industries will only end up creating inflation and destroying the dollar.

Last week, market volatility reached record levels. Dan Amoss says the wild gyrations in stocks are the result of hedge funds liquidating assets to cover their highly-leveraged positions. This means some good firms — especially those providing vital functions in the food and energy markets — are now massively undervalued.

“In my view, the oceans of new fiat money will chase scarce assets: energy and resources,” says Dan Amoss in The 5 Min. Forcast. “It will stave off the deflationary depression scenario, but not re-inflate the credit/housing bubble. This means the biggest reversal in resource stocks in history is likely soon.

It remains to be seen whether fear takes control of the markets again today. So far, global equities have seen a reprieve from the brutal pounding they suffered last week.

The crash in stock prices has most investors spooked. But it’s worth keeping you head while others lose theirs, says Strategic Investment editor Dan Amoss.

Right now, there are some very healthy resource stocks are shockingly cheap. What Dan calls “screaming bargains.”

Let’s observe a moment of silence to mourn the slow demise of capitalism in the US, says Dan Amoss. “Our government is now overtly manipulating the stock market. We have crossed the Rubicon. We can no longer pretend to be a free market capitalist country while also maintaining confidence in the US dollar as reserve currency.” The SEC’s temporary ban on short selling is a case in point.

Crude oil prices are nudging $100 a barrel today. That’s a long way down from oil’s summer high of $147 a barrel.

“It has been a brutal couple of months for commodities investors,” says Dan Amoss in Rude Awakening.

But it’s the type of wild swing that opens up a great profit play for contrarian investors. Whereas prices this summer overshot fundamentals, prices now look like they may overshoot to the downside.

But commodities will take off, says Dan, when the feds cut rates again…

“U.S. stocks strike solid gains on second-quarter GDP,” ran a gleeful headline yesterday on MarketWatch.

“Investors, showing no sign of concern about the outlook, took the GDP report at face value and pushed stocks up sharply on the news,” ran another breathless piece of editorial, following data that showed U.S. GDP up 3.3% in the second quarter.

But as Addison Wiggan and Ian Mathias pointed out yesterday in Agora Financial’s 5. Min Forecast, the government’s stimulus check program and a weaker dollar were partly responsible…

The government’s bailouts of failed banks and its economic stimulus splurge widened the federal budget deficit to $102.8 billion in July.

Bond king Bill Gross would like to see the budget deficit reach $1 trillion.

Last month, he wrote an open letter to Barack Obama asking him, if he is elected, to save the US economy by upping federal spending by a further $500 billion.

According to Dan Amoss, Gross’s prescription for the economy would do more harm than good. For a start it would cause the price of oil imports to spike…