We’re confused this morning… help us understand this mess.

Intel Dealt $1.45 Billion Fine; WSJ: Gov’t Wants Financial Sector Pay Overhaul; Verizon Divests Access Lines for Stock; AIG Says 5 Years to Pay Back Gov’t; Foreclosures Jump to Record High; Geithner: Small Banks to Get TARP Funds; Auto Dealers Get The Axe; Ford Raises $1.4 Billion From Stock Sale

Hate thy neighbor? Giveth his children money; that will fix them all. Few things are as costly as free money.

What’s that hiss? Bond sales break record, but “investors” demand higher yields…U.S. budget deficit sets annual record… in just 4 months! Key trading signals from one of our resident options analysts… Data still disappoint… housing, jobs, retail improve slightly, but still in the dumps… Last, Dubai in danger… foreigners flee so hurriedly they’re leaving cars behind…

Frosty Wooldridge, writing at NewsWithViews.com, has the same kind of attitude I do, and has titled a recent essay, in all-capital letters, “BAILOUTS: A COMPLETE FRAUD AGAINST THE AMERICAN WORKER” which is certainly attention-getting…

The December Existing Home Sales report actually surprised to the upside, posting a gain of 6.5 percent versus November. This equates to roughly 290,000 units.

Here’s the bad news: These sales aren’t from eager buyers who got priced out of the market during the run up over the last few years. The buyers are vultures, swooping in and cleaning the carcass. Over 45 percent of the sales were “distressed” according to the report.

That is bad news for the market. It is just the beginning of a viscous cycle with three simple ways you could use to profit.

Latest data from the housing market shows that the misery is set to continue for a while yet. But Christian Hill says investors can still make money by shorting two real estate specific ETFs (IYR, VNQ). A more speculative play is the UltraShort Real Estate ProShares (NYSE:SRS) inverse ETF.

The only reports on the calendar this week are housing related, and it got me thinking: what’s left? Pretty much nothing. As the fairy tale goes, the big bad wolf doesn’t even need to huff and puff; the house has already been blown down.

JPMorgan Profit Down 76%; U.S. Foreclosures up 81% in 2008; U.S. Crude Falls 10%; Incoming SEC Chief Touts Investor Protection; Apple Without its Core; BofA Plunge; Auto Execs Uncertain

Expect more pain in the housing market next year, says Don Miller. Rising unemployment will keep the foreclosures coming. And as the backlog of inventories swells, Don says homebuilders still look ripe for shorting in this environment.