Happy Days Are Here Again, Or Are They?

Stocks are on the comeback trail, bank earnings are booming once again and Ben Bernanke said Tuesday that he will keep interest rates low for a long time.

Happy days are here again, or are they?

Not so fast, says Richard Bernstein a strategist who stood up against his bullish peers before the crisis.

In an editorial penned for the Financial Times, he says forget about the gains the market has made over the past few months. The rally ignores a critical factor; all the government intervention has prevented events from running their rightful course.

“The goal of Washington’s policies has been to stymie the inevitable,” he writes. “Keeping companies operating rather than managing the consolidation to maximize the economic benefit.”

Oh sure, government involvement in the banking crisis has turned a tsunami into a wave that we can ride – but Bernstein sees consequences – serious consequences.

“Post-bubble environments tend to sustain an economy’s unneeded capacity, with the hope that economic growth will rebound so the economy can… soak up those excesses.”

So what’s the problem with that?

Bernstein doesn’t see any catalyst that can generate enough growth to sop up all the overcapacity that currently exists. "In other words we’re keeping excess capacity alive in an economy that’s slow growing. Looking out to 2010 or 2011 that’s a real risk," Bernstein tells Fast Money. And to make matters worse, he says it’s the same mistake made by Japan in the 1990’s.

What’s the bottom line?

“Although the markets’ short-term reactions might correctly be positive, investors should be wary that the US will be an American version of Japan’s moribund economy,” he says.

What do you think? We want to know.

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Trader disclosure: On July 21st, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour Owns (APPL), (BAC), (DRYS), (EEM), (FCX), (FXI), (INDY), (SBUX), (UNG); Grasso Owns (OXY), (WMT), (XLF), (CSCO), (V); Grasso's Clients Own (UNH), (V), (WMT), (USB), (OXY); Najarian Owns (AAPL) Call Spread & Put Spread; Najarian Owns (INTC) Call Spread; Najarian Owns (ISRG) & (ISRG) Call Spread; Najarian Owns (JNJ) Call Spread; Najarian Owns (MS) & (MS) Call Spread; Najarian Owns (MSFT) & (MSFT) Short Calls; Najarian Owns (PALM) Call Spread; Najarian Owns (V) & (V) Short Calls; Najarian Owns (YHOO) Call Spread; Finerman Owns (RIG); Finerman's Firm Owns (MSFT), (NOK), (PBR), (RIG), (TGT), (TBT), (WMT); Finerman's Firm And Finerman Own (BAC) Preferred Shares; Finerman's Firm And Finerman Own (WFC) Preferred Shares, Finerman's Firm Is Short (WFC); Finerman's Firm Is Short (IJR), (IYR), (IWM), (MDY), (SPY), (USO)

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