ARROYO GRANDE, Calif. (MarketWatch) -- Ancient stories oft retold: Blame the mythic gods for today's political crisis, for Wall Street's 2008 meltdown, America's $23.7 trillion new debt, for Beck, Palin, the Tea party, and now for Goldman and the resurgence of Reaganomics ... Yes, the Kraken was released, ravaging American politics.

Since time immemorial humans have seen their struggles as endless battles between the gods, Zeus and Hades, good vs. evil, the forces of Heaven battling the Underworld. ... so we blame Zeus ... or his arch-enemy Hades for releasing the Kraken, the deadly evil monster that devours good ... yes, blame the gods, yes, "the devil made me do it!"

Backflash: To that crucial moment, election time 2008 ... when Wall Street's near-death experience opened the Gates of Hell, beckoning Wall Street's too-sinful-to-save bankers ... Hades, ruler of the Evil Underworld, counter-attacked ... first releasing his Trojan Horse, the Treasury Secretary, to save his dark legions from certain destruction ... Henry Paulson kept Hades' warriors alive ... but Zeus feared Hades was preparing for a bigger catastrophe on earth, created a new Perseus, his son, the hero who must finally defeat Hades and his dark warriors ... for that role Zeus cast Barack Obama. But remember, Perseus is half-human, may be no match Hades' ultimate WMD, The Kraken.

Flash forward: Elections 2010 ... the eternal battle rages on Earth, growing louder, more violent ... The Kraken, reborn as Goldman and the too-political-to-fail Wall Street Greed Machine was winning many battles ... concessions on derivatives and fiduciary regulations, disclosures, on the CFPA ... yes, the Kraken returned from the Darkness, more powerful, thanks to a raid on Treasury.

Wall Street has new dark forces inside Zeus' domain ... Timothy Geithner, Lawrence Summers and the reincarnation of Reaganomics darkest hero, Ben Bernanke ... The Kraken now commands the most lethal WMD, the propaganda machine that's releasing inflammatory Scorched Earth talking points for Glenn Beck and Rush Limbaugh, Sarah Palin, Michele Bachmann, Mitch McConnell and John Boehner, Tea Partiers, militiamen and secessionists ...

Welcome to American politics, folks. Exciting fun isn't it, our tradition of American political discourse developed over two centuries ... politics is code for getting rich off the many endless battles throughout eternity cooked up to amuse the gods of Heaven and Hell, Zeus and Hades, fought by angels and saints, sinners and demons, and us humans ... minor skirmishes on the Senate floor, on cable news, at Tea Party confrontations ... and major battles over financial reform, Goldman's treachery.

There's more coming as good fights evil: The new Supreme Court nomination, abortion, gay rights, immigration, taxes, elections in 2010 and the big one in 2012 ... so blame Zeus and Hades for not getting along ... or "the devil made me do it" ... blame someone, anybody but you ... then blindly vote in a new Kraken, for both sides have one, and either one can self-destruct America ... now sit back, enjoy the popcorn, and watch the latest "Clash of the Titans."

Release the Kraken ... and defeat Dodd's financial reforms

Last week's SEC suit again Goldman Sachs may slow the trend. But the truth is, since Wall Street's takeover of Washington by the Paulson-Bernanke-Geithner-Goldman conspiracy, we've been predicting that even though we twice dodged the Great Depression II (in 2000 and again in 2008), Dodd's financial reforms will be denuded by the GOP, setting America up for the third wave, the next big meltdown that will finally bankrupt Wall Street's too-political-to-fail banks, and America.

Bankrupt America? Yes, that prediction comes loud and clear from Nobel Prize-winner Joseph Stiglitz, former bond trader Michael Lewis, financial historian Niall Ferguson, hedger Barton Biggs, Yale economist Robert Shiller, Hong Kong's Marc Faber and many other ignored voices drowned out by the hundreds of millions spent by Wall Street lobbyists to kill Dodd's reforms.

Now Simon Johnson, former IMF chief economist and co-author of "13 Bankers: The Wall Street Takeover and the Next Financial Meltdown," adds his voice:

Yes, another financial meltdown is coming: "And when it comes, the government will face the same choice it faced in 2008: to bail out a banking system that has grown larger and more concentrated or let it collapse and risk an economic disaster ... But there is another choice ... take a stand against concentrated industrial power ... It is a choice that the American people need to make -- and sooner rather than later. The Panic of 1907 only led to the reforms of the 1930's by way of the 1929 Crash. We hope that a similar calamity will not be a prerequisite to action again." And yet, catastrophe is dead ahead.

That's right: Even if Dodd's financial reforms are passed with token GOP support, the reforms will be watered down. America will not have to wait 22 years as we did after the Panic of 1907 till the Crash of 1929. With today's high-tech exchanges operating at the speed of light, we have turned years into milliseconds thanks to high-frequency trading algorithms, $100 million profit days, risky highly-leveraged derivatives, and Wall Street's insatiable greed demanding mega-billion bonuses.

No, not 22 years: Another crash will be triggered in 2012, certainly within the next presidential term, and it'll be a whopper.

Release the Kraken: Revive the 1981-2008 Reaganomics disaster?

Even with the Goldman suit, Wall Street's $400 million lobbyist effort to kill financial reforms signals a resurgence of unregulated free market Reaganomics capitalism, the conservative ideology that killed Glass-Steagall in 1999 creating too-big-to-fail banks, setting the stage for the 2008 meltdown. That 60-year-old law protected Main Street by separating low-risk retail banking from high-risk investment banking gambling with high-octane derivatives.

Wall Street's goals are simple: Water down the Dodd reforms enough so that Wall Street can continue to: (1) evade securities laws, (2) avoid taxes, (3) minimize capital requirements, (4) increase leverage, (5) hide speculative risks, (6) maximize short-term profits, (7) avoid stockholder disclosures, and (8) manipulate regulators. Expect surface change, but little of substantive. Why? Wall Street needs to continue running the same scam on taxpayers in order to get their mega-bonuses. They have lost their moral compass, sold their soul to the devil, lack a conscience, have no interest in the public.

The truth is, Beck, Rush, Sarah, Michele, and others driving the GOP Tea Party of No are in fact a smoke screen for Wall Street and their lobbyists' shadowy takeover of America's government ... the new Kraken is destined to self-destruct America ... even now as it fights for the resurgence of neo-Reaganomics.

Last year we predicted this revival as a "mutant capitalism." We saw Wall Street's cultural "soul-sickness," hidden in many disguises. To fully understand this relentless toxic threat, you must see it in the broader historical context of the Reaganomics capitalism as one manifestation of the eternal war between Zeus, Hades and their armies here on earth. Here's the back story:

1. Birth of Capitalism, Adam Smith's 1776 'Wealth of Nations'

Pure capitalism is the aggregate economic activities of greedy irrational selfish people. "Every individual ... labors ... great as he can," but "neither intends to promote the public interest, nor knows how much he is promoting it. ... he intends only his own gain ... led by an invisible hand to promote an end which was no part of his intention."

2. Alan Greenspan, Ayn Rand, Fountainhead and Atlas Shrugged

For decades Rand was Greenspan's conservative guru: "When I say 'capitalism,' I mean a pure, uncontrolled, unregulated laissez-faire capitalism ... the only system that can make freedom, individuality, and the pursuit of values possible in practice because capitalism demands the best of every man -- his rationality -- and rewards him accordingly ... free ... to go as far on the road of achievement as his ability and ambition will carry him." Rand and her disciple Greenspan demanded total, unrestricted freedom for Wall Street.

3. Milton Friedman's 'Capitalism & Freedom' powered Reaganomics

After 1981 Reaganomics defined conservatism: Grounded in Nobel Economist Milton Friedman's conviction that "the government solution to a problem is usually as bad as the problem." He preached pure Adam Smith capitalism, hated FDR's New Deal, hated the Keynesian economics that Obama revived with the stimulus. Reaganomics ideology released the Kraken, gutted Glass-Steagall, created Wall Street's too-big-to fail fat-cats, set up the 2008 meltdown, and exploded America's massive debt problems.

4. Reaganomics capitalism must kill financial regulations

Today Wall Street's myopic mindset lives in this unbroken 234-year history from Adam Smith to Friedman, Rand, Greenspan, Bernanke and Reaganomics. And today it's coming to a head in this new "Clash of the Titans," driven by Wall Street's Scorched Earth obsession to kill all restrictions in Dodd's reforms. This is the ultimate turning point, a grand battle to the death between the new Obamanomics and the resurgence of Reaganomics.

Why? Wall Street knows it cannot survive without Reaganomics' ideological freedoms. Wall Street's cash got Obama elected, got their Trojan Horses in his cabinet. But they never expected Obama to turn against them, starting with suing Goldman for fraud.

Wall Street spent $400 million on lobbyists to release a new Kraken in this war to kill Dodd's reforms, a war Zeus and Hades must be proud of. This, my friends, is our mythic destiny ... at least till the gods decide to shift the balance of power again in this eternal "Clash of the New Titans."

But rest assured, no matter who's elected in 2010 or 2012, who's got power in Washington, for now, Wall Street will continue financing both sides, because volatility and gridlock, deception and propaganda, lies and confusion all favor the dark forces of Hades, yes, Wall Street's too-greedy-to-fail fat-cats are his army.