Washington, DC -- (ReleaseWire) -- 10/28/2015 --"History doesn't repeat itself," Mark Twain is supposed to have said, "but it often rhymes." We heard the rhymes loud and strong this last week, in news of renewed easing from the People's Bank of China and the European Central Bank and in the market's reaction, a short squeeze that sent the S&P 500 to its biggest rally since 2011. Let's take a look at how this particular song rhymes.

First, the background. According to FactSet, a company that provides financial information and analytics for investment professionals, blended earnings declined 4.6% in the third quarter. If that trend continues into the final numbers, this will mean we've had back-to-back quarters with a decline in earnings for the first time since 2009. Even worse, looking ahead to the fourth quarter, nine companies have issued declining earnings-per-share guidance and to date only one company has issued positive guidance, so it seems like the year won't be getting better from here. Of course, we're only just beginning to see forward guidance, so it will be important to follow that news closely.

This data seems to point toward the conclusion that the U.S., and in fact the global economies are in the contraction phase of our current business cycle. And since the philosophy of the central banks seems to be doing whatever they can to paper over the impact of that contraction, we saw last week that the PBOC and the ECB announced that they would be printing yet more money to ease the natural effects of that contraction. The markets shot up on that news, a few winners disproportionately impacting the indices to lead to a massive rally.

What you must remember, though, is that on the whole stocks always decline in a recession. And in fact, for the last several years hedge funds, mutual funds, ETFs are all performing poorly. Even Warren Buffet's Berkshire Hathaway shares have fallen 11 percent so far this year. Banks are reporting staggering drops as well. According to recent reports from Reuters and the Wall Street Journal, adjusted third quarter revenues for Morgan Stanley fell 42 percent (and no, I didn't leave out a decimal point there); Goldman Sachs profits dropped 38 percent; and JP Morgan's assets declines by $160 billion during the third quarter, with revenues dropping 23 percent.

So no, this isn't the same bubble we had leading into 2008, but it certainly seems like the "pop" when it bursts is going to sound very similar, doesn't it? All these investors and too-big-to-fail institutions that have drunk so freely of the central banks' Koolaid are starting to feel the hangover. A change is coming—history does tell us that change is inevitable—but with change comes opportunity, especially for those that listen carefully for the rhymes. Fortunes will be made, by investors that pay close attention to what companies are actually doing, look at their struggles and earnings and sales with a clear eye.

Another song has been sung in the last several weeks that certainly rhymes with history. That is presidential candidate and Vermont Senator Bernie Sanders' call for bigger government, with higher taxes to go along with it. Particularly during and since the Democratic debates, Sanders has been calling for the United States to be more like the socialist "paradise" of Denmark. As the first question he asked Sanders during the debate, CNN moderator Anderson Cooper asked, "How can any kind of socialist win a general election in the United States?" Sanders' response was that his campaign would explain what Democratic socialism is: "Democratic socialists are scandalized by America's economic disparities and are eager to expand the U.S. welfare state."

Sanders' idealization of Denmark and its Nordic neighbors gives us a real sense of what the candidate intends for our nation. To be fair, Denmark was ranked 3rd in the 2015 United Nations World Happiness Report, and three years ago The Economist ranked it as the 5th best place to be born, while the United States ranked 15th and 16th on those lists, respectively. In Denmark, the state provides healthcare, education, job training, unemployment compensation, and even subsidizes leave family and sick leave. Senator Sanders wants to expand Medicare to all citizens, provide free four-year higher education, increase the availability of welfare programs. At least three things set Denmark's wonderland apart from the facts on the ground in the U.S., though. First is a matter of scale. Denmark, with 5.6 million people, is about half the size of South Carolina, meaning that problems of administration and implementation are an order of magnitude smaller. Second, Denmark severely limits non-skilled immigration, while the United States has always been a beacon for the less fortunate to strive toward bettering themselves.

The third? The simple fact that the citizens of Denmark are willing to be taxed at a much higher rate than Americans are accustomed to. The average unmarried Danish citizen pays around 40% of income in taxes, while in the U.S. that figure is closer to 26%. In fact, in 2012 government spending in Denmark constituted 52% of GDP, and in the United States that number was 39%. No matter what he says about the top one percent, to implement his fairy tale plans Sanders would have to raise taxes hugely on the middle class and the wealthy alike.

Where's the rhyme here? Although "socialism" as a political force in the United States has been mentioned about as frequently as Denmark over the last few decades, the sorts of programs being proposed by candidate Sanders are nothing new. From the Socialist Party of Eugene V. Debs to FDR's New Deal to Johnson's Great Society and even Obama's Affordable Care Act, sweeping increases in the size of government and its involvement in "taking care" of American citizens are frequently floated, often voted into being, and rarely successful in anything aside from providing yet another sink for the hard-earned income of the people.

Even these two seemingly different songs—the irrational markets and Bernie Sanders' socialist fairy tales—share a rhyme between them. A rhyme that sounds like a bigger, more interventionist government; that sounds like very expensive wallpaper covering the holes in our economy and society; that should sound like a warning to the audience that things are about to get very out of tune.

All data sourced through Bloomberg

Securities offered through Western International Securities, Inc., Member FINRA & SIPC. Bennett Group Financial & Western International Securities, Inc. are separate and unaffiliated companies.

About Dawn Bennett
Dawn Bennett is CEO and Founder of Bennett Group Financial Services. She hosts a national radio program called Financial Myth Busting http://www.financialmythbusting.com

She discusses educational topics and events in the financial news, along with her thoughts on the economy, financial markets, investments, and more with her live guests, who have included rock legend Ted Nugent, as well as Steve Forbes and Grover Norquist. Listeners can call 855-884-DAWN a as well as take podcasts on the road and forums for interaction.

She can be reached on Twitter @DawnBennettFMB or on Facebook Financial Myth Busting with Dawn Bennett.