This has to be one of the more ridiculous rallies I have seen. Well maybe not totally. We were oversold and due for a bounce and this increases the optionality value for many companies as it is yet another band aide that creates more time. However, this does not appear to change anything fundamentally as it does not address the solvency issue or start housing prices moving up or suddenly create money for consumers. It is a great time to be selling smartly. We may get a day or two of a rally and the Dow may try to make it up to the 12,300 level but as Albert Einstein said the definition of insanity is doing the same thing over and over again, and expecting different results. I think by that definition the Fed may be insane.
The craziest thing which someone pointed out is that now the monolines are now insuring the Fed collateral. Boy we live in a mixed up world.
Also, anyone want to speculate that this was meant to save Bear Stearns?? All kinds of rumors out there about potential failure of Bear Stearns yesterday. Of course flatly denied but the Fed's actions today directly addresses the supposed Bear Stearns liquidity problem. HMMMM
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