No change

Voltron says: Everything is unfolding according to my forecast. The government is nationalizing the banking system. The Democrats are demanding dilutive senior equity in "some" of the bailed out companies that would wipe out the shareholders (by "some" they mean all except Goldman Sachs). Many bond investors are upset about the FDIC's rough handling of WaMu, saying that they were unfairly wiped out. This has been termed "reverse moral hazard" because the government is capriciously wiping out good investments. Shareholders of AIG feel the same way . . . in fact the New York Times claims that the bailout of AIG was actually a bailout of Goldman Sachs.

The government is doubling down. One blogger claimed that the $700 billion dollar bailout will actually be used to recapitalize the Federal Reserve Bank which has already swapped 3/4 of it's $900 billion balance sheet for junk mortgages. The proponents of the plan claim that "it won't cost the taxpayer anything". Continued refusal to accept any economic pain leaves them no alternative than doubling down.

Peter Schiff said on his radio show that the government's ill conceived, hasty and unlimited guarantee of $3 trillion in money market accounts may have the largest unintended consequences of all. If all money markets a guaranteed by the government, then people will funnel money to the banks offering the most interest, regardless of the safety of the investments. More moral hazard.

Finally, I think the euphoric upward movements in the stock market are either manipulation or simply "buy the rumor, sell the news" When people figure out that this bailout is merely a band-aid on a arterial wound, look out below.