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.