Having watched how the US Government has moved quickly from bail-out to take-over of private financial institutions, I can see that we are indeed living the purported (but unverified) Chinese proverb:
"May you live in interesting times!"
What most people don't realize is that is maintained that this saying, while not really verified to be from the Chinese, was a much a curse as it was a proverbial blessing. I think we can determine which it is in this case.
With wild swings in the market of over 100pts per day, most people are simply bewildered. Many of the "talking heads" are confused, and many, like Bill O'Reilly, are mad because they believe the markets are rigged. Funny, rigged? Interesting point, Bill, but highly unlikely since the total future contract activity of just the ES market yesterday represented over $250 Billion USD in asset value. Now even Mr. Buffet would have a hard time impacting that amount of activity, but Mr. O'Reilly is welcome to his opinion even if its a bit, shall we say, uninformed.
The markets are reacting to the uncertainty that government intervention has brought. Market's dumped when the government said it was going to become a big player, and when they said they were going to directly inject hundreds of billion dollars of taxpayer money into the banks by taking an equity position, the markets rallied. The US Treasury, on authority granted it by the EERA 2008 (HR 1424) passed a week ago last Friday, is going to make the US taxpayer an equity owner in several of the 9 largest banks.
Can you spell LOUC (law of unintended consequences)?
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