with a little support from short banning (which apparently includes options trading as well) the government is stepping in to the tune of an extra billion. Yay!
The positive story goes something like this: there is a backstop to the housing. The govt is going to own all of the bad debt in mortgage (not just the good stuff in Framae). Yay! The government is backstopping the money markets with public loans. Yay! At least they have the shadow banking beast well under its sights and the zombies (hedge funds) spreading the virus have been rendered innocuous without their shorts. The markets have been stabilized, nay saved! Ideology, free markets, moral hazard, taxpayers and all that hocus pocus be damned. This is america, these are the money helicopters and they are dropping hundreds of billions on main street. Rejoice.
The negative story goes something like this: The USA is becoming the USSRA on the cheap with nationalizations of key institutions and most people not realizing it or cheering this momentous world socialist moment. Such a large slice of humble pie is too big to comprehend. Thank god it had to be a Republican administration that enshrined socialism in the US of A for the next 20 years.
This is both a game changer in terms of stabilizing the markets (125 on SPY throughout the day). It may stabilize the housing market. I do believe the extremes have been avoided. This market will go down, but it will go down orderly. Capisce?
His name was Hank Paulson, and Long live the USSRA.