Today’s recommended MSM article is via the Ahead of the Tape column in the WSJ, titled "Intervention Ain’t What It Used to Be."
"Government intervention is losing its market mojo.
The one-day stock rally sparked by the rescue of Fannie Mae and Freddie Mac was quickly erased Tuesday, drowned out by fresh worries about Lehman Brothers Holdings.
Repeatedly this year the government threw out a safety net as the stock market teetered at the edge. Think of the three-quarter-point emergency rate cut by the Federal Reserve in January, the shotgun wedding of Bear Stearns to J.P. Morgan Chase in March, and the Treasury Department’s announcement of plans to help Fannie and Freddie, along with the government’s temporary war against short sellers, both in July.
Each action boosted optimism on Wall Street. Grownups seemed to have the situation in hand. Past crises, such as the Long-Term Capital Management bailout, have encouraged a belief that by the time government gets involved, the worst is over.
Not this year. Each bout of hope has been stunted by a realization that worse was still to come. This weekend’s effort had an even shorter shelf life than the others. Despite Monday’s rally, Treasury bond prices rose and some riskier credit spreads widened. The VIX, a closely watched measure of market fear, jumped 12.5% on Tuesday to its highest point since mid-July."
Good stuff . . .
Weekend Bailouts and Subsequent Market Reactions September 08, 2008
Intervention Ain’t What It Used to Be
WSJ, September 10, 2008