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US Markets - 24 March 09

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DOW 7775 +495 (6.8%), S&P500 822.9 +54 (7.1%)

This rapid and violent rally is now 12 days old. The DOW has gone up ~1250 points, or ~19% from its low of 6525.

The rise last night came as government decided not to nationalise the banks, but buy up toxic assets... many commentators are suggesting this is slated for failure. The US banks are not actually fundamentally sound, and toxic assets where not underpriced due to fear and lack of market, but due to the fact that they were way too expensive, wrongly priced and contained low quality loans in the first place.

The US government is not stupid - they know exactly what they are doing. They are doing this because the nationalisation of the banks is not tolerable for them. They are doing this as a face-saving way to bail out the banks, knowing well that they are paying for assets at a price that never should have been. They rope in some private investors to make the whole thing appear more legit and calculated, but ultimately US taxpayers are wearing the loss. Socialisation of bank failure achieved under the guise.

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