The bailout doesn't go into effect for at least a month.
That doesn't mean it can't have an effect on current prices. Market actors are capable of anticipating future market events. What is your take on Osborne Computer? Was it simply a coincidence that the market value of its then-current computer-model dropped when an improved model was announced?
Is it simply coincidence -- rather than market anticipation -- that every time a corporate buyout at a specific price is announced, the stock price of the target company instantly jumps to, and flatlines at, the buyout price?
Have you considered that this is foreign territory for investors, most of whose opinions regarding the efficacy of Paulsen's measures have yet to crystallize? Right now, this is beyond a bear market and people are acting on negative impulses: The government's doing something? Buy. Bad financial news? Sell. It's when the former becomes "sell" that inflation will become rampant.
Well, not literally; capital losses will likely cause serious deflation if the stocks really crash. But I don't see how a government pumping funny money into the market on this scale can do anything but devalue its currency severely.
That doesn't mean it can't have an effect on current prices. Market actors are capable of anticipating future market events. What is your take on Osborne Computer? Was it simply a coincidence that the market value of its then-current computer-model dropped when an improved model was announced?
http://en.wikipedia.org/wiki/Osborne_effect
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Is it simply coincidence -- rather than market anticipation -- that every time a corporate buyout at a specific price is announced, the stock price of the target company instantly jumps to, and flatlines at, the buyout price?