The market is responding well to England's plan and Paulson's partial capitulation to bank equity plan. But, don't get too comfortable with Paulson, he is still resistant.
The headline of the day, however, is this plan. Unlimited dollar funds continue in the shadow bailout. Functionally, this is unlimited and unsecured loan by the US FedRes to other central banks. Per my earlier prediction, the world's central banks will be the world's only de facto lenders by this time next month, making it the biggest centralization of central bank power in history.
Part of the reason for this need in Europe is that's their banks short term debt is equal to 100% of their GDP, unlike 15% in the USA. See data here. England's leadership role on this package may be borne of out sheer desperation and necessity.
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