Stocks set to rally on rescue plan

7:25am: Government plan to bolster mortgage giants Fannie Mae and Freddie Mac lifts futures; dollar gains.

So let's see -- the government is about to add 5.3 TRILLION dollars to its liabilities. If they end up borrowing (=creating) billions (even trillions?) more dollars, it will most certainly dilute the value of the dollar, which should make it worth must LESS.

If the government has to bail out such a bedrock of our economy, how is that a good thing? How can that bode well for the economy (represented by the stock market)?

In case you didn't know, Fannie and Freddie are government-sponsored (but not government-owned) corporations which personally guarantee the value of 5.3 TRILLION dollars worth of US home mortgages -- roughly 50% of them! The fact that they can't stay afloat without government buyout/takeover says that the current "downturn" is actually a Great Depression, not just the beginnings of a small, minor 1 year recession as they claim.

So investors are saying "They're going to print hundreds of billions more US Dollars with no corresponding increase in goods to be purchased? Hmm, sounds like the dollar is going to be worth more!"  

Where do these people get their brains? Bizarro world?

Matthew