The entire world is committing to recapitalize banks and basically insure every deposit ever made, forever and ever.  Apparently, all central banks and treasuries and governments, are promising everyone a "do over" that will result in no consequences for bad actions.  Pop the champagne corks, we’re all saved!!  Holy crap.  This is honestly so amazing I hardly know what to say.  Except this:  are they out of their ever-lovin’, freaking minds!!??!! 

WSJ REPORTS THAT THE TREASURY PLANS TO INVEST ABOUT $250B IN EQUITY IN POTENTIALLY THOUSANDS OF BANKS; FDIC TO INSURE ALL NON-INTEREST BEARING BANK DEPOSITS; ALSO THE FDIC WILL INSURE NEW PREFERRED DEBT ISSUED BY BANKS AND THRIFTS
- The measure is expected to be announced on Tuesday.
- With respect to the proposed capital injections for banks, this measure will be done on a voluntary basis.
- Also the Treasury plans to buy preferred stock in 9 top banks.
- Back on 10/10, the WSJ announced that officials in the US were discussing a plan to temporarily back all US bank deposits, if economic conditions continued to worsen; The article added that the FDIC has about $45B in its deposit insurance fund  to cover the $5.2T of insured US deposits and removing the deposit limits would mean that the FDIC would be guaranteeing the remaining $1.8T of US bank deposits.
- Follow Up: The Treasury plans to announce a 3-yr guarantee of bank-to-bank lending; To announce unlimited FDIC coverage through 2009.

After the following announcement, the US S&P futures shot up another 10 points.

$250B TREASURY INVESTMENT PLANNED IN CITIGROUP, BANK OF AMERICA, WELLS FARGO, MORGAN STANLEY, GOLDMAN SACHS, JP MORGAN, BANK OF NEW YORK, STATE STREET; TRESURY TO INVEST $10B IN GOLDMAN
- Earlier it was disclosed that the Treasury planned to acquire preferred stock in 9 top banks.

For the record, that’s only 8 banks.  What?  Like you thought they could count?  The last bank is probably on someone’s Level 3 asset sheet.

People, hang on, because this is an unsustainable rally.  Why?  Because, these are unrealistic promises being made.  These are decisions by desperate people during desperate times.  Still have money in a fund managed by someone else?  Sure you still want to keep it there?  Think long and hard about that.  "Sell the rally" is still the theme, because the troubles are nowhere near to being over.  NOWHERE, NO HOW, NO WAY! 

I’m sure the CEO of JP Morgan is quite miffed that anyone dare question him, about anything, least of all these creditors:

JPM REPORTEDLY OBJECTS TO REQUEST FOR PROBE BY LEHMAN CREDITORS
- Creditors of Lehman are improperly seeking to blame it for bank’s collapse and their request should be denied
- Committee representing Lehman’s unsecured creditors said JP Morgan caused the liquidity crisis that led to Lehman collapse
- Hearing scheduled for Oct 16th

Hopefully, Chuck has time tonight to put up some charts tonight.  It’s been crazy on the downside, so don’t expect any different on the upswing.  Volatility will remain very high.