The president and his advisers have just announced the next step in their financial rescue plan. The market opened higher but has given up some gains, proving little except that volatility extends to both sides of the market -- up as well as down. Monday's dramatic record gain should serve as a warning that it is dangerous to change your investments in the midst of extreme emotion.

Today there is enthusiasm for a plan for the government to buy preferred shares in banks, guarantee short-term bank debt, have the Treasury buy commercial paper, and insure deposits even above the new $250,000 limit so companies with large payroll and other commercial deposit needs won't leave their local banks.

In effect, the government has nationalized the banking system and announced it will "print" or create all the credit necessary to get the economy going again. Money is fuel for the markets, and confidence is the pump that sends the fuel through the system. We're getting a big dose of both.

A major turning point

But for those with a larger perspective, today's announcement by the government borders on the unthinkable. We are living through the most dramatic restructuring of the American promise since the Great Depression. It will be interesting to see how this ends, and I don't have the temerity to predict.

One thing, it seems to me, is obvious. There is a frantic race between money going "down the drain" in our economic bathtub, and money being poured in full blast by the Treasury and the Federal Reserve. And there are long odds of them getting the balance exactly right.

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