Fed plans for a new bail out/SEC bans short selling

Today US markets are trading at high premium. The federal Government came forward again to contain the credit crunch. Treasury Secretary Henry Paulson said on Friday "The federal government must implement a program to remove these illiquid assets that are weighing down our financial institutions and threatening our economy," said Paulson. He added that the government would take on hundreds of billions of dollars in obligations. The team will work on this in the weekend and come out with complete details of the plan.

In another event Securities Exchange Commission (SEC) has temporarily banned short selling of 799 financial stocks. This move raised several questions as this could create liquidity problems. The bail out plan and short selling ban lifted the markets in a big way. Dow is trading at a premium of over 400 points and most of the financial stocks which were tumbled for last few days are up now.

Morgan Stanley gained 22%, Goldman Sachs surged 29%, Washington Mutual up 33%, Citi Group at a premium of 26% and Merrill Lynch and Bank of America gained 21% each.