I've said this in other threads today, but it bears repeating.
As an indicator of whether or not the bailout is working, the index funds are at best, a secondary indicator. What you really care about is the LIBOR.
If you see the LIBOR with a large upward divergence from the fed suggested rate (currently at 2%), what you are really seeing is an indication that banks are unwilling to loan to each other. They are afraid that if they do loan the money to another entity, that that entity might vanish overnight, and their investment evaporates.
In normal times, you see a 20-30 basis point spread over the suggested rate. On Sept 30th, you had an all time high spread of something close to 500 basis points, so ~20x the normal margin for risk in a loan.
The idea of the bailout was to take some of the worst assets that banks are holding, and get them off their books so that they present less of a risk for intra-bank lending, and you get the credit markets moving again.
That will trickle down into the greater economy, which is why the index funds act as secondary indicators. But if you really want to know if your tax dollars are working to fix the problem, check the LIBOR and euro-equivalent TED rates.
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