"namely get the automakers the loans they need, and avert another Lehman Brothers-scale collapse."

Since I believe that the markets and investors are counting on government bailouts, I agree with this assessment by James Surowiecki:

"I think this is a mistake, and that, in fact, the market has held up fairly well today precisely because investors believe there’s a reasonable—though by no means certain—chance that the Treasury Secretary, Henry Paulson, will do what needs to be done, namely get the automakers the loans they need, and avert another Lehman Brothers-scale collapse. Literally within minutes of the market opening, both the White House and the Treasury Department issued statements saying that they were considering using TARP money to help the automakers, and their language was unusually forceful. Treasury said it “will stand ready to prevent an imminent failure until Congress reconvenes,” while Perino said, “given the current weakened state of the U.S. economy, we will consider other options if necessary—including use of the TARP program—to prevent a collapse of troubled automakers.” That’s not a firm commitment and, given past history—including the decision to let Lehman Brothers fail and Congress’ failure to pass the first version of the TARP—there’s no guarantee that what needs to be done will be done. But, to me, it certainly sounds as if the Bush Administration is serious about acting now that Congress has dropped the ball.

I don’t think I’m the only one who feels that way, either. Look, for instance, at what happened to the auto stocks today. Ford was as low as $2.12 a share in the opening moments of trading, but as news spread that the bailout might still happen, it rocketed upward, and at one point it reached $3.21. In other words, it rose forty-five per cent in a couple of hours. G.M. needs the government’s money more than Ford does, and so its upward spurt was even more impressive: after being as low as $2.66, its shares reached $4.23. That’s a sixty per cent move. It’s simply implausible to believe that this would have happened if investors were not expecting some form of government intervention. And it’s no coincidence that the rest of the market also rose from its early-morning lows after the Administration spoke. Investors may be wrong to think that the Treasury Department will end up stepping in, but the hope that it would clearly averted a massive sell-off today."

I also think this expectation is a major reason that the Treasury is trying to step in. They and the Fed now understand this.