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Today's Fed and ECB announcements mean nothing

So, the Dow index is up by over 700+ points this week. This is certainly a market that has been impatient for good news. What was the good news?
1. Reports of a Paris/Berlin plan to organize a fiscal stability pact for the eurozone without the need for a treaty.
2. Reports of an $800 billion IMF bailout plan for Italy, since denied.
3. Establishment of large dollar swap lines between the Fed and the ECB.
4. Lower collateral haircuts at the ECB.

The Paris/Berlin plan is intended to lure the ECB into bailing out Italy; that won’t happen. The IMF bailout of Italy was a false rumor. The Fed/ECB moves announced today are plumbing adjustments which mirror their actions after the Lehman bankruptcy. They are routine and easily predicted.

The dollar run on the eurozone has squeezed the banks; these steps should make it easier for eurozone banks to meet their creditors’ demands. It won’t stop the run. There is nothing in this package for Italy itself, only its banks. So, as the police like to say, nothing to see here folks.

I would venture to say that, later this week, the harsh reality will sink in, and the markets will lose their euphoria and give up their gains. At present, there is nothing standing in the way of a major Italian funding crisis.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.