Irregardless of whether or not the US taxpayer is saddled with the bailout of FREDDY MAC and FANNY MAE, there are a slew of bank failures coming up. The economy will continue to contract as consumer spending decreases. Unemployment will continue to increase. The budget deficit will increase, as revenues decrease. Monetary policy will continue to be grossly inflationary even in the face of large scale wealth and debt destruction caused by a continuing cascade of defaulting debt.
The idea that falling commodity prices, led by a retrenchment in the price of crude oil, will spur a continuing advance in the equity markets is simplistic and not reality based. All of the equity markets around the World, not just in the US and EU are headed down, way down and soon. I watch the markets with the fascination of a young child with an unobstructed view of a fast freight headed for a broken trestle that is unseen by the hapless train crew.