Just when you least expect it, the hat is taken out to the street, looking for some help. This, the latest in a series of moves to try to open up some of the clogged credit markets. Overall it was a good thought as it had the intent of propping up a market and keeping the dollar from further decline.

Unfortunately, it took a GLOBAL BAILOUT this time to move the markets off of their lows. Now we are watching every news item to see if the next shoe is going to drop and the markets take back much of what they provided on Tuesday.

There are several scary rumors floating around the message boards that there may be a problem on the credit desks like:

Yahoo boards: “I am hearing HSBC‘s CDS desk is refusing to quote LEH, BSC and GS CDSs.”

Time to look for cover and hedge up the portfolio. Look at (SDS) (SKF) and (QID) as some short-ideas that will give you the best bang for the short buck. Don’t be surprised over the next few days when when you hear all sorts of horrible news/rumors all leading to the failure of a brokerage or bank. This is a major stress test that has been in the making.

Yesterday’s action was based on the a huge short cover after a huge bailout plan. But the bailout is a credit-swap that has our government eating the crap in exchange for fully backed paper.

How long can we do that for?

More on Bernanke’e Magic Hat later….