The New York Times reports that the market rally last week was due to investor's confidence that the Bush administration is stepping in to bail out the economy. I don't buy this explanation and think that the market moves because of what big investors are doing -- information that does not get into the media. Moreover, based on its track record, I would conclude that the Bush Put -- as I'd call the Times' notion -- is likely to be just as effective as the Mission Accomplished banner he used as a prop in May 2003.

To explain this, here's some recent history. In May 2003 George Bush landed a jet on an aircraft carrier and strutted like a peacock in front of a banner blaring "Mission Accomplished." That was over four years ago and that banner still looks like it's premature. By contrast, during the reign of Fed Chair Alan Greenspan, the market formed the concept of the Greenspan Put -- the execution of Fed policies that limited investor's downside risk -- because he successfully bailed out investors for their excesses.

This week my guess is that the market rallied in response to two moves: Fed Chair Bernanke's comments on flexibility -- hinting at further rate cuts on December 11th -- and Treasury Secretary Paulson's announcement of negotiations with banks to keep some mortgage rates from resetting upwards on some of the 1.5 million nonprime mortgages valued at $331 billion that will reset by the end of 2008. Since Bush seems to be coordinating the responses to the latest economic turmoil, I am elevating the market rescue efforts to the Oval Office -- hence the Bush Put.