The Fed's encourage speculation worldwide

China has decided to roll back the stock tax today, as the markets are now down 40% from their highs, and the the political figures are crying uncle. The Olympic torch relay didn't help.

The Bank Of England has a proposal to lend over $100 billion to the markets and take mortgage loans:

"The Chancellor hopes that the cash injection - the biggest ever by the Bank of England - will lead to cheaper mortgage deals and stop the housing market slipping further.

The Chancellor hopes that the cash injection - the biggest ever by the Bank of England - will lead to cheaper mortgage deals and stop the housing market slipping further.

Under the controversial scheme, the Bank will loan money to banks and building societies in return for potentially risky mortgage debts. If the housing market fell and borrowers defaulted on their mortgages, taxpayers could be left nursing losses."
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/04/21/ndarling121.xml

Royal Bank of Scotland is raising $25 billion in capital to offset losses.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/04/21/cnrbs121.xml

Here in the states Nat City is recapitalizing raising over $6 billion at $5 a share, after being prodding by regulators to sell or raise cash.
http://online.wsj.com/article/SB120873510977529849.html?mod=hps_us_whats_news

Bank of America, which reports earnings this week, is considering selling part of it's stake in China Construction bank.

"BofA is sitting on unrealised gains on its holdings that are worth billions. While CCB’s share price has slid in line with the Chinese stock market – 46 per cent below its October peak – the share price is still far higher than the level at which CCB listed in 2005. It has a market capitalisation of about $177bn."
http://www.ft.com/cms/s/0/ae58c83a-0f17-11dd-9646-0000779fd2ac.html

Worldwide, the banks are raising capital, to offset their losses, with the encouragement of regulators.

Add in the cut in the stock tax in China, and the markets are poised to rally again this week.

Last Friday the market soared on Google's earnings. Now the shorts have to suffer with Apple's and Microsoft's earnings this week, whereby both will trounce estimates.

The shorts will be steamrolled.

Again.