Will the Governments Move Work?

Over the weekend the US Government, led by the Federal Reserve, The Treasury Department and Federal Finance Housing Agency, took over Fannie Mae (FNM) and Freddie Mac (FRE) in a move that shows unprecedented central mingling within the world of finance. Fannie Mae and Freddie Mac, which were already semi-public institutions were essentially forced into the deal which gives control to the US Government through preferred stock. In turn the government will prop up the mortgage lenders who's books are swamped with debt.
FNM and FRE are down close to 90% today, as they both are trading under a dollar a share. Henry Paulson, Treasury Secretary Henry Paulson stressed that the bailout was to prevent a massive, potentially worldwide financial melt-down, not to bail out investors who had made a poor bet on the companies, or who believed that the fact FNM and FRE are government backed meant their investments were without risk.
The question is now whether this move is enough to turn the markets around, speed stocks to recovery and move our economy toward productive growth. Though stocks surged today, up almost 3% today, there still remains great uncertainty whether this move will actually solve the problems we face today.
What do I think? Honestly, while I think the move is a needed one to prevent a much larger problem, I do not believe that our economy will be magically cured over night by the move. Home prices are continuing to fall, and until they trough and begin to recover, defaults will rise, write-downs will mount and the overall economy will be shaky. I do, however, think that this could be the bottom for some stocks, if not the market in general. Last time the government made a large, unprecedented move to keep the markets afloat, after Bear Sterns, we enjoyed a few months of higher levels of trading before the bears came again. I think that we will definitely see stocks trading up, but they may actually stay high this time. The dollar is recovering, but it is still low enough to keep exports high, and commodities, especially oil, are trading down due to crack downs on speculation in these markets.
Overall, I think that this will be very interesting next few months. Hopefully stocks will recover, banks will start to find a foothold and buying opportunities will present themselves. The main indicator I will be watching is home prices and defaults. If you think you see a bottom in prices or a top in defaults, I'd say that's the time to jump in. I think home prices will continue to drop, however, though not as much as predicted in my last article because this move by the government will stabilize the housing market. I'm gonna watch closely and wait for this to happen.