Fully comprehending the minute details of the government’s plan to save the economy is above our pay grade. But we found two things in this morning’s New York Times alarming.
1. On the $1 trillion world leaders promised they would pump into the world’s financial system at last week’s G20 conference: “On closer inspection, the $1 trillion figure looks as wishful as the soaring words in the communiqué issued by the Group of 20. Some of the money has yet to be pledged, some is double-counted and some would be counted in a ‘synthetic currency’ that is not actually real money.”
2. On the FDIC’s pledge to insure $1 trillion worth of assets purchased under the Public-Private Investment Program, despite a provision in its statute that caps the amount it can insure at $30 billion: “The plan hinges on the unique, and somewhat perverse, way the F.D.I.C. values the loans. It considers their value not as the total obligation, but as ‘contingent liabilities’ — meaning what it expects it could possibly lose … So how much does the F.D.I.C. think it might lose? ‘We project no losses,’ Sheila Bair, the chairwoman, told me in an interview. Zero? Really? ‘Our accountants have signed off on no net losses,’ she said. (Well, that’s one way to stay under the borrowing cap.) By this logic, though, the F.D.I.C. appears to have determined it can lend an unlimited amount of money to anyone so long as it believes, at least at the moment, that it won’t lose any money.”
We don’t get it. We thought we were supposed to be turning our backs on excessive leverage and looking toward a new era of responsibility? Hello? Right? Shoot, it was only us that fell for that, wasn’t it? We’re so gullible. If anyone needs us, we’ll be chipping our MasterCard out of the block of ice we froze it in.