Don’t get me wrong. I’m still immensely pissed off at the Bush Administration for giving Barak Obama at trillion dollar credit line to go buy up whatever he wants on Wall Street. However, i wonder if the US Bailout package didn’t suddenly send the problem overseas. The Fed answers (to nearly) no-one, and the Treasury just needs agreement between Democrats and Republicans - both of which face elections in under 30 days.

The Euro Governments are much more split as the article below describes. Germany sat on France’s bailout proposal because the Merkel Government didn’t want the German taxpayers bailing out “Latin Europe”. Can’t say I blame her. The Telegraph does however: Germany takes hot seat as Europe falls into the abyss - Telegraph

As for the US itself, it has not yet exhausted its policy arsenal. It can escalate further up the nuclear ladder. The Fed can cut interest rates from 2pc to zero. If that fails, it can let rip with the mass purchase of US debt.

“The US government has a technology, called a printing press,” said Fed chief Ben Bernanke in November 2002. (His helicopter speech).

In extremis, the Treasury/Fed can swoop into any market to shore up asset prices. They can buy Florida property. They can even buy SUV guzzlers from the car lots in Detroit, and mangle them in scrap yards. As Bernanke put it, the Fed can “expand the menu of assets that it buys.”

There is a devilish catch to this ploy, of course. It assumes that foreign creditors will tolerate such action.

Japan entered its Lost Decade as the world’s top creditor, with a vast pool of household savings to cushion the slump. America starts its purge with net external liabilities of $3 trillion, and a savings rate near zero. Foreigners own over half the US Treasury debt, and two thirds of all Fannie, Freddie, and other US agency bonds.

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The crisis engulfing Europe, Asia and emerging markets, makes life easier for Washington. The United States is becoming a safe-haven again.

The Fed can now hope to pursue monetary stimulus “a l’outrance” without being slapped down by the currency, debt, and commodity markets. Take comfort where you can.