Financial Magic or The Disappearing Elephant Act

When a financial system is based solely upon the faith people have in it, maintaining this faith becomes of paramount importance. In the absence of sound financial and economic policy, maintaining people's faith in the system becomes the politics of spin management where public policy reduced is to a confidence game.

The problems in the global credit markets, wrought by overzealous financial institutions, taking advantage of imprudently lax credit standards, are throwing a wrench in the spokes of the global economic and monetary systems, particularly in the United States. The latest proposal to try to manage this potentially monumental financial crisis is the creation of what, in my opinion, should be called a super bailout fund. This is essentially a fund, created by a consortium of banking institutions, that can be used to dump assets into when they believe there is not an acceptable alternative buyer. Wouldn't it be nice if, whenever we wanted to sell something and couldn't find a buyer that would pay what we wanted, we could just create a fictional buyer to take the asset off our hands.
One of the best analyses I've seen on this subject was done by economist Nouriel Roubini, and can be found at his blog http://www.rgemonitor.com/blog/roubini/220816.
The timing of putting this plan together is interesting. This push was reported to occur last weekend. Interestingly enough at least three major banks report earnings this week. Citibanks presentation of its dismal result are already known, with a decline in profit of 57%. It looks like quite a bit of spin managment going on here, in order to keep the confidence of potential new money boosted. From accounts I've read this fund will be seeking new money coming in to it. An interesting bit of financial sleight of hand; create a buyer to support a price on suspect assets and we now have a market pricing mechanism, then suck in new money until the real solvency issues cause it to implode.