Not that one, you pigs! Leverage. One theme that has run through recent government bailout actions is the increased use of leverage. The Government will assume the first $20 bln in losses in the new plan to buy up $200 bln in asset-backed paper. They are essentially employing leverage to try and undo the damage created by the overly aggressive use of leverage. Fighting fire with fire, in effect. Brilliant if it works, crazy if it doesn’t. Only time will tell.

stocks have shed early gains and the dollar has rebounded as a result. Growing government debt remain a concern, but in a low-growth world, I suspect the US will have no trouble attracting the funding it needs from overseas cash hoards to fund things.