It is not without consequence that the Fed is creating massive amounts of money for the U.S. Treasury to leverage mega-investors and hedge funds back into financial markets on the long side. Many market observers claim Geithner’s plan will work. The question should be: 'Work to what ends?'
The U.S. Congress ought to blush about the AIG situation as should Fed Chair Bernanke. The amount of money spent defending AIG’s bad bets is incredible. But there is something else at stake here. At issue is the question of whether the government knows what it is doing. People need evidence that the Fed and U.S. Treasury are operating a “best practices” recovery plan.