"Paul Krugman’s false logical step
Actually, I realize now that I agree with you. In the last post, I said that we had already agreed to guarantee everything, if we have to. But, from my point of view, the main reason to announce the guarantees is not to have to spend the money, but to stop the panic, which would allow for a more orderly unwinding of these investments, saving money in the long run. So, I was wrong. Even though we have signaled that we have guaranteed everything, an explicit statement, in theory, would help.
Also, since, from my point of view, we've guaranteed foreign bondholders implicitly by our actions with Citi, we might as well make it explicit. It could be huge, but there's really no other good choice.
Don the libertarian Democrat