End of the rope?

Uncle Sam only has so many lifelines to throw, and I think he's over that limit by a wide margin. For months now, the government has been allowing lenders to "borrow" large piles of cash dreamed up by the Fed to try to prop up banks that made foolish financial decisions.

Now they've upped the ante even further:

The US Federal Reserve announced a 180-billion-dollar cash line to fight the racing fires of global financial crisis Thursday, as leading central banks said they would join in. ((that, of course, amounts to putting every man, woman and child in the U.S. on the hook for another $600 -- Jemison)).

The Federal Reserve said it was expanding its temporary arrangements for banks to obtain dollars by 180 billion "to provide dollar funding for both term and overnight liquidity operations by other central banks."

Meanwhile, Uncle Sam (or rather, the taxpayer he continues to milk) is now ALSO the proud owner of the debts of several major banks and corporations, having assumed responsibility for them when it became apparent their bad decisions had come back to haunt them. But there is a pattern here, as Newsweek points out:

...certain types of financial institutions are much more likely to be helped than others. A bank that lends to people with dodgy credit in California doesn't pose much of a threat to the Davos crowd. But financial intermediaries like Bear Stearns and the FM twins function like the heart of the global financial system. If they go into cardiac arrest, the whole body is in danger. Since Bear Stearns was a counterparty to (and guarantor of) trades and financial arrangements with the world's major financial players, its failure would have triggered a cascade of losses. In the same vein, huge quantities of the $5.4 trillion in debt issued and insured by Fannie Mae and Freddie Mac sit on the balance sheets of central banks and financial institutions around the globe. For the U.S. government simply to let this debt—which it had been implicitly backing for decades—go bad would have meant inflicting severe damage on America's most significant diplomatic and trading partners. Fannie Mae wasn't too big to fail, one Wall Street wag told me this week. It was too Chinese to fail.

Uncle Sam, China and a number of Middle East "sovereign wealth funds" seem to be acquiring huge chunks of the formerly private sector. Does anyone notice? Does anyone care?

Where's that Rosetta Stone set on learning Mandarin Chinese...