The carnage in the bond markets is producing the same kind of vicious cycle in the insurance industry that it generated in other financial businesses. Now the Treasury is apparently planning to offer them bailout funds.
This can't go on. Regardless of the wisdom of the plan, it seems to me that the political system won't take much more of this. The only thing that is sustaining it now is Obama's high approval ratings, which it seems to me rest largely on the public perception that all of this is being done by Timothy Geithner, that Obama is somehow floating above it. How long can that last?
But even if it does, Congress is getting more and more intransigent every day. The money is not unlimited. How much longer can Treasury keep on like this?
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