You've got me? Who's got you?

Superman: Easy, Miss. I've got you.

Lois Lane: You've got me? Who's got you?

This line from the original 1978 Superman film comes to mind as I read about the attempted bailout of the bond insurers by the banks. The insurers need a huge amount of capital to preserve their fictitious AAA ratings in the face of massive losses on bad mortgage securities that they've guaranteed. The banks also need to preserve those AAA ratings because the banks have huge exposure to the bad mortgage securities, and as long as there is "AAA" insurance on them, the banks can pretend there are no losses. Ponying up a few billion to prop up the imploding bond insurers for a while is less costly, in the short run, than confessing to huge losses on the banks' balance sheets.

What we have in reality is two Lois Lanes, plummeting through the air against the Metropolis skyline, holding each other and assuring themselves and the world that they are not falling.

There is no Superman.

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