The Fed’s plan to bailout indebted consumers and mortgage holders may sound impressive on paper (remember when $800 billion sounded like a lot of money), but it may just be “spitting in the wind.”

- So says economist Michael Darda, chief economist at MKM Partners LP in Greenwich, who is quoted on Bloomberg this morning. According to Darda, “Banks won’t be throwing a lot of loans out there when they fear – rationally – those loans may not be paid back.”

- We’re reminded of the plight of the the unfortunate French ducks who have their livers forcefully fattened to produce foie gras (literally “fatty liver”). The Fed is determined to force feed debt down the throats of already indebted Americans so that said already indebted Americans can go out and spend said debt. The theory being that this “stimulates” the economy. Of course, in the case of the poor ducks, they end up dead.

- Things are so bad that even the Queen of England is pissed. “Why did no one see it coming?” asked Queen Elizabeth during a visit to the London School of Economics this month.

- The clear lack of foresight leading up to this crisis has also left a lot of egg on the face of policy makers, according to an article in the Financial Times. Prime among them is Fed head Ben Bernanke.

In his Senate nomination hearing of 2005, Ben Bernanke, the Federal Reserve chairman, said the US financial system had already benefited from a series of crises that had reinforced its ability to cope with difficult times. “The depths, the liquidity, the flexibility of the financial markets has increased greatly,” he said.

Depths, indeed.

Bernanke’s British counterpart, Bank of England governor Mervyn King, didn’t fare much better. In May, he insisted, “It’s quite possible that at some point we may get an odd quarter or two of negative growth. But recession is not the central projection at all.”

The problem, according to Stephen King, chief economist of HSBC, is that: “Almost all economic models assume that the financial system ‘works’.” Apparently, “economists in general did not foresee how the looser monetary policy of the early part of the decade could lead to an unprecedented credit expansion.” Where were they? On the moon?

- One of the best reads on this crisis is the FDIC’s quarterly list of “troubled banks,” banks at risk of going under thanks to toxic debt. One in four institutions lost money last quarter. Meanwhile, the number of banks on the FDIC’s failure watch list increased from 117 to 171 and the assets of “problem” institutions rose from $78.3bn to $115.6bn. As long as the number of banks on the deathwatch list keeps increasing, it’s difficult to see and end to the current mess.

- Still think the government is going to fix it all like some sort of happy-ending Humpty-Dumpty? How so? What exactly are the federal rescuers doing to solve the problem? This from the Financial Times blog, FT Alphaville:

The biggest problem now though is that “bad loans” just sit where they are – with the banks – quietly impairing balance sheets but not posing an outright threat because of various government support actions. This would be a Japan-like scenario. And it’s one that has quite a lot of currency, not just because of similarities in monetary and fiscal policy. Take the saving of Citi on Monday for example. The $300bn odd of problem assets are still there on Citi’s balance sheet… Citi is still exposed to take significant first losses on them. The government’s actions seem more a sop to shareholders – more specifically the share price – than anything else.

- Today, the last words go to the financial titans at Monty Python’s Flying Circus. It’s about as good an appraisal of the current economic blowup as we’ve come across.

This financial system is no more! It has ceased to be! ‘It’s expired and gone to meet its maker! ‘It’s a stiff! Bereft of life, it rests in peace! If you hadn’t nailed ‘it to the tax payer’s perch it’d be pushing up the daisies! ‘Its metabolic processes are now ‘istory! ‘It’s off the twig! It’s kicked the bucket, it’s shuffled off its mortal coil, run down the curtain and joined the bleedin’ choir indivisible!! THIS IS AN EX-FINANCIAL SYSTEM!!