By now you have no doubt heard about Neil Barofsky’s claim during a Congressional hearing that the potential for government support arising from the various rescue programs could reach $23.7 trillion. Mr. Barofsky is the special inspector general for the TARP program.

Floyd Norris does a good job of putting the numbers in perspective in a New York Times article. In order for Mr. Barofsky’s doomsday scenario to play out, every single mortgage insured by Fannie and Freddie would have to be worth nothing, every bank would have to fail and no value assigned to their assets and … well you get the point. It basically assumes that there is no value to the assets these various guarantees support.

So, he’s engaging in a bit of scaremongering here, but on a larger scale his report is worth noting because it demonstrates the scale of government’s reach into the economy. The danger lies not with the threat of loss of capital but with the control of the economy ceded to the political class.