am I right in understanding that the Goldman Sachs plan combines more of the sort of exotic financial instruments unrelated to any real assets, which has caused problems.

I don't think so.

I think that by banking standards this is quite straightforward, although the mechanics of getting the Northern Rock "assets" (ie genuine mortgage loans a large chunk of which have been placed "off-balance sheet" into the "Granite" SIV) into a new vehicle are likely to provide much gainful employment for high-powered lawyers.

I am sure that others on ET have a better understanding of the nuts and bolts of securitisation than I do.

But everyone appears to be missing the point which is that there is no "tax-payers money" involved here. This is money being conjured out of thin air by the Bank of England which has never been anywhere near a tax-payer.

If you don't believe me, have a look at what Tim Congdon had to say in the FT....

I have not seen this Financial Pornography anywhere else since then: no decent newspaper will print it.

"The future is already here -- it's just not very evenly distributed" William Gibson