Gather round, children, and I will tell you the story of the President's New Clothes.

Once upon a time, there was a vain president in far off Washington whose only worry in life was to dress in elegant clothes and have parties. He began by holding weekly soiree's, and then twice per week, and then three times per week. And at each soiree' he loved to show off his new clothes and played with the presidential Teleprompter telling ever more outrageous stories.

His consort, Princess Shopping Cart, would also dress up in the most expensive and outrageous outfits, which disturbed the common folk to no end while the sycophants and hangers-on all cried with joy at her inventiveness. The plebes, however, began to call her Princess Gaga.

The President and his Princess had the most wonderful times eating cake and spending the plebe's money with their rich liberal friends, who all professed their solidarity with the plebes as they ate cake.

One day, two clever economists from far off Italy named Dolci and Gabbano heard of the vain president and decided to take advantage of him.

They went to the President's gate dressed in the finest clothes and said to the guards "We are two very fine economists who also happen to moonlight as tailors, and can not only fix your economy, but also weave a policy of whole cloth so light and fine that it looks invisible. We'll even throw in an extra pair of pants for free."

The head guard heard the strange story, but did not know what to make of the two outrageously dressed strangers. He summoned the Chamberlain of the Economic Policy Council. The Chamberlain notified the Chief of Staff, who ran to the President and disclosed the incredible news.

The President's curiosity got the better of him, and he immediately summoned the two economists to his throne room.

"We have done many years of research, and can not only fix your economy, but we have also invented an extraordinary method to weave a policy so light and fine that it looks invisible. As a matter of fact, the policy is so fine and incredible that it is invisible to anyone who is too stupid and incompetent to appreciate its quality." And we will throw in the pants for free."

The President gave the two scoundrels a large sack of TARP funds, and said "Just tell me what you need and I shall give it to you".

They asked for a loom, silk, an Apple MacBook Pro and the finest gold thread, and began to pretend to work. They promptly converted the TARP funds into RMB Yuan and transferred them to an untraceable bank account in Austria, which everyone knows is much more secure than Switzerland these days. The gold thread was melted down into bar and hidden in a safe place in case of hyperinflation.

The President thought he had spent his money quite well. He would fix his economy, get a new policy, and find out which of his plebes were ignorant and incompetent, along with an extra pair of pants.

 He promptly held another soirée, where the clothing was the most outrageous yet and the cake was made of the finest ingredients. He invited Princess Oprah and Lord Harry and Nancy of Marin and Princess Shopping Cart outdid herself in a dress made of environmentally sustainable materials including dixie cups and duct tape and lawn clippings and tinfoil.

Once the door closed behind them, the two economists chortled with glee. "Whadda Maroon" said Dolci. "whattan embezzle!" said Gabanno. For days they pretended to work deep into the night at the loom, but in fact were listening to iTunes on their Bluetooth headsets.

Several days later when he had heard nothing from the economists, the President said "I would really like to know how they are coming along with my policy and my extra pair of pants." But he was a bit uneasy when he recalled that anyone who was unfit for his position would not be able to see the policy or the material. Of course he himself had nothing to fear, but still he decided to send someone else in order to follow protocol.

"I'll send my honest old Treasury Secretary to the economists" thought the President. He's the best one to see how the policy is coming along and knows good clothing. He is very sensible and no one is more worthy of his position than he. So the honest old Treasury Secretary went into the hall where the two economists sat busily working their empty looms and typing on the computer. They had printed out 1,000 pages of incomprehensible gobbledegook, but the loom seemed empty.

"Goodness, thought the Treasury Secretary, I cannot understand a single phase of this policy and I cannot see a thing." But he did not say so.

The two swindlers invited him to step closer, asking him if wasn't the most beautifully elegant policy and if the colors of the pants were not the most magnificent he had seen. They pointed to the empty loom and the thousand pages of gobbledygook and the poor old Treasury Secretary opened his eyes wider and wider. He still could see nothing for nothing was there. "Gracious, he thought. Is it possible that I am stupid? I have never thought so. Am I unfit for my position? No one must know this.  No, it would never do for me to say that I am unable to understand the policy or see the extra pair of pants. "

"You aren't saying anything!" said one of the economists.

"Oh! The policy is magnificent! It will solve all of our problems and will only penalize those with incomes over $250,000 dollars, depending upon how we define it. Peering through his glasses, the Treasury Secretary said " The patterns and colors of the extra pair of pants are magnificent! Yes, I will tell the president that it is beyond our greatest expectations!"

"That makes us very happy!" said the two economists, and the called the policy and the colors and the pattern by name. The old Treasury Secretary listened very closely so that he would know exactly which words to say when he reported back to the President, and that is exactly what he did.

The swindlers now asked for more money and silk and gold and shares in  Exchange Traded Funds, all of which were immediately granted and all of which were immediately laundered. They then continued to weave on empty looms as before and download Latvian folk poetry translated through babelfish and parsed through Lexis/Nexis.

The President sent other officials as well to observe the economists progress. They too were startled when they saw nothing and they too reported back to the president how wonderful the policy was and how beautiful the extra pair of pants were, advising him to carry the policy and wear the pants in a grand procession. The entire city was alive with praise of the policy and of the pants. "Magnifique!!,  Prima!!!,  Nysseligt!!, Incredible!!" they said in all languages. The President awarded the economists with medals of Nobel, bestowing on each of them the title of Senior Policy Advisor and Master Weaver.

The swindlers stayed up the entire night before the procession was to take place, burning more that 16 compact fluorescent lamps. Everyone could see they were in a great rush to finish the policy and the extra pair of pants. They pretended to take the material from the looms and ordered 3 extra printers and a collating machine in order to print the new policy. They cut the air with large scissors, and bound the policy with the most exquisite bindings of fine Corinthian leather. They sewed the air with needles without any thread. Finally, they said "Behold! The President's policy is completed! And while we ran 3,000% over budget, behold the extra pair of pants, along with a frock coat and vest, are finished!"

The President came to them with his most trusted advisors, Congressmen, Senators, and Princess Shopping Cart. The two economists handed the President the exquisitely bound new policy, which he promptly passed to a page as he strode forward to see the new clothes. The two swindlers raised their arms as if they were holding something and said " Just look at this extra set of pants! Here is the jacket! This is the vest!!" and so forth. "They are light as spider webs! You might think you didn't have a thing on, but that is the good thing about them!"

"Yes!" said the advisers and Congressmen and Senators and Princess Shopping Cart, but they couldn't see a thing because nothing was there.

"Would your Presidentness, if it pleases, kindly remove your clothes so that we may dress you?" asked the swindlers. "We will then fit you perfectly with the new ones, in front of this mirror."

The president took off all of his clothes, and the economists pretended to dress him, piece by piece with the new ones that were to be fitted. They took hold of his waist and pretended to tie something around it. They pretended to tie his tie in an exquisitely formed knot just so. Then the president turned and faced the mirror.

"Goodness! Don't the clothes fit you well! What a wonderful fit!" everyone said. " What a pattern! What colors! Such luxurious clothes!"

"The canopy to be carried above Your Presidentness awaits outside" said the Director of Protocol.

 "Yes! I am ready!" said the President. " Don't they fit well?" Princess Shopping Cart could only smoulder at all of the attention he was getting.

The chamberlains who were to carry the train held their hands just above the floor as if they were picking up the train. As they walked, they pretended to carry the train high. For they could not let anyone notice they could see nothing.

The President walked beneath the beautiful canopy in the procession, the new policy symbolically carried by two carefully chosen members of special interest groups, and all of the people on the street and in their windows said " Goodness!! The new policy will save us all (except those with incomes over $250,000), and the President's new clothes are incomparable. What a beautiful jacket! What an exquisite pair of spare pants!" Scribes Krugman and Sullivan and Friedman and Robinson all praised the policy as they were told to do by Journo List. No one wanted to admit that they had not read the policy nor that they could see the President's new clothes, for then it would be said they were unfit for their position or that they were stupid. None of the President's clothes or policies had ever received such praise.

"But he doesn't have anything on," said a small child in a wondering voice.

"Good Lord! Let us hear the voice of an innocent child!" said the father, and whispered to a reporter what the child had said.

" A small child has said the President doesn't have anything on!" said the reporter. "And having seen a copy of the policy it seems to be nothing but Latvian folk poetry!" he continued.

Finally, everyone was saying "He doesn't have anything on! The policy is gobbledygook!"

The President shuddered, for he knew that they were right, but he thought "The procession must go on!" He carried himself even more proudly as the pages of the policy began to come loose from their bindings and dance in the breeze, and the chamberlains carried the train that wasn't there.

The two Italian economists, Dolci and Gabbano, crept softly into the night onto a G5 bound for Neckar Island, where they could not be extradited, and were warmly greeted by Angelo Mozillo, the chairman of Goldman Sachs, and George Soros.

The End

All proper respect to Hans Christian Andersen.