On guaranteeing banks

I heard Lindsay Tanner on Radio National this morning talking about the government's sudden decision to guarantee all bank deposits, as well as the banks' borrowings from overseas.

If I am not mistaken, he indicated the bank's borrowings side of it adds another potential $700 billion or so to the $700 billion the deposits guarantee could incur, in theory.

That "in theory" part was, of course, continually stressed by Tanner. But surely the danger of making it clear that "we are only saying this because other governments have done it, not because we will ever have to pay out on it" is that it makes it pretty clear that it's not a real guarantee in the sense that the government could not actually live up to its promise anyway, if the worldwide financial system does collapse. (Well, maybe they could if they simply legislate to nationalise all banks?)

Maybe someone in the media or on a blog has already made the observation, but it seems to me that if too many governments make the same guarantee, it in fact makes the exercise pretty worthless in terms of restoring confidence.