Paulson: Our National Dictator of Finance

$700 billion is a lot of money right? It's important to spend it wisely, right?

The government is making a complete mockery of the bailout oversight Congress supposedly fought so hard to get. Secretary Paulson and his team of ex-Wall Street bankers effectively have a blank check courtesy of the American taxpayer.

So far he has burned through almost half of the TARP money to sink even more cash into AIG (about $40 billion extra -- above and beyond the original $85 billion bailout) and to buy equity shares in failing banks. None of the money has been used to purchase troubled assets.

Last month Paulson announced that he thinks buying shares will be a more effective way to recapitalize banks than buying mortgage backed securities. This was probably a good idea -- the point is that he's done it with zero congressional oversight. Now he's announcing, rather than requesting, that the second half of the bailout money will be pumped into the ailing consumer credit market.

**News alert!! The private debt bubble in America has a huge hole in it and it's deflating fast -- there is no use trying to re-inflate it!!**

That's exactly the kind of thinking that got us into this mess; after the dot-com bubble burst in 2000, Alan Greenspan revved up the stimulus by slashing interest rates and the cheap money inflated an even bigger bubble in real estate. Our debt to GDP ratio is higher today than it was in 1929. The last thing we need in this country is more consumer debt. We can't borrow our way out of this. We need to accept the recession, end the debt-fuelled spending spree, and invest in a new productive economy.