Yes, you read that correctly, that is a “T”. No, we haven’t spent $5 trillion just yet, but we, the people, are now on the hook for that amount. This, according to a report from Forbes.com, citing research firm CreditSights. Yes, feel that bile rise up in your throat. Don’t worry, that is indeed the correct emotional reaction to this calculus.

But then you realize that you have a stalwart government in place, ready to spring into action with alacrity and logic. The man of the hour is Henry Paulson, former CEO of Wall St. investment house Goldman Sachs. Obviously, his recent past as a Wall St. tycoon won’t cloud his vision. Surely he can lead us out of this mess of corporate intanglements and towards a purification of our economic system. Obviously, the days of over-leveraged business practices are gone, right?

Write Congress

and/or

Call Congress

Wrong. Paulson’s answer, according to Jon Taplin and the New York Times: abandon the idea of buying ”troubled assets” (aka the infamous mortgage-backed securities) through the Troubled Assets Recovery Program (TARP). Instead, Paulson will lever up the rest of the $700 billion 20-1 (!!!) to, as Taplin put it, “get some real bang for the buck by loaning to consumer finance companies [aka Credit Card companies].”

Now, I know I graduated from business school way back in the dark ages of 2001, but to my trained eye, this seems to be the exact sort of behavior that got us into this mess in the first place. I agree that buying the mortgage-backed paper is a terrible idea, but 20-1 leveraging as a solution? Give me a break!

Just so we are clear, I’ll spell out my understanding of Paulson’s plan:

1. Loan the rest of the TARP money to credit card companies.
2. This, in turn, will keep those companies “lending” to consumers.
3. This will then keep consumers out in the malls buying unnecessary shit, leveraging themselves even further beyond their means.
4. Pat self on back for job well-done maintaining status quo that leads inevitably to the complete collapse of our economy.

Read the links. Do your own investigating. If my analysis is wrong, let me know. Then, I suggest you write your lame duck congressional reps and forcefully instruct them that this cannot be allowed to continue.

Two more fun facts for you: since the financial shit really started to hit the fan in September, Bank of America has increased my credit limit twice and Citi just increased my limit by thousands of dollars yesterday.

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