Boy, oh, boy, how do you write about the at least $700 billion that Henry Paulson wants to use to bail out the financial institutions of the country?  A few days ago, when he proposed using $85 billion to buy a part of AIG, I thought he was probably doing something reasonable, though I remarked that at that point he had been rushing thither and yon with no plan in mind–just throwing money at one failing entity or another while ignoring others.  I thought that, maybe now, a good plan was emerging.

But what emerged over the weekend was a proposal that the Treasury use the $700 billion to buy bad paper from the institutions without requiring oversight or regulation!  Isn’t the lack of oversight and regulation what brought us to this crisis in the first place?  Moreover, the bill he proposed would put the decisions by the Secretary of the Treasury beyond legal review.  He’s saying, in effect, “Give me the money, trust me to fix the problem, but I won’t be held responsible.”

The economists I’ve been reading in the past couple of days point out that Paulson would be buying the bad debts not at market price but at an above-market price.  He won’t say this publicly, but privately he has admitted it.

What’s going on here?  Is public money simply to be used to prop up big businesses that fail, with no accountability to the voters and taxpayers?  I’m no economist, but I know a bad deal when I see one.

During the weekend, by the way, John McCain said that he stands by his efforts in the late 90s to deregulate financial institutions, even when it was pointed out to him that deregulation was implicated in the present collapse.  Let us liberals remember too that this deregulation came when Clinton was still president.  He and Robert Rubin loved the idea.  I’ve praised this pair for coming up with a balanced budget, a $5 trillion surplus, eight years of unprecedented prosperity, a lowering of the federal deficit, and so on.  But they bought into the ideology that all regulation is bad.  And where was Robert Rubin when Citigroup was buying up tons of bad mortgage debt?

Never-the-less.  The country cannot afford another Republican president.   McCain wants to continue the Bush tax cuts–make them bigger, actually–and “appoint a commission” to see what happened to bring down the financial system.  Isn’t this the guy who was the head of the Senate Commerce Committee?  What exactly did he do on that committee?

The markets have reacted to Paulson’s proposed fix by dropping again.  I knew more bad news was coming, and so did you, but we never think it’s going to be as bad as it is, do we?

Read Paul Krugman of the New York Times.  Go to nytimes.com/blogs.  And read his column in the daily papers.  Years ago he began telling his readers what would happen with the housing market.  Every single thing he worried about has come true.