Paulson should have known better.

This is what he said when arguing for the Housing Bailout bill, and specifically, authorization to spend up to $800 billion of taxpayer funds on Fannie and Freddie just one month ago:

"Our proposal was not prompted by any sudden deterioration in conditions at Fannie Mae or Freddie Mac," Paulson said. "At the same time, recent developments convinced policymakers and the [firms] that steps are needed to respond to market concerns and increase confidence by providing assurances of access to liquidity and capital on a temporary basis if necessary."

"If you've got a squirt gun in your pocket, you probably will have to take it out," Paulson said. "If you have a bazooka in your pocket and people know it, you probably won't have to take it out."

Wall Street and The Debt Markets see it differently.

Notice that the stock price hasn't gone back up.  In fact, it has gone down.

We get to add this as yet one more piece of stupidity from our government, and one more lie.  It is now clear that Paulson's claim that he has this authority is being called - the "PUT", if you will, has just been exercised by Wall Street and the Debt Markets.

So Hank, what's it gonna be?  Is the counter-party good or not?

Remember, you argued that if you were given unlimited authority you would not have to use it, but if your authority was limited, you would. 

You were dead wrong - again.

This joins the list of other "dead wrong" statements you've made, of which I am keeping a running copy and sent them around on the 19th of July. 

How many times do you get to be wrong as Treasury Secretary Hank before you resign in shame?

And now I must ask again - is that really a Bazooka in your pocket, or an empty launcher?  I'm not the only one that's curious you know; the bond market seems to think it smells like BS, and so does the stock market.

Here is the mathematical reality of the situation folks.