Comrades Hank Paulson and Ben Bernanke

A Full Page Advertisement by Bill Perkins in the NYT has this graphic:

Henry "Hank" Paulson, once the head of Goldman Sachs, is now Secretary of the U.S. Treasury. He is asking the US Congress for a 700 billion dollar bailout package in which "Wall Street gets Top Dollar for its dead beat loans". Resistance in Congress is building as Democratic and Republican populisms find rare common ground in what is increasingly being seen as a Fast One by one, George W. Bush, and his Fat Cat cronies.

In a way, it all boils down to whether we ought to believe Hank Paulson's claim that the alternative to his plan would be far worse. But the plan looks likely to demolish the dollar and ignite a fulminant Global Inflation. So before We, the People sign that Blank Check made to the order of Comrade Hank, we better ask some questions and get some answers.

Barry Ritholz of the Big Picture has 14 Questions for Paulson about the Mother of all Bailouts:

1. You two gentlemen have been wrong about the Housing crisis, missed the leverage problem, and understated the derivative issue. Recall the overuse of the word "Contained." Indeed, you two have been wrong about nearly everything financially related since this crisis began years ago.

Question: Why should we trust your judgment on the largest bailout in American history?

2. How are you pricing the purchase of these damaged assets? Is the taxpayer paying 22 cents on the dollar? 5.5 cents? If there is no market price for this junk paper, how are you going to determine a purchase price?

3. Are you now, or have you ever been a short seller? Do you think short selling ban is a smart move? What does this mean to our concept of free trading markets?

4. In the nationalization of AIG, the US taxpayer received 80% of the company. What is the taxpayer getting for their money in this $700B bailout?

5. You have said that "The Housing correction is the root cause of market stability." What about leverage -- how significant was that as a root cause?

6. Your initial estimates for the cost of this were $700 billion dollars. Yet you also asked for a blank check, an unlimited ability to spend more "as needed." What is your worst case scenario for the total costs of this bailout?

7. The original version of this bailout package requested no judicial, administrative, or budgetary review of the spending of this bailout, What was the thought process behind that extraordinary, extra-constitutional request?

8. In 2004, your former firm, Goldman Sachs, along with 4 other brokers, received a waiver of the net capitalization rules, allowing these firms to dramatically exceed the 12-to-1 leverage rules. How much was this waiver responsible for the current situation?

9. Its just cost the taxpayer $50 billion to bail out money market funds, which are clearly non-insured, risk instruments. Why did we do that?

10. The Securities and Exchange Commission has been AWOL during much of the problems we now face. What do you think is the proper role for the SEC in terms of supervising or regulating securities markets? Doesn't your plan usurp SEC authority and move it to the Treasury?

11. How significant are derivatives and credit default swaps to the current crisis? Why weren't they regulated the way other insurance products are?

12. The current proposal has the US bailing out foreign banks. Has the USA become the insurer of the worlds financial assets?

13. What other financial firms and funds are likely to need a bailout in the near future? Are there other banks, brokers, insures that are at risk?

14. If we make this inordinate grant of unlimited cash, how can we rein in the budget in the future? How can we as a Congress say no to expensive budget items such as Nationalized Health Care, or Infrastructure repair programs or fill in the blank on the grounds they are "too expensive?"

And a bonus question:

Bonus comedy question: Are you now, or have you ever been, a Socialist? Do you know, or associate, with other Socialists?