Everyone rejoice! All of our economic problems are solved! You know all of that doom and gloom we've been hearing about liquidity problems with major banks not having enough capital to cover their losses and keep running? Well it's all taken care of. Big papa government's stepped in and says they're gonna make it all better. They're going to set up a special corporation that is going to take all of the bad debt that is killing the banks, and at the same time they're going to give money to those banks. Before you know it, we'll be back to business as usual while whistling a merry tune! Aint the free market grand?

Okay, enough cheery propaganda. Now let's talk about what REALLY happened today.

• Between the Federal Reserve and the Central Banks of several G8 countries, almost 235 billion dollars was pumped into the economy. Again, more money was thrown at the problem. 55 billion of this came from the Fed directly (55 billion of U.S taxpayers money, public money going to keep private business running) while almost 180 billion was raised in total by lots of central banks in lots of countries banding together.
• The Federal Reserve, between their AIG, Fannie/Freddie takeaovers, injections galore and other sponsored buyouts, effectively ran out of money. What happened? The U.S treasury sold a lot of bills and has given billions more to the Federal Reserve. Again, more taxpayer dollars.
• Late in the day, with most of the major indexes having fallen further, there was a sudden massive rally that sent the DOW more than 400 points higher than yesterday's close. What caused this furious rally? Paulson stated that the U.S Government was going to create a corporation that would deal with the credit crisis permanently. Folks literally cheered on the trading floor and within little over an hour the DOW was back above 11,000.

Wait a minute. Let's go back to that last point... what did Paulson mean exactly? Well, it's good news and bad news. The good news is if it works, the major banks may live to see another day. The bad news is that YOU will be paying for it. That's right, there's no such thing as a free lunch.

Paulson's "permanent solution" involves the creation of a special corporation that will take bad debt off of major Banks' balance sheets. Well, it won't just take bad debt, markets don't work like that. It'll BUY the bad debt from these banks. We're not talking a few million bucks here. We're talking billions and billions. No one knows how much to be quite frank, but it'll be a lot of money paid out over a long time. And it's all going to be paid for by you the taxpayer. If not by yourself directly, then by your children and quite possibly their children.

Let's nevermind the fact that the current U.S deficit is well over 9 trillion dollars right now and growing. Let's nevermind that the government doesn't actually have all the cash on hand to dole out tens or hundreds of billions of dollars to banks for their losses. So how will the government pay for this? Easy. It's going to be payed for in largely the same way that the wars in Iraq and Afghanistan have been payed for- with the biggest VISA account in the country. That's right baby, it's going on credit! Granted, it's going to be on the "Full Faith and Credit of the United States of America" which is indeed a pretty powerful credit card. But all this is doing is shifiting the costs.

Again, this falls in line with the new economic model we see unfolding before our very eyes this week:

Privatize the profits, socialize the losses.

Big banks make windfall profits, they keep them. If they run into trouble, the cost will now be passed onto you, the taxpayer. It's brilliant really. For the banks, it's win-win. For most of us joe's, it's lose-lose.

Now one question to be asked is should the taxpayer really be in the business of bailing out private banks who got into this pickle through their own greed for fast and easy profits?

Another question to be asked is shouldn't there be some kind of approval required before billions of taxpayer money can be funneled to these banks? Yes, we know that Paulson and Bernanke made the decision, but shouldn't Congress or the Senate or the Whitehouse (Ha!) step in and say "whoah pardner, this is gonna cost us a looot of money, you need our okay before we approve something like this!"

Shouldn't we be looking at the uncomfortable truth that shopping malls have replaced factories as America's main method of wealth creation and that the engine behind it, the consumer is tapped out with debt up to their eyeballs galore?

Nope, not according to the financial experts;

"Nothing to worry about here. Pay no attention to the man behind the curtain. Go about your business. Move along, move along."

That is in essence what they are saying. Rather than draw parralels to the market conditions of 1929 to 1932 which are being reproduced right now, we are continually told that these are just momentary hiccups and that things are on the up and up. If there are any problems, we are told, it is due to a few bad apples who are nee'r do wells not at all indicative of the bigger picture. Meanwhile nothing is being done to actually fix the problem, only the costs are being shifted.

And the biggest question of all; will it work?

No one knows. Don't listen to the experts. They're all polyanna's who would gladly tell us to buy stock and invest in the market if they knew the apocalypse would hit tomorrow.

Neither of the candidates know, so naturally they're gonna blame the other guy. The congress doesn't know, so naturally they're gonna blame the other party by default. The President certainly doesn't know, which is why he defers in all this to Bernanke, Paulson, or whoever has his ear and tells him that they know what's going on. The television pundits and 'market analysts' should be taken out back and given a good punch in the fact to ruin their pretty talking head image, because they sure as hell don't know and have been making a pretty penny all the while.

Some folks did call it ahead of time quite accurately. Interestingly enough, most of these analysts saw these troubles brewing behind the scenes back when the market was flying high, several years ago. They were ignored, belittled, and called just plain nuts. One fellow who accurately called things well ahead of time is Nouriel Roubini, whose website can be found here-

http://www.rgemonitor.com/blog/roubini/

No matter which way you cut it, no matter how much taxpayer money goes to bailing out private banks so they don't have to pay for their own mistakes, things won't start to settle down until there's true confidence in the market.

And that's the problem. Confidence won't be restored until transparency and accountability return. When operations are so opaque, when even knowledgeable investors can't put their money in anything and have a good idea of the risk they're exposing themselves to, there's no confidence. If you have no confidence, even banks don't want to lend to each other, let alone finance anything else or loan a single penny.

Unfortunately, restoring transparency and accountability through proper disclosure is no easy task. We're certainly not out of the woods yet!