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We've seen how the markets have reacted to the Paulson repurchase program – and today, the US major stock exchanges are continuing the global steep drop in share prices. But how have the banks themselves and the governmental bank regulators reacted to the news? I mean surely the Treasury would have asked those in change of the banks what they thought of the plan… and maybe ask the executives of the local banks if they believed the government’s proposed structure would pump cash into the system where it is critically needed… before they announced it to the world.

Apparently, preferring instead to rely on the failed structural advice of the highly paid financial advisors (the Treasury cronies – financial advisors and big law firms – who were part of the problem in the first place), they seem to have missed this one.

According to this morning’s Washington Post: “Community banking executives around the country responded with anger yesterday to the Bush administration's strategy of investing $250 billion in financial firms, saying they don't need the money, resent the intrusion and feel it's unfair to rescue companies from their own mistakes. ... But regulators said some banks will be pressed to take the taxpayer dollars anyway. Others banks judged too sick to save will be allowed to fail.”

In a long closed-door meeting, the Treasury even told some banks, nine of the biggest, that they had to agree to accepting the partial “buy out” – those preferred, interest bearing shares – “or else.” We know they resisted… they even said they didn't need the bailout, but in the end, reluctant bankers agreed. I’d love to have been a fly in the wall in that meeting. Bullying is very like to turn even the top of the food chain against the government. It’s got “loosing strategy” written all over it.

Did I mention that companies can't fund their payrolls, and the resulting level of job loss will drop the economy down one big notch that makes recovery that much harder? Kind of makes tax breaks and the government’s buying bad mortgages from the top companies who made the biggest mistakes… without addressing the people affected the most at the other end of the economic spectrum look truly stupid. Did I mention that not stopping the foreclosures, at least long enough to create solid long-term solutions, will make those bad mortgages even worse and may even turn good mortgages into bad ones as real estate values continue to plunge? Oh I did…

So Treasury and government, your plan is a bust. None of the goals will be accomplished. You have yet to convince the stock markets you know what you are doing or the banks that they can weather the storm – even the good banks. And we know the people in the middle and the bottom of this economic world (the middle are flowing into the bottom in record numbers, by the way) think you are only making the bad situation worse. Well over 80% of Americans believe we are on the wrong track!

Dump the program. Address the short term bleeding, and focus on “functional solutions” without generating expensive and unworkable programs. Next!

I’m Peter Dekom, and I approve this message.