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About 350 banks and investors.. insured an estimated $400 billion of Lehman’s debt through [CDSs]. These include [Pacific Investment Management, Citadel, AIG bailed out with $123 billion.]

the US Treasury has been overwhelmed with requests from executives of other beleaguered sectors ....Mr Paulson does not believe that it is his job to help them. Rather, he is intent on addressing the root problems of the financial crisis

The root cause of the financial crisis is the belief that the US economy is the financial sector, which adds no value. It is the health of the rest of the economy on which the US will rise or fall. It sounds like Paulson is another self-conceited idiot.

U.S. outsourced the rest of the economy, except burger/pizza joint and government services, so to speak.

Too bad decoupling did not work. If it did, these bozos could hop from economy to economy, keep inflating and popping bubbles while making billions(or trillions.)

On the other hand, there can't be decoupling because they also outsourced U.S. financial risks as well. If U.S. goes down, the rest of world economy is bound to be sucked into crisis by design.

It boggles my mind when I see some financial types desperately wishing for another hot economy out there where they can go to resume their winning streak. They closed out that option themselves, and they are pretty slow to realize it.

This shows how much their perception is warped. A kind of perception you can find among hardcore addicts.

I understand that the extant difficulty in our economy (and the world's economy) is the 'freezing up' of the credit which banks extend to other banks. When Lehmans was allowed to fail it said to all banks, "Although the Fed and the Treasury bailed out, countrywide, Bear Stearns, and Indymac, it let Lehmans' fail, and it could just as easily allow my bank (say, Morgan Stanley, Citi, or Goldman Sachs) to fail. Therefore I will borrow as heavily from the discount window at the Fed, get my books in the best shape they can get in, just in case my bank has a run. I ain't loaning money to anyone because they may be the next to be allowed to fail." Banks are not loaning to other banks, like they used to do, because there is no trust in the counterpart banker who tells the bank of whom is being asked to loan money, that their books are as they say they are. The loan buisness is frozen up.

Now, with that said, for the life of me I do not know what Paulson hopes to achieve from people with the above mindset, by buying preferred stock (nonvoting shares). He has no sway over that bank other than the threat of pulling out of the government purchace to force the banker to do as Paulson wishes....that is loan to other banks.

Short of the government guaranteeing all loans, why would bankers feel compelled to not worry about giving out loans?