Stocks fell again when Paulson changed the plan for that $700 billion of our tax dollars AGAIN. Market analysts say it’s the uncertainty of the Treasury “script,” this one the third change of direction.

Other federal officials just turned down a bank request to forgive 40% of credit card debt for borrowers unlikely to be able to pay. For banks, getting 60% would be better than zero. Instead Paulson urges them to give us yet more credit (translate: debt).

What’s a poor investment bank to do? Here’s a quote from an accessible overview from The Columbus Dispatch in Ohio:

Earlier yesterday, federal bank regulators issued a joint statement jawboning banks to start lending money to consumers. But Alex Merk, president of Palo Alto, Calif.-based Merk Investments, a mutual-fund firm, said that there are many factors that are making banks hoard capital.

“They don’t trust their own balance sheets, and why lend to consumers when the consumer sector is going down the drain?” he commented.

Everywhere Paulson and his peers look, nothing appears as it seems.  People who have been trying to manage more with less have lived with this reality for a while. For the past decade, while expenses went up and jobs lost ground, I’ve wondered if the news reported was about the same economy I knew. Paulson’s meeting up with insecurity somehow seems a comfort. What exactly SHOULD we trust about an economic system that creates 98% of its currency by private bank debt? Since no one creates the added interest money that bank loans demand, someone is always left in the hole.