Although Paulson doesn’t have the means to actually do much, if anything, about China, his rhetoric is right out of Wall St. and exactly what the markets want to hear.

An “orderly” resolution is very much desired as the alternative is a crash which could and almost certainly would have ramifications globally.

Do you think that Paulson’s (and Robert Rubin’s) Wall St. connection is crucial to the Treasury position? It’s hard to see Snow or O’neil with as much credibility.

The “starve the beast” theory isn’t really about access to funds. The government owns the printing press. They have unlimited access to funds. (although not at the current price 😉

They have a debt ceiling too, but every time they get near it, they raise it. It’s all politics, not economics. It’s a selling point for tax cuts without reduced spending.

What would be a good idea is going back to the Paygo system that we had from 1990 to 2002. That balanced our budget, started to pay off our debt, gave us fiscal discipline and created a responsible system.

Oh where oh where did my little Paygo go? :-))