The Cutting Edge lays out the promises made, none of which have been kept. Treasury Secretary Henry Paulson, who should be held accountable for the fiasco he has needlessly piled onto the fiasco that this government’s economic policy has helped create, is apparently, as the site says “winging it.”

By any reasonable assessment, the Troubled Asset Relief Program has been a miserable failure and a complete waste of taxpayer money. The basis used to ram the bill through Congress was the purchase of the toxic assets off of bank’s books. Not one dollar has been used for this purpose. The main purpose for passing the $700 billion bailout was to restore confidence in the markets.

On October 3 when the TARP was signed into law, the S&P 500 was at 1,114. Today, it is 887. The 20 percent decline in the markets in six weeks doesn’t show much confidence in Paulson’s acts. Paulson changing course every few days has shown the world that he is “winging it.” He has floundered from buying toxic assets to jamming capital down the throats of banks to his current plan to support consumer debt. Did Paulson lie to Congress about buying toxic assets?

Paulson has handed out a grand total of $310 billion of the initial $350 billion tranche. He would have to go back to Congress for the 2nd $350 billion tranche. Congress was supposed to create a five-member congressional oversight panel, but hasn’t. The White House was supposed to nominate, and the Senate was supposed to confirm a special inspector general to audit and investigate where the funds are going. After six weeks, President Bush hasn’t proffered a nomination.

Poorly run automakers (GM, Ford, Chrysler), poorly run cities (Atlanta, Philadelphia, Detroit, and Phoenix), and poorly run states (California) are begging for a piece of the pie. The banks that received the first $179 billion have not made any loans with the special money. Indeed, some are using the money to buy other banks. It appears their goal is to become “too big to fail.” Others, like Citigroup, are using the money to buy back bad assets from off the balance sheet SIVs they created. SIVs are the “structured investment vehicle” instruments that Citibank invented in 1988 to become part of its so-called “shadow banking” system. The solvency of the SIV world is now in question.

Hence, TARP has failed.

But then again, maybe not. The TARP has obviously failed to do what we were told it would do, but were we told the truth about its purpose?

I don’t think so.

I believe the TARP may have been intended to provide a huge pile of cash to do two things:

1. Rescue the Wall Street gamblers who created this mess and who are in bed with the regulators. Remember, Paulson worked on Wall Street, so his buddies are his “skin in the game.” Also, remember the corruption that runs rampant through Washington, DC, like Christopher Dodd’s sweetheart loans from Countryside – he’s the head regulator of that industry in Congress now.

2. Keep the stock market bouncing around, and up occasionally, while the Bush Administration is still in the White House. Many think a group funded by Paulson’s TARP money is the entity creating these end of day rallies that in the last half hour of trading, prop up the DOW. Once the money (and the Bush Administration) is gone, these “economic commandos” will disburse, and a massive crash could occur.

At least that’s the theory.