Dear Mr. Paulson

I noticed today that the debt instruments of the entity you head are trading at levels for which you pay virtually nothing.  For example, one-month and three-month T-bills were yielding a knee-scraping 0.02%, the 2-year was at 0.97% and the 10-year at a shade under 3%.

Clearly, everybody loves you, even though you are issuing boatloads of the stuff.

Contrast that to everything else fixed income that is not guaranteed by the government.  CMBS spreads have blown out of record highs.  Junk bonds are yielding over 20%.  Corporate bond spreads are at or above all-time highs.  Leveraged loans, mezzanine debt, and securitized paper are all trading at mouth-watering levels.

Everybody hates them.  Nobody will touch risky assets with a 10-foot pole.

Now, Mr Paulson, you worked at Goldman Sachs, a hedge fund in drag.  You know how this works.  Create a special purpose entity (SPE) - preferably incorporated in the Cayman Islands to avoid taxes, and off balance sheet so we are all fooled that it is non-recourse to the US government - issue a trillion dollars of debt and transfer it to the SPE, sell it to those who believe the end of the world is upon us, then buy all those risky assets at mind-blowing yields.

I figure you could probably earn 8%-10% over Treasuries in aggregate for at least the next seven years.  At a trillion dollars, you could earn up to $700 billion, enough to fund your wildly successful TARP program!

Leveraged assets got us into this mess.  Let's get leveraged assets to get us out of this mess Mr. Paulson.