Too many mouths to feed. Someone will have to starve.

Now that Henry Paulson has $700 billion and some discretion about how to spend it companies from car manufacturers to airlines want a piece. So do some municipalities. Insurance companies are already in the "salvation system", or at least AIG (AIG) is. But, its $123 billion came from a pot all of its own.That means Treasury has a bit more money.

It is not unreasonable to think that "strategic" industries like automobiles should get a Brink’s truck of bullion. The trouble is that Treasury Secretary Henry Paulson may find financial firms need more money than projected. Right now Treasury has $250 billion earmarked for equity investments. Tens of billions of dollars, or perhaps more, will go for the original plan of buying toxic paper.

If Wall St. considers that massive write-downs that NCC (NCC) and Wachovia (WB) made when they were taken over, it gives some picture about how bad off banks may really be. NCC is a modest-sized bank and it will take almost $20 billion in charges. Wells Fargo (WFC), Wachovia’s new owner, says write-offs after the buyout could be a large multiple of the NCC number.

Several analysts recently wrote that Citgroup (C) may not make money until 2010. What the total cost of future capital going into the big money center banks is hard to calculate.

But, Paulson had better save the entire $700 billion for the banking system. He is going to need it.

Douglas A. McIntyre

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