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Paulson's Bazooka May Miss

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NEW YORK (Fortune) -- Treasury Secretary Henry Paulson fired his bazooka again, but the target remains elusive.

Paulson has proposed using $700 billion of taxpayer funds to relieve struggling financial firms of distressed mortgage assets. He did so, he said Friday, as part of a "comprehensive approach to relieving the stresses on our financial institutions and markets." He then spent the weekend and Monday on a non-stop sales call to TV studios and Capitol Hill offices.

But a selloff in the dollar and U.S. stocks shows that the stresses remain, if perhaps in different form. Investors spent Monday taking the two big pluses on the U.S. economic landscape in recent months - the recovery of the dollar and the collapse of commodity prices - and turning them back into minuses. The dollar dropped the most in its history against the euro, and oil prices surged as much as 22%. Early Tuesday, crude prices retreated sharply, falling below the $108-a-barrel mark.

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