It’s the same way for politicians. Give them some cash and they’ll have it spent in no time flat, even if they can’t find anything worth buying.

Take, for example, the infamous Troubled Asset Relief Program, TARP in informal nomenclature. Passing the $700 billion program was a matter of financial and economic life and death according to Washington.

They gave us the same panicky “must-have” arguments as a six-year-old in the toy aisle.

But once they got what they wanted, their “toy” sits unused in the corner. As I write, TARP has over $140 billion in uncommitted funds and $300 billion that has yet to be spent.

Yep, they really need that money, didn’t they?

But the story gets even better. Fully expecting a miraculous recovery by the end of this year, our policymakers set TARP to expire on the final day of the 2009. They figured Obama would certainly prop all 300 million of us on his shoulders and carry us to safety by year’s end.

Now that the economic situation is not nearly as rosy as Obama promised a year ago, Washington is crying once again how badly it needs the money. It’s just how little Johnnie cries and moans when little Janie plays with the toy truck he hasn’t touched in months.

Geithner and his team have hundreds of billions of borrowed money up their sleeves with few viable ways of spending it. But now that we are asking for the money back, they say they need it… at least through next October (definitely not through November elections).

Do we ever grow up? It’s like a bunch of kids playing with very expensive toys in Washington.

*** Have you noticed a lot of Washington’s “economic recovery” programs are up for renewal these days?

TARP, the housing stimulus and all sorts of unemployment benefits have been or will be extended. I’m surprised we haven’t seen the resurgence in Cash for Clunkers.

There’s even a bill that would tax Wall Street to the tune of $150 billion annually to help create new jobs. It’s called, get this, “Let Wall Street Pay for the Restoration of Main Street Act of 2009.”

All these extensions and new programs are a surefire signal that all is not grand in the economic world and Washington had absolutely no idea what it was getting itself into as it spent nearly three trillion dollars to supposedly prop up the nation’s economy.

With Congress continuing its reach into the chest of the domestic economy, its no wonder gold prices are hitting new records day after day. By the time Washington is done, nothing “American” will have any intrinsic value left.

But just as I said yesterday about investing in the dollar’s downturn, be cautious of jumping on the golden bandwagon. It could be trouble.

So far this year, gold’s Street value has increased by 32%. It’s a strong gain when compared to historic moves, and it beat’s the S&P 500’s year-to-date climb of 22%, but how far will the bulls take it before they say enough is enough and the bottom falls out once again.

After all, gold really isn’t worth a lick.

You can’t eat it. It won’t fuel your truck. It won’t give you shelter and it won’t protect your house (unless you’ve got a good arm). When the dung really hits the fan, gold’s only strongpoint is it’s more valuable than a fancy certificate that says you own 1,000 shares of XYZ.

But even then, it’s only valuable because we say it is.

Let’s be flat-out honest with each other here. What are the chances of full-on economic calamity? I mean the kind of situation where you will dig your gold out from beneath the old oak tree and take it to the grocery store to buy a slab of bacon.

In other words, what are the chances you will actually use gold for its “emergency” purpose?

Slim to none, and I’m more pessimistic about this economy than any Roubini-following perma-bear.

Gold’s a trap, especially for the folks buying at today’s prices and actually paying to store the rare metal in some vault.

If you absolutely have to own gold, keep your ownership to a minimum, a few grand worth of coins or so. Nothing more.

Better yet, take advantage of the gold rush of ’09 and invest in the world’s gold miners. They are the ones fleecing the bandwagon riders and creating the ultimate market-beating profit potential.

In this market it is more important than ever to not be a clueless sheep merely following the herd.

Be the shepherd and lead the lambs to slaughter.

*** As options investors we love to lead the pack. That’s why over at TFN Strategic Trader, we are all smiles today. After locking in gains of 400% last week, we sold another set of call options for quick-and-easy gains of 60%.

On Friday I sent out a buy alert. This morning I said sell. Traders that followed my advice locked in three-day gains of 60%. Way better than gold.

This past Friday with King Juan Carlos, the Spanish economy seems to have faltered again and this has occurred several times in recent months. There are already some who are speaking of reforms, hoping this slip will not be transformed into a fall, one that will leave more than a bruise.

What is happening with the Spanish economy?

The Spanish economy is facing several negative situations at the same time. One of them is linked to what it is happening with the value of the euro. The appreciation of the euro is playing a very dirty trick on Spain. Spain’s current account reached record deficit levels the first quarter of this year, constituting nothing less than 12.1% of the GNP.

How has this happened? The main blow to the Spanish’s current account was the significant deterioration of the trade balance. The level of imports has grown to a rate of 10.5% year-on-year, which represents a rate of growth of more than double that of the level of exports, which has only grown at the rate of 5.1%.

However, one of the factors explaining the increase in the level of imports is the increase in the price of the energy. These higher energy costs generated a rise of inflationary pressures. In fact, the preliminary economic data shows that in the month of May, inflation was sitting at 4.7%, its highest level in more than eleven years.

This situation, created by major inflationary pressures, is occurring in the context of economic deceleration (a situation many are already calling “recession”). In the case of the real estate market, Spain was one of the countries affected the worst in continental Europe. The data shows that in March there was a 38% drop in mortgages over that of March of 2007. The sale of houses also fell a dramatic 38.55%. In April, a large deceleration in construction was observed (as well as a slowing down of other economic activity). This lack of new construction has tested the rest of Spain’s economy by, in effect, spilling over into the rest of its activities.

So it is in this context of frustration, confronting Spaniards, that they find themselves not speaking of “consumer confidence” but rather what I would call the “distrust of consumers”. And this level of “confidence by Spanish consumers” hit its lowest level in fourteen years this April.

What will the Spanish government do in the face of this situation?

For Rodrigo Rato, the former Managing Director of the International Monetary Fund, it is in his expert opinion that Spain is facing a situation requiring that it consider the possibility of undertaking its first program of structural reforms since the country entered the Eurozone. It is these measures that are going to need to be more than Spain would ordinarily have considered since joining that union.

It is true that Spain has had past success with the implementation of reforms, especially when the various sectors of the Spanish economy agreed to the necessity of those measures. According to Rato, Spain also enjoys many benefits of membership in the Eurozone such as: “the advantage of stability, without currency exchange or monetary policies”. In his opinion, situations like the present one adequately demonstrate that the Spanish economy will be difficult to control without the enactment of some sort of monetary policy.

Rato goes on to note that one thing is certain: the government of Spain must react to the current situation quickly before time runs out. Spain must accept the fact that it must effectuate urgent changes, and now. Ex-president Felipe Gonzalez has already predicted there could be a serious energy crisis facing Spain by 2012. As one can see, the situation is complex.

Beyond all the debate that is generated by this situation confronting Spain, we will have to hope that within a month the Cabinet will approve a package of measures that will devise to stabilize the economy. Some of the things that they are contemplating are tax reductions for industry and the elimination of many administrative regulations to increase openness in the marketplace.

The Spanish government promises an ambitious package… Will its aims be realized? We will meet again tomorrow,

Horacio Pozzo

Editor’s Note: The economic figures in Spain have deteriorated. Rato proposes reforms, and hopes that the government approves a package of economic measures soon. Send your comments to me at: paola@latinforme.com