"I don't wish to spread alarm on the line people but the big issue confronting the market is I'm afraid the health and sustainability of Morgan Stanley and Goldman Sachs," Hugh Hendry, Partner and CIO at Eclectica, told CNBC. "It is unimaginable that they can be allowed to go, I suspect that they will nationalized at some point today or over the weekend," he add.

Some say the Emergency Economic Stabilization Act of 2008's vague language gives Paulson almost unlimited power to intervene.

Yet too little attention has been paid to who is financing that debt and what it means for the national security of our country.

The United States was already dangerously indebted before the housing crisis forced the government to slip even further into the red. Since January 2001, the U.S. national debt has increased from $5.71 trillion to more than $9.64 trillion in August. Our foreign debt has increased even faster, from $1.01 trillion in January 2001 to $2.67 trillion today.

The debt we owe to countries that do not share our interests or whose interests may run at odds with our own has grown even faster than that.

In 2001, we owed oil-exporting nations $48.5 billion - we now owe them $173.9 billion. In 2001, China held $61.5 billion in U.S. debt; it now holds $518.7. In 2001, Russia held less than $10 billion; it now holds $74.1 billion.

The new debt we are assuming in this crisis needs to be understood as a potential strategic vulnerability. Clearly, those governments buying our debt are investing in America, but they are also gaining leverage that we might wish they did not have.

In the past eight years, we have financed two wars and massive tax cuts to the wealthiest Americans by mortgaging not just our children's future, but their very security to the highest bidders around the world.

Debt-financed tax cuts and overly zealous deregulation have proven to be a failed social experiment with potentially dire national security consequences. We have long recognized that cuts to defense spending can sometimes hurt national security; so too must we acknowledge, once and for all, that tax cuts and runaway spending can do the same.

The United States is a rich and powerful country. It is criminal that we have weakened our own fiscal health so gravely that we are left to consider the national security consequences of restoring liquidity to credit markets. But we must.