Tuesday, January 01, 2008

Three Big Machines In A Row

You're considering a money manager for your retirement savings. You do some research, and come across this record (more here and here; note the dates on the articles). Would you let him manage your money? So why is it any different for one of the highest economic policy positions in the land?

I have a lot of respect for Hank Paulson and his private sector success. We're lucky that people like him are willing to serve in government, and I praised Bush's nomination of him in this post. I also warned about the consequences of losing credibility -- and about the future of the dollar, by the way. Both warnings have come to pass. It's clear now that Paulson's got BDS: Bush Diminution Syndrome, a tragic affliction that strikes formerly respected, erstwhile high-achievers from all fields once they join this administration -- or, in the case of foreign leaders, once they ally themselves with it. (I know this blog has readers at Treasury, and I hope they'll weigh in via posted comment or email, anonymously or not.)

In the film Casino, there's a scene in which Robert De Niro's character defends his firing of a well-connected employee:
"I'm sorry, but he knew about our gettin' hit on three big machines in a row and he did nothing about it. That means either he was in on it or, forgive me for saying this, he was too dumb to see what was going on. Either way, I cannot have a man like that workin' here."
The real estate bubble was only the most chronicled socio-economic phenomenon in U.S. history, a "three big machine" event really, and any sentient being realized the fallout would be both brutal and protracted. Paulson either knew that and continued to cheerlead anyway, or he didn't see what was going on. If the latter, he's unfit to run Treasury. If the former, he's a political shill at a time when independence and credibility and seriousness, particularly for our top economic policymakers, is desperately needed.

Either way, he needs to go.


Anonymous judyo said...

It is doubtful that you could look @ any agency of our current federal gov't and find a competent first tier. Competency is not allowed. Loyalty is the only virtue and loyalty to a failed CEO, at that.
There's a concept I've had in mind since 2002. The one word definition of this concept is COUP.

1/01/2008 8:40 PM  
Anonymous rapier said...

The fate of the world as we know it depends upon our financial/political elites being ignorant or lying about the true nature of the systematic problems in the financial system.

If they know saying anything bad is analogous to saying the emperor has no clothes. Thus hurting 'confidence' and risking a financial panic. Nobody in the world want's to have their name in the history books in the sentence which says

(name)s remarks started a panic.

Paulson knows full well the RE problem isn't near half over That RE is only a part of the bigger problem in the credit markets. That the solvency of the financial giants is questionable. That the fate of the auto companies is sealed. . If he were to say so,,,,,,,,,,,,well, he just can't. All he and everyone can do is stall and wait for a miracle or someone or something to blame it on besides the elites themselves.

Oh where oh where is Osama?

Paulson's Wall Street is the foundation of our problems and the fact that he made a half a billion dollars there proves it. Why he took the job I cannot say. I guess it was out of a sense of class duty. To try to delay and deflect the reckoning. In fact he has barely been a cheerleader at all on the level of Snow. He declined the offer of the job long before he took it and I would imagine one stipulation was that he said he wouldn't shill. Then too the Bushies didn't want him really, being that he wasn't a loyal Bushy.

Still, when the questions come up he gives those quotes. It's the only thing he can do.

1/01/2008 11:28 PM  
Anonymous goldhorder said...

I agree with rapier.

What good would it do to say anything? If you don't salute the great leader you'll just get thrown out like O'Neil did...and then smeared as a disgruntled failure on Fox News.

1/01/2008 11:48 PM  
Blogger oyster said...

Thanks very much to the Cunning Realist for the link.

I honestly thought that Paulson came in from a position of strength, since no other "A" candidates were rushing for the Treasury job. I thought he'd be able to negotiate some welcome independence from the Bushies, and their repetitive talking points. I wouldn't think some Presidential pom poms would hold that much allure for Paulson at this stage of the game.

1/02/2008 2:11 AM  
Blogger LFC said...

rapier said... If they know saying anything bad is analogous to saying the emperor has no clothes. Thus hurting 'confidence' and risking a financial panic. Nobody in the world want's to have their name in the history books in the sentence which says

That means the global economy is a house of cards, supported by fabrication. If that's true then, just like Enron, reality will eventually come crashing down and all the mouthed catchphrases and assurances won't mean a thing.

1/02/2008 1:22 PM  
Anonymous goldhorder said...

IFC...ummmm...welcome to planet reality. Yes, it is a classic confidence scam. To keep the confidence scam going the US will lose control of the ability to say No to foreigners with large piles of cash(remember China and Unicol). What will these foreigners do with their large piles of cash? Now that is a good question!!!


1/03/2008 10:59 AM  
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