Paulson's Shocking Change of Heart 13 comments
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I guess everybody is as shocked at Paulson's change of heart...
Instead of the 3 pager proposal to request $700 billion, 1 page for the title, 1 for the thank you and goodbye, and 1 single page with the gravy of the plan, now, he doles out an "I'm not afraid to make changes if the facts change".
Granted, I think he's right in trying to get ahead of the curve, or putting the carrot ahead of the cart, or in layman's terms: making the loans available to those who will buy things --making it easier to buy a house or a car.
So, it's with mixed feelings that we move on. On the one hand, there are still all those derivatives left behind littering the landscape like a mine field, and, on the other hand, the new consumer oriented lending is sure to give some needed traction to the economy.
And you already know that the markets reacted bitterly to the waivering Paulson attitude. If you stop for a minute to think about it, trillions are at stake, and Paulson reads like he's thinking it out for the first time... I mean, we could've had a couple of DC buildings full of well paid geniuses, like they do in the military, working out all the possible economic what-if scenarios.
But, we didn't. Human nature, I guess. High price to pay, though.
Reading here and there, trying to get my bearings on Paulson's comments, I ran into this fantastic piece by Michael Lewis, commenting on his early twenties. It's self explanatory...
[T]he willingness of a Wall Street investment bank to pay me hundreds of thousands of dollars to dispense investment advice to grownups remains a mystery to me. I was 24 years old, with no experience of, or particular interest in, guessing which stocks and bonds would rise and which would fall. The essential function of Wall Street is to allocate capital—to decide who should get it and who should not. Believe me when I tell you that I hadn’t the first clue.
[...]
I’d never taken an accounting course, never run a business, never even had savings of my own to manage. I stumbled into a job at Salomon Brothers in 1985 and stumbled out much richer three years later, and even though I wrote a book about the experience, the whole thing still strikes me as preposterous—which is one of the reasons the money was so easy to walk away from. I figured the situation was unsustainable. Sooner rather than later, someone was going to identify me, along with a lot of people more or less like me, as a fraud. Sooner rather than later, there would come a Great Reckoning when Wall Street would wake up and hundreds if not thousands of young people like me, who had no business making huge bets with other people’s money, would be expelled from finance.
Why are we getting half baked plays from the ones we who should be giving us double chess plays?
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This article has 13 comments:
Let's hope that after trashing Wall Street they don't move on to companies like Boeing.
To boot, Paulson gave the banks another $140 billion in tax breaks by illegally loosening Section 382 of the tax code which will allow acquiring banks to write off losses incurred by the acquired banks. Incidently, the Republicans have been trying to repeal Section 382 for the last twenty years.
They robbed us once and got away with it so they're coming back for another $350 billion score. You can bet your sweet ass that they'll be back for more.
As if they were not already making enough money, the banks are raising credit card interest rates. And of course, the politicians will knuckle under as usual.
Let the big boys fail and choke on their derivative paper. The great reckoning is upon us and we must pay. We cannot weasel out of it. There are plenty of banks with no sub prime sxposure who can step up and manage our money. Is that where he's headed?
I've also argued we need a new deal right now, this thing is gonna leave a mark. I was stunned China introduced a new deal style stimulus package and we decided to get our credit markets flowing again. Aren't they communist? Are we a good ole boys club?
We should have been ahead of the power curve, and we certainly can use some infrastructure improvement. Is that where he is headed? Will Obama take us there?
Paulsen is a team player and the team is running in a different direction now.
What do you expect him to do, continue running down the field in the other direction after the second half?
which translates to: “We can’t figure out what caused the serious structural cracks to develop so fast in that huge wall over there so let’s throw as much sh_t against it as we can and hope some of it sticks and stops the wall from falling. Then let’s analyze the components of the sh_t that stuck and see if we have enough of that kind of sh_t left to fill the rest of the cracks and make the wall stable again. Only by determining the kind of sh_t we need by trial and error will we ever figure out why the wall cracked in the first place!”
We all need a chuckle during these times.
Source: www.stockresearchporta.../
Is paulson's change of heart came because of OBAMA victory or he found real answer to the problem? Was his conscinece pricking him about $700/- bailout?This is serious matter and i hope one has the answers.
No one wants to talk about the inevitable failure nor do they want to be around when the wall collapses. They are just buying time to get out of Dodge. Why the wall cracked is not important (other than going after the criminals) because we won't want to rebuild it; we need a financial and monetary system that is fair and equitable for all, and more importantly, based on sound economic principles. We have to start saving and living within our means and credit needs be tightly controlled.
Greed driven leverage that threatens the financial system and the economy should be prohibited and violaters should be harshly punished.
That aside, can he do that? Change his mind? I mean, didn't congress give him control over the bail out on the premise he would spend it they way they understood he would? Is congress buying in on this?
I also had the thought he was just gearing up for the Obama administration. The Bush boat is sinking and he's jumping ship. Good or bad, that remains to be seen, I guess.