King Henry Paulson's Personal Fiefdom

[Excerpted from Bill Cara's Daily Report]

Traders have lost all confidence in U.S. Treasury Secretary Paulson. Asked to explain why he arbitrarily changed the mandate of the $700 billion bail-out package, he looked the media in the eye and said, “You should be thanking me.” What kind of nonsense is that?

When the Congress of the United States votes a clear mandate to the Administration of previously unimaginable proportions, common sense would dictate that the Treasury Secretary would have called a press conference to announce his required changes prior to taking the extreme reversal of action he did.

The U.S. Treasury has apparently become the personal fiefdom of King Henry Paulson. If he keeps it up, it will be, metaphorically speaking, off with his head. His court will react in the strongest way.

I have been saying this for maybe 18 months now. The people are starting to listen. Henry Paulson is and has been the architect of the demise of capital markets and the wanton destruction of the U.S. financial services industry. While at Goldman Sachs (GS), he was the industry leader who promoted the financial engineering of products too sophisticated for mere mortals like you and me to understand. He and his colleagues became rich as a result of what people today resoundingly call bad management practices. Then he took a three-year job at an annual cost to the U.S. taxpayer of $60 million (his personal take), where he proceeded to pull his Goldman Sachs people into key positions in Treasury and the Fed. They too stiffed the U.S. taxpayer with their personal capital gains “relief” packages accorded to private sector despots who joined the so-called “public” service.

Once in control of King Henry’s fiefdom, these autocrats have taken over $1 trillion from the public treasury and are doling it out as they see fit.

If there is a single reason why capital markets are in disarray, you are looking at the big guy stammer and stutter through his press conferences. As for personal communications, Henry was always better with a knife anyway.

The good side to all this is that now the public sees the enemy, sees their M.O., their culture, their management practices. Is this any different from what was portrayed in the movie Wall Street? This is Wall Street – only now the show has come to Washington.

What is going down today is worse than capital market prices, which will come back at some point; it is fraud on a level never seen in history. Somebody had better take action soon. Lame ducks are not going to help the people.

By the way, the Goldcorp (GG) report I issued before the open Wednesday contained a recommendation that within hours was almost executed: there was a stop at $18.90, and the session low was $19.36.

Comments

[Jason Rines...:]

You will never see an apology out of Mr. Paulson. But it does look like the President is taking the reigns out of his hands a bit prior to leaving office which is a good thing. Fiscal stimulus plans toward job creation in energy was the biggest lost opportunity in 2008. Failure for government to be in touch with it's people and conduct adequate research to reveal this result is shameful. Washington is a reflection of our culture. It is human nature to not be paying attention when the basics of life are abundant. It creates a reactionary enviornment of wild pendulums.

2008 Nov 13 10:09 AM

[Socialism c...:]

This will not end well for the current "power elites"!!! Too long they have stolen from the working class. Too long they have crafted laws and a tax system that keeps us on the treadmill, with little hope of real change. It will come by a revolution. And not by a left-wing, nutjob Marxist with no morals!! It will come from old-fashioned, hard-working, gritty family people -- those who want a decent place for their kids to grow up, still free -- without answering to the town board over when they are allowed to burn leaves on their own property. Without divulging every last detail of their lives to an "Internal Revenue Service". Without a preemptive claim on their income!

We had a Tea Party once. That was just the beginning. The people are getting ready for another.

fairtax.org

2008 Nov 13 10:45 AM

[bosun.j:]

Drag this Bankster out in the street, give him a fair trial followed immediately by a first class hangin'!

2008 Nov 13 11:13 AM

[RealityChec...:]

Bill ... agree completely ... this is stealing and fraud at a level never seen before in history (even in the worst examples in africa, asia and LATAM, the wealth stolen never reached these levels).

the punishments will need to fit the crime. no white collar country club, exile and even charges of treason. other countries go after their corrupt leaders and try them for crimes against the citizens.

king paul is no better than marcos, baby doc, or some other despot. but instead of mascacres of lives, king paul has massacred the financial futures of generations to come.

2008 Nov 13 12:07 PM

[tginomorebush:]

ithinkbig .............. king george iii bush-it "taking the reigns (reins) out of his hands" .................scary... scary ........ scary......scarier!!! king george iii bush has, totally, no idea or concept of what to do
....... hurry Jan 20th 2009!

2008 Nov 14 09:28 AM

[300mph:]

Bill, why are you speaking? According to CXO Advisory your calls are only 44% accurate. You are even worse than Jim Cramer at 46%. Why should we listen to you, we can do better with a dartboard. www.cxoadvisory.com/gu...

2008 Nov 14 10:41 AM

[dr.doolittle:]

great stuff, although I don't know how "king Paulson" is different from any other CEO. Obviously we are all seeing why this guy was making 60 million! the question of course is this bad or not? I actually find him refreshingly arrogant. The reason we're in this mess is not because of Hank or even George Bush but all these clowns the American people keep electing over and over again. These people aren't just ignorant and corrupt, they're completely out of touch. Government has a default setting in situations like these, and we've all confronted it: do nothing. That's what all those people at the DMV are telling you--welcome to the result of an idiotic "no new people" voting record. I voted for Obama, but that whole "change" thing still makes me laugh. What I do know about Paulson is that he is not a do-nothing, something that cannot be said for Washington, and I can gurantee you you will not get a "do right" in Washington on this situation no matter who's in charge.

2008 Nov 14 12:08 PM

[Old Trader:]

300 mph,

Its a bit silly to take a 44% accuracy rating to task. The "success" would be determined by how much is gained on the 44%, minus what is lost on the balance, NOT merely by the accuracy percentage (does the phrase "cut your losses and let your profits run" ring any bells?).

2008 Nov 16 05:23 PM

[Chickenpookie:]

Paulson has been the very best Treasury Secretary money can buy! It's really a shame Congress doesn't understand, or perhaps we've also got the very best Congress money can buy?

It's all so very, very sickening.

2008 Nov 28 06:09 PM