Paulson Drops the Ball Again

Since Hank Paulson came out and said he no longer planned to buy assets off the balance sheets of troubled financials, the S&P 500 Financial sector is down 22%. 

Is there any wonder?  Why would Mr. Paulson ever in his right mind come out and say that he wasn't buying any assets when he still has the ammo to do so?  It makes no sense at all to make a statement like that when the option is still on the table unless you want investors to panic again.  What are the odds that Mr. Paulson has to come out and say that buying troubled assets is actually not off the table?  

President-elect Obama needs to name a new Treasury Secretary, and fast.

Comments

[closed:]

Calls for a new U.S. Federal "economic stimulus" of $400 billion-plus are multiplying on a far larger scale than before the British government's steering of "a consensus for internationally coordinated fiscal stimulus" at the G-20 summit. This is also a much larger "stimulus package" than the $150 billion which Congressional Democrats talked about before the November 4 election, and then dropped. Although the Mis-Leadership around Speaker Nancy Pelosi is not yet talking about $400 billion, it appears that think-tanks like the Economic Policy Institute, Center for American Progress, and Peterson Institute for International Economics have been asked to point "the British way" until the 111th Congress can meet.

Today a circular letter was released signed by 400 economists, headed by Joseph Stiglitz, demanding a $350-400 billion stimulus annually for several years. Its purpose was stated by Dr. Laurie Appelbaum of Rutgers University to be, "filling the huge hole in economic demand" left by a collapse in consumption. Purely Keynes--the John Maynard Keynes who from 1932-36 looked to Nazi Germany as the model for his monetary theories. This morning Dr. Simon Johnson of the Peterson Institute was in front of the Senate Budget Committee calling for the same policy. This was ironic, since Johnson's boss Peter Peterson is spearheading the propaganda campaign for long-term drastic cuts in U.S. fiscal budgets, including particularly in Social Security and Medicare entitlements!

EIR representatives asked the four economists presenting the letter, including Stiglitz, why they hadn't emphasized that the cause of the economic collapse sweeping the globe was the breakdown of the financial and banking system--or discussed the need to reorganize the financial system in bankruptcy. All four answered in turn, that the measures of Treasury Secretary Hank Paulson and Fed Chairman Ben Bernanke had stabilized the financial crisis (!) and taken it off the table--exactly what Paulson and Bernanke had been claiming the previous day to a House Committee. "I think we stopped the financial collapse," said Dean Baker of Economic Policy Research Center, speaking for all of them and putting the "big stimulus" network firmly in Paulson's and Bernanke's camp.

Famous last words.

2008 Nov 20 11:00 AM

[happysoul77777:]

Paulson has made many mistakes. He's not smart at all!

2008 Nov 21 12:00 AM

[morph366:]

We should have known there was something wrong with this picture when way back in the early days of this crisis everyone kept referring to him as "Hank". He's just another bloke from the world of investment banking who's full of bluff and bluster and doesn't have a clue how to sort things out.
But then again that's easy to say from someone who hasn't seen how bad the balance sheets of the big banks really are.

2008 Nov 21 10:34 AM

[chinooking:]

i want and the whole bush cabinet in jail

2008 Nov 21 11:13 AM

[paul:]

If you think the Bush admin caused this, you must be smoking good stuff. It all goes back to housing, mortgages, Fannie Mae, & Freddie Mac. All enabled and promoted by Chris Dodd, Barney Frank and company.

On Nov 21 11:13 AM chinooking wrote:

> i want and the whole bush cabinet in jail

2008 Nov 24 04:27 PM