Cutting Paulson Some Slack 23 comments
an article to
-
Font Size:
-
Print
- TweetThis
Damien Hoffman has an article at the Wall St. Cheat Sheet entitled "The Treasury Department Endorses Lying to the Public". Basically, Damien is critical of attempts by Hank Paulson to calm investment markets last fall.
So, if the Secretary told investors the truth, would we be any happier with him? Wouldn't it have been something like yelling "Fire" in a crowded theatre?
Of course, he could have refused to answer any questions that could be interpreted as giving investment advice. Then, I'm sure, there would be many who would criticize the lack of openness.
The perception in the fall of 2008 (I think correctly, and continuing into 2009) was that loss of confidence was a major problem. Paulson (and other officials) did what they could to minimize panic. That was probably the best course of action, even if there were lies of omission and, to some extent, commission.
I am no fan of Paulsen. I think he (and the Fed) remained non-responsive to a developing crisis for a long period of time. I think his basic premise that we needed to preserve the status quo regarding financial system structure is debatable.
But, those criticizing his emergency actions should cut him a little more slack. Mistakes were made, but things could have been much worse.
Unfortunately, the mistakes made, that are of major importance, address much bigger issues than how investors were affected, as badly as they were hurt. The major mistakes made involve trying to continue to develop and stabilize a financial system structure without replacing or repairing a crumbling foundation.
Related Articles
|
-
The Seeking Alpha 100
See allThe top 100 stock
market authors
selected for publication
Seeking Alpha 100 » -
Fastest Climbers
Authors with the largestSee all
increase in followers
in the last 7 days
Fastest Climbers » -
Top Commenters
Top commenters,See all
as ranked by their peers
Top Commenters » -
Top Instabloggers
The 100 most active
Instabloggers.-
1
David Fry
-
2
TraderMark
-
3
Don Dion
-
4
Cliff Wachtel
-
5
Mike Havrilla
Top Instabloggers » -
1
-
Top StockTalkers
TopSee all
StockTalkers.
Top StockTalkers »
On Oct 07 06:45 AM Michael Clark wrote:
> I agree, Tom. Lying and being a public official are often seductively
> and necessarily interwoven. It's not Paulson's lies, per se, to
> which I object. His intrigue to destroy GS's chief rival and to
> protect GS's pocketbook would perhaps be a wonderful biography of
> a BS CEO -- but they are criminal in a government official.
These GS guys are really evil.
The proper analogy is those who understood Paulson was lying exited the theater quickly and quietly while leaving the average, nonfinancial professionals to burn in hell while Paulson told them they were hallucinating about the fire.
Case in point: after the major investment banks and hedge funds met with Bernanke and Paulson days before the collapse of Bear Stearns, they all pulled EVERY funding source and investment they had in Bear. So, they were told about the fire (the truth) and were given the chance to save themselves. Should the government act as a truth-teller to certain factions of society and not others?
If we accept the government lies because We the Children are too dumb to handle the Truth, this logic can rationalize every single lie the government tells. I don't think that's the vision of the Founder's ...
Joe Public is lied to while those inside the magic circle are provided with the necessary and timely information to move ahead of the crowd.
Problem is that Joe Public increasingly doesn't have the wherewithal to be the sucker of last resort.l
I think someone as well-paid and presumably well-qualified as Paulson could have lied, if that was really necessary, for a better cause. The lying continues, I presume, because of both the stupid who believe in present policies and proposals, and because of the looters who apparently aren't done yet.
The SA editors changed the title of this article. I submitted it as "Should Hank Paulson Have Yelled "Fire"? I think my intent in writing this was completely distorted by the title change.
The article still has the original title on my Instablog.
Yes, I do have a peripheral statement about slack. Perhaps that was ill advised. But the purpose of the article is slanted in totally the wrong direction by the title change.
Maybe the editors thought the title change would instigate more controversy. Actually, that is good. There are times that I write things that I consider debatable and I don't get the debate. A particular article that I thought could have had a lot of interesting debate and failed to do that was the one about the hidden depression of the 2000s. There have been other occassions, too. I just don't remember them at the moment.
> Telling the truth ...
I agree completely. If you can't count on your leaders to tell the truth, that credibility problem will come back to haunt everyone in the future. No one knows when they are being lied to "for their own good" and that can cause problems for the entire system.
I don't want a doctor to lie to me about my medical condition nor my government to lie to me about anything else.
Nice read.
"Paulson (and other officials) did what they could to minimize panic."
To a large extent, this is his principal job in a crisis. This is why the Fed claims to want transparency, but knows it would be counter-productive. The fact that they told the truth (gave the factual data) to the banksters while smoothing over the rest of us is inexcusable.
"his basic premise that we needed to preserve the status quo regarding financial system structure is debatable. "
"The major mistakes made involve trying to continue to develop and stabilize a financial system structure without replacing or repairing a crumbling foundation."
I was about to ask the question- What reform?
I then realized that this is your question. They're sticking their finger in the dike of financial system structure without acting on reforming the financial foundation.
The question is the reform delay due to continued fear of instability or is it regulatory capture?
THIS WAS NOT AN ELEMENT OF PRACTICE VARIANCE UNDER DURESS. IN FACT, A GOOD MEASURE OF THE SITUATION WOULD PLACE pAULSON RIGHT AT THE HEART OF THE ACTUAL PROBLEM...NOT THE EMERGENCY SOLUTIONS.
you raise an interesting point. i want to start about by saying i also refuse to judge Paulson severely for battle field decisions where all the perimeters are known only in hindsight.
i want to balance this thought with another.
lying has become commonplace. we are at the point where there is so much stretching of the truth. little any government official says is believed - either in American or overseas.
we now have to assume everything is a lie. what happens if the government needs to convince the masses of the truth?
at this point, the truth no longer works either.
it seems we have gone too far in our belief that we can lie for the public good.
Does this mean the SA editors WANT US to cut Paulson some slack? (Maybe Paulson is actually a hero, like Ben Bernanke.)
On Oct 07 02:00 PM John Lounsbury wrote:
> Good comments.
>
> The SA editors changed the title of this article. I submitted it
> as "Should Hank Paulson Have Yelled "Fire"? I think my intent in
> writing this was completely distorted by the title change.
>
> The article still has the original title on my Instablog.
>
> Yes, I do have a peripheral statement about slack. Perhaps that was
> ill advised. But the purpose of the article is slanted in totally
> the wrong direction by the title change.
A baited banker thus desponds,
From his own hand foresees his fall,
They have his soul, who have his bonds;
'Tis like the writing on the wall.
Mene, Mene, Tekel, Parsin.