Tag Archives: Henry Paulson

Prevaricate: Paulson edition

Vocabulary review time. We may have to review these words more often than I’d like:

Prevaricate:v. to stray from or evade the truth

Paulson: megalomaniac ex Goldman Sachs CEO, now Chancellor of the Exchequer (known in the US as Secretary of the Treasury).

Henry Paulson wants Congress to rubber stamp his three-page Wall Street bailout plan. It includes this paragraph that couldn’t be clearer:

Sec. 8. Review. Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

In other words: I AM KING.   But when questioned he realizes we don’t really like that kind of language in the US of A. Now he says:


Paulson and the Politics of Fear

Treasury Secretary Henry Paulson has been on the fearpath since Thursday when he warned Congress and the country that the world as we know it would end if Congress didn’t immediately authorize $700 Billion (of taxpayer dollars).

Naomi Klein wrote the book Shock Doctrine last year to describe the way that governments use major disasters to grab power or property from the public while everyone is in the grip of fear, loss or grief. Examples from the New York Times review of the book:

“The Shock Doctrine” is Klein’s ambitious look at the economic history of the last 50 years and the rise of free-market fundamentalism around the world. “Disaster capitalism,” as she calls it, is a violent system that sometimes requires terror to do its job. Like Pol Pot proclaiming that Cambodia under the Khmer Rouge was in Year Zero, extreme capitalism loves a blank slate, often finding its opening after crises or “shocks.” For example, Klein argues, the Asian crisis of 1997 paved the way for the International Monetary Fund to establish programs in the region and for a sell-off of many state-owned enterprises to Western banks and multinationals. The 2004 tsunami enabled the government of Sri Lanka to force the fishermen off beachfront property so it could be sold to hotel developers. The destruction of 9/11 allowed George W. Bush to launch a war aimed at producing a free-market Iraq.

Paulson cautioned lawmakers against letting the plan get bogged down in a debate over unnecessary additions. As one blogger noted “Unnecessary additions” – things like accountability, transparency, making sure that the crisis does not happen again, and making sure that it solves the underlying problem. But many questions arise:

1. Did Paulson pull that $700 billion number from his butt? Exactly where would the money be spent and what would it accomplish there? Is this amount just for starters? Others say the number is more like a TRILLION.  How much is a trillion? Ronald Reagan said:

I’ve been trying … to think of a way to illustrate how big a trillion is. The best that I could come up with is that if you had a stack of $1000 bills in your hand only four inches high you would be a millionaire. A trillion dollars would be a stack of $1000-dollar bills 67 miles high.

Since most of us have never seen a bill larger than $100, that stack would be 670 miles high.

2. Did this three-page Paulson Wall Street bailout plan just materialize out of thin air, or — far far scarier — is it something the Bush administration has been scheming about for months – waiting for the right moment, like they did with attacking Iraq (see Shock Doctrine, above)? From Roll Call:

White House Dispatches Team to Push Economic Bill

The White House today is drumming up extraordinary pressure on Congress to approve its plan to enact a $700 billion mortgage bailout fund, suggesting the markets cannot wait much longer and dispatching Vice President Cheney and other top officials up Pennsylvania Avenue to jawbone lawmakers. ……

[White House Deputy Press Secretary Tony] Fratto said it would be “unthinkable” for Congress not to pass legislation this week, asserting the result would be a “very, very serious situation” for the U.S. economy…….

Fratto insisted that the plan was not slapped together and had been drawn up as a contingency over previous months and weeks by administration officials. He acknowledged lawmakers were getting only days to peruse it, but he said this should be enough.

This afternoon Terry Gross interviewed Gretchen Morgenson, business columnist for the New York Times (a must listen to…) who said that she suspected things have sucked for well over a year, and the Bush administration knew it but kept telling us these problems were “contained to the subprime market”. Her question was, “Why should we believe them now??”

3. Who is Henry Paulson, anyway, and does he have a dog in the fight? Silly you for wondering if a Bush appointee could have a conflict of interest… For starters he was the CEO of Goldman Sachs, and is very much from and of the Wall Street culture – and will no doubt return there when Bush leaves office, so he’s not going to want to bite the hand that feeds.  And how about this juicy tidbit?

Paulson Debt Plan May Benefit Mostly Goldman, Morgan By Jody Shenn

Sept. 22 (Bloomberg) — Goldman Sachs Group Inc. and Morgan Stanley may be among the biggest beneficiaries of the $700 billion U.S. plan to buy assets from financial companies while many banks see limited aid, according to Bank of America Corp.

…Its benefits, in its current form, will be largely limited to investment banks and other banks that have aggressively written down the value of their holdings and have already recognized the attendant capital impairment,” Jeffrey Rosenberg, Bank of America’s head of credit strategy research, wrote in a report dated yesterday, without identifying particular banks.

4. If this is all so horrible and if we’re going to be on the hook for the bailout, why can’t we hear Paulson’s briefing? As Markos said today:

So Treasury gets congressional leaders into a room, and gives them a briefing so horrifying, that they all immediately age 20 years and come out with white hair and immediately get to work pissing away $700 billion to Wall Street.

They’re terrified, we’re told! It was horrible!

So why not slap that presentation online? Why not share this with the American people?

This isn’t Iraq, where you can pretend that the information is “top secret” and must be protected lest disclosure amount to a security breach.

In this case, we’re probably talking financial projections, maybe an excel sheet or two.

So put it online so the rest of the country can see what supposedly has our fearless leaders in a panic.

More tomorrow.

Paulson’s Pinata: Wall Street waits for the candy to drop

Piñata: a decorated vessel (as of papier-mâché) filled with candies, fruits, and gifts and hung up to be broken with sticks by blindfolded persons. When it breaks and the goodies fall out, everyone scrambles to scoop up as much as they can.

Bob Herbert calls for a second opinion before we turn the keys to the kingdom back over to the thieves who stole the gold in the first place.

The sky was falling, [Paulson] seemed to be saying, and if the taxpayers didn’t pony up $700 billion in the next few days, all would be lost. No time to look at the fine print. Hurry, hurry, said the treasury secretary. His eyes, as he hopped from one network camera to another, said, as salesmen have been saying since the dawn of time: “Trust me.”

With all due respect to Mr. Paulson, who is widely regarded as a smart and fine man, we need to slow this process down. We got into this mess by handing out mortgages like lollipops to people who paid too little attention to the fine print, who in many cases didn’t understand it or didn’t care about it.

-snip –

I agree with the economist Dean Baker, co-director of the Center for Economic and Policy Research in Washington, that while the government needs to move with dispatch, there is also a need to make sure that taxpayers’ money is used only where “absolutely necessary.”

Lobbyists, bankers and Wall Street types are already hopping up and down like over-excited children, ready to burst into the government’s $700 billion piñata. This widespread eagerness is itself an indication that there is something too sweet about the Paulson plan.

Yup. “Fool me once, fool me….”