Bailout urgency sounds like war with Iraq, Paulson’s ability questioned

Just use our search box to look up “Paulson” and you will see a problem. Henry Paulson was in charge at Goldman-Sachs, and is now the treasury secretary. In August 2007 Paulson said he did not see anything that caused him to reconsider his view that the economic damage from the housing correction was “largely contained,” despite losses in a number of financial institutions and a long period for sub-prime issues to move through the economy. We thought he was short-sighted, lying, or manipulated by politics. Now he wants a free reign to spend $700 billion.

In his former job Paulson should have seen the problem. Wages based on unemployment checks, welfare, and food stamps cannot sustain the mortgage industry. In 2007 Paulson said U.S. sub-prime mortgage fallout remained largely contained due to the strongest global economy in decades. Again we thought he was dillusional. It is evidence of the strange, distorted reality that prevails on Wall Street.

In December 2007, while Treasury Secretary Henry Paulson was speaking, a federal appeals court shut the door to state enforcement of federally charted banks. Now Paulson wants help from the states. Sorry buddy but people stabbed in the back usually don’t want to help you. There is something wrong with Paulson’s qualifications. Something does not ring true, as if Paulson is willing to echo the ideas of others. Optimism and rose colored glasses do not override realism and practicality if you get $700 billion and no oversight.

The bottom line is simple. The $700 bailout “rush” to do something imediately sounds exactly like the “rush” to start a war with Iraq. The tactics are the same, and the option sounds the same. “The alternatives will be much worse” we are told. Right, like Iraq and the weapons of mass destruction? Bush said he did not know of the gravity of the situation until he was briefed in September 2008 but the facts and similarities have “Bush” written all over them. Something is wrong.

Either Bush should not be allowed to make decisions on or around September 11th of any year, or Paulson’s forethought and foresight is severly hampered by his former career at Goldman-Sachs. Oddly enough Paulson has quickly distinguished himself from his two predecessors in the Bush administration by formally identifying the wide gap between the richest and poorest Americans as an issue on his list of the country’s four major long-term economic issues to be addressed. I think he made the gap much wider, and plans to spend his $700 billion to squash the issue for good.

Was mortgage financing one of his “four major long-term issues”? Here is a little more from our archives and elsewhere:

On July 20, 2008, after the failure of Indymac Bank, Paulson reassured the public by saying, “it’s a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation.”

On August 10, 2008, Secretary Paulson told NBC’s Meet the Press that he had no plans to inject any capital into Fannie Mae or Freddie Mac.

He also helped to create the Hope Now Alliance to help struggling homeowners during the subprime mortgage financial crisis, and we all know how well that worked.

Paulson agreed to allow foreign banks to slurp up part of his $700 billion dollar pie, such as the Hong Kong Shanghai Bank Corp.