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  • Hank Paulson: Smartest Man in the Room
    Read this: www.nytimes.com/2008/1...
    Oct 02 08:46 am |Rating: 0 0 |Link to Comment |View article
  • Hank Paulson: Smartest Man in the Room
    Another rather pathetic piece.

    You quote numbers from "a depression" as if there's a representative standard, rather than from THE great depression.

    You compare numbers from today, when NOBODY says we're in a depression, to numbers from the deepest depth of the great depression, as if this comparison shows that we shouldn't do anything. A more apt comparison would be now versus 1930, when the depression was just getting warmed up.

    You claim real GDP is growing at 3% per year, despite the fact that recent numbers have massively understated inflation.

    "Hank knew that the ‘sky is falling’ mentality would return this September..."

    If this was so predictable, why did hedge funds lose money this month?

    "This proposed bailout plan isn’t a bailout at all. It’s really a Superfund that will act as a mortgage security specialist to provide confidence and liquidity during housing cycles...Its ability to hold these beaten down assets and turn a profit over time will cause the legislation to become a permanent solution."

    Kind of like how RTC became a permanent solution? Oh, that's right. IT DIDN'T. No, this is not a solution that is envisioned to have a continuing life after this correction.

    "Hank planned the whole thing."

    Hank planned for overnight LIBOR to spike from 2.5% to 6.8% in one day? Hank planned for the effective federal funds rate to run more than 3 times the target rate? Hank planned for money market withdrawals that threatened to bring down the entire commercial paper market? Hank planned to force his old firm to change the nature of its organization and raise capital?

    "The next bull market is right around the corner."

    Suppose you got dropped at 7th Ave. and 57th St. in New York. You're told something is right around the corner and you start walking. If you've headed north, the corner's less than 100 yards away; if you've gone east, it's three times as far. But here's the catch - there's an open manhole between here and the next corner.

    Better to watch where you're stepping than to worry about where the corner is. You'll get there eventually, as long as you don't fall into the abyss.

    "Hank Paulson is the smartest man in the room."

    Though this is almost always true, when it comes to matters of the economy, you clearly don't believe it. Nobody even close to the smartest in the room would play chicken with the economy.
    Oct 02 08:31 am |Rating: 0 0 |Link to Comment |View article

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