Thursday, September 25, 2008

Clueless Hank?

Not everyone is singing the praises of Hank Paulson. I don't believe he's done a good job (his infamous line of having a bazooka and not needing to use it proven utterly, tragically wrong, for one). But this commentator savages Bailout Hank.

Until last week, I was in a minority of one in arguing that Mr Paulson was personally responsible for suddenly turning the painful but manageable credit crunch that had been grinding away 18 months in the background of the US economy into a global catastrophe. Mr Paulson's appearances on Capitol Hill, marked by the characteristic Bush-era combination of arrogance and incompetence, are turning my once-outlandish view into conventional wisdom: Henry Paulson is to finance what Donald Rumsfeld was to military strategy, Dick Cheney to geopolitics and Michael Chertoff to flood defence.

A different perspective, an English one.

Mr Paulson may be a former chairman of Goldman Sachs, but as US Treasury Secretary he does not know what he is doing.

He has learned how to speak without saying anything of substance; I watched some minutes of the televised hearings.

The good news - before I return to the perils of Mr Paulson - is that his blunders no longer matter very much. There will still be a huge US government bank bailout, which will probably avert a disastrous slump in the US and global economies. But because Mr Paulson has lost the political initiative, this bailout will now be led by the Democratic leadership in Congress and will be structured around its priorities - relief from mortgage foreclosures, restrictions on bankers' pay and big government shareholdings in US banks. For President Bush it is a disaster, dashing his last faint hope of having a tangible achievement to his name before he leaves office.

No tangible achievement; that about says it all.

The only substantive clause in the draft was a swaggering demand for untrammelled power: “Decisions by the Secretary pursuant to this Act are non-reviewable and may not be reviewed by any court of law or any administrative agency.”

Unmitigated arrogance.

The people who do not understand the role of government should not be regulating markets any more than they should be fighting wars or managing flood defences. P.J.O'Rourke, the conservative writer, once remarked: “The Republicans are a party that says government doesn't work - and then get elected and prove it.” This should be the epitaph for the Bush Administration - and Mr Paulson.


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