There Is No Plan

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Paulson – The Man With The Plan

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Man With Plan

Man With Plan

After nationalizing Fannie and Freddie, then letting Lehman Brothers die for no apparent reason, then bailing out AIG to the tune of $85 billion (now around $150 billion but who’s counting), Hank Paulson sat back to watch the credit markets unfreeze. But instead they just froze up some more.

Hank was totally bummed. “This job totally sucks”.

“The credit freeze just keeps on freezing”, he said to his posse of former Goldman Sachs hacks. “What the frick do I do?”

“You need one big plan”, said Neel Cash and Carry, “not just a whole bunch of little plans stuck together”. Hank nodded furiously. “Yes, yes, that’s right”. After scribbling a few notes on the back of a dry cleaning bill he looked up. “I’ve got it”.

It was so beautiful, so brilliantly simple. Bail out his pals on Wall Street by buying up all the junk they’d created that was sending them all over a cliff. His ex-Goldmans Treasury peeps loved the idea, so Hank canvassed around for a number on this unfathomable pile of shit.

Someone told Hank that all the ‘toxic mortgage securities’ on the books of financial institutions were worth a “don’t quote me on this ballpark” half a trillion, and another guy said they were “maybe, possibly, potentially” worth a cool but toxic trillion, so Hank did what any smart dude would do. He split the difference, thereabouts.

$700 Billion became a household number. The Troubled Asset Relief Program was born. And “Toxic” became the word du jour. Everyone outside Treasury thought TARP stank as an idea, but Hank said that without it we’d all be in the poorhouse. The situation was grim, and he and the President lathered us up into a right panic. It was so important that Hank was going to run it all by himself. But Congress didn’t like that. So after a lot of talk, a bucketload of pork was added and TARP got the go ahead, along with a few trimmings.

Hank sat back and waited for credit to start unfreezing. Except that it didn’t. It froze some more. “There goes my effing bonus,” said Hank, forgetting that he was a public servant.

Meanwhile, Gordon Brown, the British Prime Minister, instigated a plan that everyone really liked. His idea was to invest in the struggling banks so they’d start lending again. Brown demanded the heads of the bank CEOs and the stock he bought in the big UK banks gave the government a real say in how the banks were run. Suddenly, Europe came on board, and things got better on that side of the pond. UK and European banks were starting to look safer. Hank had to do something so US assets wouldn’t fly to London.

Earlier in the crisis, Hank had said no to a meeting with Gordon, probably because he was a “socialist”. But now Brownie’s idea was flying, Hank did what any smart dude would do, and he diverted some of the cash to a watered down version of the Brown plan. He didn’t exactly oversell the idea either, basically bad mouthing it as he enacted it (just the confidence builder we needed). The handout to the bank CEOs happened in a one hour meeting. Hank told the banks to start loaning out the money pronto, but instead they just hoarded it to buy weaker banks. More free money.

Today, Hank decided mortgage securities were out for good. Wall Street took another bath because that meant the spigot was turned off. Hank also decided to use some of the famous $700 billion to bailout consumers with credit card debt, the first time he’d even mentioned the poor bastards with the big screen TVs. Wall Street will rally tomorrow when they realize that bailing out consumers bails out banks who hold their debts.

As for dealing with foreclosures, Hank says that’s way too complicated, so he’s sticking to a new version of the half assed plan that totally failed to get any traction on the most important element of the financial crisis. Someone asked him about saving GM and Ford. “Naaah”, said Hank. “That’s not my deal”.

So what’s left of the original, incredibly vital plan? Just the name. It’s still called TARP, even though we’re not relieving troubled assets anymore.

Maybe it’s not surprising, considering the joke’s on us, but nobody is really talking about this as the farce that it truly is. A five year old could come up with a better plan than Hank Paulson did.

But we have to be grateful to Hank for one thing. If his handling the crisis hadn’t been so pathetic, the election might have been a lot closer. As it is, Hank’s last day at Treasury is January 20th.

Hopefully the world can hold out until then.


Written by coolrebel

November 12, 2008 at 11:18 pm

One Response

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  1. Love your description. Right on the button.

    I reckon we are heading for £1m [$1.7m app] as debt for each of the 6.7bn of us around now. Roll on inflation?

    Joseph Harris in the UK


    November 13, 2008 at 4:07 am

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