Thursday, February 4, 2010

Henry Paulson's Evasion

Former Treasury Secretary Henry Paulson conducted an interview with CNBC in support of his new book. While the press is using his memoir as ammunition to heap more abuse on Wall Street, Paulson inadvertently provides some illuminating insight into government regulators.

In the interview, Paulson admits that he did not know what to do when Lehman Brothers collapsed:
So I was just saying, `What do we do?' And I didn't have answers... But from that moment there I had no idea what to do, and I knew everyone was going to be looking to me for answers.

So as I say in the book, I stepped out of the room--and I just didn't want to do this in front of other people--took my cell phone out of my pocketbook and called my wife at home and just simply said, `Wendy, this is--this is really tough. I'm scared. People are looking at me. I don't know what to do. Pray for me.'
According to an article in the Washington Post, Paulson's wife told him:
You needn't be afraid. Your job is to reflect God, Infinite Mind, and you can rely on Him.
At this crucial point, Paulson was told to reflect the Infinite Mind. For those who say that philosophy is just pointless babble, this is philosophy in action. This is one of the most powerful men in the world trying to connect with the Absolute. When faced with a crucial decision, Paulson sought to find answers for this world by transcending this world.

At another point in the financial crisis, Paulson and his henchmen locked the leaders of the nation's largest banks in a room and told them that they could not leave until they "agreed" to take government money, even if they didn't want it. When faced with a crisis, Paulson literally resorted to faith and force.

Having abandoned reason--Paulson explicitly sought answers from the Inifinite Mind, rather than his own--Paulson had to resort to force. He could offer facts to convince the bankers to accept government money, for he had no reasons. And when a man abandons reason and this world, his only other means of dealing with others is brute force. He will lock them in a room and demand that they act as he dictates, or else.

Paulson has joined the chorus in calling for more regulations of financial institutions. Even though he, as one of the top regulators of those businesses, had no answers when called upon in a financial crisis, he wants to hand his equally clueless successors even more power. This is evasion on a massive scale.

That Paulson will not and cannot see the implications of his own statements is not surprising. He has abandoned principles, and thus, each event is an isolated occurrence:
I feel so strongly that, looking in hindsight, that the major decisions we made were the right ones. And we made them without a playbook, dealing with very, you know, unprecedented challenges, with imperfect tools to work with and in a really heated political environment. And they worked, because the system didn't collapse.
In the context of human action, "without a playbook" means without principles. Principles are precisely what provide us with a guide to action. Principles are what allow us to analyze specific situations, project the consequences of our actions, and determine the proper course of action. In the absence of principles, all one can do is pray and hope for the best. All one can do is act blindly and look at the consequences to determine if one made the "right" decisions.

To Paulson, his decisions were the right ones because "they worked"--because the system did not collapse. The fact that the federal government seized the opportunity to grab greater control over the economy and our lives means nothing to Paulson. His only concern was averting a complete financial collapse, and anything that would accomplish that ends was justified. Even if it means a greater disaster in the future--a disaster that Paulson cannot see, just as he could not see the disaster he was hired to prevent.


Moataz said...

lol at the infinite mind. He became God all of a sudden to fix the problems of this world. Who cares if he used force to bully others. He is God now and knows everything

Brian Phillips said...

I must admit that I was surprised to see such a comment. If she had just referred to God, I wouldn't have been surprised.

C.W. said...

The NY Attorney General has just announced that he is going to prosecute leaders of the Bank of America for fraud in their purchase of Merrill Lynch. Elsewhere, I am sorry that at this moment I can't remember where, I read that Bernanke, who is Chair of the Fed, lied to BoA about the condition of Merrill, and when BoA found out, Bernanke threatened to remove the leaders and replace them with people who would do what he told them to do. And now, these victums are being prosecuted. Will Bernanke speak up?" HA!

Brian, if you liked Paulson's comments, you'll love "In Fed We Trust" where a Wall Street Journal editor cheerleads us through the entire circus as they made it up week after week. I am only part way through because I can only read a page or two at a time.

Brian Phillips said...

While government officials love to charge private businesses with fraud, they engage in their own massive fraud right out in the open.

They bust Madoff for a Ponzi scheme, while they have run the largest one in history (Social Security). They openly buy votes for health care. They don't pay their taxes and then claim that they didn't know.

I'm not sure which disgusts me more, the dishonest thugs in Washington or the voters who put them there.