Parts I and II of the Flying, Fickle Finger of Fate entries established that Fed Chief Ben Bernanke and Treasury Secretary Henry Paulson are total failures, how want to be rewarded for that failure with unprecedented power over the U.S. financial system--having proven (not) how good they are at financial forecasting and management. Part IIa shows that Paulson's plan is actually worse than it appears.
The "plan" is not limited to mortgages, but (in Paulson's version) extends to all "troubled" assets. This means you will have this massive government entity trading in almost anything, and virtually running the economy--"bailing out" whoever it wants by whatever means it wants, including government ownership of almost any kind of troubled asset.
The "plan" is not limited to U.S. companies. Yes, this "plan" proposes to let the new government entity buy assets from world entities--"bailing out" the entire world. I actually heard one commentator suggest that this wa an endorsement of Obama's idea that we need a "global" approach to economic problems, and not just a U.S. approach. He is not nicknamed Barack "World" Obama for nothing, and is not included in this week's award of the "Finger" for nothing.
Can you envision the stupidity of attempted central planning for the entire world? It doesn't work, and hasn't worked, for individual countries (including the U.S.). So, natuarally, we want to make sure the whole world fails on the largest scale possible. It is absurd to suggest any human beings can successfully "manage" the economy of the world. The arrogance of Obama, Paulson and Bernanke exceeds all bounds, and conflicts with their record.
Finally, the Paulson "plan" is not really limited to "only" 700 billions. Oh, it goes without saying that we will have to come up with more money, if the "central planners" say it is needed. But even now, the plan is not so limited. Rather, this massive new government entity will have the power to both buy and sell. It could put the taxpayers on the hook for a trillion and a half dollars--who knows how much. The 700 billion only represents the maximum amount of assets that the new entity can own at any one time.
AsI have said, after the massive failure of Paulson and Bernanke over the past two years, it is hard to know whether something drastic like Paulson's plan is now necessary. I am almost at the point of saying that a massive meltdown of our fianancial system is better than this insanity. Under no circumstances should Paulson and Bernanke be in charge of the management of this "plan", even if something like it is necessary. Failure should not be rewarded with more power.
Thre remains a curious reluctance to point out that Paulson was CEO of Goldman Sachs, during the time that it developed the "business model" that was revealed to be a failure over the weekend (and the past several months). It is also curious that no one seems to be mentioning that Paulson's plan seems directly aimed at "saving" Goldman Sachs, even though it obviously would bail out more than just Goldman.
P.S. The "Finger" is a statuette of a poointing INDEX finger representing the Flying, Fickle Finger of Fate award for outstanding stupidity revealed in the previous week (although, as in this case, the stupidity may date back years).
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