Paulson's Lies

July 12th, 2007 "This is far and away the strongest global economy I've seen in my business lifetime."

My note: By July 12, 2007, we were well into the first stages of a steep retrenchment, and defaults were soaring. By this time, over 160 small mortgages lenders had already failed/

April 20th, 2007 "I don't see (subprime mortgage market troubles) imposing a serious problem. I think it's going to be largely contained."

My note: By February of 2007, the subprime market was going "down in flames", and then-failing Countrywide Financial's people stated publicly that "40 or 50 small lenders are failing daily".

April 20th, 2007 "We've clearly had a big correction in the housing market. Retail housing was growing for some time at a level that was not sustainable," Paulson said in a speech to The Committee of 100, a business group in New York promoting better Chinese relations.

My note: Well, no shit, Sherlock. I said the same thing in 2003, in 2005, and in 2006,and so did many pundits and economists who have a lot more credibility than this one disgruntled renter and taxpayer. Many other observers also said that $500,000 adjustable loans for fruitpickers and store clerks making $20,000 a year were not sustainable, and many economists were noting that the United States had the largest public and private debt loads of any economy ever to have existed, and that every other economy that had reached anything like this level of debt overhang, had collapsed.

August 1st, 2007 "The market has focused on this. There's a wake-up call, and there's an adjustment to this repricing of risk, but I see the underlying economy as being very healthy," he told reporters before leaving Beijing.

My note: Some understatement. By August of 2007, American Home and New Century had gone under, along with over 160 other lenders, and the credit markets were unspooling rapidly, as two hedge funds operated by Bear Stearns cruised toward collapse. Unemployment and inflation were soaring.

February 28th, 2008 "I'm seeing a series of ideas suggested involving major government intervention in the housing market, and these things are usually presented or sold as a way of helping homeowners stay in their homes. Then when you look at them more carefully what they really amount to is a bailout for financial institutions or Wall Street."

My note: The grand-daddy of boners. Do you remember saying this, Mr. Paulson?

March 16th, 2008 "We've got strong financial institutions . . . Our markets are the envy of the world. They're resilient, they're...innovative, they're flexible. I think we move very quickly to address situations in this country, and, as I said, our financial institutions are strong."

My note: Another whopper. The United States has the most over-leveraged economy along with the most rampant fraud and malfeasance and the most over-compensated financial industry executives, in the history of the world, as we have since seen. Our entire economy has been founded on the layering of debt since 1980.

May 7, 2008 'The worst is likely to be behind us,' Paulson told the paper, in one of the most optimistic comments by a top U.S. finance official since sub-prime mortgage losses set a domino effect in motion in mid 2007.

And....

May 16th, 2008 "In my judgment, we are closer to the end of the market turmoil than the beginning," he said. "Looking forward, I expect that financial markets will be driven less by the recent turmoil and more by broader economic conditions and, specifically, by the recovery of the housing sector."

My note: Well, we've seen what's transpired since. Mr. Paulson did not offer any supporting evidence to back these statements, which were made as the blight was spreading into Alt-A and prime debt, and as foreclosures continued to soar and as current defaults foretell even higher foreclosure rates as we leave the selling season behind.

But worse lies ahead, for commercial credit is even worse and is only beginning to unravel, and there remains unsecured consumer credit- the mountain of credit card debt that will almost certainly default more rapidly than housing or commercial. The reckless expansion of credit of the past 20 years promises to be matched by a proportionately ruthless contraction, and it's doubtful that people who have walked away from impossible mortgages and are losing jobs that there are no replacements for, are going to be able or willing to meet less-pressing obligations, such as the tens of thousands of dollars of credit card debt that many householders rung up when they had tapped out the last of their fake house equity.

The foregoing is only a sampling of Paulson's flamingly bad calls, flagrant mis-statements, and outright lies. We know that we have no reason to believe any of his statements, yet he and Bernanke have managed to terrorize the administration and Congress into rushing to foist a bailout of failing institutions that will cost each taxpayer in this country an average of $6,000 a year at least.

Worse, we can't help but wonder what else remains unsaid. Paulson insists that without a $700 Billion bailout, our economy will collapse. What he has not said is what another trillion dollars or so of debt will do to our currency and how we will continue to meet the interest payments on our government debt if we continue to add to it at the rate of a trillion dollars at a time. At this time, we have approximately $9.5 Trillion worth of soveriegn debt, and the interest per annum on this debt is $500 Trillion dollars.

At what point will the United States be forced to default on its government debt, and become the world's largest IMF client state? And what will that do to our currency, our economy, and our ability to keep the oil flowing into the country? There is no public discussion of these harrowing possibilities.

The risk of failing to take action is repeatedly belabored, yet neither Paulson or any of the other policy makers pushing for the nationalization of our banking system, which is what this bailout amounts to, wants to talk about the risks entailed in this massive socialization of the fallout from the greed and malfeasance of the only people who really stand to profit from the bailout.