November 14, 2008
It’s always nice to get affirmation. Y’all have read my complaints about what a nincompoop Paulson is. (And Bernanke, too, for that matter.) Today I happened to read a column by Michele Malkin who made the same point. Here’s how her column begins:
“Treasury Secretary Hank Paulson finally confirmed what lonely bailout opponents tried to tell the American public all along: The man doesn’t know what the hell he’s doing.”She’s referring to the fact that after begging for the $700 billion dollar bailout money, he now says he was wrong about what the financial sector needs. Now he has decided—just weeks later—that buying troubled financial assets with the $700 billion is not a good idea.
I bought my first new car from a man like Paulson. He was a salesman at the Gezon Datsun dealership in Grand Rapids, Michigan. The guy told me that if I didn’t buy the 280Z right away it would be gone and I’d miss my opportunity. My dad tried to slow me down, tried to tell me that it’s better to walk away when somebody sells you something using pressure, but I was young and stupid and bought the 280Z at the sticker price. Two months later I looked down at the MacDonald’s wrappers on the floor and realized that a board with wheels would work just as well if it got me to work and back. I had learned my lesson and acquired a little common sense.
Too bad we don’t have congressmen who have learned common sense.
Malkin has constructed a crude timeline of Paulson stupidities, a timeline which should make us all terrified at the idea that this guy is committing trillions of taxpayer dollars with almost zero oversight.
April 2007—Proclaimed the subprime crisis “largely contained”As I said in an earlier column, economists are the modern-day astrologers. Mathematics are unequivocal about this: the statistics and charts that economists use are nonsense. Past data on the economy does not predict future behavior of the economy, just as the orbits of planets and the position of stars in the sky could not tell a medieval king whether he would win a battle.
May 2007—Said the subprimes crisis was “near the bottom”
October 2007—Said he had “no interest in bailing out lenders or property speculators”
October 2007—Said he couldn’t “think of any situation where the backdrop of the global economy was as healthy as it is today.”
May 2008—Declared that “the worst is likely to be behind us”
8/10/08—Said he had “no plans to insert money” into Fannie Mae and Freddie Mac
9/6/08—Committed $200 billion to bailout Fannie Mae and Freddie Mac
9/15/08—Refused to “put taxpayer money on the line” to rescue Lehman Brothers
9/16/08—Engineered an $85 billion taxpayer-funded bailout of AIG
September 2008—Promised that the $700 billion Troubled Asset Recovery Plan would provide stability and save America money in the long run
November 2008—Reverses himself and says “this is not the most effective way”—admits that he knew this on October 3 when the bill was signed
Does this destroy our ability to make decisions? Not at all. A king who realized that astrology was nonsense could make rational decisions based on troop strength and military tactics instead of rushing into something stupid because an astrologer said it was a good idea. (Those were the kings who tended to win.)
In the same way, once we realize that the economy is in the Black Swan segment of a decision box, we can make rational decisions. The man whose writing informed me about the mathematics behind this, Nassim Nicholas Taleb, ran a hedge fund that had a 50% return over the past year while everybody else was taking a financial hit.
When you start admitting that you don’t know what will happen to the economy tomorrow, then you can start making rational decisions about what to do with your money. That goes for the nation as a whole and for each of us as individuals. Our government needs to send the court astrologers packing, and hire people who make rational decisions based on facts instead of crystal balls and star charts.
Right now the entire financial future of our nation is in the hands of a charlatan—an astrologer bamboozling us with bullshit.
From Reno, Nevada, USA