This morning Yahoo News published a Reuters Article titled:  ‘Paulson says U.S. lacked tools to tackle crisis: report’.  In this article Paulson is quoted as having said (apparently yesterday in Singapore):

• he was surprised by the ferocity of the (financial) crisis but believe he grasped from August how severe it was;
• we have been for some time in the frustrating situation of understanding much more than the public or even the Congress understood in terms of the magnitude of what we are facing; and,
• with respect to his successors “They have got a great team and they don’t need advice.  I really believe that.”

That he grasped in ‘August’ how severe the financial crisis was comes as no great surprise to me.  I said in posts in August and September that the fact of bail-out programs being introduced during the Presidential election campaign was a clear signal that the problems were far greater than the public then was being told or understood.

That the Congress was asked to pass legislation in circumstances where Paulson thought it did not understand the magnitude of the problems being faced speaks either to:

• ineffective communication on the part of Paulson and his team; or,
• an inability or unwillingness of U.S. senior elected representatives to grasp the magnitude of the problems when they passed the Bail-Out Bill.

In either case this does not auger well going forward from here.

To suggest the successor ‘team’ doesn’t need advice strikes me as either being a misquote, an incomplete quote, or just patent nonsense.  I can’t believe Paulson and his group will not give the best advice they can to the successor group based on the knowledge they have gained over the past few months.  For Paulson and his group to do otherwise (i.e. not convey whatever knowledge they have gained over the past few months and make recommendations based on that knowledge) is simply not how intelligent people behave, and again would not auger well going forward from here.

Comments as to what readers think about the foregoing will be appreciated.

The views expressed in this Post are those of the author. They are offered to readers for information and general guidance only. They are neither intended to, nor should be taken to, constitute economic or investment advice. See Legal Disclaimer.

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