Paulson Handcuffs Obama By Empowering Goldman Sachs
The very popular economics blog Marginal Revolution has a very rare mathematical property: The mean insightfulness of the comments left at MR is significantly larger than the median insightfulness of the actual blog posts. Discuss.
Anyway, today my jaw literally dropped in awe at the following comment made by “a person”:
It is becoming increasingly clear to me that President Bush is again choosing the shock doctrine, as he did in pushing for the Iraq War, to subvert the democratic process. His wish is to tie up the financial freedom of an Obama presidency. There needs to be a more uniform response (screaming, yelling, etc.) from intelligent people in America that we will not be bullied again in the same way into another terrible plan.
(In retrospect, it doesn’t look as impressive now that I’ve put in up on a pedestal and shined a spotlight on it. But trust me, for that to be just some guy’s comment on a blog post…whoa.)
What’s very interesting about this is the amount of power that has been transferred to the private sector. At first this is counterintuitive–haven’t the feds been grabbing more power from the private sector?
Yes: In general the federal government has grown at the expense of the financial sector. However, a very few firms–chiefly Goldman Sachs–now wield much more power than they did 13 months ago.
I heard a guy say on CNBC that it was crucial to save Goldman Sachs because it is a symbol of capitalism around the world. So that means no matter what, the Goldman shareholders know that they can’t possibly go bankrupt or even get bought out, especially by a foreign buyer. They are untouchable now. Unrelated trivia quiz: For which Wall Street investment bank was Henry Paulson the CEO, before he assumed his current job of CBA (Chief Bailout Architect) for the Treasury? (BTW, that link also indicates that Paulson’s predecessor at Goldman Sachs was Jon Corzine, who is now Governor of New Jersey. Wow that job of being CEO at Goldman must give you some really good people skills or something.)
If Obama should win, the few remaining “independent” players on Wall Street can literally stage a crisis if they want. The politicians won’t know the difference, and even if they did, enough of them could be induced to defend the legitimacy of the crisis and demand that President Obama “stop ignoring the experts and start showing leadership by supporting the Republican Financial Patriotism Act.”
Look at how easily the panic on Wall Street pushed oil companies and hurricanes off the radar. They could easily do the same if McCain wins and then a scandal threatens him. “You need a few days to regroup? No problem, Mr. President. We’ll stop lending to Goldman.”
