A week ago, I made the following comments that should be extended:
… it goes without saying that the new unwritten rule on Wall Street is that no investment bank of any large size is going to be allowed to fail; that the People’s money, not the shareholders capital, will stand behind the company debts and the mistakes of executive management. That offends me because I stand up for social equity, not socialism.
This latest situation in Washington is simply mind-boggling to the owners of capital in America who once had a measure of faith in their capital market. Now it is apparent that the market will be played by Henry’s Rules, and Mr. Moral Hazard had the arrogance to not even show his face at these crucial hearings. That’s not right.
Careful planning on his part had Henry Paulson in China working on a deal that would help Wall Street investment bankers, which is the flow of funds from Chinese investors, public and private, into America, public and private, via investment bankers. I’ll say this again, once: Henry Paulson, as Secretary of the Treasury of the US, and the individual who was integral to the Bear Stearns-JP Morgan-Fed deal, had an absolute and total obligation to stand before Congress and give testimony as to what he did to save the financial system of America that others who gave testimony stated was so critical at the time.
Paulson knew that Rep. Senator Chuck Grassley wanted the moral hazard issue addressed. He knew that Rep. Congressman Dr. Ron Paul and Dem. Senator Bob Menendez were going to demand answers to the committees they are members of. Yes, the China mission was important. The Senate hearing was more important.
Life is all about choices. Had one of Paulson’s parents passed, he would not have gone to China. The gravity of the Congressional hearings was such that the Treasury Secretary had an obligation to stand there and give the full truth to the American people. He turtled.
He did it to protect the Fed and the Administration and the increased role he wants them to play in the US government. I say enough is enough from Mr. Moral Hazard. There is no need to have a Federal Reserve System, which manages the People’s money, under the control of private bankers. It was a ridiculous notion to begin with, and now is leading the capital market into an abyss that could possibly result in an economic depression and a very weak state of the union.
There is also no need for the President’s Working Group on Financial Markets (aka PPT) to have any power whatsoever other than being one of several policy study organizations within the US government.
These are not principles on which the US was founded, and the imbalance that Paulson is recommending clearly conflicts with public policy from Congress that leads to legislation with checks and balances the People need.
At the end of the day, what goes around comes around. The People whose ancestors fought for America, and those who have recently joined it for opportunity and protection, will have their needs met. If they don’t, let’s call a spade a spade; in that unlikely event, America could no longer be called a democracy, and the bankers will have won.