US Treasury Has Become The Personal Fiefdom Of King Henry Paulson

Traders have lost all confidence in US Treasury Secretary Paulson. Asked to explain why he arbitrarily changed the mandate of the $700 billion bail-out package, he looked the media in the eye and said, “You should be thanking me.” What kind of nonsense is that?

When the Congress of the United States votes a clear mandate to the Administration of previously unimaginable proportions, common sense would dictate that the Treasury Secretary would have called a press conference to announce his required changes prior to taking the extreme reversal of action he did.

The US Treasury has apparently become the personal fiefdom of King Henry Paulson. If he keeps it up, it will be, metaphorically speaking, off with his neck. His court will react in the strongest way.

I have been saying this for maybe 18 months now. The people are starting to listen. Henry Paulson is and has been the architect of the demise of capital markets and the wanton destruction of the US financial services industry. While at Goldman Sachs (NYSE:GS), he was the industry leader who promoted the financial engineering of products too sophisticated for mere mortals like you and I to understand. He and his colleagues became rich as a result of what people today resoundingly call bad management practices. Then he took a three-year job at an annual cost to the US taxpayer of $60 million (his personal take), where he proceeded to pull his Goldman Sachs people into key positions in Treasury and the Fed. They too stiffed the US taxpayer with their personal capital gains “relief” packages accorded to private sector despots who joined the so-called “public” service.

Once in control of King Henry’s fiefdom, these autocrats have taken over $1 trillion from the public treasury and are doling it out as they see fit.

If there is a single reason why capital markets are in disarray, you are looking at the big guy stammer and stutter through his press conferences. As for personal communications, Henry was always better with a knife anyway.

The good side to all this is that now the public sees the enemy, sees their M.O., their culture, their management practices. Is this any different from what was portrayed in the movie Wall Street? This is Wall Street - only now the show has come to Washington.

What is going down today is worse than capital market prices, which will come back at some point; it is fraud on a level never seen in history. Somebody had better take action soon. Lame ducks are not going to help the people.

Btw, the Goldcorp (NYSE:GG) report I issued before the open yesterday contained a recommendation that within hours was almost executed: there was a stop at $18.90, and the session low was $19.36.

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