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Aug. 26, 2011, 1:20 p.m. EDT
By Al Lewis
NEW YORK (MarketWatch) "” Poor Henry Paulson.
The former Treasury secretary and Goldman Sachs Group /quotes/zigman/188479/quotes/nls/gs GS +1.74% chairman still can't get kudos for rescuing the U.S. economy in 2008.
Democratic Congressman Barney Frank warned this would happen.
"He said, "?Hank, you'll never be able to get credit for staving off a disaster the American people never saw,'" Paulson recalls.
Paulson lamented his place in history at the Global Business Travel Association's conference in Denver this week. Last year, he came out with a book called "On the Brink: Inside the Race to Stop the Collapse of the Global Financial System." But does anybody care? Is anybody listening? Hello? In case you haven't noticed amid the ceaseless economic calamities, this guy saved the world.
Since 2008, ugly partisan politics have led many to forget it was Paulson and President George W. Bush who pushed for the monstrous anathemas to free-market capitalism that now define our times.
The Troubled Asset Relief Program, the nationalization of mortgage behemoths Freddie Mac and Fannie Mae, the bailout of rogue financial giants, including American International Group, and the doctrine of "too-big-to-fail." These all began with a Republican administration suffering from the delusion that Wall Street was the answer to everything.
"I supported some very, very objectionable things in terms of bailouts or rescues, but I did it not for Wall Street, but for the American people," Paulson said. "Because it would have been a huge catastrophe."
Commercial lending would have ceased. Money-market funds would not have been able to pay back their depositors. ATMs would have stopped spitting out $20s.
"As Americans we shouldn't like bailouts," Paulson said. "Where I come from, if someone takes a risk and they're going to make the profit from that risk, they shouldn't have the taxpayer pay for the losses."
But leave it to a guy who used to work for President Richard Nixon to decide that when you're faced with an uncertain battle, you carpet bomb.
"It's better to have the taxpayer pay for the losses than have the United States of America become an economic wasteland," Paulson said. "If the financial system collapses, it's really, really hard to put it back together again."
Lately, it's far from clear that America isn't becoming an economic wasteland, or that the financial system would exist at all were it not for trillions in zero-interest loans from the Federal Reserve.
All Paulson may have done is propped up failed businesses and prolonged the inevitable. And President Barack Obama? He's boldly carried Paulson's dicey economic experiment forward.
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