Romeonomics

Henry Paulson is an idiot. That's all I have to say.

As I drive from home to work and back, I listen to NPR on KPCC (89.3 FM). It seems Treasury Secretary Paulson does not want to help homeowners with their mortgages. Well, he is an idiot. How can he justify taking money from tax payers to bail out the big banks on Wall Street but not help the lowly homeowner on Main Street?!

If he feels that government should not interfere and just allow market forces to correct themselves, then he has no business giving money to the big banks. That's socialism! But he goes further than that. He perpetuates elitism. He thinks that only big banks are deserving of government rescue because they know how to be responsible. But isn't it the big banks that allowed and even rewarded... undocumented loan originations?!

Certainly, the homeowner deserves to lose a house that is beyond his means. Even I believe in that. But the same should apply to the big banks. They should be allowed to crumble. But because they are so big and vital to the global economy, Paulson will not allow them to fail. But this happens at the expense of the tax payer. How unfair is that?

Not only is it unfair, it does not help the economy recover. Imagine a bank lending commercial paper to a manufacturing company. The bank is happy because it will benefit from interest charges. The manufacturing company will be happy because it has capital purchase raw materials and manufacture goods. But what if nobody buys? If the homeowner is not helped, he will have not enough disposable income. He cannot buy goods from the manufacturer. Instead it will remain in inventory.

Paulson is an idiot. He will change his mind again when "the facts change". But I thought facts don't change? Unless he got his facts wrong in the first place...