Changing the Rules When the Game has Already Begun
We read in the Wall Street Journal today the fact that Treasury Secretary, Henry Paulson, officially backed away from the original plan to buy up troubled mortgage assets from distressed financial institutions. We are still proponents of some form of this plan and are dissapointed that Secretary Paulson and his team have decided to walk away from such a notion. It’s almost as if the Fed is brewing a completely new recipe for a stew, and they randomly add a little salt here, a little pepper there, but they can’t actually taste the soup for months or even years later.
This reminds us of a situation (which everyone has experienced) where you’re learning a new game you’ve never played before, and while playing, your friend or host suddenly tells you of several “new rules” that they forgot to tell you about. The government should be doing everything in its power to instill confidence in the marketplace and its’ investors – the Secretary’s actions today certainly have done the opposite.
The economy has begun its’ gradual process of deleveraging itself, yet liquidity is still tight and we’re not out of the woods yet. We do not envy Secretary Paulson’s position, these have been difficult days and for the most part, Paulson has done the best he can. However, leadership requires to be strong, to set goals, make plans, and then move with confidence in accomplishing those goals. To be a leader is to be alone and sometimes not well liked, but by executing a plan and fulfilling its design is to prove ones ability to lead.
It is obvious that Secretary Paulson will not implement any new programs and in his press conference said:
“I’m not looking to make anything more difficult by implementing programs that don’t need to be implemented before they’re here”
President Bush has been between a rock and a hard place for sometime, and now it appears that he has some company in the form of Secretary Paulson who made it quite clear that he would be reluctant to implement any new programs or plans prior to the inauguration of President-elect Barack Obama.
So with that, we wish Secretary Paulson all the best for the future, we thank him for his service, but oh how we wish he had followed through and stuck with his original intention as it relates to the mortgage assets that still taint the balance sheets of so many financial institutions.
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