A Conversation with Uncle Hank Paulson
Gary Kaltbaum is an investment
advisor with over 18 years experience, and a Fox News Channel Business
Contributor. Gary is the author of
The Investors Edge. Mr. Kaltbaum is
also the host of the nationally syndicated radio show “Investors Edge” on over
50 radio stations. Gary is also editor and publisher of “Gary Kaltbaum’s
Trendwatch”…a weekly and monthly technical analysis research report for the
institutional investor. If you would like a free trial to Gary’s Daily Market
Alerts
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888.484.8220 ext. 1.
I don’t even know where to start. I am beside myself. Everything I have
written about and talked about for over 2 years…is now coming to fruition. 2
years ago, I appeared on Fox and said there was a housing and credit bubble to
come. I was lambasted and called a dreamer. For 2 years, I have watched
Greenspan say it is not his fault…even though I have provided you with
evidence that he is at the top of the list. For 2 years, I have told you Uncle
Ben had his head in the sand. Since Uncle Hank stepped foot into the fray, I
have told you that he was just another genius with blinders on. So after 2 years
of these blithering idiots saying everything was fine, they decide everything is
not so fine. So what is their answer to the problems they missed, enabled and
did nothing about. Their answer is simple. GOVERNMENT KNOWS BEST. Think about
it. What is Uncle Hank’s 2 big moves as Treasury Secretary? #1…become a lawyer
for his friends who committed Enronesque crimes…by creating sham off-balance
sheet vehicles. Aren’t there people in jail for things like that. And now
#2…making a move that all but destroys contract law…and then lying about it.
Did you hear Uncle Hank say that this IS NOT government interference? I guess
we all have to find out what the definition of IS…IS. Did you hear Uncle Hank
answer questions?
Question…What do you say to those who say your plan gives incentives to
people who can afford to pay…to say they can’t afford to pay?
Uncle Hank…”This plan is not a perfect plan!”
Question…What do you say to those that say you are not letting markets be
free?
Uncle Hank…”This plan is not a perfect plan!”
Question…What do you say to those who say you are only protecting your
friends that are holding all the bad paper?
Uncle Hank…”This plan is not a perfect plan!”
Question…What did you think of the latest hurricane projections?
Uncle Hank…”This plan is not a perfect plan!”
Question…How good are those Patriots?
Uncle Hank…”This plan is not a perfect plan.”
You get the hint. Uncle Hank was hit with every question possible…and was
only in robot mode spinning talking points. He did his best to channel Hillary
Clinton at debate time by not answering one of those questions directly.
So what do we have? We have a plan coddled together by whom? The same sleazy
scummy lenders that caused a lot of the problem. Did you see who was a part of
this “committee” to come up with this plan? Yup…!
So who wins?
Do the borrowers win? Nope! Why no? After all, Uncle Hank says this is great
for the borrowers. Well…all these borrowers bought at the fantasy prices
starting in 05. All these borrowers are now under water. Just about all of these
borrowers are paying off interest only loans meaning they have no equity and
will never work off the equity. All of these borrowers continue to pay into a
black hole. All of these borrowers are going to wake up one day to realize the
scam and all of these borrowers will eventually drop off the keys. They are
sitting with no equity in an investment that it depreciating right now.
So…if the borrowers don’t win…who wins? There is only one group of people
that wins? And that is all the buddies of Uncle Hank who are holding crappy
paper. Instead of continuing to take massive losses now, they get to take them
over a long period of time. These are the same people that are being saved by
the Uncle Hank SIV!
The bottom line…in my humble opinion, blanket solutions will not work. This
problem should be worked out on a case-by-case basis between borrower and
lender…and not borrower, lender and the government. I support allowing
borrowers and lenders to work things out themselves. I have carried the water
for this administration on taxes and the economy because they have had facts on
their side. I am afraid I can no longer. They have hired a man who benefited
immensely from the free markets by making hundreds of millions at Goldman Sachs.
We now know how he feels. Free markets are terrific when you are making billions
off of of them…but when losing money…let’s shut them down.
No need to add to my thoughts on the market here. Nothing has changed. The
Fed yaps this week and would rather wait to see how markets react to another
“save” by Uncle Ben. Keep in mind, markets have now gone nowhere even though the
Fed has lowered several times and even though the Fed has printed money at a
rate I have never seen.
Gary Kaltbaum