Author : Henry M Paulson
Total Page : 496
Publisher : Business Plus
Publication Date : 2010 02 01
On the Brink Inside the Race to Stop the Collapse of the Global Financial System
>> Three Blind MiceI read all 460 pages of this tome I found it very interesting and informative These pages describe how an unqualified Secretary of the Treasury a highly skilled income tax cheat and an extremely intelligent and educated Professor of Economics rescue the United States on the brink of a nationwide financial meltdown caused by the criminal machinations of certain members of Congress who swap their votes for cash in an envelope
The book unfortunately does not mention the activities of economist Philip Gramm which resulted in the repeal of the Glass Steagall Act an action which eventually caused millions of Americans to lose their homes It also does not mention Gramm s wife economist Wendy who as boss of the Commodity Futures Trading Commission ruled that the trading of derivatives was exempt from regulation She was later sued for 168 million for her accomplishments as a director of Enron Her ruling exempting derivatives from regulation directly lead to the crash of 2008 described in this book
Henry Paulson graduated with a degree in English This degree does not require the study of economics mathematics finance or anything remotely challenging It is sufficient to get dressed in the morning and to show up in class He utilized his football meat head background and strong verbal skills to work his way up to CEO of Goldman Suchs He was not a trader or a money maker just a talker
Tim Geithner studied Government and Asian Studies but mostly spent time learning to read and write Mandarin His main claim to fame was his failure to pay the United States the taxes due on his income According to Wikipedia he cheated the United States out of 35 000 in self employment taxes and was assessed additional taxes of 14 847 by the IRS He was eventually charged 15 000 interest by the IRS but with no penalty why Using his friendship with mentor Larry Summers the dishonorably discharged ex President of Harvard he managed to be appointed president of the Federal Reserve Bank of New York It is hard to understand why Obama would appoint an income tax cheat as Secretary of the Treasury with authority over the IRS
Ben Bernanke brings a breath of fresh air into the story Although the book does not specifically point it out Bernanke s intelligence education and experience brought knowledge stability and judgment to the effort to rescue the U S in the fourth quarter of 2008
This effort with the many sleepless nights is well described in the book The nerve wracking effort to get the TARP program passed by Congress is well presented
In the last pages of the book Paulson states his conclusions and recommendations which are very reasonable and worthy of implementation I particularly like his suggestion that we move from an income taxed nation to a sales taxed nation where big consumers pay big taxes and savers pay much less It seems very sensible
>> ComplexityAny reader impacted by the recent financial crisis will find something of value on the pages of Hank Paulson s recollections of the turmoil at its epicenter Titled On the Brink Inside the Race to Stop of the Collapse of the Global Financial System Paulson presents his views and recollections of what happened when and who said and did what This book reads like a novel as Paulson paces the action well As one might expect he tends to put the best light on what he did and how he did it He focuses intently on the collaboration between himself Ben Bernanke and Tim Geithner President Bush comes across as fully supportive of Paulson doing whatever was necessary to prevent a financial meltdown This candid book reveals how much was done by the seat of the pants and how complexity and interconnections led to actions that were both distasteful and necessary It will be a long time before history weighs in with perspective on the actions during Paulson s tenure as Treasury Secretary In the meantime his personal account is an important contribution to gaining insight into those times
Rating Four star Highly Recommended
>> The conventional view of the crisis definitively relatedHenry M Paulson was the head of the Wall Street investment firm Goldman Sachs before being picked by George W Bush to be his final Secretary of the Treasury Paulson was thus one of the government officials most responsible for the economy when the great downturn of 2008 hit In this book he tells the story of the response to the crisis
The book is remarkably well written The memoirs of public officials are often ponderous and dull This is not Paulson has a simple fluid writing style Unlike many he actually tells a story and he tells it well Considered as a narrative it is a good book
The story he tells is fundamentally fairly simple As the economy started to crash in 2007 and 2008 Paulson and most other high federal officials became terrified that this would be a repeat of the Crash of 1929 and that it would lead to a repeat of the Great Depression Although Paulson tells us that he is a free market person his response to the crisis was to use the full power of the government to defend America s large private financial institutions His paramount goal was to not let the major Wall Street firms go under
Most of the book is taken up with responses to the crises that came one after the other The first big crisis was the fall of Bear Stearns which was cushioned by a federal bailout The next crisis was the fall of Lehman Brothers As Paulson tells the story he labored mightily to save Lehman but it was not possible due to lack of needed powers in the federal government and the refusal of Lehman Brothers management to act fast enough to save themselves After that it was one crisis after another until Obama was elected and Paulson out of office
As Paulson tells the story he worked very closely with Ben Bernanke head of the Federal Reserve and Tim Geithner who was head of the New York Fed and then became Obama s Secretary of the Treasury As he describes it President Bush was always very supportive of what he was doing but never involved in the details It never seems odd to Paulson that the President would basically delegate the handling of so huge a crisis to a cabinet official
In a rather short ending Paulson gives his overall take on the crisis The system had too much leverage There was too little regulation New laws are needed permitting the feds to take over nonbanks with systemic importance
Everything that Paulson says is sensible intelligent and focused on the surface of the problem His point of view is that of a Wall Street guy He instinctively defends the Wall Street system He has intelligent ideas on how to make the existing system work better
He never asks the question however why is the existing system so unstable He never looks below the surface or thinks very deeply about why the crisis occurred
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