From Bob Herbert of the New York “Not a Journalistic Organization” Times, on the man Newsweek magazine lauds as the “Captain of Wall Street” and praises as the “right man at the right time.” Bob has a slightly different take on Paulson’s Master of the Universe status:

The treasury secretary, Henry Paulson — heralded as King Henry on the cover of Newsweek — has been handed the reins of government, and he’s galloping through the taxpayers’ money like a hard-charging driver in a runaway chariot race.

Yes, I think that about gets it right. Paulson wants 700 Billion Dollars (just a trifle, really) and he wants the unfettered right to spend that money propping up his old friends and colleagues on the “Street” as he sees fit. And he’s willing to use scare tactics to stampede Democrats in an election year to give him that power. God knows, its worked before. Something tells me that this time, however, Paulson is playing the role of financial terrorist, with his “give me all your money, or else bad things will happen” attitude. As economist Dr. Ronald Solberg, in an article published in the Asia Times, puts it, Paulson is really pushing for what he labels “reverse socialism” with his willingness to buy anything at any price as long as it helps out those poor investment bankers who (now say “boo hoo” everybody) got caught up in “forces outside their control,” and shifting the cost of their “series of unfortunate events” onto the American middle class for generations to come:

(cont.)

Recent events have revealed that the methodology of Wall Street’s financial models used for valuing securitized assets is entirely broken. Furthermore, the credibility of rating companies on assigning ratings that assess ultimate payouts for mortgage-backed and asset-backed securities is also bankrupt.

Hence, in contrast to the potentially generous mark-to-model valuations that banks are currently using, it is anyone’s guess as to what the value of Level lll assets sitting on bank balance sheets are worth. (Level lll financial assets and liabilities have values typically based on management assumptions or expectations rather than on market valuations. Their market value is therefore questionable.)

In contrast to the inherently unknown intrinsic value of these securities and the putative value currently assigned by the beleaguered investment and commercial banks, what is the price the proposed Mortgage and Financial Institutions Trust (MFI), will actually pay for these securities? (MFI follows to some extent the path of the Resolution Trust Corporation, created in 1989 to liquidate assets held by insolvent savings and loans companies). In many ways, this is likely to become a political decision. […]

If the price paid by the MFI is above intrinsic value, then the taxpayers end up with a losing proposition as they subsidize former banking largesse. If the price paid is below intrinsic value, then the taxpayer at least has a chance, perhaps even then slim, to invest in a profitable trade. In this latter case, however, the banks will be left with a huge gaping re-capitalization requirement. Please remind me, with whom will they finance this?

Even if the MFI wanted to pinpoint which of these two parties would be the winner and loser, the uncertainty over the intrinsic valuation makes this calculus virtually insoluble. {…]

According to the US Treasury text, they also propose raising the Statutory Limit on the Public Debt to $11.315 trillion. This approaches 87% of US gross domestic product, not including off balance sheet and contingent liabilities. Who will buy this new debt issuance: cash-strapped Americans and American investors or foreign investors? […]

On one hand, Paulson’s aggressive state interventionism into the private sector is little different from the numerous examples in history of the nationalization of the banking sector with all the implications of moral hazard and inefficiencies this spawns. Yet there is a further absurd, bizarre twist. In many of these past instances, the mantra associated with the initiative was to take from the rich and subsidize the poor. In this current case, the US Treasury policy is effectively bailing out the rich, corrupt and incompetent on Wall Street and funding it by taxing current and future generations of the lesser-heeled, middle class on Main Street and further reducing American real incomes across the board with incipient inflation.

These wounds will be assuaged only if we demand that all banks that decide to participate in the proposed MFI bailout refund all paid bonuses over the past seven years received by all bank officers from the chief executive on down. Otherwise, this has the makings of a Weimar Republic redux (with hallmark rampant hyperinflation and massive unemployment echoing the period that saw the rise to power of Adolf Hitler) and an erosion of the social contract.

What better way to prep the American people for the rise of a “strong man” (left or right flavoring, it makes no difference) than to steal from the poor to give to the rich? Henry Paulson is merely the latest in a long line of financial stick-up artists. His robberies are conducted out in the open and cheered by a cowed and frightened media only to willing to paint him as the “hero” of this most epic of epic fails when in reality he’s merely the front man for a pack of thieves. As Bob Herbert says:

[Paulson’s] eyes, as he hopped from one network camera to another, said, as salesmen have been saying since the dawn of time: “Trust me.”

Ladies and Germs, I trust anyone in the Bush administration, much less someone who wants to take money out of my pocket and hand it willy-nilly to his bestest best friends without telling me what I’m getting for my troubles, about this much:

[.]