Financial Armageddon is right on:
Today, Henry Paulson served up his latest round of reassurances that things were looking up. According to the Associated Press, in a report entitled "Paulson, Bernanke Defend $700 Billion Bailout," the Treasury Secretary said that
the U.S. has "turned a corner" in averting a financial collapse.
With that in mind, Iit seemed like a great time to go back and see whether Mr. Paulson's remarks should be taken at face value. Below is a sampling of his past prognostications (in chronological order):
"Bush, Paulson: Economic Upturn Will Take Time," MSNBC, Oct. 15, 2008:
“I believe [the financial rescue plan] is a major step in restoring confidence in our capital system, and that is key — it’s the most important thing we can do for our economy,” Paulson said.
"Paulson 'Very Optimistic' on Freddie, Fannie Rescue," Bloomberg, July 20, 2008:
The banking system is "sound" and regulators are being "vigilant," though some banks are starting to struggle, he said.
"US Treasury Secretary: Economic Fundamentals are Sound" , VOA News, 20 July 2008:
"We are going through a challenging time with our economy,...but our economy has very strong long-term fundamentals."
"Paulson Says Economy Strong Despite Oil Strains," Reuters, June 24, 2008:
Treasury Secretary Henry Paulson said on Tuesday that the global economy was being strained by costly energy but said U.S. economic fundamentals were sound.
In an interview on Mexican television, Paulson said he thought that most of the slump in U.S. housing prices would be over by year-end and that growth should be stronger by then.
"Paulson Again Downplays Credit Crisis, Expects Continued Economic Growth," Thomson Financial, August 20, 2007:
"US economic fundamentals are healthy: unemployment is low, wages are rising and core inflation is contained," Paulson told the House Financial Services Committee today. "Although the recent reappraisal of risk, coupled with weakness in the housing sector, may well result in a penalty, the fundamentals point to continued US economic growth."
Paulson has said previously that the August credit crunch will act as a penalty on growth, but that the US is not headed toward recession.
Paulson added that unlike previous market downturns, turbulence in the markets over the last few weeks was not caused by problems in the 'real economy,' and instead reflected "excesses in the credit markets."
He also downplayed problems in the subprime mortgage market, saying that US home ownership has increased over the last decade and that home ownership in general is not threatened.
"Even in the current environment, the vast majority of new homeowners will not have difficulty keeping their homes," he said.
"Paulson Sees Subprime Woes Contained," Reuters, August 1, 2007:
Treasury Secretary Henry Paulson said on Wednesday the repricing of credit risk was hitting financial markets, but U.S. subprime mortgage fallout remained largely contained due to the strongest global economy in decades....
"The market has focused on this. There's a wake-up call, and there's an adjustment to this repricing of risk, but I see the underlying economy as being very healthy," he told reporters before leaving Beijing.
Paulson added that he did not see anything that caused him to reconsider his view that the economic damage from the housing correction was "largely contained," despite losses in a number of financial institutions and a long period for subprime issues to move through the economy.
We report. You...cry.