Wednesday 19 Sep 2018 | 15:04 | SYDNEY
Wednesday 19 Sep 2018 | 15:04 | SYDNEY

Paulson keeps talking...and talking...

19 November 2008 15:03

Guest blogger: Peter McCawley is a Visiting Fellow at the Indonesia Project, ANU, and former Dean of the ADB Institute, Tokyo.

As the economic crisis worsens, and hot on the heels of the latest attempt by political leaders to focus on the problem at the G20 meeting in Washington, US Treasury Secretary Hank Paulson has written an op-ed for the New York Times.

But it's unlikely to do much to bolster confidence. He still looks as if he is floundering.

Paulson has come under fire for seeming to be adrift in his policy response to the crisis. A week ago, he issued a long and carefully worded explanation on progress made so far in responding to the crisis. What was worrying in the statement was the news, submerged beneath much technical jargon, that Paulson was still trying to figure out how best to spend the roughly US$700 billion that Congress had agreed to provide him just a few weeks earlier. 

The public response to this statement, not surprisingly, was cool. The apparent confusion in working out what to do with the US$700 billion drew criticism. It looked as if Paulson was making policy on the run.

This op-ed is Paulson's response to the most recent criticisms, but it does little to help his case. Paulson says that the US$700 billion 'is not a panacea for all our difficulties.' This is stating the obvious. And in response to the key criticism that not enough is being done to address core problems in the US housing market, he waffles.  He talks about reducing 'preventable foreclosures' and steps to 'promote mortgage lending.' But details are very vague.

And perhaps most worrying of all, Paulson then lapses into rambling rhetoric about the strength of the US economy. He tells us that he is 'very proud of the decisive actions by the Treasury Department', of 'strategy' and 'flexibility' and 'difficult challenges ahead', and of 'the speed and trajectory of our economic recovery' and 'the entrepreneurial spirit and productivity of the American people.'

All of this as global markets keep sliding. We need more — much more — than this from Paulson and Bernanke and other US economic policy makers.