Why is anyone surpised that an investment banker can be incompetent? - the industry is full of mendacious grifters who know nothing - the good news about the subprime crisis is that the investment banks are going to be marked to market and arbitraged out of existence at last!

Chie, Tokyo, Japan

It's clear this 'bail out' is a shock doctrine. Disaster capitalism in action. "A political debate for another day" says Paulson. This is one of the most shockingly undemocratic political maneuvers i've ever seen...

Jamie, London, UK

Kaletsky is so obviously anti-Republican that he's losing credibility: "Republicans shouldn't be fighting wars or managing flood defenses." Well, thanks to the steadfastness of Pres. Bush, the war in Iraq is being won and LA voters post-Katarina threw out the incompetent then Gov. Blanco.
Ove FL

Ove Wengler, Mount Dora, United States

The bankers are holding on to the cash that the fed put into the system and choosing not to lend. So they have us over a barrell. They won't provide credit until Hank buys their toxic investments at a premium. Now Hank is over a barrell. Time to get Hank out of the game.

R Decker, Spokane,

The quote is right on the money “The Republicans are a party that says government doesn't work - and then get elected and prove it.” For the most of the 50 years Repulicans have controlled the White House and Congress and look what happened. But people don't seem to learn.

TNYC, New York, USA

Section 8 of The Great Financial Bailout Act says:

"Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."

~or~

We're the government; trust us!

Dennis, Portland OR, The American Colonies

I think Kaletsky is missing something. The words "Ben Bernanke" appear nowhere in his article. From the hearings it appears to me that Bernanke is really the brains behind the plan. The odd thing is that while he is one of the leading U.S. economists, few other economists seem to support it!

Philip Pam, New Jersey, USA

However it is done, investing in failing private enterprises is not - ever - a legitimate use of governmental power.

The only way to minimise the risk of such future economic catastrophes is to ensure that everybody bears the full consequences of their own choices, come what may.

James E. Petts, Burnham, England

Paulson in Congressional hearings was astonishing to me...he seemed average, repeating many generalities, often refering to other "experts"....repeating himself...

Payne , Honolulu, USA

A classic fascist grab for power, create the problem then provide solution. I urge any Americans with a high demand qualification in medicine, engineering or geology to move to Australia before the razor wire goes up around your once great nation.

Greg Hudson, Sydney, Australia

Thank you for saying exactly what I thought so perfectly. I seldom read an article that voices my exact reaction to a situation as this one did.

Judy, Cleveland,

At this rate, no American will be financially able to even purchase clothing. All that we have, all that we may acquire, all that we might earn, shall be owed to the government, in order to cover the appalling mistakes of the 'banksters', 'fraudsters' and lunatics running the financial world.

Elizabeth, Chicago, USA

John Karpiscak wants to blame this mess on the Democrats? We have had an administration that replaced policy with ideology and ended up with a disaster. Look at how much the budget GREW under Bush, with a GOP congress. Blaming the Democrats is just evidence of blatant stupidity.

Pat, California, USA

A floor cannot be put on house prices, house prices are still too high, and cannot be propped up. The house prices aren't the problem; the problem is the stupidly large mortgages and the insolvent banks who lent money they didn't have. The bank losses are real, and those dollars are sitting in China

Aaron McDaid, Dublin, Ireland

Hank Paulson is a praiseworthy peacenik. The 700 billion he will throw at the Wall Street Fraudsters he won't be able to hand over to the Pentagon. Hail King Henry! God bless American impotence!

Magnus Göller, Hammelburg, Germany

The arrogance , vanity and greed displayed by major American bankers and insurers, has evidemntly reduced the IQ's of supposedly intelligent men to single figures.

Alistair MacColl London.

A MacColl, London , UK

Foolish article. Bush tried to reform Fanny Mae, etc. but was prevented on at least 12 occasions by the evil Demoncrats. Bill Clinton even said so on TV today. Demoncrats will cost us a trillion because of their lust to spend money that is not theirs and create a dependency (i.e., slave) class.

John Karpiscak, Fredericksburg, USA/ Virginia

As bad as this Bailout is, inaction is worse. If this does not work more UK banks will fail, the government does not have the money to bail out any more banks. It cannot borrow from ECB, leaving only the IMF. THis is also a problem for the smaller independent non euro countries.

tim, sunbury, uk

Markets are not right and wrong sometimes. Having a market is either right or wrong. If it is right to have a market then all prices it dictates are right. If it is wrong - i.e. you cannot accept that there will be uncontrollable price rises and falls - then prices need to be set by an authority.

Alex, Salisbury, United Kingdom

Anatole, the market is the sum total of the ignorance and wisdom of all those who trade it, it is NEVER wrong.

JonB, Charlotte, US (Ex-UK)

Add Paulson to the long and sordid list of Bush appointees. His legacy is secure. He will forever be the butt of every Presidential joke. He may as well skip the lecture circuit and go the route of Reagan by just fading away. At least Reagan had alzheimers as an excuse.

Juan, Seattle, USA

Free maket? All hail King Henry! Paulson is not clueless. Paulson is acting in concert with the executive branch and private central bankers in order to transition America to state corporatism. This plan absolves the elite and sticks it to the "commoners". Let the tycoons fail and fall.

Jennifer, Granbury, TX/USA

My job is relatively unimportant compared to Paulson. Even still, if our company was facing dire straits and I showed up with a bail-out proposal consisting of 3 whole pages, I would be laughed out of the room.

Seriously, has this guy ever had to give a presentation before?

Roger, Kansas City,

Undermining the stability of the country is treason.

HTuttle, Manhattan,

He in, fact, said what was necessary. They needed to create a market for these instruments to free up cash for financial institutions. He also said the figure has to be big enough to matter wether it was needed or not, in order to restore confidence. Then he gave it to congress.

Mike, Santa Fe,

I'm really glad the financial experts are happy that the American people are being saddled with yet another debt we have no say in,and that will push us further towards the complete collapse of our nation a decade or two down the road.

Fred, Rock Port, USA

Who caused this mess? Congress and the Clinton Admin.Barney Franks in particular encourage FAN and FRED to help low income families participate in the housing boom.
Paulson is trying to solve the problem.Neither he,nor Goldman caused this mess.
Andy Tucson Az

Andy, Tucson, U.S.A

Valuing the assets is not impossible. Every mortgage holder's payments make their way through the financial labrynth to the holder of the proper CDO or CMO. Those mortgagees who have defaulted are being pursued by the appropriate creditors. This is smoke and mirrors made to conceal criminal activity

teri, salem, or,

Bob - did you read the article? He gave a price - with no plan attached. And asked that his decisions be unaccountable (that is the bit about not open to being reviewed). A plan with margin for error on costing would have been reasonable.

Minnie Mae, Pittsburgh, US

Now that we have the fix where is the accountability for the mess. Ken Lay went to jail or was supposed to for misleading everyone, but his folly or discete pails ito insignificance.

George T, Elk Grove , USA

Splendidly stated, particularly the penultimate paragraph.

Josef Chytry, Berkeley, USA

Surely what would be more credible is if Paulson did have a plan but was unable to specify the cost of the plan. It is the difficulty (impossibility) in valuing assets which has caused the crisis so putting an absolute value on a rescue deal could be difficult. Knowing where to start however is key

Bob, Reading,

A great article by Anatole. Banks provide jobs for the boys..and not particularly bright boys at that. And then we allow those boys to make decisions about the world economy!? I can't help thinking that if women were running the banking world we wouldn't be in this two and eight..

Jupiter, London,

Suppose a guy gets blind drunk and drives into a lamp-post on the way home. He dies of a massive haemorrhage and trauma in the ambulance on the way to the hospital. Kaletsky would demand that the paramedics be charged with murder.

James Albert, St Albans,

I listened to Paulson speak to the Banking Committee and could not believe the stuttering rubbish I was hearing .. that and the endless Repitition, Hesitation & Deviation.

p.s. . How in the world made it as Chairman & CEO of Goldman Sachs and amassed a personal fortune of $500 million beats me!

Fawaz Shalan, Amman, Jordan

USA has a low savings ratio so convert the 700Bn toxic stuff to a tax free saving plan ,interest & capital underwritten by Govt over 10 years .Investors get a prescribed return ,banks get a capital injection and Govt gets any future profit on the run off liability .Tax the traders/banks to offset

charles heaton, london, uk

"this bailout will now be led by the Democratic leadership in Congress and will be structured around its priorities." Democrat policy for for 30+ years is what created this mess in the first place. Whose legislature forced banks into bad loans and who allowed Fan & Fred to run unfettered?

Philip, Midwest, USA,

I completely agree with this article and thank the author for stating the truth. To me telling the truth, not the fantasy that Bush warned of Fannie and Freddie "17 times" is the starting point out of this debacle.

Vivian, Vancouver, Canada

Paulson's plan is simply to bail out Wall Street: nothing more than that. His demand for a quick decisive answer from Congress shows that he needed speed to win his audacious 'save Wall Street at all costs' plan.

drumsfeld, London, uk

Good article. “Decisions by the Secretary...are non-reviewable and may not be reviewed by any court of law or any administrative agency.” $700 billion, another $700 billion and on and on ad infinitum. Recognise the pattern? Familiar?

It's fundamentally wrong (again). Let failures be failures!

NDG, Tokyo, Japan

Whilst you have to wonder about giving one bloke $700 bill to punt I'm sure he is quite right about the thing that amazes Anatole Kaletsky.

Banks won't participate unless they really really need to if executive pay is limited - which means anyone who participates is damned.

Jon Underwood, Seaton, UK

People who are short the markets, like Jim Rodgers or Soros, claim we are headed for disaster. Those who want markets up, like Buffet and Eveillard, tell us to have hope. Paulson wants to make friends for his future job. Congress wants us to forget they mandated Community Lending to poor homeowners.

Regis, Bronxville, USA

Edward,London & Stephen Rothbart,Prague Czech Republic
well said.The author's criticism of the American Administration
and Hank Paulson in particular are in my view completely unwarrented.

If he is so knowledgeable of the current situation where are his suggestion's to help solve the problem?

Dennis Daly, London, UK

It really gets me that someone can be so critical, from the sidelines. These are desperate, volatile times with little time and little information. If only we all had the time sit down and attack the people taking the risk and trying to solve a bad situation.

Donald, Miami,

It's been the same old story since the Dutch went berzerk trading tulip bulbs ... the only difference now is that we have shorter memories. Previous crashes have led to the public distrusting financial institutions for at least a couple of decades - now we seem to be happy to be duped every 5 years

Mark, Switzerland,

You can take the boy out of Wall St., but not Wall St out of the boy. Making a poacher the game-keeper was always a risky plan.
Paulson is no incompetent but arrogant, authoritarian and anti-government.
This mess was created not by lack of regulation but by wilful lack of enforcement, as in UK.

R G James, Brasschaat, Belgium

If they end "Mark to Market" accounting for Mortgage Backed Securities, the banks would be recapitalised free of charge immediately. Let them hold the MBOs to maturity and amortise the losses over the next decade and save the 700 billion of tax payers’ money.

Arthur, Melbourne,

I have some sympathy with the view that a "rescue" is needed. It does beggar belief however that Paulson can come up the figure of $700Bn without seemingly knowing what he is going to buy or at what price. To be called a "plan" this surely needs to have some scetch of what its going to do when.

abharrisson, London,

Paulson ran the company most responsible for the credit house of cards, with direct connections to Washington to manipulate the economy. He then moved to Treasury, saving millions in taxes, and now runs the government side of the Goldman Sach/Washington oligarchy. Lord Acton's dictum.

Ransford Pyle, Gainesville, USA

Of course Paulson hasn't thought through the details or long-term consequences. The investment banks didn't either. Asking Paulson to sort this out makes as much sense as asking a goat to look after the vegetable patch.

P Williams, London,

It's time to just allow the financial system and society to collapse. Let people who have fiearms defend their food storage and homes while the rest pillage and burn. After a few months, lets see what's left and what should be reconstructed. It would great fun here in Michigan.

fred temby, ottawa lake, usa

A multi-billion dollar bailout for a "storm in a teacup" (as you described it) credit crisis seem a bit excessive don't you think? Journalists called this situation just as badly as bankers but seem to backtrack to the conclusion that they knew all along. Lots of finger pointing with no solutions.

Edward, London,

Putting Paulson in charge of the Treasury is like the cat being put in charge of the milk.

James, LONDON,

The U.S. is on track to become a socialist state, no healthcare no safety net for the poor, just protection for the wealthiest 1%. We cannot allow the wealthy to suffer and worry about going broke now can we. I say it may be good to learn to live within ones means.

jim, Pembroke, U.S.of A.

The $700 billion would be far better spent on infrastructure and energy projects (similar to the Tennessee Valley Scheme or Manhattan Project) which would create large numbers of jobs during the downturn. Let the weak banks fail and be consumed by the strong - capitalism in action!

Neil, York, UK

Charles, Bush fraud? Clinton signed the Act that deregulated the markets in 1999. Bush tried 17 times to get both Republican and then Democratic controlled Houses to regulate Fannie Mae and Freddie Mac since 2002. They chose to ignore his advice. Perhaps for once blame for the right man? Clinton.

Stephen Rothbart, Prague, Czech Republic

"Decisions by the Secretary pursuant to this Act are non-reviewable and may not be reviewed by any court of law or any administrative agency. "

Sounds like an attempted coup.

Andrew G, London, Uk

We just must accept that this is, any way, the end of the system and the end of an era. Capitalism or what you want to name it will never be the same, as our every day relations with capital, banks, market and so on will be for ever changed.
World of the golden boys is finished and ...ok.

JRC, Luxembourg, Luxembourg

Think "theft" and then look at what has happened this last 13 months for what it is.

This series of US Government bailouts is to serve one purpose, and one purpose only, and that is to enable the crooks and fraudsters of Wall St to have one last bite before leaving a wrecked financial system.

Paul O'Smoake, Paris, France

If you want to know how we got here, see Prof. Liebowitz's analysis at http://johnrlott.tripod.com/Liebowitz_Housing.pdf. The blame is upon everyone - the Fed, Govt regulators, Congress, bankers and borrowers. How we "cure" this problem is not so easy and deep recession is now a near certainty.

lallen, Atlanta, USA

Bush and his Govt are accountable for fraud on the grandest scale in condoning the false mortgage business that led to this debacle, he was incompetent from day one and everything he has touched has been a disaster for America and the wider world. Leaders must lead with solid core values.

Charles Duigan, Ubon, Thailand

Anyone who, like Paulson, waves his arms about quite so much during retorts cannot be too sure of his brief. In fact, watching Paulson answer most questions looked like watching a man drowning in an ocean of his own incompetence.

Mike Mitchell, Spalding, England

"Markets are usually right, but sometimes they are dangerously wrong - and they need to be managed with decisive and competent government intervention."

The market is always right! The over-evaluation was caused by the credit flood: drowned by liquidity. Now the government will drown the dollar.

Karl Kraut, Nijmegen, Netherlands

Hey Lewis:
If I can get a mortgage for the Brooklyn bridge I'll buy it!
Pete

Pedro , Montevideo, Uruguay

and as Alberto Gonzales was to civil liberties.

Steve, lyme, usa

Do what you like USA , you are going the way of Japan

they too confused the word "bailout " with free markets .

johnpandya, zurich , ch

I watched all of the coverage yesterday, and was appalled by Paulson's complete failure to give any coherent answers to some very well crafted questions. After several hours I was no closer to understanding what the $700bn is for except that it will boost confidence and 'lubricate the money markets'

Simon, High Wycombe, UK

If we buys this debt at what price? If at present value how will that help. There will be millions of over priced homes. Who will buy property at such a time save vulture funds. Are we proposing to allow the finaciers to get away with 700 billion in order to buy back our own assets at bargain prices

WAK.Coe, Llandudno, Wales

Is it not obvious that Hank W. Paulson is protecting his His Own at the expense of taxpayers? How can he defend more fat cat remuneration for his banker colleagues when they caused their own insolvencies? Paulson is to Bankers as Rumsfeld &Cheney have been to Halliburton: milking crises for profit.

Russell, London,

the whole lot of them are part of a conspiracy to take over the financial system. they are all members of council on foreign relations and are good buddies.all of them.this is an exclusive club whos job is to milk the american taxpayers more and more.
usa ia bankrupt full stop.

ebbi britt, valencia, spain

If you really believe that Henry Paulson and his cronies can get the US out of this mess, then maybe I can interest you in buying the Brooklyn Bridge, which I just happen to have on sale at the moment.

Lewis Winders, Tasmania, Australia

The challenge is that we aren't talking about buying a bunch of ipods. The securities being bought vary dramatically - and consequently determining a pricing mechanism is difficult. These are not all toxic either, it's as much an accounting rule causing the problem as an asset valuation issue.

Andy Carlson, London, England

Reminds me of the South Sea Bubble when prospective investors were offered the following information;

'For carrying on an undertaking of great advantage; but nobody to know what it is.'

And with the same likely outcome.

Vince Meegan, Brighton, England

i would be interested to learn what psychologists make of mr paulson's unusual hand movements and gesticulations as he struggles to explain the intricacies of the wall st financial meltdown.
To me it seems as he is trying to "press down" the mounting tide of jetsam as he struggles to stay afloat

james, wigan, england

Thank god we have Anatole to guide us. His steady hand and always thoughtful, always right analysis have proven their worth time and again.....

James Madison, New York, NY, USA

Ken, Oxford, you're wrong: Paulson was indeed chairman of Goldman Sachs, and also its CEO. he was BOTH chairman and CEO of Goldman between 1999 and 2006.

Lukas, Stockholm, Sweden

Former top banker, now in Govt office demands £700m, without recourse to any other authority, to 'fix' failing financial markets. By 'fix', does he mean 'Sort out my mates so they can keep their yachts and holiday homes in the Hamptons'? Undeniable corruption and attempted misuse of public money.

Darren, Norwich, UK

When Pres. Bush came on TV last night in effect holding a loaded gun to the heads of the American taxpayer; "thousands of homes repossessed, millions of jobs lost" I began to realise that this was all bluff and double-bluff.
He was in effect saying, "give us your money, or else"
Very persuasive.

C Nugent, London ,

As the Federal Reserve makes money from every dollar they produce, its hard to see how they can be fair and balanced on their views. Every dollar produced is money in their pocket.

John, London,

Get Warren Buffet in there to give some advice. He seems to be one of the few men in the USA that knows how to run a tight ship.

Anita, Cessnock, Australia

The chutzpe of this demand at gunpoint to make the US taxpayer pay twice – for the endless wars on credit and the equally hubristic gambling in the financial institutions by a similar bunch of overpaid braggarts. And if this method of extorting money/compliance with threats works, guess what?

Julia Iskandar, London, England

I have to agree, if they had any idea of how to fix the problem, we would not have the problem. Bush can not go home leaving his friends with empty pockets. They counted on him to give them trillions through Medicare, Social Security, deregulation and oil. One out of four will not do.

William, Plainfield, USA

Ken,
Hank Paulson was BOTH Chairman AND Chief Executive of Goldman Sachs. I can't think of anything more annoying than a person who scolds others for inaccuracy and gets the facts wrong himself.

David Blake, London,

Paulson was CEO not Chairman of Goldman - a mistake you keep making. So, Paulson doesnt believe markets can be wrong, but is asking for $700 billion? Can you run that piece of logic by me again? Yes, the plan was too non-specific, but these crises are always political bargaining games.

Ken, Oxford,

Paulson does appear clueless although one could interpret his plan as an attempt to bailout his buddies at Goldman and elsewhere. Why otherwise would he choose to recapitalise the banks by buying toxic waste at above market prices rather than investing directly in the banks and having a say in mgmt.

William, Guildford, UK

I think this is a great opportunity for the US to clean house. Fannie and Freddie were cranking out tainted mortgages into the system the way Chinese milk factories were producing tainted milk.

I hope that Americans take the time and do the research to learn how complicit Congress was in this.

Ron, Dallas, USA

Paulson is competent. He is also a mendacious grifter.
Follow the money - his actions have not benefited the US, but Goldman Sachs, his company, which
now is the only remaining investment bank and this is about giving them more money.
HIs demand for unfettered power is also to this end.

David Martin, Bristol, UK

This is another indication that the system is at fault. A system that monitored would not have identified Mr. Paulson as a faliure. There is no checks and balances. The Mr Paulsons of this world would get weeded out if there was a moitoring system in place. It is the system that needs changing.

Jim Wills, Brisbane, Australia

Couldn't the US Govt just let banks with excessive toxic assets fail and swap debt for equity? This whole $700bn "blank cheque" is a mess, and what is worst is giving room for old fashioned socialists (such as the president of my country at the UN today) to talk about big state intervention.

Juan Figueroa, Santiago, Chile

How did any body decide that £700 bn would do? I fear that this figure is a thin end of a wedge and like a builders estimate the cost will mushroom . As the mess was created by all the investment banks it is questionable whether an exmerchant banker is the best person to sort out the mess?

S Yogarajah, Harrow, uk

Mr Kaletsky it has been obvious to many for sometime that neither Henry nor Ben have any real idea what they are doing. People who would throw money out of helicopters probably should be rock stars not bankers. Even Congress is starting to wake up to fact that the US no longer can afford this waste.

Stephen Hargreaves, Hobart, Australia

"The Emperor has no clothes"-a number of contributors having been helpfully pointing a similar analogy to you for ages about Greenspan's (collapsing) debt bubble strewn economic legacy - how refreshing it is that you have taken our ideas on board and now see that Wall St has choked on its own greed

rick, melbourne,

"Mr Paulson simply cannot believe that markets can be fundamentally wrong. "

What are you talking about?? This is completely the reverse. Paulson is making out the markets ARE wrong and that the govt by stepping in and paying held to maturity rates is more realistic than current fire sale prices

Dan Ellis, Norwich,

The biggest problem I have is that these people who are telling us that this is the right course to "fix" the economy are the same people who got us into this mess.I don't believe them,their credibility is non existent.If they knew what they were talking about why are we here today?

Ian, Austin TX, USA

You can't regulate greed and extortionate pay structures. ONE of the problems is a huge disconnect between people saving for their old age and Bankers who have zero competition & can dictate their own pay. Part of the answer is for investors to play a bigger role in how the rewards are divided.

Bernard, Austin, TX

I do agree with the main thrust of this well-written article that Henry Paulson is clueless.
He came from Goldman and they pretty soon forget all the principles of economics there in the hunt for profits by fair means or foul.
I cannot agree with the optimistic part of the Article.

Cheers.

William Kent, Brandon, Canada

Sounds like the rich boys club want to take the saving of the working class for themselves.

We have lived through banks and other financial institutions collapsing before.

Alex Samad, Sydney, Australia