When Paulson and Geithner wrongly euthanized Lehman Brothers, the consequences pretty much spelled the end of finance as we know it. Saving Lehman was well within their capacity, even though they refuse to admit it or say it was even a mistake. The markets have never recovered.
Their hands-off policies ended after Lehman. Two days later, when worries about moral hazard went out the window, they did a total about-face and began what is now an endless bailout of AIG (Stock Quote: AIG).
Nevertheless, they never questioned their beliefs and therefore never answered to anyone -- Congress, the press or the pundits -- so sure were they that everything was fine and things would work out well in the end.
President Obama's team, unlike Bush's team, demonstrates a thinness of skin that shocks me. When I somewhat obviously and empirically judged that the populist Obama administration is exacerbating the crisis with its budget and policies, as evidenced by the incredible decline in the averages since his inauguration, I was met immediately with condescension and ridicule rather than constructive debate or even just benign dismissal. I said to myself, "What the heck? Are they really that blind to the Great Wealth Destruction they are causing with their decisions to demonize the bankers, raise taxes for the wealthy, advocate draconian cap-and-trade policies and upend the health care system? Do they really believe that only the rich own stocks? What do they think we have our retirement accounts in, CDs? Where did they think that the money saved for college went, our mattresses? Do they think the great middle class banks at the First National Bank of Sealy and only the wealthiest traffic in the Standard & Poor's 500?"
