I wonder what this is really all about:
Barnes then goes on to say that “Paulson’s fear of a significant Chinese recession dovetails with another of the major tasks assigned to him by Bush: crisis management. Paulson believes a financial crisis is overdue—a serious crisis that would be a body blow to the U.S. economy. This fear is shared to some extent by Bush and Bolten, who wanted a major Wall Street player at Treasury in case an economic emergency occurs.” Barnes then details Paulson’s activation of the financial working group “to prepare for the crisis”.
All in all, it does not seem that Secretary Paulson shares the sanguine Wall Street view of the market and the economy. Indeed, now that he is no longer in the securities business, Paulson is acting very much like a man who is looking ahead and does not like what he sees.
The Chinese recession bit goes hand in hand with the issues Lawrence discussed in a previous comment on this blog. Their potential financial difficulties become ours - they would simply call in debt and tip the balance of our false prosperity. I guess we knew second and third mortgages could not drive and economy forever - particularly when massive amounts of debt have been shipped overseas. It is all just a make believe world - existing on paper and on computers, but with little real value.
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